As owners we know that we have too many responsibilities competing for our attention. And when times are unpredictable, competition from the outside – from really well-run agencies – adds yet more pressure.
So how do you win?
Over many years as a founder, and now as chairman of some very successful agencies, I’ve observed that clients love survivors. I don’t mean those of us that had long careers, I mean agencies that are well run. Built to last. Prepared for all the ups and downs in a shifting and unpredictable economy and rapidly changing media landscape.
Clients want – no, they need – to know their agencies are in great shape. Why? Because it’s a costly business changing supplier: a failing relationship produces distracted work that generates less revenue; running a pitch costs scarce management time; and onboarding a new relationship may mean months before sales pick up again. The risk to the client of an agency that falls over after being hired is not one very many are prepared to take.
So, aside from being brilliant, the ideal agency needs a stronger-than-usual (“usual” being three times monthly costs) balance sheet. This provides a robust safety net. It gives agency managers the flexibility to work with unpredictable clients, do rush projects, move into new disciplines based on client demand, cope when there’s a brief lull in sales, and make brilliant hires when the opportunity arises. It also allows agencies to be tactical about acquisitions, especially in harder times, when agencies that don’t have the resources to be flexible might be struggling. A strong balance sheet gives you real power.
With this in mind, it’s imperative that the agency is run as a cash-generative business. You should be delivering a good twenty percent net profit (a year of which gives you your safe three months’ costs in the bank) and it needs to be fairly consistent so you are constantly building reserves, which you can then use for future growth.
Twenty percent takes determination. To quote the Eisenberg brothers’ wonderful book, Be Like Amazon; Even a Lemonade Stand Can Do It, it’s simple but not easy. However once you’ve made the changes needed to get there it becomes easier to maintain. These changes, all of which need to dovetail with each other, include sorting out your positioning, pillars, team, reporting, new business process, client happiness and risks. There are some amazing methods and processes for this, drawn from Verne Harnish’s excellent Scaling Upand half a dozen other stellar must-reads. It’s a pleasure to watch a senior team coming together to develop and execute a plan using these amazing (and incredibly practical) frameworks.
And guess what? Clients want to work with you because you’re determined, and have vision, and a clear belief in what you’re doing. You have strength and resilience when times are tough, and flexibility and nimbleness when clients need tactical. In your team you build confidence. Against your peers you can be fearless. And that’s how you win.