Most agencies struggle with sales. Honestly, I think one of the challenges of business development is that many agencies blur the lines between marketing and sales. Many agencies are getting better at marketing. Technology and social media, and all of that make it easier for you to create content or do an e-newsletter, or have a Facebook page. The challenge with that is — it’s not sales, it’s marketing. It feels like you have a new business program when really you have marketing activity. In some ways, the fact that agencies are better at marketing makes some even worse at sales. All of that marketing “stuff” makes them feel as though they can check the box of new business activity. But really that’s just erroneously putting two things in the same box that should be in separate boxes. Many agency owners say to me, “If we can get across the table from someone, we can make the sale.” And what that says to me is: A) they’re probably punching below their weight class because nobody wins all the time. B) they’re waiting for opportunities to present themselves as opposed to going out and creating an opportunity that really is the right kind of client, the right fit, the right industry, and the right size. Take a good look at your business development efforts. Do you really have a sales program or are all of your marketing activities blurring your vision? If you’re waiting for luck and referrals to completely fill your pipeline — is that helping you grow the agency you actually want to build?
No one buys homeowners insurance because they actually expect to have a fire at their house. But they know if they wait until there’s a fire, it’s too late. So, on the very first day of homeownership — they buy the insurance as well, hoping they never have to use it. For some reason, agency owners don’t always apply this same logic to their business. If you have any sort of partner (minority, silent, 50/50, etc.) you need to have insurance in case that partnership goes south. Hopefully, it will never happen but an illness, a divorce, a midlife crisis or a myriad of other things could put your business in harm’s way. Without the proper partnership documents that outline how you handle any threat to the agency — you can be left holding the bag. I’ve had many conversations with owners over the years who find themselves in a position they’d have sworn could not happen. And yet it did. A good partner will welcome this conversation and exercise. After all, they’re at risk if you’re the one who gets sick, goes off the deep end or has personal issues that trickle into the agency. If you’re a 50/50 partner, your documents should also outline how to settle disputes when the two of you are on opposite sides of an issue and neither is budging. Don’t be the person standing on their lawn, watching their house burn to the ground, all the while wishing they’d purchased the insurance. Protect your partnership now — when there are no issues, problems or worries. It’s a much easier conversation to have when you can’t imagine ever needing it.
It’s a rare agency that does not incur any travel for either themselves or their clients. Because travel norms are very different for everyone, it’s important that the agency have a written travel policy that clearly spells out the processes, boundaries and expectations that come along side that employee’s travel on behalf of the company. In our work with 250+ agencies a year and our annual salary and benefits survey that is answered by almost 1,000 agency leaders – we were able to pull together what seems to be the “norm” for most US based agencies. Each agency owner will want to review and modify these policies to fit their own culture, budget, expectations and unique circumstances. In some cases, I’ve just listed what seems to be the common policy and in other cases, I’ve given you some commentary like 30% of agencies do this or that. My goal is not to give you an off the shelf set of policies but rather a framework from which you can build your own travel policy for your agency. AGENCY TRAVEL POLICIES (modify for your own shop) Allowable Expenses Most agencies will pay or reimburse the employee for all reasonable business expenses incurred while traveling on behalf of the agency. Agencies will typically not pay for upgrades i(n rental car classes, hotel rooms, flight classes) without prior approval. The exception to this is international travel. Most agencies will pay for business class plane tickets for travel of 6+ hours. If an employee chooses to live in a different country, the agency does not pay for their travel back to the agency’s home country for meetings (internal or client-facing). Meals and client entertainment are typically on a daily [...]
I know there are agency consultants who will tell you that timesheets aren’t necessary. Unfortunately, they’re wrong. I totally get it. No one likes doing them. But they are an important management tool for you as you run your agency. It has nothing to do with how you bill clients or if you’re still billing by the hour (which I hope most of you are not doing) or project versus retainer billing. It’s about resource management. Your agency may be profitable and everything seems to be running smoothly but the truth is — you don’t know. You don’t know if a few superstars are carrying the weight of a handful of slackers. You don’t know if someone is putting 50% more billable time on jobs than the estimate calls for. You don’t know if you’re over-servicing clients or if one of your employees is struggling with some aspect of their job. You are in the dark. Timesheets illuminate what’s really going on in your business. Marketing Agency Insider asked me to write an article about timesheets, how to get your squad to do them and how important they are to the success of your agency. I don’t want hate mail but I would love to hear your thoughts. Be gentle — remember, I am just the messenger! If you’d like a healthier, heartier bottom line — timesheets are not optional.
I’m working with an agency owner to think through his exit strategy. He’s 52 years old and doesn’t want to retire for at least 15 years. You may think he’s crazy to be planning that far out but the crazy ones are actually the ones who wait too long. Because he’s ahead of the curve, he has the luxury of exploring all the options and laying the groundwork to keep those options open as his agency evolves and grows. I’ve seen so many agency owners who get close to their retirement age only to discover that they haven’t set up their business to be able to deliver what they would ideally like. The owner I’m working with now wants to sell his agency to an employee or group of employees. But there’s no one in his shop today that would be an ideal buyer. So we have to recruit/hire and train his eventual buyer. That doesn’t happen in a year or two. It’s definitely a long term strategy but because he’s starting so young, there’s no reason we can’t make it happen. We started our work by asking/answering some key questions. You might run yourself through these to see how many of them you can definitively answer. Do you want to sell the agency or is it your intention to use the agency as an ATM machine making as much money as possible each year, and grow your wealth outside the business? Do you want to completely exit the agency and be 100% retired (or doing something else)? If you want to retain some ownership — what would your involvement look like once you take on other owners? Do you want to build your agency [...]
I know it seems like common sense and your brain may agree — but your mouth often takes a different path. If you’re struggling to work with some of your team members, odds are you have not embraced the idea that employees need clarity. Truth be told — most agency leaders struggle with this, especially if they are offering constructive criticism or even tougher — disciplinary action. One group of employees that really needs you to get good at the whole clarity thing are your millennials. They come into your agency with very different ideas about how employees behave, what success looks like and how they can contribute. They’re eager but raw. But if you really find a way to be straightforward and very directive with your feedback, I think they will surprise you. Be it millennials or any other group of employees, agency owners and department heads can be vague, passive-aggressive, or just absent in their management style (you may well be the exception to the rule) and I think there are a few reasons for that. In a recent blog post, I dug into what gets in the way of us being more clear and then offered up some tools we can use to get better at it. Check it out and let me know what you think.
You've probably heard me say it a million times, but timesheets are the source of foundational data that you need to to run your agency in a fiscally responsible way. They may have nothing to do with billing. You can value price, project price or sell your work for chickens...that is not my point nor is it the reason timesheets matter. They matter because they are a measure of the efficiency and effectiveness of your team. Your people (W2 people) are your most expensive resource. If you do not know if you're using your resources well, if they are performing at a high level, or if/when you need to add more resources -- then you are operating your business in the dark. I totally get that no one likes timesheets. I have never met an agency employee or owner who does. But without them -- I promise you, you are leaving money on the table. Every month. Timesheets that are not done daily are 67% less accurate than daily timesheets. So let's assume (humor me) that you've decided that daily timesheets are a mission critical focus for the agency. You want to be able to use all of the other agency metrics that are based, at least in part, on timesheet data. But, your folks don't do their timesheets every day. Maybe they don't do them at all. Or, if you are like most agencies, most people do them once a week or so. But you always have some stragglers who are a few weeks out. How do you change the culture? I have seen many agencies from from zero to hero in this arena in 2-3 months using the carrot and stick combo I [...]
Many agencies are struggling with what I have termed “stale employees.” These are seasoned pros who have probably been with your agency for a long time. They were incredibly talented and valuable back in the day, but their skills have not evolved as your agency and the marketplace have. Odds are, they’re someone who has stuck by you through thick and thin as your agency has gone through its ups and downs. Which is why you’re ignoring the issue. But the truth is — this employee is typically one of your more expensive salaries and they are contributing less and less. Not only is this team member costing you money but odds are, they’re going to cost you some of your most valuable employees too. American Express’s Open Forum asked me to dig into the issue and offer some solutions. If you’ve dealt with a stale employee — I’d love to hear how you resolved it.
Given that it's the Monday after a holiday weekend, I have one question for you ... Where were you? Most agency owners can barely squeak out a long holiday weekend, let alone a family vacation. And even when you get away, you aren’t really disconnected. There are lots of issues with this reality and the costs are significant. It’s tough on your relationships, you’re super stressed, and if something doesn’t change... your agency isn’t sellable. But other than that, it’s a great strategy. So what do you do about it? That’s what iMedia asked me to write about and my answer was — you embrace the 50-20-30 rule. In the article, I describe how I believe agency owners should be spending their time and how to actually own a business as opposed to just having a stressful job. Check it out and let me know what you think. Our September AE bootcamp is getting pretty full. If you want to send some of your crew — it would be good to get them registered soon. Click here to register.
Most agencies use the the accrual basis method of accounting because it aligns more closely with how our businesses actually run and gives the agency owner more realistic numbers and metrics, so their decisions are better informed throughout the year. In the cash method of accounting – the day a business gets a check or cash from the client, it recognizes the revenue. This works well in a retail world. I walk into the grocery store. I pick up milk and bread and give the cashier some money. At that point, they have actually earned that money. Our transaction is complete. But in our world – in many cases, when a client gives us money, we haven’t actually earned that money. If the client asked for the retainer or the media pre-payment back, we have to return the money because it’s not ours yet. We haven’t done the work. But in the accrual model of accounting, transactions are accounted for when the transaction occurs or is earned, regardless of when the cash is paid or received. (Note: most agencies convert to cash for tax purposes.) Let’s play this out. You send a client an invoice for $30,000 which is 50% of a project’s fee, after they sign the scope of work. They send you a check. Your bookkeeper should book that $30,000 as a liability. Again – if they ask for the money back the next day, you owe them the $30,000. If your bookkeeper books that as a sale or revenue (like they would in the cash method) it would tell a lie. It would say that you did $30,000 worth of work in that month and you can spend that money without risk [...]