If you want to get an MBA from the streets, learn how to run an advertising agency.
If you don’t know me, I’m Arsham Mirshah, one of two co-founders of WebMechanix. We’re coming up on 10 years in business.
In that time, I’ve grown a thriving, nearly-50 employee digital marketing agency (with equal help from my co-founder, Chris Mechanic). WebMechanix has grown from an idea in a townhouse to one of the top-ranked agencies in the DC/MD/VA area according to Clutch.co and other directories.
Along the way, I’ve learned running an agency might very well be the hardest business to run. With that, comes countless business lessons.
Here are ten of the most important lessons in entrepreneurship, one for each year of business.
One of my biggest discoveries as a CFO is that you must establish a rigid, recurring routine.
For me, a strict routine means knowing:
- Every Tuesday, we get and process checks and update Account Receivables.
- Every Wednesday, we do collections.
- Every Thursday, we look at collections, see who is overdue, and tell the marketing team to stop working on tasks for those who are overdue.
- Every Friday, we look at cash flow and expenses, so we can print checks based on the cash available.
Every week, I know what to do every single day, and I do the same tasks. I don’t care if there’s a tornado or hurricane, we do what we planned to do based on the schedule we established. It’s why I stress the importance of having a routine.
Discipline also translates to evaluating reports. I look at the Profit & Loss statement at least once a week. If there’s a spike, I find out what went wrong (e.g., Clare is overspending on marketing) and I talk to the individual directly to seek clarification. Digital dashboards can help you find info quickly.
- Identify a choke point in your market and own it
When we were building a marketing firm, we identified talent as a choke point in our market. We saw the supply wasn’t growing as fast as demand, so we created our supply. We started the WebMechanix Academy.
Our business model supports integrating third and fourth-year college students, or young professions during career-transitions, and train them Monday, Wednesday, and Friday. In our training, we provide the opportunity to work with an actual practitioner.
That combination of theory and hands-on experience is the “secret sauce”. You can’t learn by theory alone. Anyone can take an online course, but applying the knowledge is the way in which we assure our trainees are actually developing professionally. Watching someone make fries at McDonald’s doesn’t make you the fry master. You have to cook the fries a few times! You can’t use audio or visual training alone to learn how to swing a bat. You have to swing that bat.
We learn who has potential through the Academy by seeing who is paying attention, taking notes, working after hours, and whose deliverables are the best. We have standardized assignments at the end of each lesson, so we can easily compare and see what deliverable is best.
- Have balance (one of the most important lessons learned in business)
Balance doesn’t mean everything should be 50/50. Identify the right balance for your company. You can sway one way or another depending on the business needs.
How we take risks with hiring
You want to take some risks with hiring, but also mitigate others. For WebMechanix, we plan out 75% of our hires. We look when we have an actual opening, we know the position, who they’ll report to, and so on.
But 25% of hires should be risks. We find an HPEL (high potential, entry-level) person or a highly skilled person we didn’t budget for that we don’t know what they’ll do on day one. These individuals typically possess coveted skill sets, networking connections, or some other desirable quality that we are willing to take a risk for.
That’s what we did for a recent hire who was in a career transition. The candidate who we were considering managed Google ads four years ago but then worked at a niche startup. His company was going through a fire sale, and he reached out to us because he was out of a job. Chris fought to hire him, and one of our Directors was not confident that he would be a good fit.
Fast forward to today, our Director can’t live without him. We also recently extended an offer to an Academy student for a future hire date because of her HPEL characteristics.
When it comes to hiring spontaneously or based on business needs, I am in the middle, while Chris is much more spontaneous. Chris is someone who will see someone talented or has experience and hire them quickly, even if we aren’t hiring. He has the vision that enables him to see who could potentially revolutionize the company on day one.
I like to hire talent after we’ve planned and prepared, because we must dedicate resources to manage them, train them, prioritize their tasks, give feedback, and the like. No one works in a vacuum, especially in a service business. I prefer to time hires and make sure the “supporting cast” is ready.
What we look for (and avoid) when hiring
If we sense someone has poor business ethics or a negative attitude we do not extend an offer. We like sunshine and rainbows. That said, there is an acceptable range. Some people exude or personify a core value. Some may not exude certain values, but they’re not the opposite of value, and that’s good enough.
I like positive attitudes. Some people possess extreme positivity. However, as long as you’re not super negative, it’s cool. If you’re stoic, that’s good enough for me. If you seem to be in a perpetual negative state, that’s not good, and I avoid hiring that individual.
We have a culture of care — no question about that. We care about one another. Care is one of our values. I put that word up there, and I believe in it.
We have a culture of family. We encourage each other to take personal challenges. If you don’t want to participate in that, you don’t have to. But if you want to be negative toward that, I don’t like it. You can stay neutral, but it’s unnecessary to attack the ideas of others.
Applying balance in other areas of business
Balance sales with delivery. You can’t just increase sales and ignore the importance of delivery.
Have balanced agility. Balance knowledge and ideas with execution. You may have great ideas, but what are you doing about it?
Balance also means having a business partner to bounce different perspectives off of before you make decisions. We have a core value called “Data rules,” and that makes sense in a track-able, digital world. However, when you add in creative, you have to balance data with gut instinct. Marketing is an art and science.
Marketing is persuasion and creating perspective. I would argue persuasion is a science since parts of persuasion are scientifically proven to work.
Sometimes you don’t have data, so it becomes a 100% gut decision. Sometimes, the data speaks louder. Understand where that balance needs to be. Use that to make decisions.
- It’s all about the people
The sooner you realize it’s all about the people and, in a service business, your product is the people, the better off you are.
You can do the work yourself. That’s why you went into business. Maybe you even enjoy doing the work, and you have high standards of doing that work.
You can deliver more value by hiring someone who already has higher standards than yours in a specific area or by hiring someone you can train to develop those standards in a short period. So, make that your goal.
To illustrate, another employee we hired, Dave Brong, was a better back-end developer, CTO, server admin, and so on than me from day one. We hired someone better than us, which we call hiring over the top.
I was the best developer and SEO out of Chris and me when we started. We hired Derek Cavaliero. He wasn’t a better developer than me on day one. But within six months of training and working together, he surpassed me. Now, he’s a way better front-end developer by far.
Since it’s all about the people, LISTEN to them. If you did your job right and hired the right people who are smarter and better than you and passionate, then you should listen to them because they’re on the front lines.
Don’t ever consider yourself a know-it-all or high and mighty. Remove ego.
Don’t just listen to them. Solicit answers from them. Challenge them to give you feedback even when it’s hard. As an example, I’ll ask the SEO experts if we should sell more SEO. Although I can use my gut or look at data in QuickBooks and Harvest to see how much we sell and how long it takes to complete, I can get intel I can’t get elsewhere by talking to people.
The SEOs may tell us qualitative info, like:
- “It’s easy.”
- “It’s too hard.”
- “It takes too long.”
- “We want to do more.”
- “There are more tools we want to use.”
- “We’ll smash it for this niche and industry, so if you see one of those on the sales table, SNATCH it up.”
- Don’t get tempted by other opportunities
I am amazed at how much opportunity there is out there, but that’s also dangerous. Listen up because this is important and applicable all the time:
Focus. If you lose focus or try to capture all opportunities, you won’t capture as much as you would have if you just focused. It’s the difference between spreading yourself a mile wide and an inch deep versus an inch wide and a mile deep. The riches are in the niches.
A 25-watt bulb will barely light a room. But if you take the same 25 watts and focus it into a single laser beam, it’ll cut through steel.
There’s always going to be a new, shiny object. Sometimes, you should go after it. Usually you have to say no. You have to be disciplined to make that decision.
We started a second business, a SaaS, and ran it for three years. I was trying to run both companies at the same time. It broke even, and we shut it down.
The SaaS didn’t go anywhere, and WebMechanix suffered. It was some of our slowest growing years. We learned that if we wanted to start another business, then it can’t be run by the same leadership as the current company.
My friend, Noah, came along later with his business partner and told us he saw an opportunity in the market. He needed cash, office space, and clients. We gave those to his company, OBO, and let them run the show since they’re proven leaders. They’re growing and doing well.
- Always be Open to Learn
My job changes rapidly. I can’t even describe it because it’s so crazy. There are new, huge challenges at each “stage” — and a stage is defined differently for each business.
This constant change is a challenge because one day, I was doing client work. Now, I’m doing change management — That’s the type of stuff they teach in an MBA program
I change roles based on growth and what the business needs. Right now, we’re getting close to the 50-employee mark. Hence, I need to put on the legal hat for the finance and tax changes. I’ll also need to put on the recruiting hat and look at our core values to see what we’re looking for. Later, I’ll have to put on my strategy hat to see what the future of marketing and agencies is, where our product-market fit is, and so forth.
I wear a lot of hats, and those hats change. Therefore, always be open to learning opportunities. Peter Drucker puts it best. He says you need to be aware of what the business needs today and what it needs tomorrow. Be intellectually humble.
“What will our business be? Aims at adaption to anticipated changes. It aims at modifying, extending, and developing the existing, ongoing business.
There is also a need to ask “What should our business be? What opportunities are opening up or can be created to fulfill the purpose and mission of the business by making it into a different business?”
“Businesses that fail to ask this question are likely to miss their major opportunity.” -Peter Drucker
- Always add value
“Render more service than that for which you are paid, and you will soon be paid for more than you render. The Law of ‘Increasing Returns’ takes care of this!” -Napoleon Hill
I don’t know why this is #7 — because the best lesson I learned for business and in your personal life is you have to add more value [than you’re getting paid for].
I must mention you can’t always take value. Give value. This principle of giving more than you take works well when in social media marketing.
- Always stay active
Some people think they’ll get rich quickly by starting a business. Good luck. They have misguided expectations. It’s not that easy. Have patience.
You can’t take a month or a year vacation from your business. Take on projects you can deliver on, or you’ll fail. If someone comes to WebMechanix offering $1 million to improve brand identity, we won’t take it because we can’t deliver.
- Get a CPA (and a bookkeeper)
Get a CPA. In year one, you can do your taxes, but once you make a lot of money, you need to do tax planning. A good CPA can make you aware of important areas to get on top of on the state and federal levels, like tax credits, incentives, and capitalization.
We took our taxes to an H&R Block in year one. From year 2 to 4, we used a CPA recommended to us that cost $800 a year. Now, we spend $6,000 to $10,000 a year on another CPA because he does extra stuff like financial and tax planning.
The biggest difference between a cheap and an expensive CPA is the personalization. A pricey CPA looks at your business and you personally. He or she suggests ideas that help with areas outside of just finance, like adding a 401K, which helps with recruiting. And he or she will explain how certain ideas can help with recruiting, expenses, and so forth.
We also now have a bookkeeper. He’s different from a CPA because he handles day-to-day transaction tracking. You must have clean books because:
- It makes end-of-year taxes much easier.
- The data is invaluable when making business decisions.
- Your CPA won’t be confused with tons of uncategorized expenses (such as why travel is 50% of your revenue).
The information that good bookkeeping provides helps us answer questions, like:
- Should we sell more service X or Y?
- Which service have we been selling the most?
- How much did that service cost?
The data also helps us identify unnecessary expenses. I may look at the expenses and be like, “Whoa, there’s a spike. We spent $2,000 on this event. Did we get anything out of that? No. Don’t do that next year.”
- Get a business partner
If you want to learn how to run an agency, my biggest advice is to get a business partner, which goes back to balance. Find someone who is the yin to your yang. Great business partners complement one another in a way that allows each to do what he or she does best every day. Also, you should have some overlap, so you can speak the same language.
Wrapping it all up
I’ve learned a lot running an agency. If I could write a message on a billboard to millions of business owners, it would say “find balance.” If I had more space, I’d mention my best business lessons:
- Know thyself.
- Always be open to learning.
- Take a long-term view.
- (If it’s a service-based business,) it’s all about the people.
There is an opportunity today to add more value than what you earn. If you do that consistently, you will earn more than the value you add, eventually.
“Never in the history of the world has there been such abundant opportunity as there is now for the person who is willing to serve, before trying to collect.” -Napoleon Hill
Don’t focus on the money. Focus on adding value. If you take care of the people and give them a great experience, the money will follow.
“The outcome of every struggle is equivalent to the attitude with which you face it.” -Arsham Mirshah
Hopefully, these tips have helped you learn how to run an advertising agency more effectively. Let me know what you think.
For more of my thoughts, go to my site thoughts.arshammirshah.com or check out our services at WebMechanix.com. If you’re interested in services, tell us you came from this article, and we’ll give you a free audit (this is a $4,000 value and super-secret, so don’t tell anyone ;).