This video was shot in mid-March 2020 as the coronavirus was just beginning to impact the US.
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Hey, everybody, Drew McLellan here from the Agency Management Institute. This week I am coming to you from home where like many of you, I will be for the next couple of weeks. So this is a longer video. So I want to give you that heads up right away, because I want to talk about some strategies around the virus.
First of all, what I want to say is what I’m going to say is all about your agency and business. I am not going to get into what you should be doing with your family or how scary this is for everyone. I want to acknowledge that that our country is certainly facing a crisis. And that both personally and professionally, this is frightening. But what I’m here to do today is talk to you about how to make sure your business survives and thrives through this and gets you back to normal, which I want to assure you, we’re going to get to.
So from my perspective, this Coronavirus event, this all of a sudden, this shutting down businesses, people working from home, the quarantines, the schools, all of that is not really that unlike 9/11, or the recession of ’07, ’08, meaning that it is a moment in time. It’s a blip in time. And one of the things I want you to remember, and I want you no matter how long this takes, I want you to keep in mind that this too shall pass. And so your job is to make sure that your agency survives the storm so that you get to the calm waters on the other side, because we are going to have calm waters. That is the absolute. We as a world will survive this and we will go back to business. And so that’s the lens that I want you to keep looking at. But there’s some specific things I want you to think about as you prepare for this season, whether it’s a couple of weeks or a couple months or whatever it may be.
So the first one is, many of you are asking what you should do about your employees. So I’m recording this on March 16th. So keep that in mind that this is a changing, evolving event in our world. So as of March 16, this council is sage and spot on and taking in everything we know as of today. But if something changes, I will do a new video. All right. As of March 16th, nowhere in the US or actually nowhere in North America right now, are we being told that we cannot gather. What they’re saying is gatherings larger than 250 people should not happen, but there’s no reason why you can’t fly, or you cannot gather in small groups.
So again, personally, you may choose not to do that. You may want to social distance, whatever that may be. So I’m not, again, commenting on that. But in terms of what you do with your employees, if you have a brick and mortar location, if you’re a virtual, this is easy for you. You’ve been doing this for a while and you’re just going to kind of keep on keeping on. But if you have a brick and mortar office, what do you do about the team? It really depends on where you live. If you live someplace where they haven’t closed the schools, they are not asking everyone to stay at home. But really what they’re saying is if you’re sick, if you have symptoms, stay at home, but otherwise just please be cautious and careful, wash your hands frequently, all of that. There’s no reason why you can’t still ask everyone to come to the office, intellectually. There may be emotionally, reasons why you want to let people work from home. Because right now, as we all are seeing on social media and everywhere, people are afraid.
And so let’s start with if you have school closings and other things. The key to how we’re handling this with our staff is that we want to make sure that we emphasize if we have a brick and mortar location, that anything we’re doing to mitigate risk now is temporary. The greatest fear of agency owners right now are around sending people home and letting them work from home is that they’ll never get them back into the office. That once they figure out, look, we can do this, maybe not as well, maybe not as quickly, maybe not as profitably, but we can do this from the comfort of our living room, in our pajamas. Maybe they’re going to really balk at wanting to come back to the office or maybe this is going to escalate what you’ve already been managing, which is the whole remote worker, work from home a few days a week. All of those kinds of requests.
So many of you have differing opinions about all of that. So here’s what I’m going to suggest. If you’re going to let people work from home, and if you’re going to basically shut the office down, then attach it to a finite date or event. So K through 12 schools have closed in our area through March 31st. Therefore, we are going to work from home through March 31st. Depending on what the schools do, we may extend that. But for now, plan on being back in the office the 1st of April. So tie it to either an event like the school closing, or we think in an abundance of caution, we are going to close the office, bring the cleaning crew in and have them do a deep clean of the entire office. And so we’re going to sort of self quarantine and work from home for two weeks. And then if you close for however long you decide to do that, have a set date, and then talk about how you are still going to function as a team.
So we are going to have a all team meeting at 8.30 and at 1, we’re going to use this software tool to do that, or we’re going to use a call in number. Whatever it is, be very clear that this is temporary and that we’re still a team working as a team. And here’s how we’re going to get the work done while we are absent from each other’s physical presence. You’re going to need to practice a lot of kindness and empathy over this next little season. Again, however long it goes, because quite honestly, everybody, both rationally and irrationally is scared. And so they’re going to need a lot of grease from you and you’re going to need a lot of grace from them. I’m not saying you’re exempt from being afraid. But when your employees ask for ridiculous things or people are short tempered, just care for them. Well understand that this is a unique moment in time and lots of deep breaths, lots of, don’t send the email right away, let it sit for an hour and make sure that the tone is what you want it to be.
But your big thing is you want to emphasize in your words and your actions that whatever you’re doing to keep your team safe is a temporary thing. And that there is an end date in sight. And as quickly as you feel safe and confident to bring them back together, you want to do that so that we get back to normal. I’m not suggesting that in any way you endanger yourself or your team. So be smart about it, but also use language to communicate that this is a moment and we’re going back to how we were, whatever that was, when this moment has passed. Okay.
Number two, let’s talk about money. So many of you are fearing that we are now at the recession that we’ve been waiting for, for two years and you probably are right. The good news is most economists are suggesting that because this is tied to a specific event, that we’re going to have a spike of drop or recession, but that it’s going to be shorter in duration and in influence than 9/11 was or than the recession of ’07, ’08. So the job right now is to survive this so you get to the other side. So here are a couple ideas around money.
Number one. If you don’t have a line of credit, if you can get one now is a great time to get one. If you do have a line of credit now is the time to ask the bank for an extension, triple it, double it, triple it, whatever you can get. This is a good reminder. So right now the banks are probably going to be less excited about giving us an extension on our line of credit, but it’s worth asking. But this is also a great reminder that you should have on your calendar to ask for a line of credit bump every 18 months or so. So you should be using your line of credit, not now. Now I’m talking longer term. You should be using your line of credit, even if it’s just pulling a couple thousand dollars and then paying it right back in the next month. So you should show activity on the line of credit and your goal should always be to get a larger line of credit.
It is not your goal to use the larger line of credit all the way to its maximum. But the more protection you have, the better. This is also a great reminder that we need to have two to three months worth of operating income in a savings account or a money market account. If you can do that now, without cash starving yourself, start putting some money away for you to be able to weather this storm. But if you don’t and you don’t have the money to do it, that should be a big goal for you as we come out of this and you get back on your feet and you are feeling strong again, is to start socking away money for that rainy day. Because as we’ve experienced, every 10 years or so, we have a rainy day. So it’s good to start to plan for that and get ready for that. So line of credit.
Number two. You’ve got to run your business by the numbers. Many of you are already feeling clients slowing down, pulling projects back, really wanting to just sort of wait and see what’s happening. It is often, depending on what your clients are and what they sell, it may or may not be the right time for them to be out selling their products anyway, it may seem inappropriate, or maybe for example, if you’re in the travel and tourism industry, it may be that nobody’s going to buy right now anyway unless you’re going to put together a post virus package. So wherever you are with your clients, odds are, things are going to slow down.
And so what that means is less revenue coming in and you’ve got to manage to the 55, 25, 20. And if you’re not familiar with that agency metric, I’ve put a link in the comments so that you can watch a little video, much shorter than this one, that will explain to you what 55, 25, 20 is. And it’s basically how you’re going to spend your AGI and make sure that you don’t get in the red. So make sure you manage to the numbers.
And the hardest part of this is going to be staffing. Do not hang on to staff people if you can’t afford to keep them. So I know this is a time when you don’t want to send somebody out and have them be unemployed. I totally get that. But remember that it is your job to take care of the whole, the whole agency has to survive this. And so for some of you, there may come the unfortunate reality that you just afford to keep someone on staff, that they’re not busy, that you can’t find anything for them to do that’s productive and you can’t afford by the 55, 25, 20 to keep them. And by the way, I’m fine with you not making a lot of money in this short little season. But what I don’t want you to do is go in the red.
So that gets to my third point, which is if someone leaves or you have to let someone go, you need to move that fixed cost, that salary cost, into a variable cost. So outsource as much as you can, rather than adding any staff until we get through this and be wise about negotiating with your freelance vendors, to get them to bid by the project, not by the hour. Okay.
And the fourth thing I want to remind you is when you are building your estimates for work that’s coming up, make sure that you are not allowing your worry and your panic around money to give work away for free. You can’t afford to work for free right now. You might have to discount how much profit is inside your job, but make sure there is profit inside the job. And remember when your team is slow, work tends to grow. It fills the space allotted. So still hold your team to the right number of hours to get the project done and all of that, don’t let them languish in a project forever just because they can, because then all your profitability goes out the window. Okay.
The third thing I want to talk to you about is your relationship with your clients. Your clients are afraid, they’re pulling back, some of them may be in crisis planning mode and they need you now more than ever. Now is not the time to take advantage of that. Now is not the time to get angry with them or pissy with them because they’re cutting back. Now is the time to do the right thing for the right reasons. It’s easy to be a good partner when things are going great and the money is flowing and everybody’s happy. It is much harder, and it is much more a true glimpse into your character and your agency’s values when you’re a good partner when times are not so great. And we’re in a not so great time right now. So whatever you can do to help your clients weather this storm, then do that because then when we come out of it and we are back in calm waters, they’re going to remember what you did for them and how you helped them.
What I am not saying is worked for free. I am not saying that, but I am saying now is not the time to put too much profit in the jobs, to price gouge them, to have an attitude with them because they’re cutting back. Now is also the time for you and the AEs who have a relationship with them to be reaching out and just see how they’re doing, coaching them through this. So again, helping them business problem solve through this season will make you a great asset to them post this season.
And the last thing I want to talk to you about is biz dev. I know that no one is buying today. I absolutely know that, but biz dev is a long term play. And what we’ve been seeing in the season of the last year and a half is that already clients are slow to say yes. I do a trends report for my agency owners and the peer groups every spring. And one of the things I’ve been talking to them about is this elongated yes cycle of 9 to 18 and even 24 months. And in some cases they said yes, and it still takes 18 months to get them to sign the project authorization and to actually get work going. So I don’t think that’s going to change. I think you’re going to see people still sort of treading water, taking their time, but now is a great time to be planting seeds. Now is a great time to take that authority position as the new book that we just wrote that Stephen Woessner and I just wrote, Sell With Authority is talking about.
So now is a good time for you when things are slowing down to be creating content, really helpful, useful content, to be reaching out to your prospects and offering to be a resource. So think of it as a seed planting time. You’re not going to harvest a lot right now, probably. If you do, awesome, but you’re probably not going to harvest a lot right now. But it is an amazing time for you to be planting seeds so that a year from now, or 6 months from now, a year, 18 months, 24 months, all of those seeds are going to come to bear fruit for you. So use this time to plan for the future. Use this time to build up content that is really helpful and really demonstrates your subject matter expertise around your niche, your vertical, whatever it is that you specialize in. Use this, great PR opportunities. If you’ve got downtime, invite a nonprofit to come in and help them through a tough season. So there are ways for you to not only survive what we’re going through right now, but to actually thrive in it.
But it starts with you staying calm. It starts with you realizing this is a blip on the radar screen. It is going to go away. We are going to come out of this and your job is to stay calm, to stay compassionate. But to carry on, to know that the decisions you’re making now for this very short window are going to impact your future a year from now. And so be really smart about taking a longterm view of this and recognizing that there is much more opportunity here than there is crisis. All right. So stay safe. Keep your people safe. But again, stay calm, stay compassionate, stay focused on the future because we are going to come out of this and it’s going to be okay. All right, I’ll talk to you next week.