How can a PR agency prepare for an economic downturn?

Key takeaways

• Focus on financial resilience over panic cuts. The goal is to create a buffer that lets you make smart decisions, not just slash costs reactively.
• Your retainer model is your biggest asset in a downturn. Protect it by demonstrating undeniable value and aligning your services with client survival needs.
• Build a specific business continuity plan for a recession scenario. This isn't a generic plan; it's a playbook for protecting cash flow and core clients.
• An emergency cash reserve is non-negotiable. Aim for 3-6 months of operating costs, and start building it now, not when headlines turn negative.
• Use a downturn to strengthen your agency's foundations. This includes client relationships, service efficiency, and team skills, positioning you for accelerated growth post-recession.

What does PR agency recession planning actually involve?

PR agency recession planning is the process of getting your agency's finances, operations, and client strategy ready for a period of economic stress. It's about building a buffer so you can make choices from a position of strength, not fear. For a PR firm, this means protecting your retainer revenue, managing your cash carefully, and ensuring you can keep delivering great work even if client budgets get squeezed.

Many agencies think planning for a downturn is about cutting everything to the bone. That's a mistake. Smart PR agency recession planning is about being proactive, not reactive. You're building financial resilience so you can navigate challenges without damaging the core of your business.

In our experience working with PR agencies, the ones that plan ahead don't just survive a slowdown. They often come out stronger. They keep their best people, hold onto key clients, and are ready to win new business when competitors are struggling. This guide will walk you through the exact steps.

Why is recession planning different for a PR agency?

PR agencies face unique challenges in a downturn because marketing and communications budgets are often the first to be reviewed by nervous clients. Your planning must account for the retainer-based model, the relationship-driven nature of the work, and the need to prove tangible value. Unlike product businesses, your "inventory" is your team's time and expertise, which you must protect.

When companies cut costs, they look at discretionary spending. You must ensure your retainer is seen as essential, not discretionary. This requires a different kind of PR agency recession planning. You need to understand your clients' potential pressures and reposition your services accordingly.

Furthermore, your own cost base is heavily people-focused. You can't just stop buying raw materials. Making rash decisions about your team can destroy your agency's culture and capability. Your plan must balance financial caution with protecting your most important asset: your people.

How do you build financial resilience for a PR firm?

Building financial resilience means creating multiple layers of protection for your agency's cash flow and profitability. Start by strengthening your client base, diversifying your revenue streams, and tightening your financial management. The aim is to have options so a single client loss or market shift doesn't cripple your business.

First, look at your client list. Do you have over-reliance on one or two big clients? A resilient PR agency spreads its risk. Aim for no single client to make up more than 20-25% of your revenue. This might mean politely saying no to growing a single account too large, or proactively seeking clients in different sectors.

Next, scrutinise your own costs. Build financial resilience by knowing exactly where every pound goes. Categorise costs as essential (rent, core team salaries, key software), important (training, certain subscriptions), and discretionary (non-essential travel, lavish client entertainment). This clarity lets you make precise cuts if needed, rather than across-the-board freezes.

Finally, improve your cash flow management. Invoice promptly, chase payments diligently, and consider shorter payment terms for new clients. The faster you convert work into cash in the bank, the more resilient you become. Using a tool like our financial planning template can help model different scenarios.

What should be in a PR agency's business continuity plan for a recession?

A PR agency's business continuity plan for a recession is a specific document outlining the steps to take if income drops suddenly. It should cover client retention strategies, cost reduction triggers, cash preservation rules, and communication plans for your team and clients. It turns panic into a pre-agreed process.

Your business continuity plan needs clear "trigger points". For example: "If monthly revenue drops by 15% for two consecutive months, we enact Phase 1 of the plan." Phase 1 might involve a hiring freeze, pausing discretionary spending, and the founders forgoing dividends.

The plan must also address client strategy. Which clients are most at risk of cutting spend? For those clients, prepare a "value defence" pack in advance. This shows the measurable results you've driven—media coverage value, share of voice, lead generation—to make your retainer harder to cut.

Include a communication protocol. How will you talk to your team about challenges? Transparency prevents rumours. How will you reassure clients? A proactive check-in showing you're thinking about their challenges builds trust. This structured approach is what separates a robust business continuity plan from wishful thinking.

For a detailed framework, the UK Government's Business Continuity Management Toolkit provides a useful starting structure to adapt for an agency context.

What are the best emergency cash reserve tips for an agency?

The best emergency cash reserve tips for an agency are to start building it now, set a clear target, keep it separate from your operating account, and define strict rules for its use. Your reserve is for genuine survival only, not for smoothing out ordinary cash flow bumps.

Set a target amount. A common benchmark is 3-6 months of operating expenses. Calculate this precisely: add up all your essential monthly costs (salaries, rent, utilities, core software). If that's £30,000 per month, a 3-month reserve is £90,000. This is your savings goal.

Build it systematically. Don't wait for a big windfall. Automate a monthly transfer from your business account to a separate, easy-access savings account. Even £500 or £1,000 a month builds a meaningful buffer over time. Treat this transfer as a non-negotiable fixed cost.

Define the "break glass" rules. In your business continuity plan, state exactly when the reserve can be used. For example: "Only if revenue falls below X and after all Phase 1 cost measures have been enacted." This prevents you from dipping into it for a new laptop or a team event. These emergency cash reserve tips create discipline.

How should a PR agency protect its retainer revenue?

A PR agency protects its retainer revenue by proactively demonstrating value, aligning services with client business objectives (especially cost-saving or revenue-protecting ones), and building deep, strategic relationships beyond just day-to-day contacts. Make yourself indispensable by understanding their commercial pressures.

Move from reporting outputs to reporting outcomes. Don't just send a list of clippings. Show how your work impacted their business. Did the coverage help recruit talent? Did it reassure investors? Did it generate inbound sales enquiries? Frame your work in the language of commercial value.

Offer flexibility within the retainer. In tough times, clients might want to pause a project-based element but keep core media relations. Be prepared to restructure your retainer offering to focus on the services they need most right now. It's better to adapt a retainer than lose it entirely.

Communicate more, not less. Increase your check-ins with client decision-makers. Talk about the economic environment and show you're thinking strategically about their brand reputation during a downturn. This positions you as a partner, not a supplier. Specialist accountants for PR agencies can help you model the financial impact of different retainer scenarios.

What cost management strategies work for PR agencies in a slowdown?

Effective cost management for PR agencies in a slowdown focuses on preserving team capacity and cutting non-essential overheads, not on blanket austerity. Protect your ability to deliver great work by scrutinising subscriptions, freelance spend, and operational inefficiencies before considering team reductions.

Audit all software and subscriptions. Agencies often accumulate dozens of tools. Cancel duplicates or tools that aren't critical. Negotiate with vendors—many offer discounts for annual payments or are open to discussion if you mention budget constraints.

Review freelance and contractor usage. While freelancers provide flexibility, their cost is 100% variable. Could some of this work be done in-house by upskilling your team? Balancing permanent and freelance staff is key to managing your gross margin (the money left after paying for delivery).

Look at operational efficiencies. Can meetings be shorter or less frequent? Can reporting be automated? Time saved is money saved. Improving your team's utilisation rate (the percentage of their paid time spent on billable client work) is one of the most powerful ways to boost profitability without cutting heads.

How can a PR agency use a downturn to get stronger?

A PR agency can use a downturn to get stronger by investing in team skills, improving service delivery systems, and deepening relationships with core clients. While competitors retreat, you can advance by focusing on foundation-building work that you never have time for during boom periods.

Invest in training. Use slightly quieter periods to upskill your team in high-value areas like crisis communications, data analytics, or financial PR. This makes your agency more valuable to clients navigating uncertainty and prepares you for the upturn.

Improve your processes. Document your best practices, refine your pitching templates, build a stronger case study library. This makes your agency more efficient and scalable. It directly contributes to building financial resilience for the long term.

Double down on business development. When others go quiet, your outreach stands out. Reach out to prospects with thoughtful insights on communicating in a downturn. This can win you clients who are re-evaluating their agency relationships. A strategic approach to PR agency recession planning turns a threat into a opportunity for market share growth.

Getting expert financial guidance is crucial during this time. Our team specialises in helping agencies navigate these exact challenges. Get in touch for a conversation about your agency's specific situation.