Agency Growth Tips 9/21: Defend yourself at all times.
Anyone that knows me knows I love boxing. And this is the first rule in the ring. And has nothing to with this article apart from it keeps you safe.
If I had written the proper headline for this, most people wouldn’t dive into it. It would have less likes. Reads. And shares.
And that’s a shame. Big time. Because this tip is one of the most important in growing your agency. It’s the most important growth of all. Your margins.
This week I am touching on a few of the basics.
Yes, there’s a theme. Financial. Yuck money. Come on – its important.
Yesterday it was ‘Don’t give shit away’, 8/21. Because it’s madness. But we all do it. And we all need to stop doing it. Another to follow this week – really important, charging properly.
Aside: Someone challenged me yesterday, why are you giving these away for free then? The point is I’m not charging anyone for this advice, I am purely trying too help. Why? Shouldn’t the question really be, why not? I’m trying to be helpful. It’s an investment in the creative community. Stuff I wish I’d known. So I am sharing it. Gladly.
Tomorrow is pitching. Not just pitching. But winning pitches. If you’re going to pitch, do it meaningfully. And bloody win it. I maintained an 80% career pitch win ratio. Showing off? No. I had a formula.
And I’ll share some of the basics. First of all it starts with an important tip. ‘Speed is a weapon’ – also coming this week.
But winning pitches start with one BIG question that most agencies forget to ask themselves at any stage during the process. “How do we win this piece of business?” We’ll get to that…
Usual aside: Dyslexia warning. I can’t splel. If it bothers you, I am sorry. I am cool with it.
Back to business.
Agency Growth Tip 9/21: Defend Yourself at all Times.
Here’s the real title. Defend your margins.
This is a discipline that is key for financial stability.
There are two key aspects – controlling your fixed costs in your business (things you HAVE to pay no matter what on a monthly basis) and your variable costs / costs of sale (things you pay based on what you sell).
Both are critical. I won’t labour this tip – but there are some VERY important behaviours and habits that are fundamental to manage your margins.
Purchase order are vital for every purchase in your agency – for your own administrative and corporate services and your client work. You must be able to match invoice to quotes.
If they don’t match. Find out why. If you have unexpected costs on an invoice – challenge it. Just like your client would. Learn from them.
Measuring time employed versus time quoted is equally important. And one of the most significant factors in margin pressure in an agency – often overlooked… at your peril. If you used more hours than you quoted? Why? Understand what happened, put a process in place to stop this happening again.
Scope creep, particularly in digital agencies, is common. And it kills profitability. If a scope changes because of a client requirement or brief change, it’s chargeable. DO NOT absorb it. Tell the client. Best time to do it? Right now!
When you’re working on fees, agree what margins you will work too in advance for pass through (third party purchases) and stick to it. Do not vary this. Profiteer on third party purchases and eventually you’ll pay the price. Your client will benchmark you. And the price they paid for a set of letter heads, a brochure or email sends could bring down an account worth way more than you were getting away with.
Keep your own costs low. Negotiate everything. Put yourself through a process get three routes for big purchases, benchmark your suppliers, review them as you would be reviewed. That’s running a business. If all you do is client work, that’s not running a business.
There is a HUGE difference.
If your attention is not your own business, and only on client business, I assure you you are doing bad business.
I ask everyone reading this to financially analyse EVERY job that leaves your agency. You or someone.
Take margins seriously. No point putting on top line sales if you haemorrhaging cash at the same or faster rate.
Know your numbers. You’ll know your business.