Protect your consultancy from recession

The consensus is that we are heading for a recession. Although protecting your firm sounds very defensive, there is a time to safeguard what you have created. However, as a passionate chess player from the age of ten, I have the words ‘the best form of defence is attack!’ ringing in my head.

Having grown a business through more than one recession over the last 25 years, here are my thoughts and some related stories that might help you plan your offense and defence strategies to make this your best recession yet.

Get perspective

In 2008/09 we suffered the worst financial crisis since the 1930’s and yet, what many people don’t realise is, at the peak of the recession, GDP was only down 4%! Of course, some sectors suffered more than others. But overall, there is no hard and fast reason for founder-led firms to suffer during a recession. Consider this: if the value of your addressable market today is £100 million, then are you really going to panic if it drops to £96 million? 

Recessions are a natural part of the business cycle and as such they are temporary.

Recessions are a natural part of the business cycle and as such they are temporary. In the same way that the inflation we have all been grappling with is also temporary. Inflation is widely predicted to fall quite rapidly in the second half of this year, following which the employment market is predicted to loosen up, bringing us out the other side of the recession. So my first message is: ‘don’t panic, it’s going to be ok’. And my second message is more of a question: how are you going to use the recession to your advantage and come out even stronger – just like so many firms did, following the pandemic?

Let’s explore what your strategy might be through some different lenses:

1. The client lens

The impending recession is a great opportunity to deepen your relationship with your existing clients on two levels – organisationally and personally. 

Organisationally. Ask your team: 

  • How are your clients’ perceived needs changing in the context of the impending recession? 
    Typically needs shift towards saving time, money or mitigating risk. Are those needs really that unusual?

Once you have qualified and understood those changing needs, the next obvious question is: ‘How do your services need to be developed to meet these new perceived needs?’ Or perhaps it’s simply a case of adjusting your messaging and packaging what you do differently.

Personally. Ask your team:

  1. What are your clients concerned about personally?
  2. Can your work help them keep their job, get a promotion, build their reputation? 

Use the recession as a reason to get closer to your clients. 

So, my recommendation is to use the recession as a reason to get closer to your clients. The best way to succeed at this is to get your whole team on board with having these types of conversations. We know that the majority of firms don’t have a proactive sales culture across the board and so this may well require some investment in developing your team’s mindset, skills and your internal practices.

Value. value. Value.

A parallel strategy to getting closer to your clients is to shout your value from the roof tops.

What stories can you jointly promote within the client that could go viral in the business, making your firm indispensable?

What stories can you jointly promote within the client that could go viral in the business, making your firm indispensable?

Case study

When I owned my consultancy, we ran a leadership development programme for a multi-billion pound construction business.  The vision was to create a more collaborative culture. It is notoriously difficult to quantify the ROI for such programmes. However, we were determined to prove a financial return. 

Thanks to the programme, two project managers took it upon themselves to conduct a peer review of their respective construction projects. Denise spotted that Gareth was about to make a mistake that Denise had previously made using intumescent paint. Thanks to their collaboration the business saved in excess of £1.2m. 

That story (among others) became folk lore and when there was talk of cutting the leadership programme, the board said, ‘well, we only need one more instance like that and we will have paid for the programme four times over’.

The unfortunate truth is when you have been working for a client for a long time, they may well forget about all that amazing value you created early on in the relationship. It’s your job to make sure that, not only do they not forget, but the word spreads throughout the organisation. A clever way to do this is to enter an award for your work. This requires the client to articulate and publicise the value of the programme and then run internal learning lunches sharing the success of the programme.

2. The leadership lens

If the recession does start to impact your business, then it is likely that you will have many questions swimming around your head like: How much business information do you share with the team? To what degree do you protect your team versus bring them into the dialogue? 

How do the answers to these questions differ depending on the role or seniority of the team? There are no universal right answers to these questions as they will depend on your firm’s culture and your leadership style to date. If you have always kept business information close to your chest in the good times, it might be a shock to your organisation if you suddenly start sharing everything now times are bad!

At my consultancy firm we used to talk about ‘conscious leadership’ – in fact we delivered programmes for clients of this nature and I learnt that the first step is to get your head in the game (and that of your partners). Its easy leading a business when you’re growing, making money, hiring new people and creating opportunities for all. Its when things get tough that you find out what kind of leader you are. 

So, a few questions for you to consider:

  • What kind of leader do you want to be?
  • How do you want to be remembered when the recession is over?
  • What do you want your team to be saying about you during and after this period? 
  • What do you want your clients to be saying about your firm (and your team)? 

Start painting a vision for how you will thrive through this recession and work backwards from there.

Start painting a vision for how you will thrive through this recession and work backwards from there.

3. The internal lens

Assuming the landscape does shift in 2023 and things become a little tougher, what simple things could you and your team do differently?

  • A great place to start is to raise the commercial awareness of your team and in parallel introduce targets that go beyond revenue and share accountability for expenditure. For example, if your account directors are currently bonused on revenue, consider bonusing them on gross margin – this will drive them to think twice about using an associate rather than a permanent member of the team or throwing extra days at a project without upselling the time to the client.
  • Review your suppliers to ensure you are not paying over the odds for their service and you are getting maximum value. If you are a member of The Consultancy Growth Network then direct your finance person to the benefits page on the Growth Hub and make sure you are saving where you can.
  • Strip out or defer non-essential costs and vanity projects that will not deliver in time to support your navigation through the recession.
  • Upskill your team in negotiation skills to drive more favourable termination clauses, longer term contracts and to minimise discounting.
  • Consider which clients or sectors are likely to thrive in a recession and which ones will suffer? Direct your marketing efforts towards those that are less likely to start tightening budgets or are more likely to lean on consultants during the difficult times.
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Article | Strategy and leadershipPeople and talentSales and marketing

Written by

Marc Jantzen

Founder

The Consultancy Growth Network