I was in a FB group for agency owners today and someone posed the question "what is your number one tip for people starting their agency up?" I said, "Understand agency math and set up your financials and dashboards does you ALWAYS run a profitable shop." To which, of course, someone asked me to elaborate. Given that we teach a 12 week course for newer agencies (which is currently running as I write this) and hold an entire two day workshop on all things agency math/money, I was trying to figure out how to sum up some of the core lessons quickly. I decided I'd share some short videos I've done on the topic and a free ebook resource. So...what do I mean by understanding agency math so your financials and dashboards are correct and will help you always stay profitable? Here you go: Videos: AGI defined AGI per FTE Your top line is not the only way to grow your bottom line Is your boat at risk? (Overstaffing costs) Why timesheets matter Billability versus utilization What are you leaving on the table? Ebook: 5 mistakes that cost agency owners money ebook Hope these help!
I don’t believe there is an ideal size for an agency. But there’s probably an ideal size for your agency, based on your goals, ambitions, age, client mix, and the role you want to play in your own shop. Whether you want to have no employees and just use contractors or you want an agency of 100+ FTEs — your structure needs to support the machine. As you grow your agency — the processes, systems, and roles that got you to that size will not survive the next evolution. Many agencies make the mistake of outgrowing their work systems without anticipating that they’re going to need to make changes as the headcount increases. I tackled this subject for Forbes and I’m hoping the article is useful to you. Be careful that you don’t equate growing your agency with growing the number of bodies in your shop. That’s certainly one way to grow. But, growth doesn’t have to mean more people. It can be about better efficiency, better profitability, or new services. So no matter how you grow, recognize that things need to change to support the shift. Otherwise, things break down. It’s like being a teenager and going through a growth spurt but trying to squeeze into your elementary school clothes. Pretty soon, the seams can’t take it anymore and embarrassing things happen. The same is true for your agency. You don’t want your hard work to accidentally result in a faux pas that costs you money, a team member, or a client.
Our business is rife with myths. What clients will and won’t do. Which channels are dead long before they are dead. But the one that I think is most dangerous to your business is that it can’t survive without you. I know too many agency owners and leaders who are afraid to leave the office for more than a day because they are convinced disaster will ensue. I am constantly encouraging agency owners to book the trip to Paris, to go on the African safari, or to take a few days off around their son’s graduation. Don't worry, I follow my own advice. This past Spring Break, despite a huge level of demand, I took the week off. In fairness, I worked a couple hours a day while the kids slept (young adults can be counted on for uninterrupted mornings!) but for the most part — I was “out of the office.” I slept more that week (11.5 hours one day alone!), put more steps on my Fitbit (we averaged 20K a day) and rejuvenated my energy. When I did sit down for those few hours to get something done — I was better, faster, and more efficient. Best of all, my team handled all of the fire drills, drama, and client issues that I thought I had to be around for. If you honestly believe your team can’t handle your absence — then it’s time to start training them to do just that. Here’s a smart way to ease them in. One day a week: Work from home, a coffee shop, or anywhere that you can be productive. Turn off your email notifications and your phone. Turn both on at lunch and at the [...]
Okay -- so not only is it new, it's our first. Check out the Foundations mini course! Having a strong foundation for your agency is critical any time but right now, it may be the difference of surviving or not. Whether you are new to the agency owner game or even a few years in -- I promise, there will be plenty of takeaways. We've cherry picked some key metrics, decision points and techniques that every agency must employ to be successful. Foundations is a 12-week mini course that is a combo of video lessons (with some homework, downloads, etc.) and a weekly live Q&A call to talk about how you're implementing what you learned earlier that week. We are starting our next 12-week cycle the week of October 5th. Calls are every Monday night at 7 pm central. At this point, we only have a small handful of people registered which means this is pretty much going to be like private teaching/coaching for you for 12 weeks! We'd love to have you join us!
Every year, I get to hang out with 30+ digital team members from various AMI agencies hailing from California to Connecticut and everywhere in between. They come together once a year to pick each other’s brains, learn about new tools, and share best practices. One of the things that impresses me the most about them is that their focus is bigger than tools, tactics, and techniques. They’re also asking about agency new business strategies, how to help the agency’s social media get on track, and how to streamline processes so the agency is more profitable. These are employees who care about their agency and the agency’s performance. As I listen to them strategize together on how to bring even more value to the shop and your clients, I also identified some unspoken needs that would make their work easier and better. Require everyone in your agency to get some basic digital certifications so they have a better understanding and can work together better in identifying opportunities, writing proposals, and spec’ing projects. Use your agency as the test dummy — try video, voice, social experiments — but be out there and be bold. Be smart about tools versus time. You may be saving a buck or two by having them do something manually but if there’s an automated tool out there — use it so they have more think/learn time. Keep your own digital saw sharp — there’s always something new to learn and as their mentor and leader, you chart the course. I’m impressed and encouraged by the drive, curiosity, and hunger that these professionals display. It is definitely to your advantage to help them help your agency!
A few of the agencies we’re working with have committed to building a leadership team and actually holding each other accountable (you all let each other off the hook way too often) for the internal goals they’d agreed needed to be tackled that quarter. So, how do you create that leadership team? It’s not about tenure or titles. It’s about who can actually advance your agency. Who is a holistic thinker, rather than protecting his/her department? Who offers off the wall solutions that force the entire group to step way out of their comfort zone? One of the best litmus tests? Who is an influential mentor inside your shop? Who loves to teach and celebrate others? Who lives your core values? Disregard age and title. Who is proving to you every day that they’re ready to lead? I got very prescriptive in an article I wrote for Spin Sucks so you can build a team around you that is equipped to take you and your agency further, faster. I’d love to hear if your leadership team strategy is aligned with mine or if you’ve taken a different approach. You can’t grow your agency alone. Grow your leadership team as you grow the agency. They'll serve each other (and you) well. This was originally published in the weekly AMI newsletter. To subscribe, click here.
In the last couple weeks, two agencies I’ve been working with onsite, every quarter wrapped up our first year together. As part of their homework, they had to prepare a PPT deck of every goal that they had crushed as a leadership team. I have to tell you — it was impressive. I take no credit for their efforts other than holding them as capable and accountable. They did all the hard work. I promise you, if I’d shown either agency owner the list of what they presented a year ago and promised them they’d get all of those items done (and done well) they would have laughed out loud. They’d never achieved so much in a mere 52 weeks before. So what was different? Their intentions. They entered into this year-long experiment by making a commitment to each other that they would not drop the ball or let each other off the hook. And they didn’t. Here’s what else made their efforts so successful. They didn’t over commit. One single focus per quarter and they weren’t allowed to chase any squirrels until their original commitment was complete. Regular accountability meetings. They met and reported on their progress. There was no tolerance for excuses, evasion, or the usual “well, we know you’ve been busy....” Measure what matters. We set up a list of metrics and they measured themselves against them every week. They were never surprised and they found that they anticipated shifts faster and better. They decided together which needs should get priority attention. There were no lone rangers, not even the owner. They worked in concert to assess what the agency needed most and what was needed to get it done. They stopped [...]
I can remember early in my career I was bemoaning the fact that I couldn’t seem to get it all done. My boss started laughing. Like belly, starting to cry laughing. At me. When he finally caught his breath, he said, “Drew, it’s never all done. This isn’t a 9-5, leave when the work is complete sort of job. You need to learn how to work smart but also not let the inbox (back then it was a literal inbox) get in your head. When you can get it all done, there’s a problem.” I’ve spent my entire career, as I imagine you have, trying to define and refine my own work habits to be as effective as possible. I have a much better sense of how I work, when I am most effective at certain tasks, and how to cleanse my palette so I stay fresh throughout the day. But, there are some days, like when I’m on planes all day (pre-COVID), that work has to get done and the time is now. Much of my job requires writing and I can’t wait for quiet, a muse, or inspiration. It’s due and it’s due now. Thrive Global asked me to share how I pack my plane trips with productivity and while my specific circumstance is probably not yours — I’m hoping these tricks and tools will be helpful in your quest to make the most of your workday. Being more effective and efficient is a key component (among many) in our Advanced AE and AE bootcamps (Sept 1-2, 3-4) as well. An AE needs to get the most not only from their own day but in how they frame up the work for the [...]
Agency owners are, for the most part, some of the bravest people I know. They have put everything on the line to start/own their agency and every day they face and move past tough decisions. But if there’s an Achilles Heel for most owners, it’s the staffing issue, especially if your agency has hit a rough spot. It’s ironic but in a typical agency, the higher a person’s salary, the less billable client work they do. They’re running a department, doing admin work, or chasing after new clients more than serving clients. I’m not suggesting their work isn’t valuable. It just isn’t billable. What balances that out is that most of your younger, less expensive employees are very billable. Their billable hours cover the non-billable hours of the more senior staff. If you look at all of the hours your agency employees (including the owner) works — you need to be at 60% billable overall. Most agencies struggle to get into the 50-55% range. Which is why you aren’t making the kind of money you’d like to make. Unfortunately, many of you are out of proportion. You’re over-staffed in general and in particular, you’re top-heavy. You might have a large leadership team or multiple owners. On top of that — you’ve got an employee or two (or more) who have been with you for a very long time. You’ve given them regular raises and now, if you’re honest with yourself, they’re overpaid. Odds are, their skill sets and energy aren’t really what they used to be. But you feel a loyalty to them and so they stay. You’ve been okay with a net profit that’s nowhere near the ideal range and you’ve stayed in the [...]
First, let's dismiss the idea that timesheets are somehow unnecessary. It doesn't matter how you bill, from time and materials to value pricing -- you still need accurate, daily timesheets. Timesheets actually have very little to do with billing. They're really all about effectiveness and efficiency. Let's say your agency is dropping 20% to the bottom line. Some would suggest that as long as your agency is profitable, there's no need for timesheets. But without those little buggers, how will you know which projects were contributing to the profitability? How will you know if your estimates are spot on or a huge miss? How will you know which employees are super stars and which ones are spending twice as much time on a job as they should be? What if your profit could be 28% and you're settling for 20%? Worse...what if you profitability could be 15% and you're settling for 3%? No one likes them but everyone likes the data and insights they provide. But how do you get your team to actually do them. Here's a foolproof system that has brought dozens of agencies from 23-45% daily compliance to 95-100% daily compliance. Step one: Review your timesheet tools (software, job numbering/naming convention, and task codes. If you have more than 10-12 billable tasks and/or more than 8-10 non-billable tasks, then you need to trim it down. Let them use the comments section to be more specific. You need to make doing timesheets easy and convenient. Step two: Hold an all staff meeting and explain that daily timesheets (weekly timesheets are 67% less accurate) are required for every employee, including you the owner and that you will be implementing a new program to encourage/reinforce [...]