Is Your Agency a Few Phone Calls From Closing Shop?

How to Optimize Your Shop for Lean Times

Posted by Darryl Ohrt on 11.04.09 @ 02:55 PM


Darryl Ohrt

Four calls from being out of business. That's how a colleague summed up the plight of many smaller agencies. Or the agency business in general. We've seen some fantastic, talented, historic agencies shut their doors this year. Big and small. How can we better prepare ourselves to weather the storm if one or two or three clients pull out?

This is something we're constantly learning, growing and building toward. We have yet to meet any agency that's found the ultimate secret, but there are some generally smart things we've discovered, implemented or seen in place at other agencies across the country:

Work business development, 24/7. Sell your firm even when times are awesome. This allows you to be more selective of clients during boom times, and guarantee a more regular flow of work during slow times. Because sales cycles are longer than ever, the sooner you begin the process the better.

Always be building your agency brand. It's not enough to just do great work. That alone won't keep your agency in business because many agencies do great work. Sure, there are exceptions, but generally speaking, you've got to build your brand continuously, and not rely on the chance that future clients will notice your current work. (C'mon. We tell our clients this all the time. Practice what we preach!)

Grow with cash. It's easy to buy new computers with every Apple press conference, outfit your agency in the most stellar space and gear possible, and give employees company cars. Plenty of firms built themselves up in this manner by borrowing and leasing their way into newness. When current business supports the lease payment this is great, but when things go bust, everything goes with it. If you purchase equipment, space or other capital expenditures with profits while business is good, you'll never regret the purchases (or have payments to make) when a slow-down arrives. The fewer long-term financial commitments that exist, the stronger your position to weather the downturn.

Don't just have one or two major clients. That's basic business, and you do that by having a mix between large and small clients. To that end, don't turn your nose at smaller business opportunities. We try and look at our smaller clients as the mortar that holds the bricks of the client base together. We do our best never to turn down work unless it's inappropriate for our firm, and treat small clients like they're our most important clients. When you lose one large client, it's nice to have the stability of ten smaller ones to catch you from falling.

Plan for the worst. Assume it's going to happen. The more you're prepared for the worst case scenario, the better you'll be.

Position for success. People like to do business with brands and companies that exude success. You can structure your company so that you're more likely to have a positive story than a negative one. If you're setup for flexibility, people expect you to flex. Have a fat agency, obese with salaries? Then it's news the minute you downsize or issue pay cuts. It's far better to run lean, leverage freelance and strategic partnerships, and keep pay tight. When times are great, share the wealth. That's the kind of news you want people shouting to the world -- rather than "Agency X just issued a 10% pay cut."

While all of this might seem obvious, sometimes we tend to overlook the basics. What steps have you taken at your agency, to minimize your risk and stick around for the long haul?

ABOUT THE AUTHOR

Darryl Ohrt is a former punk rocker, the founder of creative agency Plaid and chief contributor to the greatest blog in all of the land, BrandFlakesForBreakfast. While his business card says he's "band manager" for the agency, Darryl prefers to call himself an internetologist. Darryl knows just enough to be dangerous. He's on the internet right now, playing, investigating and exploring. Watch out.

9 Comments

By Kevin | New York, NY November 4, 2009 06:36:32 pm:

It's not that it seems obvious, it's that it seems about 9 months too late.

Permalink

By William | East Rockaway, NY November 4, 2009 09:53:58 pm:

Darryl Ohrt says "Work business development, 24/7" and he's exactly right! But that means agencies - particularly smaller ones - need to have a dedicated CMO and genuine new business development executive on the payroll. Getting in the game and winning is not a part-time proposition. It's a full-time job of smart prospecting as a "farmer" or pipeline cultivator, and being a sharpshooting "hunter" when an account is in active review. And this usually takes building relationships before-the-fact. Unfortunately, when times are flush, most small agency principals put new biz on the back burner and ride the wave of current prosperity until it peaks. And when it breaks, they bank on past momentum to carry the day ... which it rarely does. And then, when there is no pipeline or action on the horizon, they say they can't afford to hire a CMO for new business development until they get some new business. Is it just me, or is this crazy? bcrandallnyc@aol.com

Permalink

By Todd_Sebastian | Cincinnati November 5, 2009 08:46:40 am:

"Work business development, 24/7." Agree. But in my opinion, the best source of new business is your roster of current clients. Maximize the headroom with them, leverage the trust and respect you have worked so hard to cultivate, and passionately and proactively bring them new ideas to grow their business and, in turn, your business.

Don't wait for the phone to ring. Don't simply react to client demand. Create it.

http://www.TellYourClientsWhereToGo.com

Permalink

By JeroenBours | New York, NY November 5, 2009 09:16:38 am:

It's good to read the principles Darryl makes clear. We are much too young to be even making some of the mistakes he points out; but when it comes to "growing your business lean", we agree. We 'think' lean, 'work' lean, 'eat' lean and even 'charge' lean. The best thing that comes from that, besides protecting yourself from dark or darker days, is that creativity blooms. Just like it takes a poet to be left by his love to write his best poem. Shakespeare already new that.

Permalink

By DeniseSalvaggio | Orlando, FL November 5, 2009 10:46:14 am:

Excellent points all, Darryl! Especially "Don't have just one or two major clients." In fact, our Web developer said he chose to work for us because we didn't have a "whale" that would sink the entire agency if it went under or signed with another agency.

Regarding William's comment: A new business development executive is an advantage (we have one), but it's also important for a small agency to make itself known and form relationships in the community through joining the Chamber of Commerce and other organizations dedicated to promoting business opportunities. Technetium Creative is a charter member of the Economic Cooperative and a member of the Executive Advisory Board Exchange. Establishing a strong presence in the business community and ensuring your agency stays top-of-mind among those in your professional network will go a long way in achieving long-term positive results.

Technetium Creative
www.technetium.com

Permalink

By PULL09 | Ojai, CA November 5, 2009 07:47:31 pm:

Great post! One more point I would like to add to Daryl's awesome list: Specialize!

There are so many generalists ( full-service) agencies 77,000 in the US alone... our business is a commodity... clients have abundant choice in the buying cycle (which now takes a year or longer to turn a suspect into a paying client). The best way to distinguish your firm from the slush pile is deep expertise in one thing and one thing only. Get your brand known for doing one thing better than anybody.

Two things will happen: your phone will ring, and you will choose from amongst the best of those oppourtunities... oh yeah you'll be charging more too!

I am ready for prosperity, how bout you?

Thomson Dawson
www.whitehotcenter

Permalink

By JANET | CHICAGO, IL November 5, 2009 10:58:57 pm:

Many great points here, but none should be news to big or small firms. And if you don't have a CMO or dedicated New Business Executive you can consider outsourcing...firms like Linkergy specialize in customizing new business platforms for each individual agency based on their core competencies. Then developing a proactive prospecting program to ensure the right postioning and messaging reach the kind of clients you most want. This is not a part time job. But you can outsouce it and not have to pay the overhead.

Permalink

By William | East Rockaway, NY November 6, 2009 07:54:35 pm:

To Janet/Chicago, IL ... I certainly understand your personal interest in promoting Linkergy's outsourced new biz services and I've heard from so many companies like yours over the years. And while it all seems to make sense on the surface, it doesn't work! "Dialing-for-dollars", which too many smaller agencies do these days in lieu of having an experienced and dedicated new business professional on the payroll, offends client prospects. It's impersonal, thoughtless, and basically the lazy way to go on its face.

If an agency wants the serious attention and time of a senior-level client marketing executive, you'd better at least be able to write your own letters of introduction or pick up the phone yourself. It's just good manners and there is no substitute.

Moreover, how can an outside rep from Linkergy or any other new biz "vendor" possibly know as much about the agency brand as the agency's own CMO, CEO or president? How to ensure that the style and personality of the agency brand is reflected in all outreach efforts? How to know that the working prospect database is right in the first place? These are just a few of the critical issues in outsourcing new business development.

All of which is to say, if an agency wants 15 minutes or one hour of a prospect's invaluable time, they had better at least have one of their own top execs investing their time as well. Bill Crandall at bcrandallnyc@aol.com

Permalink

By darrylohrt | DANBURY, CT November 9, 2009 09:41:00 am:

William -

I couldn't agree more. The age of the "cold call" is long gone. There are countless talented creative agencies in the market, and nothing that you could communicate in a cold call is likely going to get a meeting, turn someone into a client, or get real results.

We really believe that *attraction* is the best selling technique. Share great ideas, thinking or original content, and clients will remember you, come looking for you, and perceive your talents for what they really are.

Social media has also evolved to the point where we can now build relationships with people early on. Some of these people will likely become clients or partners in the future. All without cold calls.

(Oh - and people don't answer their phones anymore, anyway.;)

Permalink