Recession Killing Small Firms?

Hi all,
Just wandering if the small ID firms out there are being affected by the economy (AKA recession) the US is going through? Any changes on the amount of work coming from the manufacturers/clients?
Any advice on how to survive low tides?
Thanks! :wink:

… The way I see it the small firms have a chance to out preform the large firms during a recession for many reasons.

Totaly agree…!

Smaller firms will have an edge, they can charge less an hour then the big guys with big overhead (creative directors, mannagers etc…)

historicly your wrong about survival, small firms have fewer clients, less credit, and so are more fragile than the biggies. The smart biggies will reduce prodution staff and ramp up marketing (as there are fewer projects every one is important). On the client side it generaly is a case of “tough times, low risk” and that means going with a proven biggie. Note I say the smart biggies, not all are, but thats what happens in a ressession (and this aint one yet) the smart get stronger the weak get gone.

Depends on what you mean by smaller firms? I was thinking about the one and co’s and smaller start up companies that can offer rock star design without the overhead that a ziba would have etc…

part of “rock star design” is the “rock star status” and the free marketing noise that comes along with it.

After the dot-bomb I remember witnessing a large migration of designers from large consultancies to in-house corporate.

first off the .bomb times were just a short term “hickup” after hyper growth of non buisness buisness. The desigerns that “went home” most ended up “going under” in short order. In a long ressession (ok here it comes) like in the 70’s and early 80’s (some of) the bigs get fatter the littles go byby. The current problem is kinda worse, china is giving ID away to many, and to a LOT of mfg’s that are tightening the belt that is a deal too good to pass up. So there you have it, rock star if you can afford it/need it for its publicity value or free…takes your pick.

Isn’t the bottom line something like:

Do damn good work and you won’t starve? Small, big…does it really matter if you keep doing stellar work?

I wish that was the case, but in a true ressession its more of a matter of sell, sell, sell (ie get the work in any way you can, ANY work)and be very good friends with your banker.

To answer the original question:

I do not think what is happening with the economy is impacting the small ID firm or big firm (yet). Corporations are still more then ever trying to innovate and be competitive, to do this they need strategic partners (id firms) small or big.

I think to stay above water in the upcoming years you need to bring something of value to the table as a small firm. This could be anything, but, having a strong original point of view and the drive to do the best work you can will help keep the little guy alive.

My 2 cents

In some cases when an economic downturn comes on, some corporations downsize their internal team to cut costs… then realize one of the key components to coming out of a slump is better product, so they hire firms, once they pull out of their downward spiral they hire in house again and dump the firm… logic is not always involved with these things.

As an old-ish fart who has been through a few of these slow-downs and recessions as a small, 7-10 person shop, everything Zippy has said is correct.

I think thats the difference between people who run small firms and those who opt for the comfort of a large firm where everything is taken care of for you.

You have to believe when running a small firm that you can do it and that you have the edge. Otherwise you walk during a marathon. And thats close to quiting.

no, the real difference is simple… If you run a small shop not only must you be a good designer but a very good buisness man/woman and thats very rare indeed.

Successful small firm owners are usually “super designers” who are very resourceful and highly skilled.

They have to manage the business end as well as do the design work and are master networkers. Most are highly experienced so when hiring them you get the best value in terms of knowledge. Other larger firms often hand stuff down to junior staff or interns. Here you get the main veteran soldier fighting the battle.

It takes a certain kind of maverick personality and courage to be a small firm owner. They don’t have many folks to rely on and have to keep up theirskill sets to swin with the sharks.

I tend to find them the best designers because they can see the big picture. They are not cogs in a wheel or drones in some big company. They have to run the company and, as a result, can apply that knowledge to the clients’ business goals.

There’s a bunch of Zippy’s comments that I completely disagree with:

… small firms have fewer clients, less credit, and so are more fragile than the biggies. The smart biggies will reduce production staff and ramp up marketing (as there are fewer projects every one is important)…

Size is not the issue. Being smart is.

…On the client side it generally is a case of “tough times, low risk” and that means going with a proven biggie.

I agree that existing long-term relationships may be strengthened, but it’s unlikely that recession would drive a client from a small firm to a more expensive larger firm.

But then there is a Zippy-ism that did ring true:

…The current problem is kinda worse, china is giving ID away and for a LOT of mfg’s that are tightening the belt that is a deal too good to pass up.

Agreed, ID firms that differentiate only on cheap services will have the biggest challenge.

All in all, I don’t think that size is the issue; the recession brings on many challenges for small and large firms alike. Being smart and nimble is the key.

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I think you’re still obsessed with size. Being a smart, nimble firm doesn’t necessarily make you ‘big’.

In a recession a small firm with the chance to grow rapidly should choose to control growth slowly (smart), and may diversify their services to cement existing relationships (nimble). A less smart firm would expand too quickly (higher risk) which makes them very susceptible to outside changes.

A large firm acting smart should also focus on client retention and not new business, which is not only more cost effective but creates stability. They tend to have more diversity of staff and its hard to keep all those different roles fed, so their staff need to become flexible (nimble) with their capabilities (otherwise typical in a smaller firm).

Beyond all the talk, our hope is that working smarter and running lean works. If it does not then its back to 10 cent noodles (or worse yet working at a cushi major manufacture). In our human effort to survive we have to believe we can do it… no matter what it is. Kind of like a race, a runner must first picture themselves going across the finish line.

And if you run a small firm then you have to embrace the attitude and make you process/plan work. It’s attitude and endurance that wins in the end with a smaller firm.

And if you notice even the big firms as large as motorola or caterpillar try to run lean like small firms by incorporating business units. Thats attitude.