I am sitting on the deck this morning, watching the millions of green leaves drink the water as the rain tries to get past them to rest on the earth. There's a 700' drop off a rock cliff to the two waterfalls below. I woke up thinking about courage, but I decided to describe a world where it's absent.
You're a principal running a digital, marketing, advertising, public relations, or design firm. You're creating jobs and doing good work, all the while trying to remember some days why you do this in the first place. It's the weekend and you can't wait to get back to work or you can't stand the idea of feedng the machine again on Monday. From time to time it's good to step back and get a helicopter-down view of what your life looks like. So here goes.
If You Had Less Courage...
But you don't have less courage, which is why I love you.
Successful entrepreneurs have too many people talking to them, each with some nugget that would change their lives. The endless stream of coaching comes from your employees, the owner you bought the agency from, the guy in your business roundtable who always seems to have that idea for you, and the newest business book. Oh, and your clients. The successful entrepreneur builds a powerful defense system that keeps unqualified outside voices at bay. That leader is somewhat self-assured, makes decisions, recognizes and corrects mistakes quickly, and listens to a few people who have proven to be reliable guides in their lives. They succeed in part because they do NOT listen to people.
There is more danger in listening to too many people than listening to too few of them, but here are a few suggestions about how to narrow down the list of voices in your head:
Content marketing died a long time ago–not too long after it made a big splash. The promise that we would move from an outbound world to an inbound one, where prospective clients would find your content and be drawn to working with you, was a wonderful premise. But as with many things marketing, it didn’t turn out to be quite that simple. And of course everyone got on the same bus.
The world is overrun with content. We need less content and more insight, and here’s the difference:
I’m getting more calls than usual from agency principals who are nervous about their businesses. It’s a combination of three things, it seems:
Those are the three external factors that are bringing some agencies back to their home bases where–truth be told–they are doing really good things:
I think the current agency leaders are the best leaders we’ve ever had.
I’ve written and spoken extensively about how half of your hires need to take your firm further from their very first day. The easy test for that is whether you can picture them teaching an agency-wide seminar where everyone soaks up some insight.
But you can go too far with that concept, leaping so many rungs on the ladder all at once that you lose your footing. I’m talking about hiring far out ahead of your supply lines, making that first big hire, stretching with the compensation package, hoping to be in the big leagues now. Here’s why it’s tricky to pull off:
I think it’s easier to get carried through a day, like a leaf on a river, and get nothing of substance done. Our typical interruptive, distracting environments ensure that something can always be done, whether it really moves us forward or not. I am disgusted by my own lack of progress in certain areas, and I’m sad for you as well.
Let me nudge you about where I wish you would spend more…and less…time making those better business decisions.
Say that you’re a tightly positioned marketing firm but that your service offerings for that vertical or that demographic or that type of business are broad. Should an account person be capable of speaking intelligently about each of your offerings? Do you need different SMEs for each service line? Would your clients even pay for that? How do you make sure that your front-line client interactions aren’t getting lost in translation?
While there is no simple answer to these questions, there are some clear guidelines around the fringes. As you solve this for your particular firm, keep these six principles in mind:
Inevitably a new client will ask, “So how do we compare with the other firms you’ve worked with?” Some of my clients make astounding amounts of money and I’d never want to work there. Others are brilliant but struggle with the killer instinct that puts space between their performance and a peer. Others do remarkable work with good people but nobody has heard of them.
But the most interesting aspect of that question is around their positioning. I’ll tell you how I answer that, and then I’m going to tell you how my two primary competitors....
First off, let me say that I’m not a huge fan of growth for growth’s sake. You can have a great firm and be that same great firm at the same size for as long as you want. But there are some advantages to being a bigger firm, and growth might be on your radar. So if it is, but it’s not happening, why is that? I’m going to give you the five most common reasons I see.
There are some great tools for growing existing accounts (like this webinar, $160). Decide how big you want to be and make it happen. You might be the only significant obstacle.
Marketing firms do this all the time. Most of them don’t put it front and center, instead describing what they’ll do for a client and then giving them a price (e.g., $140,000). But then the hourly rate will sneak into the small print when they talk about what will happen during scope creep: “After seeking your prior approval, we will bill additional work beyond the scope of this estimate at $xxx per hour.”
Here’s why you don’t want to talk about your hourly rate:
That’s a very confusing statement on the surface, so let me explain. The global economy is sending mixed signals these days and so salary load is top of mind for principals. Let me walk you through the decision matrix so that you can make a smart business decision about that. (Please forward this to your controller if you need help following this.)
First, figure out your salary allowance. Look at your fee basis for last year. Look at total revenue ($4M in our example firm) and subtract cost of goods sold ($1M) These COGS capture outside expenses like media and freelancers but not employees on salary–put employee salaries in here and you’ll get it wrong. That leaves us with $3M in agency gross income, gross profit, or fee revenue, which all refer to basically the same thing. You can afford to spend 45% of that on unburdened compensation, including your own. So add up what people make ($36K + $78k + $128k, etc.) and see where you stand. Our example firm can afford to spend 45% of $3M, or $1,350k. It turns out that they are spending $1,620k. It appears that folks are overpaid, but not so quick.
Second, normalize the allowance. There’s a calculation here that you cannot skip, and that’s to calculate....
