Starting an agency is exciting
Starting an agency is exciting, very hands-on, scrappy and exhilarating. But taking that next step – from starting up to growing your agency – is different and can be a challenge to get right as “what got you to where you are today, is unlikely to be the same thing that will make you successful tomorrow”
The “grow up stage” is the point in the agency lifecycle where leaders and owners still carry many of the core responsibilities – business development, sales, operations, client services and financial management, on top of the remit of inspiring everyone with an agency vision, mission and an informed and sensible strategy. As a result, those leaders often struggle to balance spending sufficient time “on the business” with spending time “in the business”.
This stage of the journey – scaling and growing the business to achieve your ambitions and increase your agency valuation – should involve forward thinking about your ambition for scaling to a certain size, setting a suitable level of revenue and profit. Looking even further ahead, it could also involve an exit or value creation event of some sort (sale, merger, MBO or EOT).
In order to achieve these outcomes, a different set of skills and a new level of leadership capability will be required to overcome the new challenges that will present themselves as barriers to agency growth.
At Waypoint Partners, we meet many agencies who struggle at this stage of development as they don’t fully understand what’s needed to transition out of start-up mode and move into serious growth. Leaders often become consumed by the day-to-day running of their agency, doubling down on the processes, behaviours and habits that drove their initial start-up success. Their focus remains on financial survival, creating short-term focus and reactive behaviours with very little medium or longer term thinking or planning.
This is a key barrier that agency owners must break in order to drive the right growth and potentially realise more value in the asset they are building.
So, how do you scale a marketing agency?
- Plan: Challenge yourself to clearly articulate the inspirational vision and desirable destination for the agency. Working back from that end point, map out the journey to the destination in a formalised growth plan that covers the core financials (revenue, detailed costs and margins). Alongside this sits the critical strategic activities and actions (circa 15-20 per annum) that are needed to deliver the financials. This is critical as “those who fail to plan, most definitely plan to fail”.
- Increase revenue: Make the brave but essential move away from presenting competence and capability as your key differentiator and focus on the “impact and value” you can deliver to your clients instead. It’s far easier to win larger contracts at a higher cost rate if your solutions demonstrably resolve quantified business challenges that clients need to overcome to be successful themselves.
- Position a strategic partnership: If you are able to understand and solve clients’ business problems you can make the critical shift from being a ‘do for me’ activity based, lower value commodity supplier to becoming a ’think for me’ value based strategic partner resulting in higher value and longer-term client contracts.
- Improve profitability, not just income: Whilst improving revenues creates the opportunity for profit, value is realised in the bottom-line. Simply put, the more profitable you are the more valuable you are. Agency growth requires a solid focus on aligning cost rates to market norms and active measurement and tracking of work done against work contracted. This will result in improved billable utilisation ensuring a higher realised rate for your work that trickles down to improve your underlying profit. This is the most neglected area in scaling agencies!
- Optimise structure and business model: Are there elements within the agency structure or operating model that could hamper the growth plan? Is your client base too reliant on one large client, or too many small unprofitable ones? Do you have team members ready to step up? Are people adequately skilled and trained, or is knowledge concentrated in a few key people? Examine the vulnerabilities from all angles and then address them one by one.
- Seek out the right advice: Many leaders believe that seeking help to move through this transitionary period is a sign of weakness. But if you look at the world’s leading companies, most of their leaders have sought expert guidance at various stages of their development to accelerate their growth journey and gain competitive advantage. There are many experts out there who have been through the process you are embarking on, who have made all the mistakes, learned the lessons and overcome the barriers that you will likely encounter. These people can help you shortcut these challenges, saving you time, pain and often lots of money in the process. These expert advisors don’t have to be expensive and if they are good will return 10x the value they cost you for their help and support. Seek them out and use them to help you grow.
In the current business climate access to reliable expertise, support and guidance has never been more important.
Waypoint Partners have taken the collective experience of 22 seasoned industry professionals and distilled their experience, knowledge and insight into their growth advice and guidance, providing critical insights for businesses at any stage of their growth journey. If you’d like to learn more about our services, please drop me a line at firstname.lastname@example.org
Here’s what one of our clients says about Waypoint’s advice and guidance….
“Working with Waypoint to understand and focus on the metrics that really matter has helped us get underneath our financial performance and shape our growth strategy for the coming years. We have optimised our operations function and process with Waypoint’s expert guidance improving our bottom-line profit by 800% in less than 2 years.”
Ian McIntosh Founder/ Director, Evolved Search
What’s your challenge? Contact Waypoint now to start a conversation.