EP 72: Can Your Agency Withstand a Recession?
Kelly: So welcome back to this week's episode of Thrive, your agency resource. Today we're talking about planning for a recession. And I've got Founder and CEO of Auster Agency with me, Karen Auster. Thank you so much for joining me today and taking the time out.
Karen: Thank you for having me. It's a pleasure to get up and shower today.
Kelly: It's the little things, right?
Kelly: So your agency is a 25 plus year old experiential firm, right?
Kelly: So that means that you've weathered the recession. You've kind of been in a situation as similar to this as possible. Can you share a little bit about your experience with that, your story, and really how that impacted your life not just from the business sense, but you personally?
Karen: Well, it's funny you said something about this is going to be about planning for the recession. The truth is, you really can't. The plan is that there's really no plan, that you really have to go with wherever you're at. But something I talk about often is that, learn from your mistakes and move on from there. So what I did learn when it happened in 2008, 2009, my firm went through the recession. Auster Agency, at that time was in event planning. We did planning big events, festivals.
And 2009, 2010 when the recession hit, I had to kind of sit and listen to my clients, what they needed. And that's what the plan became. The world around us was changing at that time. I mean, today, it's hard to describe then and now because now it's about health and financials. The Coronavirus is totally different than the 2009 recession, but in the sense that my marriage ended. I was a single mom. I had an agency. It was petrifying what was happening in the markets and what was happening to my clients.
But at that time, and fortunately, I stayed nimble and I listened to what my clients needed. And they really wanted at that time, not just an event planning agency, but it was an opportunity for me to become a marketing agency and really take on all different services and to get revenue from different sources of services. It was really scary time like now. That's the only difference. It's scary. I think it's much scarier now. But if I use what I learned in 2008, it was stay nimble. Listen to your clients. Pivot where you see there's an opportunity and don't be irrational but to really sit tight, especially right now, it is really sitting tight and watching what's happening with the markets and what's happening with your services.
I mean, I do events. That is our niche. We bring products and places to the marketplace. We bring communities together outside and this Coronavirus puts that to a halt. Like over the years, we've built events for over a million people. And now it's all to a halt. So it's really about, what I learned in 2008, to cut back, cut your expenses back and really hold tighten the reigns and pay attention to what's gonna happen next.
Kelly: Yeah. And one of the things that you and I have talked about before is this sense of like, the energy of community in terms of your mindset. So I think that that's a good place to go because a) that's sort of like you just mentioned, that's your area of expertise. But I think you also take that a step further from the mindset perspective and like really anchoring into that sense of community. Why is that so important, that energy for you?
Karen: Well, that's why I chose to do what I do. Because I get energy from people and bringing together passion for projects. I love being around people. My favorite thing is creating experiences, to sit back and watch everyone enjoy what we just produced. I mean, there's a festival we produce that we grew from, a couple thousand people to almost a million people, which the greatest joy for me was sitting and watching the events while I'm producing it from afar and that goes on in everything we do. So watching people come together and enjoy something is an energy to it.
So now what's difficult is no one could talk, touch or anything. So driving, I'm hopeful with this like I was in 2008, that people are going to be really thirsty to want to be together to share the love and I think it's gonna happen slowly, very slowly. I mean, we're not even at the crux of it. I live in Brooklyn. It's a very unknown time. I don't want to use the word scared, because I'm healthy today. And I'm grateful for that. And when you just sit back, watch, I mean, there's a lot of things happening in politics right now that you're paying attention.
As a matter of fact, this morning, I don't mean to go off topic, but this morning, the crazy thing was a bill came in and said, oh, you owe your general premium insurance for the year. So here's a big enormous bill and I was like, ah, like, right now, it's expiring, of course, April 1. And, I'm like, well, we're not even going back to the office. We're not mandatory workers. So I have to pay this insurance though. But I sat on it. I watched the insurance agent. And then, minutes later, a note came in saying all general policy insurance, 90 day waiver, to be delayed. And it was like, okay, I didn't react, it didn't get crazy. And I just waited and that information just came in an email. It’s like the coverage is on it. Like he delayed the payment.
Kelly: Yeah. Well, that kind of, I think leads into this whole concept of being really self-reliant and trusting yourself that, that waiting, that pause, sort of you could even say, leading with love, and being as opposed to doing. I think that that's sort of how, from my perspective or my perception is like, that's how you show up as a leader. And for those who are struggling right now, how are you able to kind of see this light and remain so positive amid so much darkness?
Karen: Well, I lost my entire life in 2008, 2009. I mean, I lost everything I knew as what it was, and it was petrifying and sad and I did so much crying, just pure crying. And I always say, learn from your mistakes or learn from the past. You're smart. If you make the same mistake twice, that's stupid. So I see that I lived through that. And now again, I'm going to remain calm because I know that this too shall pass and I will survive this.
So I look back, obviously in 2008 my life was a catastrophe. Business was plummeting. My personal life is plummeting. Everything was taken away from me as I knew it. My new normal was creating nothing. I was floating around like a particle. And now, I know I did that. And that's why this experience for everyone on the planet right now, if we could get through this, whatever happens next, as you persevere and stay positive and, I mean, a lot of people are really suffering right now and I don't want to minimize that because it is so scary for people that are sick, actually ill.
So I'm grateful to stay connected. It's really important to stay connected to people and who shows up in your life. I say this about divorce. I say this about business, clients. Some of my clients called me when they were letting us go. They were really kind and human and very careful and then there was some that were just obnoxious. People you surround yourself with, it's like gold mining. You pick up some gold nuggets that stay at the top and trigger it, move it and then all the other sediment goes off. And that's what I how I feel now. Like those people that I love, they're staying around. All my good friends, all my clients that are amazing, they're staying with me. They’re in it. We're talking. We're connecting. That's what it's all about love and passion. They know I've worked really hard for them so they're sticking around. They're kind. And then there are people that just disappear and they just freak out and they disappear.
Kelly: Yeah. With all of that in mind and making sure that we filter out the people or the universe filters out the people that aren't supposed to be our clients that are in our life whatever your belief system is, we still need to be realistic though. So I know you mentioned before cutting back expenses, what are you personally and professionally cutting back, sort of in terms of planning for this inevitable or inevitability of a recession after this pandemic is over?
Karen: I'm cutting back on everything. There's just so much.
Kelly: Did you make a list? How did you arrive at? What were the things?
Karen: I looked at their MX and I looked at MyCFO. Literally we had meetings weeks ago about what expenses, I mean, really planning. That's where I am a planner. I'm an event planner by nature by who I am. And this is where you can plan. So this we're gonna go back to the planning. So you look at your expenses, what is your overhead? This is something I didn't really know in 2010. And that's what I learned. It was like fast learning.
What's the fat? Where can you skim the fat? So for me, literally, I stopped the water expense and bought the water holder. There were things that we just picked up on. The cellphone service, my assistant who's brilliant went out and renegotiated phone systems. And couple of weeks ago, we installed less expensive phone systems, like those kind of big expenses that I saw on a monthly basis. And we then went out and bid it out. When you're running an agency, you're just paying it out.
Because money's coming in, you're just paying it out. And then all of a sudden, a couple of weeks ago, I said to my assistant, let's take a look at MyCFO. And he was really great about it. He's super organized. And he said, here are your expenses. And this is maybe, this is where you can…I mean, there's just extra insurance you're paying for. And here's the news. There's no insurance for this Coronavirus for businesses, like I can pay billions of dollars in insurance, and nothing covers this. So there's a lot of things, as simple as parking garage, got rid of it, like the small but they all add up.
Kelly: But they add up and they compound and that's where you're kind of able to survive through this. And then that way you can sort of rebound on the other side, right?
Kelly: Yeah. So I know this is sort of like a bigger question. But from your perspective, what do you think the lessons are in all of this? I know that there are probably so many, but I'm sure you have had a little time to kind of think and digest and just look at things about what you do, who you surround yourself with, who your clients are, like you mentioned before, what you will accept, what you won't accept, like have you started really diving in from that perspective to look at what are these lessons that I'm supposed to learn from this.
Karen: The two things I am going to say I'm grateful for. One is that I did learn my lesson in 2010, to be careful about monies like don't put yourself into debt for anyone, make sure that your clients are paying on time, so that I was not in trouble and all the work that we do was kind of current. And I have a lot of friends that run agencies that aren’t current and it's impossible to compete now. And there are 2 clients that haven't paid me and there's not gonna pay. So surrounding myself, my instinct about certain people, I should have listened to my belly. My stomach told me about certain people and I didn't listen.
And sometimes because you get hungry and you want to get more clients, the higher level clients but always my mother told me, listen to your stomach like listen, trust your instinct. I'm 53 years old. Trust that instinct. Go back to that and people show up who they are, like again a client that let us go who I liked, it’s been a bit minute. He just checked and wrote, how are you doing Karen? Just said that and then paid me a nice amount of retainer and he just couldn't see who I am just because he’s a nice person. So the lesson is don't overspend. Be smart about your business and your money and ensure that you're getting your revenue in and cut your expenses down. And I guess secondly is really surround yourself with whom you know you like and your stomach trust. Trust your instincts. You know who is a good person. They really show up at the end.
Kelly: Yeah, I think that's a really great point. I mean, trusting that intuition, number one, I definitely agree with that. You could call it instinct or gut feeling. For me that shows up as intuition. It's something that you just feel. It's not rational. It's like, I may not even know this person, but I get this vibe, or I get this feeling about whether I want to work with them or not. And, when you go against that, you know that you're going against it.
Karen: That's the great thing about being older. Like I love being 53, because I've been here in some capacity. I mean, I'm always learning. I'm learning so much. It's like so much fun. I have much more confidence now because, what am I gonna lose? Give it to me. But yes, I have that intuition. And I had it when I was in my 20s.
Kelly: Right, but you didn't trust it?
Karen: Did not know. Like, of course, you knew that. Come on Karen. The other person is not going to show up. They're gonna lie, literally lie. So it's business. It’s not personal. That's the differences here. There's a lot of things that I don't take personally at all anymore because it's a game. This is a game. I am moving forward. I'm only going to work with people. My life has changed now. I don't have to hustle kids, have to do college, but I don't want to. My instinct feels something. And my intuition tells me this person is not to be trusted. I'm going to move forward with that.
Kelly: Yeah. So I think that's kind of one the big lessons, kind of where I was coming from. It's about going forward, as we know that we're going to go through recession and a recession is cyclic, right? It's not this thing that oh, my God. We do expect this, like every 10 years we kind of expect something fairly big to happen from a financial perspective. So we know this is coming and maybe the best way to plan is actually cutting back on the expenses. That's more from a tactical standpoint, but also trusting your intuition about the clients that you do have or even other people in your personal life. And, figuring out, am I actually doing the thing that I feel really called to do and that I feel adds value to the world? I think this is really a time for everybody to plan. I use that term kind of lightly. To plan from that perspective. What do I want my life to look like on the other side of this, whatever the other side of this means.
Karen: Right, because setting goals again, it's like readjusting; setting goals, trim the fat.
Kelly: Well, your goals are different though. Your goals aren't necessarily oh I want to hit $5 million by the end of the year. Your goals might be I want a client roster that actually checks in to see how I'm doing in the middle of a pandemic. Maybe we need to change the metrics a little bit.
Karen: Yeah, I like that. I’ll take that.
Kelly: Well, Karen, thank you so much for joining me on the show. I really love this discussion. And just be safe and I will talk to you.
Karen: Thank you. Take care.