Monday, March 2, 2009
Recession Proof Design
A Time to Sink or Shine
The more I read about about this crunchy recession (which to be frank its hard not to) and previous ones, the more and more it starts to sound like an unavoidable natural economic process (with the unavoidable part stemming from the predictability of human greed). Companies slowly charge more and more, companies get bigger and then bigger through growth, but growth eventually has to stop due to resource mismanagement. One companies domino knocks over another, and another and it's all reset to ground zero. Its a like an earthquake waiting to happen with pressure building up at the faultline then BOOM, a seismic 7.8 on the rictor scale, everything flattened.
However.. for smaller studios as ourselves it can be a time of fruitful endeavor.. let me explain... Lets say the average budget for Joe Bloggs project is say £100K, he normally goes to CompanyX for his design needs. CompanyX is ten years old and has managed over that time to command a hefty fee for its works based on its track record. They are probably over charging a little but they have the portfolio to warrant that. Wallop, along comes a recession, Joe Bloggs marketing budget gets slashed into a skinny wedge. CompanyX is so used to charging 100K they cant even think of backing down to 50K ESPECIALLY in such a short space of time, they dont have time to adapt, backing down too quicky may show cracks in their previous pricing and they have racked up such overheads they CANNOT afford to drop their prices too much. So CompanyX cannot respond, they lose most of their clients and the gravy train days are over, by not willing to (and not being able to) lower their costs they commit business suicide by lack of choice. By the time they realize what has happened they have probably dismissed most of their staff. They do well to survive if they can but the clock is reset. This is where the lower run studios can then jump into those still warm shoes (Lets call them DesignInc here). Whereas a budget cut for CompanyX from 100K per project to 50K per project may be unbearable, for the smaller studios its actually an increase from maybe 20K (this is especially relevant as a Nottingham based studio touting for London work). Here both parties are happy, DesignInc now get all the work and even though Joe Bloggs budget has decreased they get more work than they did with CompanyX because DesignInc is getting paid more than they usually do. And thus the cycle begins again... DesignInc then start employing staff, expanding etc etc etc.
The point is times of recession are in many ways unavoidable and in many ways necessary (new tech sweeps in as does different process and thinking in the newer companies). The recession can actually serve as much as a purpose as a natural forest fire (thousands of tree perish but its actually a much needed process to naturally revitalise the soil, split the new seeds open and start anew). The businesses existing within recession act within darwinian rules of survival of the fittest, ie those that can adapt win, the dinosaurs die. Recession can be a time of positivity for smaller businesses who have a chance to step up and shine.