Business Development for Digital Agencies in the Time of COVID-19

 

Dear reader: If you are feeling like the world we all inhabited only a few short weeks ago is gone and never coming back: (1) you’re certainly not alone (2) you’re more than likely right. As I write this, I’m being informed by my wife that our child’s school is now canceled through the end of May.

“Prophesy is a good line of business, but it is full of risks.” – Mark Twain

“Ethics is knowing the difference between what you have a right to do, and what is right to do.” – Potter Stewart

“Sure, we can do that.” – Software development agency business development person, 2014

Paradigm Shift

This new reality of ours should weigh heavily on the minds of those in the software development industry. Private persons and public companies alike are now being inundated with fear inducing disaster marketing: how to capitalize on social distancing, how to repurpose your business in a time of crisis, buy this product or die (hyperbole, but one gets the point).

Only a few weeks ago, the average prospective client of a software development agency was coming to said agency for positive affirmation of their concept, and for help implementing their growth strategy. They likened themselves “disruptors.” On offense, attacking the market. 

The prospective client of tomorrow will inevitably have this crisis in mind. It’s also highly likely that their business (whether it exists now or not) will have been negatively affected by the pandemic, and it’s here where I’d like to focus my attention. 

The Truth Will Set You Free

Many thousands of businesses are going to shutter. Permanently. Many thousands more will carry on in a zombie like state, having been dealt a mortal wound by this crisis. Private equity will (if allowed to) eventually have a field day with the latter group. But before that happens, these companies will likely look to “make it work” and may see technology development as a way to save their business. They’ll be scared and vulnerable. 

And it is up to the software development agencies to tell them the truth. 

And the truth is: even the greatest technologists in the world will not be able to “save” particular businesses or industries. Going forward, development agencies should be adopting a “management consultant” mindset when engaging with prospective clients, one that challenges a prospective client on their assumptions, reasoning, and impetus for engaging with an agency – from both a technical and business strategy point of view.

What challenges and opportunities face the prospect’s industry writ large? What particular challenges does the prospect face? What industry trends are developing, and what do they tell us, based on the respective market and technology development landscapes? 

Many agency folks reading this will have engaged with a client without a complete understanding of where the client’s funding came from or if applicable, where their business stands: financially, competitively and so on.

In the time of COVID-19, these conversations are of paramount importance. The prospect’s funding is from a venture capital firm? Which one? What are the terms? What happens when the current round runs out, and what is your burn rate? What if any exit strategy does the key business stakeholders have – and is that the ultimate goal? The company budgeted (x) amount to cover this project, you say? How did you arrive at this number? Is this from cash reserves or will it be deducted from revenue as it comes in? Where would this leave your cash position/how would this affect your margins during the period before this project work shows a return? It may be uncomfortable to ask these questions, but they are necessary and for the benefit of all involved.

How many agency folks reading this have relied solely on a prospect’s “expertise” of the market and industry the prospect plays in during the pre-sales process? How many have equated “ability to pay” with “project viability?” 

Our first thought – and it should always be this way – has to be about the prospective client’s viability for success – as a business. 

A prospect came in with a new twist on ride sharing? Is that viable, given our new reality? Another has an AirBnB concept for small cruise ships? Is that going to work out? A Family owned retail chain in business for forty years, with tiny margins, no staff that could maintain the new technology, and an unknown Uncle Fred that wants to sell? Sure, they have the budget, but do they have the strategic vision and the ability to deliver the project on their end? Will they be in business in a year?

What happens to your agency, dear reader, when your case study clients go out of business? When you have a rash of clients cutting projects short or walking away entirely? Even in a good economy, agencies are vulnerable to clients walking away or going out of business. These risks have now greatly increased. Digital agencies rely on the relative health and stability of their clients’ businesses, and so these questions are critically important for the agencies themselves.

Conclusion

We at Trellis want to engage prospective clients along these lines. We see ourselves as consultants, with very specific core competencies in technology development. But we understand business, markets and have an eye toward what is coming next.

 

The client of tomorrow may be teetering on the edge of oblivion, and given to irrational thinking. Digital agencies may find themselves in this situation: where the right thing to do is not what they have the right to do. Whether we, as technology consultants, know we are in said situation is entirely on us. So, ask a lot of questions, and get comfortable being uncomfortable.