How to Manage When Your Small Business Gets Bigger

Insight and Advice From Three Agencies That Have Been There

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One of the dreams of most small businesses is to get bigger. But even those lucky enough to achieve it have to do so smartly -- or find themselves back at square one. Three agencies offer their insights on how to handle growth.

Shift Communications: Avoid Anchor Accounts
Shift, which opened in Boston in 2003, has managed to add offices in San Francisco and New York and expand its workforce to almost 100 people. The PR shop grew an average of 20% annually until 2008, was flat or down in 2009 and 2010, and is now back at about 20%.

"We're not looking to blow out one year and spike the next," said President Amy Lyons. "An incremental march toward that 20% [growth] is what we work toward."

To maintain solid growth as well as and its small-business culture, Shift wants to cap each of the three regions at 75 people. The firm also avoids clients that would represent more than 20% of total revenue, according to Ms. Lyons.

"I've seen situations where anchor accounts can have a devastating impact," she said. "We never want to be in that position."

The firm's early reputation in social-media work helped it diversify its practice groups. Talent structure is a more recent focus. The firm empowers VPs to manage their own P&L and reviews them monthly. It recently added a layer of reporting, requesting client forecasts.

A few years ago, Shift recognized that its VPs were stretched too thin, which was affecting client relationships. It made more of an effort to grow account managers into directors and invested in outside talent to support each VP with up to three directors.

"[Now] VPs have more time to focus on agency initiatives and things that brought value to the agency," said Ms. Lyons.

Baldwin&: Moving the Goal Posts
Baldwin& launched in January 2009 with three people and a goal to double headcount each year. The firm has had 30% growth annually and plans to double 2012 headcount to almost 50 employees.

The North Carolina-based agency had revenue of $750,000 its inaugural year with a roster that consisted only of projects. It was a major accomplishment in a struggling economy, founder David Baldwin told Ad Age . But pitching for projects can be costly, and its long-term goal pushed the firm to bring in national-brand retainer business.

Jerry Bodrie, Baldwin&'s director-account management, said, "We talked a lot about how, in year four, if it looks like the year-five goal is happening, we'll have to reassess and set new goals and hit those."

Baldwin& won BMW Golf the second year and Burt's Bees last year, but hitting the agency-of -record target put even more pressure on the human resources and financial functions, Mr. Bodrie said. The key would be finding and retaining talent, and allocating more for benefits. The firm foots the entire bill health coverage and will soon introduce a 401(k) program. It's also looking into a plan in which the company and workers donate $1,000 a year to a fund that could turn into a $12,000, six-week sabbatical after six years.

"We're not in New York," said Mr. Baldwin. "We have to create a reason for people to come to the company and like us."

Via Agency: Managing the Swings
Between 1993 and 2000, Via grew from zero to 125 people in multiple regions. It placed big bets on digital business for technology clients, but the bursting of the tech bubble dashed hopes of continuing that momentum. The economic ripples of 9/11 further dampened its spirits. The firm cut back to 60 employees and decided to concentrate on steady growth.

But it hasn't been easy, especially with a 35% boost in revenue last year.

"One of the challenges of managing growth at a smaller agency is swings can be pretty dramatic, and most small agencies are not deeply capitalized," said CEO and founder John Coleman.

The firm is focused on improving its infrastructure. A year and a half ago, it moved into a new office in Portland, Maine, with enough room to double staff to about 90 people. And it recently upgraded its technology infrastructure with a new SAP small business system.

Via has also learned that when it needs to expand capabilities, it can't let fears about tarnishing the culture interfere with hiring big talent in its small shop. For example, a decade ago the firm brought on an established creative talent from New York to accommodate its growing retail business.

"When you hit inflection points where you outgrow your space you have to make big capital commitments," said Mr. Coleman. "You're a size that requires different systems or a different kind of client."

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