From knowing your worth to understanding nailing your content, there are various ways to up your marketing agency’s game and thus, improve its’ cash flow. Financial advisors Hudson Weir give their insights into how to optimise your finances and succeed in the marketing industry.
Poor cash flow is one of the major red flags that your agency might be on its way to insolvency, among other warning signs.
If you can give this area some attention, you will be doing a lot to safeguard your business against financial instability.
Here are our top tips to make your agency financially robust and avoid spiralling debt:
Know Your Speciality
Forget going after clients and projects that aren’t a good fit for your agency. You know what you do best. You specialise for a reason, so make sure that you stick to your speciality.
If you keep taking on projects that you are not the expert in, it will drain your profits; your staff will waste valuable time researching things that they don’t have prior experience in.
It’s tempting to say yes to every enquiry that comes your way, especially during uncertain economic times, but it doesn’t make financial sense in the long-term.
Hold onto your niche. Be the go-to expert. You can do this with your eyes closed.
Know Your Worth
This is all about how much value you attach to your services. Ask yourself: Are you charging the market rate, or are you underselling?
Do your research and check out what your competitors charge. You need to make a sufficient margin or one spell of bad luck – think a late payment from a major client – could have you teetering on the brink of insolvency.
Once you have looked at this, you might find you can increase your pricing for certain elements, or you might want to consider packaging up some of your services in ways that will make you more profit.
When you have got this down, you will find that you naturally attract high-quality clients with healthier, more realistic budgets.
Keep Your Eye On The Ball
While you are reviewing your pricing, you might as well take the time to look payment terms in the eye too. And we’re talking terms for both customers and suppliers.
While it’s not a good sign to be a consistently late payer, and doing so could be a financial red flag, it’s also not good business sense to pay every invoice the second it comes in.
With the exception of freelancers, who often need to be paid straight away, you should try to get into a monthly pay cycle with larger suppliers. Otherwise, you could find that you are paying out to suppliers before the client has paid you.
Similarly, for your clients, make sure you have your payment terms nailed down, with penalties for late payments.
There needs to be a reason for them to pay on time and if you have made terms clear from the start, there won’t be any nasty surprises.
You can also chivvy clients along up by offering multiple payment options too. Make it as easy as possible for them to get money from their account to yours.
And this might go without saying but insist on a deposit, especially for new clients. This way you can get money into your business sooner, and it incentivises the client to pay if you have a policy whereby you don’t start work until you get the deposit.
Play The Long Game
To develop more confidence in your agency as a brand that knows its onions, you need to be leading by example.
Sure, you know exactly what you need to do to improve SEO for your clients, but do you have time set aside, and a dedicated team, to work on your own website?
If your potential clients are faced with a website that is slow or hard to find, how many opportunities are you missing out on?
You can’t convert if your bounce rate is through the roof due to poorly written content, a page being slow to load, or it not being mobile-responsive.
You also need to make sure that you are investing in technology. This is another area that can impact customer confidence.
How can you position yourself as the go-to marketing agency if you are not across the latest keyword trackers, advanced metric tools, photo and video editing apps and social media schedulers?
Potential clients won’t work with you if it is obvious they know more than you about these things.
If you are finding that you are having real cash flow issues, coupled with other problems such as difficulty paying bills when they become due, or if your debts outweigh your assets, it might be time to get some expert advice.
Insolvency professionals can help you to make a plan to find a way back to profitability and to avoid liquidation. Just make sure that you recognise the signs early on and seek help before it’s too late.