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Should my advertising agency take on debt?

All debt is not bad debt -- the question you need to ask yourself is 'should my advertising agency take on debt?" Every business faces the issues surrounding cash flow and keeping the money moving in and back out the door.  Advertising agencies are no exception. Until I actually owned my own agency, I didn't really wrap my head around the differences between how much income a business generated and the daily cash flow issues. As many of you have experienced -- you can have incredible billings but that doesn't mean you have enough money to make payroll. Sooner or later an agency owner is going to be faced with the question -- should I borrow some money? Here are some reasons NOT to borrow money: Work is slow and you're over staffed.  Billings won't cover payroll but you don't want to lay anyone off. Your computers are a few years old and the creatives are starting to complain. You've had to toe the line for the past couples years and not bonus yourself.  Your husband is making not so subtle hints about Hawaii. In other words -- don't borrow to avoid tough decisions, to keep staff the business does not warrant, to pay for disposable items (sadly computers now fall into that category) or to line your own pockets.  Those are emotional, short term feel good decisions that you will regret.  Over and over. On the flip side, there are times when borrowing makes sense.  None of these are absolutes of course. To buy a building that will house your agency for years and appreciate in value over time. (Do it as a separate LLC) To invest in an opportunity that could pay off [...]

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Do you see a vendor when you look in the mirror?

Earlier this week, we kicked off a conversation about why agencies find themselves relegated to vendor status. If you remember, we identified 3 causes. The economy -- workforce reductions, budget cuts and overall fear (out of your control) Agencies willingness to behave like a vendor just to get the project (within your control) Agencies hiring "nice" account executives who are order takers rather than smart business people (within your control) In this post, we're going to look at what you can do to change your mindset (and choices) so you don't look like a vendor to prospects and clients. None of us like the word "vendor." Vendors sell stuff. They sell umbrellas on the beach, hot dogs on Time Square and truckloads of parts. But the truth is -- many agencies behave like a vendor. They: Charge by the hour rather than use value pricing They set their prices based on the "stuff they make" like brochures and websites They talk tactics, rather than strategies If you recognize yourself, even a little bit, in that description -- here are some things to consider as you wrestle with getting away from the vendor label. Take business with your prospects and clients: Don't limit your interest or your conversations to marketing or advertising. Talk about their pricing strategies, how they go to market with their product/service, sales goals and even operations. Your job is to stick your nose into their business and help ferret out solutions that can change the game. You want to identify and talk about the metrics that matter to your prospect or client. Price like an advisor, not a vendor: Vendors price by the pound, the item and by the hour. Advisors price by the [...]

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The economy is pushing agencies into vendor roles

Earlier this week, we kicked off a conversation about why agencies find themselves relegated to vendor status.  If you remember, we identified 3 causes. The economy -- workforce reductions, budget cuts and overall fear (out of your control) Agencies willingness to behave like a vendor just to get the project (within your control) Agencies hiring "nice" account executives who are order takers rather than smart business people (within your control) In this post, we're going to look at what you can do to work around the economy issue. In the current economic climate, ad and marketing managers on the client side are trying to keep their jobs and cut costs. They're seeing fellow employees being downsized are doing everything they can to make themselves look more indispensable to their bosses. One obvious way for them to do this is to bring a lot of the work they normally farmed out to agencies back  in house. Some marketing managers even go so far as to set up an in-house agency, not knowing or not heeding the fact that no in house agency has ever been proven to save money in the long run. (Don’t waste your time or your breath trying to argue them out of this dumb idea. It's one of those "you have to live it to believe it" deals.) It's tough to deal with someone who is operating from a place of fear but that's where a lot of our clients are right now.  They kept waiting for the economy to go back to normal and now they're realizing that this is the new normal.  Now, every dollar they spend is scrutinized and performance expectations are huge.  Human nature drives them to clutch [...]

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Tired of being treated like a vendor? Stop acting like one.

Agency owners and staff alike have been complaining to us for several years about the growing number of clients – including existing clients – who insist on employing the agency as needed, rather than maintaining a long-term working relationship. In other words, using the agency as a temporary source of specified services, rather than as a valued advisor. If you're tired of jumping through purchasing department hoops or being one of many agencies at the table -- there's a way out.  This doesn’t have to happen to you.  But you need to be willing to make sue changes. It's time to start acting  like an advisor and resist being mistaken for a vendor. How many times have you heard that if you look like a duck, act like a duck, etc., people will treat you like a duck? Maybe it's time for us to stop walking around, quacking! There are three key reasons why agencies are being treated like vendors today – one largely beyond your control and the others totally within you control. What you can't control The reason that's largely beyond your control is what's happening in businesses today. Many of them are experiencing workforce reductions and cost cutting because of the economy's ongoing struggles.  Unless you have a magic bullet for the economy -- you're going to have to find work arounds for this challenge. What you can control The reasons totally within your control are the willingness of agencies eager for income to behave like transient vendors, rather than being and presenting themselves as valuable long term advisors. The second reason that your agency gets stuck in vendor mode is that agencies have been hiring “nice” account managers whose focus in [...]

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