A Brooklyn creative studio lost a client accounting for 38% of revenue overnight. We built the first annual budget and a 3-scenario survival plan. Replacement revenue reached target in 8 months.
01The Situation
The founder had built the creative studio on relationship-driven growth. One client had grown to represent 38% of revenue. When that client signaled a preference for a different agency, the founder faced a potential $836K revenue loss with no financial model to plan around it.
She had always managed cash intuitively. Now she needed to know: could the studio survive? For how long? What would need to change? Could she replace the revenue before making layoffs?
02What We Did
We built the annual budget in three scenarios: client stays (baseline), client leaves in 3 months (stress case), and client leaves but is partially replaced by month 8 (recovery case). The cost structure analysis showed $70K of genuinely variable costs cuttable immediately, and two roles partially funded by the departing client that could be converted to part-time.
The recovery scenario showed the studio could remain profitable if replacement revenue reached $520K by month 8, 62% of the lost client revenue. Month 8 replacement revenue: $580K, above the survival threshold.
03Client Impact
The budget gave the founder something she had never had before: a plan for a bad scenario. She had always managed well in good times. The budget told her exactly what to do, in what order, to get through it. The studio came out smaller but healthier and more diversified.
Breakdown
| Cost Category | Annual Amount | Fixed/Variable | Cuttable | Priority |
|---|---|---|---|---|
| Staff Salaries (11 FTE) | $1,240,000 | Fixed | 2 roles variable | Critical |
| Freelancer Budget | $184,000 | Variable | 100% cuttable | Discretionary |
| Office & Utilities | $96,000 | Fixed | Not cuttable | Fixed |
| Software & Tools | $48,000 | Semi-variable | $22K cuttable | Discretionary |
| Business Development | $64,000 | Variable | $48K cuttable | Growth |
| TOTAL FIXED | $1,568,000 (71%) | — | $70K fast-cut | — |
What changed
Annual Budget Built in 3 Scenarios
Baseline, stress case, and recovery case. Cost flexibility mapped. Decision triggers identified.
Studio Remained Profitable Through Transition
Cost structure adjusted on budget-managed timeline. No emergency layoffs.
$836K Revenue Replaced in 8 Months
$580K from new clients by month 8, above the $520K survival threshold.
Client Concentration Risk Addressed
New policy: no single client above 20% of revenue. Largest client now 18%.
The budget gave the founder something she had never had before: a plan for a bad scenario. She had always managed well in good times. The budget told her exactly what to do, in what order, to get through it. The studio came out smaller but healthier and more diversified.
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