Digital marketing agencies are no strangers to bolivia b2b leads boom and bust cycles. As client budgets rise and fall with the economy, agency owners must adjust their financial strategies to remain competitive and profitable.
Damian Papworth, founder and CEO of global white label agency services provider Globital, explores some of the key ways agencies can better manage fixed costs and pricing to thrive in uncertain times.
One of the biggest threats agents face during an economic downturn is a misalignment of cost structures with revenue. As Damian explains, when an agency has high fixed costs, the fees remain the same no matter how much revenue it generates. In tough economic times, like what Damian’s company experienced in 2023, many agents struggle to make sales and revenue declines.
However, their fixed costs (such as rent, wages, etc.) remain the same while revenue continues to decline. This squeezes their profit margins and leaves them with less money. This also makes cash flow very tight.
Globital saw this happen in 2023, for example, when agents they worked with started paying invoices an average of 12 days later than usual. This is not because customers are difficult to work with, but because lower revenue and high fixed costs result in less cash.