The Coming Recession
It's coming - we've felt it here in Michigan for two years now. If ever there was a Business & Marketing topic, it's this:
How are we to deliver more for less? You are going to have to deal with it soon, the run is over...
Is your business ready? Because, I'm telling you, it's going to be a real bitch for some time to come. Are you ready?
Well, I'm not sure I completely agree with the assessment...
Randall's glass may be half empty as usual on the subject, but I'm going to (perhaps foolishly) be a Pollyanna and consider ours half full in this case.
We do almost nothing but :30 broadcast commercials... and have been blessed through the years that most of our clients realize the value of advertising. Fortunately only a small percentage of ours tend to cut back when economic times are tight... the rest tend to stay pretty much the same or see the value in advertising more, not less, when the economy takes a downturn. We have managed to see continuous almost perfectly-steady growth that doesn't seem to mirror the national economy all that closely... and I know several colleagues with similar businesses in other markets that have seen the same.
In a variation on the "If you build it, they will come" attitude, I think if you do excellent work and give your clients great service... then a lack of work is not going to be a danger. There are zillions of production companies out there and if you are like me you watch tons of other people's reels... and while some are great, sadly the vast vast majority of them are simply not very good (the same is true for almost any business). I'd say step one would be to make sure your work is as near the top of the quality heap as possible, and you will not be lacking for work. Of course it will fluctuate... sometimes our production boards are full far in advance and sometimes not as much so, and sometimes the waiting list for clients is fairly lengthy and other times not as much... but it all tends to even out in the wash.
As to "What can one do?", I'd suggest first taking a close look at the companies you serve, pinpointing the ones that keep production budgets fairly irrescpective of economic factors, and work as hard as possible at maintaining and increasing your relationship with them in particular. As for those clients that may be expected to bail during tough times, if you can't educate them on the advantages of your work then don't count on them as factors in the regular daily budget that you must make... but rather just as gravy when times are good.
Oh... and maybe don't make any unnecesary capital equipment investments if the economic forecast seems gloomy. If you'd like a $50,000 new toy but only really need a $10,000 one, then go the cheap route.
Fantastic Plastic Entertainment, Inc.
In the "Depression" Hollywood knew that people went to the movies to escape "reality." Today, when people don't have money to go out they watch TV or serf the web. Business models might change but video will still be important. Marketing strategies might change for both client and video business but the need isn't going to go away.
In keeping with Todd's 'half-full' philosophy, I'm still following my every-January resolution of focusing on my top 20% clients and less on the bottom 80%. Maybe I'm not 'firing' the bottom guys as quickly as I've done in the past, but I still don't waste too much time nursing them along hoping for the 'big one'. Keep your best customers happy, its far cheaper than obtaining new ones. Plus with the spectacular service you offer (you do offer spectacular service right?) your customers should be happy to refer their peers to you - this costs nothing and they're pre-qualified as to your pricing, business practice, morals and ethics. There's no selling, just the keepin' 'em happy and keeping to the scope of work for a given price which has absolutely NOTHING to do with offering more for less. Is your favorite restaurant giving you 20% more food for the same price in fear you'll go somewhere else? I don't think so. We (the industry) can offer more because the tools allow us to, but the price doesn't come down. And we're thankful that our first quarter has a pretty full schedule.
I'm reminded of that guy in the airplane magazines who say's something like "you get what you negotiate". You have to have faith in your skills and market them appropriately. We do good work, not the super-high end stuff, but its what our customers want, we're comfortable producing it, we make a profit, we grow. Do we offer the BEST product out there for our price point, probably not - alot of you are much more talented - BUT we take care of our customer, service is king NOT the widget. I got a job yesterday to put together a series of infomercials - we got it because I called the guy back! OK, well he liked our demos too, but I communicated every step of the way. You're never too busy to be courteous.
Call you customers - don't send an email. Take them to lunch - yep, ya gotta spend a few bucks. Why did they hire you in the first place? Ask for that referral. Don't you get testimonial letters from you customers? Focus on what they liked about you. Send your top 20 customers a $5 gift card just to say Hey. Little things go a long way. Thank people along the way. Thank your customer ALOT.
Running the show is a huge job for small companies especially if you are working IN the business, ya gotta work ON it too. E-myth, Tom Gerber. Look at any big businesses, they have full departments for sales, marketing, production - they have the advantage of volume. I can't live on the typical grocery store chain profit of 4%. Some just get tired of doing it all, its a 20 hour day to wear all the hats if you're a one-man, full-service shop as opposed to just an editing guy.
Maybe you can partner with a competitor/friend? I make a horrible employee that's why I'm a small business (I was knighted by a client the other day that if I'm in biz for 16+ years, have employees, an office... he said I graduated past being self-employed). That's the kind of relationships I have with clients. He never questions price. Make sure your customers know your full service list. You'll be surprised how many of your dupe clients don't know you could produce their training video. Or put the video on the web or CD for them. Cross-sell what you already offer.
So I'm a bit off, but it all relates I guess. When things are good, its easy to be optimistic, we have rough patches too. And like Todd, watch the bottom line. I'd love an HD cam, but so many people have them now, they're cheap to rent.
With the coming recession, I intend to pack up the family and sell everything we have at a steep loss. First stop, Petra. There, we shall grow Quinoa and use our wits to survive whilst you are all shot in the streets like dogs!
Or, barring that, I might just take a permalance gig inhouse at a network and float things out if they really bad. Even Armageddon will need programming, according to Uncle Ted Turner...
John Davidson____ writer | producer | director____http://www.magicfeather.tv
Personally I see the glass as completely full. At no time in history are media production professsionals able to offer so much for so little. In a downturned economy businesses must do everything they can to put themselves ahead of the competition which to the smart business owner means marketing and advertising, especially with rich media content. Smart business people see the value in a professionally produced media piece. Smart media professionals know how to market and deliver what the client needs. This is why I'm choosing to open my business now. The internet as well as wireless communications has opened up a whole new world of potential clients.
When I sell a client on rich media content, I point out that by good planning, we can make content that can serve them on many different levels. For instance, I usually try to sell them on a video for their web page first, for a reasonable price. But I don't shoot just for the web video. I shoot with upselling them custom tailored marketing tools in mind. Once the web video is done and I've wowed them for an affordable price, I then show them how the footage can be made into targeted pieces, or a television spot. In other words, I shoot once, and then sell that footage several times over. They get a great value and I get repeat business.
I've also trimmed the fat on my operation. By opting to work from my home I save thousands on rent, not to mention being able to claim home office deductions. I feel fortunate to have a large home that allows me to do this. Instead of hiring someone full time, I have a herd of excellent freelancers to pull from when I need it. I'm sharing a part time office assistant with my wife who also has her office in the home.
If we focus on doom and gloom, that's what we'll receive. If we focus on abundance and opportunity....well you get the picture.
Higher Ground Media
[Mick Haensler] "If we focus on doom and gloom, that's what we'll receive."
There are worse businesses to be in during a recession than advertising, that's for sure. I think the focus should be on helping clients through it - they are the ones caught in the catch-22 situation of needing to go after more business while watching their ad-budget disappear just to keep the doors open.
Actually, this can be a very good time for us in nabbing new business from agencies who won't acknowledge or help clients during a down-turn.
Really interesting thread....
I work staff right now but am starting to try to do more freelancing. Kinda don't know what to think about the supposed upcoming recession. Hearing so many different things.
LOL according to the Sopranos "Two businesses that tend to do well in a recession our elements of Hollywood and 'our thing' "
I'm still pretty young and obviously the business has changed greatly over the years. Would love to hear some industry war stories of what it was like during the last recession or two (early 90's, 80s etc) from you guys.
I think cross selling is going to be a key factor. A few new things that I’m going/am trying out:
1) Cross sell “DVD extras.” As you all know, when doing interviews, the majority of the footage ends up on the cutting room floor. Hey, you already got the footage, why not make a few hundred extra bucks and create “behind the scenes” DVD extras with extended interviews?
2) iPod podcasts. Once again, the videos are in the can, so why not jump on board the iPod wagon? It costs as little as $50 for the conversion software.
3) Attend my existing customers’ trade shows. For those of you that know me, I have a lot of clients in the credit union industry. I plan to attend at least 1-2 industry CU trade shows/conventions. Each should cost less than a couple/few thousand bucks (including airfare, hotel, food, booze, etc.), which isn’t too bad for a marketing expense.
Any other suggestions?
[Randall Raymond] "It's coming - we've felt it here in Michigan for two years now."
You are living in an area that is tumbling in economic times. My wife is from Detroit and the financial situation is not looking good.
Because we don't know what you specialize in, maybe you can give us some background so we can brainstorm with you.
The posters above have already given you some excellent advice but everyone's situation is different. We had a slump last summer that was brutal for us. We then decided to call all of our clients and ask what we could do to help promote their businesses and increase their sales. It took a few months but then we took off like a rocket (sorta). We are having one of our best Januaries ever and February is looking ok so far.
It's a dry heat!
Sony HDCAM F-900 & HDW-2000/1 deck
5 Final Cut (not quite PRO) systems
Sony HVR-M25 HDV deck
Sony EX-1 has arrived and it's fascinating.
[Steve Wargo] "We then decided to call all of our clients and ask what we could do to help promote their businesses and increase their sales."
That's a brilliant bit of marketing there, Steve. Right now we specialize in web video, Google campaigns, and flash web-sites - I've got more work than I can shake a stick at. I basically say what you just said, it's the message my clients want to hear.
I've been through recessions before, I fear some of the younger guys might get hit from the blind-side. You really have to hunker down and work WITH your clients in tough times (or they'll get picked off by someone else)- it's about mutual survival.
It's on everybody's lips these days (so it seems) but my outlook is very similar to the other responses here. While we are looking to diversify and otherwise shield ourselves from a recession, I just don't think it will hit our industry as hard as others. In the fallout of the dot-com days, the companies that reeled in all of their marketing and basically took the ostrich approach withered away. I think a lot of people learned from that period that in a recession you need to get out there and compete your butt off or lose it, pure and simple. Also, I agree with other statements here about the breadth of markets and potential revenue streams our industry currently enjoys vs. times past.
We WILL see a shakeout, no doubt about it, but I think there are three things that will lead to demise in this - poor reels, high debt and excessive employees.
< rant > These days when you hear talk of "hard times" and recessions, they are usually talking about major corporations and lenders taking a bath in the markets because they made poor investments. Sure there's a trickle down effect, but the real agenda seems obvious - they want all of us to get nervous about our own wallets so that we will eagerly approve the bailouts Uncle Same will inevitably offer them. Free market my ass. < /rant >
[Brendan Coots] "the companies that reeled in all of their marketing and basically took the ostrich approach withered away."
A recession is anything from a lack of growth to a double digit decline in business activity. The problem comes when business people forget this, panic and start the wholesale cancelation of marketing activities. Brilliant. What a great time to make sure that fewer people know about you and what you offer.
This frequently happens in companies where the top execs came up through positions other than sales, for example engineering, manufacturing or (shudder) accounting. I've worked with companies "led" by people with these backgrounds and seen more than one large company destroyed from within by them.
[Steve Wargo] "We then decided to call all of our clients and ask what we could do to help promote their businesses and increase their sales." Dead on, Steve! Bruce's cross selling ideas are also very much on target and not just during recessionary times.
Another of our best defenses against the 'slash all marketing costs' mentality is to remind clients that during past recessions smart companies have used downturns as a time to go against the grain, promote more and, in doing so, increase market share. In other words, a recession is a good time to do MORE advertising and marketing activities rather than less.
[Nick Griffin] "...is a good time to do MORE advertising and marketing activities rather than less."
VERY true... but sadly, some people will never learn.
We have one automotive client that we do some reasonably slick spots for, and they sell high-end stuff (they have Porsche, Jag, Land Rover, and BMW dealerships)... but they just can't seem to catch on...
We do buttloads of spots for them, about every other month. They will advertise heavily, have a great month, and say "We're selling like crazy, we don't need to advertise." So they'll stop. Sales tank, then they say "Maybe we need to get back on TV," and the cycle starts over again. This has been going on for years (have been a client for almost a decade)... but they can't see the cause and effect, no matter how much we try to point it out.
We finally stopped wasting our breath... just smile and take their money every alternate month.
Fantastic Plastic Entertainment, Inc.
And that is one of the reasons that when I moved over into industrial, technical and B2B I never looked back. I've worked with too many car dealers who thought planning and business strategy meant what you would do today and tomorrow. I even had one dealership tell me to pull the spots and think of something new because they've already run one day and nothing has happened.
In B2B we almost always work from annual plans, annual goals and annual budgets.
I hear ya, Nick...
Fortunately we do very few car dealers, and the problems are generally few and far between (thankfully most of them realize the advertising benefits moreso than that one example)...
We do plenty of B2B and corporate stuff as well... but it just ain't my thang and I can't seem to make myself like it. I'm glad that a few of our big corp clients are marketing-savvy enough to let us be pretty creative and sometimes do some wacky fun stuff (unblieveably we had a military gig once where they actually let us do it like a 50's era Army training film... a bad one)... but many of them are so stiff and buttoned-down that they just can't seem to hold my creative attention much (and I pawn them off on my other guys here... sometimes it's good to be the boss...hehe).
I much prefer living in my short-form world and make my little :30 movies, and quickly move on to the next one.
I will say the benefit is that you get paid faster too if you're doing a commercial gig with a day or two of shooting and a day or two of post...as opposed to the corporate jobs that tend to drag on. The corporate money is much much better... but honestly I'd rather do 10 $10K commercials than one $100K corp gig. But yep, I know plenty of people that feel exactly the opposite. Different strokes...
Fantastic Plastic Entertainment, Inc.
I for one will be growing all my own food this year, powering my house with a proprietary perpetual motion machine I bought from a Chinese company, and despite my condo association's strict rules, I am raising cattle in my garage. Oh, and compact flourescent bulbs!
Seriously, we have weathered the 2001 recession and ones before that. Cross your fingers and keep working hard to generate business and keep clients happy.
[Mike Cohen] "Seriously, we have weathered the 2001 recession"
I must have missed that one..
[Randall Raymond] "I must have missed that one.."
Come on Randall, how could you have missed that one? Remember 911 and the so called "War On Terror."
David Roth Weiss
David Weiss Productions, Inc.
POST-PRODUCTION WITHOUT THE USUAL INSANITY ™
A forum host of Creative COW's Business & Marketing, and Indie Film & Documentary forums.
[David Roth Weiss] "Come on Randall, how could you have missed that one? Remember 911 and the so called "War On Terror.""
Oh, that one!