fbpx

Advertising agency owners take money out of their own pocket to stay overstaffed

I have found that most agency owners are very generous people. They love the people they work with and want to create an amazing working environment. They are also very slow when it comes to firing an employee – whether it’s because the person isn’t performing at the right level or because billings have dropped and they just don’t need that person any more. All of that is lovely. But, you are literally taking that money out of your own pocket when you make that decision. I can’t tell you how many times an agency owner has lamented to me, “I know I should let Carl go but he’s putting two kids through college.” Yup – and you are taking money that should be going into your kid’s college fund (or your retirement or investment account) and handing it to Carl’s kids. Even more than that – by not firing an employee, you are putting your entire agency at risk, for the sake of this one person. Your responsibility is to run the agency in a fiscally sound manner so that the agency survives the ups and downs of cash flow, clients coming and going and other economic factors. I saw way too many good agencies just close their doors in the last recession because the agency owner stubbornly held onto too many people and didn’t trim overhead expenses fast enough. One ratio that can help you stay in alignment is a rule of thumb we use at Agency Management Roundtable with our agency clients. On average, for every $100,000 - $125,000 in AGI (adjusted gross income = your gross billings minus your costs of goods sold) you should have one full time equivalent. If [...]

February 22nd, 2013|

Advertising Agency Training: How We Help

We want agency owners to win. We particularly want small to mid-size agency owners to win because they are some of the most tenacious, passionate professionals we know. It’s why Agency Management Institute (AMI) exists. We do everything in our power to help agency owners gain an unfair advantage. And that’s why we try to offer so many options for advertising agency training include a wide variety of free resources. You'll find that you can get a great deal from our free resources like our Build a Better Agency podcast, Drew's weekly videos, weekly newsletter, our "Agency Edge" annual research series, our agency-focused webinar series, and our blog for agencies just like yours. We also invite you to join our Build A Better Agency Facebook group to become a part of our community. Beyond that, we offer other training and professional development such as: Build a Better Agency Summit On-demand and live agency training workshops Agency owner coaching and consulting On-site consulting A variety of AMI memberships for every commitment level If you can’t find training or resources that would be helpful to your agency and team — ask. We can either be of assistance or we know someone who can! https://www.youtube.com/watch?v=wKV061-xXss

February 3rd, 2013|

Resolve to collaborate more in 2013: Agency Networks work

A personal development network is a great way to grow as an agency owner and employee, and your agency will succeed because of it. Back in the early days of my agency career, I worked for a shop that would not allow employees from other agencies into our building.  So if you were hosting an Ad Club meeting or some other event that involved agencies from the area -- you had to take it off site.  When I asked why the rule exists I was told, "what if they walked by and saw some of our work for a client.  They could go after our clients." I thought it was a bit paranoid back then, even though I was professionally wet behind the ears. Now, 30 years later, I think it was ridiculous.  If your relationship with your client is so tenuous that you're at that sort of risk -- then you're going to lose that client in a hurry no matter who knows you're working together.  While that agency's policy was an extreme, it was very representative of the attitude most agencies have about their competition -- other agencies.  They are the enemy.  We must keep them at arm's length. I've always had the opposite attitude.  If our work is good and our relationship rock solid -- no one can steal that client away.  Which means we should be free to enjoy the benefits of connecting and collaborating with the talented and smart people who are drawn to agency work - even if they work for our biggest competition. That's probably what drew me to AMR and the agency networks from the beginning.  The idea that I could sit around a table with 11 [...]

January 7th, 2013|

Do you know your agency’s sales life cycle?

Every business has a sales life cycle and communications agencies (whether you're an ad agency, digital, PR, etc.) are no exception.  It used to be pretty straightforward -- you either chased after a prospect or met them at some networking event or got a referral but the face to face happened early on.  Today, an agency's sales cycle is 70+% done before the prospect ever reaches and even has an email interaction with the agency. Every agency needs to map out their sales funnel, understanding that the first three-quarters of it happens prior to contact.  The visual shown here is my agency's (MMG) sales funnel. (If you click here, you can see it full sized). The left side of our sales life cycle shows the prospect's relationship to the agency at the time.  It flows from I've never heard of you to I'm a customer.  The question is how do you move a potential client through the funnel when you don't even know they're out there? You use your content marketing, social media, SEO and active prospecting to capture their fleeting attention and then you begin to serve up content that demonstrates that your expertise could help them achieve their business goals. Once they're paying attention to your smarts, you also need to give them a chance to get to know your agency's culture, values and what it's like to do business with you. Now, they start to like you. That's usually when they actually initiate contact and you have a shot at actively pursuing their account. As you can see by the bottom of the diagram -- you shouldn't leave current clients out of the equation. You need to be re-earning their business every [...]

September 24th, 2012|

Advertising agency non-compete agreements

A non-compete agreement form is like fire insurance. It's a sickening feeling to see the smoldering ruins of your just-burned house, and wish you'd bought the insurance policy. The time to create your non-compete agreement is before you get burned. There's a widespread belief among the advertising agencies that we meet in our workshops and consulting that non-compete agreements are not enforceable. We do all we can to dispel that belief. We're not attorneys so we won't attempt to give you legal advice, other than say a properly written non-compete agreement form required by the agency and signed by the employee is binding upon both parties. Doing so could even save you a fortune on legal fees. Non-compete agreements do not fall under Federal jurisdiction. The covenants are governed by State law. With fifty states there are fifty sets of rules. This means you need to talk to your legal eagles and have them put one together for you that can be upheld in your state courts. You need to have ALL current and new employees sign the non-compete agreement form you and your attorneys have fashioned. Your attorney will tell you that you will probably have to compensate each employee in some way to sign the new agreement.  In my agency, we paid them all $1 -- which we literally handed to them. You may find that it may be simple to include a "section" on non-compete in the employment agreement. But the key is getting signatures on the document -- no matter which document you choose to include your non-compete language. While it's true that you can't prevent someone from making a living, you can prevent them from making a living at your [...]

September 18th, 2012|

How many hours should ad agency employees work?

How do you track billable time in an agency, and how many hours should ad agency employees work? This is a question that comes up all the time in my work with agencies.  The expectation in terms of a work week ranges from 37.5 hours a week to 50 hours a week although most agencies will say 40 in terms of hours worked in a week.  So that gives us a range from 1950 hours a year to 2600 hours a year with most people citing the 2080 hours a year number (40 hours/week).  But given an average of 3 weeks of time off (vacation and sick) and 10 work holidays (which translates to 5 weeks off) that gets you down to 1762.50 (37.5) to 2,350 as a range with 1880 hours a year being the 40 hour work week average. So when you think about how you're going to track billable time, the rule of thumb is that no employee can be billable 100%.  So here’s the best practices expectations by job function: Project Managers/Production Managers — 80% which is 1,504 hours at the 1880 hours in a year model Sr. Account Staff who have more admin/new business responsibilities — 70% which is 1,316 at the 1,880 hours in a year model Account Executives (jr and mid range)  -- 80% which is 1,504 at the 1,880 hours in a year model Creatives (writers and art directors) -- 75% which is 1,410 at the 1,880 hours in a  year model Media — 90% which is 1,692 at the 1,880 hours in a year model   And then you have your admin folks, who if you can get 25% billable time from — that’s great. The [...]

September 6th, 2012|

Managing Your Agency in a Renewing Market (part one)

Don't get carried away with your enthusiasm about the increase in business activity. We are recovering from the Great Recession. You've survived it and have earned the right to celebrate.  A little. But now is not the time to take your eye off the prize.  In this recovery period, agency management can be tricky, because we're a little tired of fighting the fight and are looking forward to backing off a little. Don't do it. We've developed 25 helpful agency management steps you need to consider in managing the agency during this recovery period.  Here are the first half.... (and here's the 2nd half!) Make sure your strategic plan is in place, and that it focuses on some specialization with diversification. Now is the time to grow the agency, and within the context of your existing operations. New business programming is critical, but isn't the only source of profitability. Your managers and account staff need to understand what others do and why certain reporting requirements are needed to manage the agency effectively. Be a sponge. Get all the input you can from peers and suppliers about competition and how they are handling the recovery. Get into a network group to discuss operating techniques. If the network is an advertising agency network, that's better than a "business" network with people from other businesses. Always keep an eye on your profits. Don't assume that the bigger clients are the more profitable clients. They may pump in a lot of bucks, but they may be sucking the life out of the agency because they aren't profitable. Watch them all and know where your profits are coming from. Take another look at your fees and retainers. They should all be [...]

August 14th, 2012|

How do you get your agency employees to do their time sheets?

What do you do about late (or non-existent) time sheets? Did I hear an echo? It seems that this question is asked again and again, year after year.  The only modification in the conversation is whether or not you should do time sheets at all.  (Watch for that discussion later this week.) The attitude of agency management (you) towards the problem is the solution, or non-solution. If you set and enforce a policy of completing time sheets on time, the question is moot. If you tolerate tardy time sheets, that's what you get. Your attitude is reflected by your employees. It boils down to rewarding the behavior you want. Remember, the greatest management principal? If your agency has the tardy-time-sheet illness, it is because you've rewarded the tardy time-keepers by not making a stink about it. I tend to run a relatively easy going shop. But many years ago, I realized I had to take a stand on time sheets if we were going to be able to accurately track our work, our profitability and our workload. I had a choice -- the carrot or the stick. Most bosses would go for the carrot like JWT Casa did.  They created a direct correlation between filling out and getting something you desperately need at the end of the workweek: a fridge full of beer. Guess what? Everyone filled out their time sheets. On time. Suddenly, time sheets weren't a problem anymore. I went the way of the stick. I told my employees that I would fine anyone who did not complete their time sheet before they left the office for the day. I'm not sure they believed me. It was an unusually strict response from me. Until about [...]

July 23rd, 2012|

Need a new search?

If you didn't find what you were looking for, try a new search!

5 Mistakes that cost agency owners money.

Go to Top