When projects came to a halt during lockdown, brand agency Notepad had to rethink its business model. Three months later, it’s on track to have its best month ever.
Like most branding agencies, Notepad would go into a business, set projects, rebrand and move on. But this project model creates constant pressure to feed new clients into the sales pipeline. “One of the big wake-up calls as a result of coronavirus is that we need more retained work,” founder Naeem Alvi explained.
Choose a business model that lets you scale
Naeem was considering a retainer model before lockdown. Notepad would act as long-term brand guardians for clients and the work would provide a steadier, more predictable revenue stream.
“The biggest thing we’ve learnt is that the project model isn’t giving us the certainty of predictable revenue. I don’t think we can scale much more without finding some form of retained income. So we’re really going to lean into doing more of that,” Naeem said.
Talk to leaders in your space
Lockdown gave Naeem the time to speak to other agency founders, including those who run bigger operations. These agencies have taken similar paths with the retainer model, so had useful experiences to share.
“The general consensus from agencies is that the split is about 50:50; half of their clients will be on some kind of retainer.
“While it would be nice to have 100 per cent retainer, you would have to offer something more tangible than branding. It would need to be something like SEO or PPC that had a monthly report – brand is more of a fluid, long-term thing,” Naeem explained.
Benchmark your business against others
Benchmarking can be tough in the agency space because every business works slightly differently. Naeem recommends Agencynomics, which sets out benchmarks for agencies under 50 staff.
“It sets really clear benchmarks. Once we hit this revenue point, we should hire this person, once we hit that revenue point, we’ll need to change our system to allow this to happen – and so on. It’s given me a really clear path in terms of what we need to achieve.”
Naeem’s conversations with other founders have also inspired him to add LinkedIn prospecting and cold calling to his marketing activity. The crisis has led Notepad to test content marketing and set up a proper marketing function for the first time, which should generate a steady stream of leads.
In the last month, all of Notepad’s projects came off hold. The company is back to where it was before the crisis, but the changes it made are here to stay.
How is your business emerging from lockdown? Do you have an interesting business model story to tell? We’d love to hear about your experience. Here’s how.