Scenario planning for PR agencies during crisis seasons

Key takeaways

• PR agency scenario planning is about preparing for 'what if' before it happens. It moves you from reactive firefighting to proactive management, protecting your cash flow and team when clients pause campaigns or economic conditions shift.
• Revenue diversification is your first line of defence. Relying too heavily on a few large retainers or one industry sector makes you vulnerable. A balanced mix of retainer, project, and consultancy income builds stability.
• Cost-risk modelling identifies your financial pressure points. It shows you exactly which costs are fixed (like salaries and office rent) and which are variable, so you know where you can adjust spending quickly if needed.
• A contingency budget is your financial life raft. It's a separate, realistic plan for running your agency on significantly reduced income, detailing which expenses to cut first and how to preserve core profitability.
• The process creates confidence, not fear. Having a clear plan reduces stress for you and your team, allowing you to lead decisively and protect your agency's long-term health during uncertainty.

What is PR agency scenario planning?

PR agency scenario planning is the process of creating detailed 'what if' financial plans for your business. You map out how you would respond to different potential crises, like a key client leaving, an industry downturn, or a global event that freezes marketing budgets. The goal is to move from panic to a prepared, calm response when challenges arise.

For a PR agency, common crisis scenarios include clients suddenly pausing retainers, delayed campaign payments, or sector-specific downturns. Planning for these events means you're not making rushed, emotional financial decisions. Instead, you follow a pre-agreed strategy that protects your cash flow and your team.

This isn't about predicting the future perfectly. It's about building resilience. When you have a plan, you can navigate tough periods without sacrificing the long-term health of your agency. You protect your margins and your ability to invest in growth when conditions improve.

Why do PR agencies need a specific crisis plan?

PR agencies face unique vulnerabilities that make scenario planning essential. Your income is often tied to client marketing budgets, which are among the first costs companies cut during uncertainty. A plan specific to your business model protects you from these predictable shocks.

Many PR agencies operate on slim net margins, often between 10-20%. A single lost retainer or a few delayed invoices can quickly turn profitability into a loss. Without a plan, you might be forced into reactive measures like sudden layoffs or cutting essential services, which damages morale and client service.

Your service delivery also carries inherent risk. A crisis communications scenario for a client can demand sudden, unbudgeted team hours. If you haven't planned for this resource strain, it can hurt your profitability on other work. Specialist accountants for PR agencies often see this pattern, where unplanned work erodes margins because the financial impact wasn't modelled in advance.

A good plan gives you control. It turns a potential crisis from a threat into a managed situation. This confidence is invaluable for agency leaders who need to reassure their team and clients during difficult periods.

How do you start building scenario plans?

Begin by identifying your agency's biggest financial risks. Look at your client list, your cost base, and your market. Common starting points include the loss of your largest client, a 30% drop in overall revenue, or a major increase in costs like software or salaries.

Gather your key financial data. You need your profit and loss statement, cash flow forecast, and a detailed breakdown of your costs. Categorise every cost as either fixed or variable. Fixed costs are things you must pay regardless of income, like rent, core software subscriptions, and permanent salaries. Variable costs change with your activity, like freelance support, client entertainment, and non-essential software.

Create three distinct scenarios: a mild challenge, a serious crisis, and a worst-case scenario. For example, 'Mild' could be a 15% revenue drop for one quarter. 'Serious' might be a 40% drop for six months. 'Worst-case' could involve losing multiple key retainers simultaneously. Give each scenario a clear name and define the specific trigger event.

This process of cost-risk modelling is foundational. It shows you exactly where your money goes and which levers you can pull first if income falls. Most agencies discover they have more flexibility than they thought once they analyse their costs in this way.

What does effective cost-risk modelling look like?

Effective cost-risk modelling is a clear map of your expenses, ranked by priority and flexibility. It answers one critical question: "If our income drops by X%, what can we stop spending money on, and in what order?"

Start by listing every monthly cost. Next to each item, note whether it's essential for survival, important for growth, or discretionary. Essential costs keep the lights on and core services running. Important costs support your team's effectiveness and client satisfaction. Discretionary costs are nice-to-haves that can be paused immediately.

Then, categorise them by how quickly you can reduce them. Some costs, like freelance budgets or travel, can be cut within days. Others, like office leases or permanent team salaries, may have notice periods of months. This gives you a timeline for action.

For example, a typical PR agency might find its fixed essential costs (rent, core team, accounting software) make up 60-70% of its monthly outgoings. The remaining 30-40% is in variable or discretionary areas like new hires, marketing spend, and bonuses. Your cost-risk modelling reveals this buffer. It tells you that in a crisis, you likely have an immediate 10-15% cost saving available from discretionary items, and a further 15-20% available over 3-6 months by restructuring variable costs.

This model becomes your decision-making framework. You're not guessing what to cut. You're following a pre-defined plan that protects your agency's core operations and culture.

How can revenue diversification protect your agency?

Revenue diversification means spreading your income across different clients, industries, and service types so no single point of failure can cripple your agency. It's the most powerful form of preventative PR agency scenario planning.

Many PR agencies are overly reliant on one or two large retainers. If one leaves, the financial hole is catastrophic. Aim for a healthier mix. A good benchmark is that no single client should represent more than 20-25% of your total revenue. Similarly, try not to have all your clients in one sector that might downturn together.

Diversify your service offerings too. A mix of retainer work, project-based campaigns, and strategic consultancy fees creates stability. Retainers provide predictable monthly income. Project work can fill gaps and boost cash flow. High-level consultancy often has better margins and is less likely to be cut than executional work.

Actively building revenue diversification is a strategic priority. It might mean politely turning down a client that would become too large a portion of your income, or investing in business development for a new sector. This strategy is highlighted in industry analyses, like those from the Public Relations and Communications Association (PRCA), which notes diversified agencies recover faster from market shocks.

Think of it as not putting all your eggs in one basket. If the basket falls, you still have eggs in others. This directly reduces the likelihood and severity of the crisis scenarios you need to plan for.

What should a PR agency contingency budget include?

A contingency budget is a stripped-down version of your agency's running costs. It shows the minimum amount of money you need to survive a crisis period while protecting your core team and capabilities. It's not your ideal budget. It's your survival budget.

Start with your absolute essential fixed costs. This includes key team salaries (often leadership and delivery leads), essential software (like project management and accounting tools), insurance, and professional fees. Be ruthless. What must you keep to stay in business and serve remaining clients effectively?

Next, identify all costs that can be reduced or eliminated. This includes non-essential subscriptions, freelance budgets, marketing and advertising spend, training budgets, bonuses, and client entertainment. Office costs can often be renegotiated or switched to remote working models.

Your contingency budgeting should also plan for reduced income. Model what happens if retainers are paused or paid late. Factor in a realistic drop in new business during a crisis period. The budget should show a path back to break-even at this lower income level, even if that means operating at a reduced profit margin for a defined period.

Finally, attach clear triggers to the budget. Decide in advance what event would cause you to switch from your normal operating budget to your contingency budget. This could be two consecutive months of missed revenue targets, a drop in your cash reserve below a certain threshold, or the loss of a specific major client. Having a trigger removes ambiguity when a crisis hits.

How do you stress-test your financial plans?

Stress-testing means running your contingency plans against real financial data to see if they actually work. You plug your crisis scenario assumptions into your cash flow forecast and see if the numbers add up. The goal is to find the weak spots in your plan before you need to use it.

Use a simple spreadsheet or a dedicated tool. Take your forecasted income for a crisis scenario (e.g., 40% lower than normal). Then, apply your contingency budget cuts. Does the agency still have positive cash flow? If not, you need to find more savings or identify a source of emergency funding, like an overdraft facility.

Test different timeframes. What happens if the crisis lasts 3 months versus 6 months? How much cash do you burn through each month? This tells you your 'runway' – how long you can survive without new income. Most advisors suggest aiming for a minimum of 3-6 months of operating expenses in accessible reserves or facilities.

Involve your leadership team in this exercise. They might identify operational constraints you haven't considered. For example, cutting a certain software tool might save money but cripple your team's ability to deliver work. Stress-testing turns your theoretical PR agency scenario planning into a practical, battle-ready strategy. To benchmark your agency's financial readiness for crisis scenarios, try our Agency Profit Score — a quick 5-minute assessment that reveals gaps in your Profit Visibility, Cash Flow, and operational resilience.

What are the common mistakes in crisis planning?

The biggest mistake is not having a plan at all. The second biggest mistake is creating a plan that's too optimistic or vague. A plan that says "we'll cut costs" is useless. A plan that says "we will cancel these three software subscriptions, freeze freelance hiring, and defer bonus payments" is actionable.

Many agencies fail to communicate the plan to their leadership team. If only the founder knows the contingency steps, they bear the entire stress burden. A shared understanding among key decision-makers ensures a coordinated, calm response.

Another error is treating the plan as a one-time exercise. Your agency changes. Your clients change. The market changes. Your PR agency scenario planning needs a regular review, at least twice a year. Update your cost-risk model as you add new fixed costs. Revisit your revenue diversification targets as you win new clients.

Finally, some agencies create a plan but don't secure the financial tools they might need. If your contingency budget relies on accessing a bank loan or overdraft, you need to arrange that facility in advance, during good times. Banks are less likely to lend when you're already in a crisis.

How does scenario planning improve daily agency management?

Robust scenario planning doesn't just help in a crisis. It improves your decision-making every single day. It creates financial discipline and clarity that makes your entire agency more profitable and resilient.

When you understand your cost-risk model, you become more deliberate about adding new fixed expenses. You'll think twice before signing a long office lease or hiring a permanent employee if the work could be done by a freelancer. This naturally improves your gross margin (the money left after paying for direct project delivery).

The focus on revenue diversification guides your new business strategy. You'll actively pursue clients in different sectors and of different sizes. This leads to a more stable, predictable income stream, reducing the monthly anxiety about where the next invoice is coming from.

Having a clear contingency budget also empowers you to invest more confidently in growth during good times. You know exactly what your safety net looks like. This allows you to take calculated risks, like hiring a senior person to develop a new service line, because you understand the potential downside and how you would manage it.

In essence, good PR agency scenario planning turns fear of the unknown into managed risk. It allows you to be proactive rather than reactive, both in crisis and in calm. This strategic confidence is a significant competitive advantage in the volatile world of public relations.