Podcast - Four Things Successful Agencies Are Doing Right Now
PODCAST: 30:10 mins
AUTHOR: Jason Swenk and Robert Craven
Does your agency have the right people and the right systems in place? Do you want to work smarter, not harder? If it seems like no matter how much time and work you invest, you just stay stagnant, it may be time to review these four basic things.
In this episode, we’ll cover:
4 things successful agencies are doing right now.
Why you shouldn’t compare yourself to larger agencies.
How do you measure your agency’s success?
Are you planning to sell your agency someday?
Today I sat down to talk with Robert Craven, founder of GYDA Initiative and author of Grow Your Digital Agency. Robert works with digital agencies to help them figure out what they want and the life they want to live. He’s here to talk about what he thinks is working right now (and what’s not) and why so many smaller agencies struggle.
4 Things Successful Agencies are Doing Right Now
There’s no doubt many agencies across the globe are struggling right now. While the pandemic has hit some industries harder than others, Robert says there are a few things he has noticed some agencies are doing right to stay afloat in today’s economic climate. So what can you do to grow your agency today and when the economy gets back to “normal”?
Start with strategy: Where are we going? Do you have a vision? Do you have a plan for success?
Focus on marketing: Are you struggling to convert prospects? Trouble generating leads? Don’t let your own marketing take a backseat. Make time to work on the business, instead of just in it.
Build the team: Hire the right people in the right seats. Surround yourself with people who are smarter than you and be smart about how you grow your agency team.
Understand the finances: How is your cash flow looking and how can you improve the situation? Consider: changing payment terms, raising prices, or even firing those PIA clients who aren’t profitable.
Naturally, Robert has also noticed things that don’t work, regardless of the economic climate. This includes:
Hiding your head in the sand — just because you don’t want it to happen, doesn’t mean it won’t.
Thinking just because you can create a good product/service people are going to buy it.
Focusing on you instead of the client. Let them be the hero — you should be Alfred (the advisor) and position the client as Batman.
Why You Shouldn’t Compare Yourself to Larger Agencies
Robert and I have both worked with many smaller agencies that attempt to replicate the success of larger agencies. They’ll go in and copy the website or a marketing campaign because “if it worked for them, it will work for us.” This simply isn’t true.
The successful agencies are the ones who take time to do the boring stuff. They measure time and profitability and have long-term contracts in place. But they’re also the ones who are able to be a solution to their client’s problems. Remember, your client doesn’t want to hear about how great you are or what awards you won, they want to hear how you will make their life easier.
How Do You Measure Your Agency’s Success?
How does your agency define success? Most agency owners look at margins, EBITDA, or how many clients they have. But profits are variable and can depend on a variety of factors. As such, they aren’t always the most reliable indicator of success.
At the end of the day, most of us got into the business to be able to do what we want and pick and choose who we work with. But you can’t just skip to the end and have a million-dollar agency. To find success, you need to go back to the basics. Understand how to manage a business and people and figure out how to get the right systems in place. Success doesn’t just come down to the numbers. It’s about fulfillment and significance.
Are You Planning to Sell Your Agency Some Day?
I tell agency owners I work with, start with the end in mind. What do you want to get out of your agency and how do you plan to get there? A lot of the time, the end goal is to sell the agency for a profit. But what if you didn’t?
If you run a successful agency, selling it isn’t your only option. You may be tired of the day-to-day grind now, but as agency owners, we’re creators. While the idea of selling your agency and living off the proceeds may seem great, in actuality, it can quickly become boring. Instead, why not take a step back and bring on someone to run the agency while you continue to pull a paycheck? Then when you are ready to sell, you have allowed your agency to grow even bigger.
The agencies that have the most success are the ones who have a good understanding of the basics. Understand your agency and make yourself a trusted advisor. When you do, you’ll find it easier to have the freedom to pick and choose what you want to do.
Transcription:
Jason Swenk 00:03
In this masterclass, I bring in Robert Craven over in the UK and we've just had a good time chatting about what agencies need to do, what they're doing wrong, what they're doing, right. It's a really great episode where we jump off in all kinds of different topics so you can grow your agency faster. Hey, Robert, welcome to the show.
Robert Craven 00:25
Oh, it's absolutely great to be here. Great to be here. Jason.
Jason Swenk 00:28
Damn excited to have you on. I know, we initially talked, I guess a month ago or something like that. And we just hit it off. I was like, You're just like me, but across the pond. So tell us who you are and what do you do?
Robert Craven 00:44
Right. The name is Robert Craven. I run something called the Guider initiative. Guided stands for growing your digital agency based in the UK, and we help the lead is a digital agencies, we help them figure out how to run the agency they really want to run. And the reason they do that, so they can figure out the life that you want to lead.
Jason Swenk 01:03
Awesome. And how long have you been doing this?
Robert Craven 01:05
We've been doing it for about five years. We had a big contract with Google partners about five years ago on a big piece of research about what makes high performing agents different from the rest. And then kind of the rest is history.
Jason Swenk 01:19
Awesome. And so did you run an agency in the past?
Robert Craven 01:22
So my background is my father said, leave university and become an accountant. And I got to university and I realised that the last thing I wanted to do was beyond the accountancy course with these girls with their umbrellas and their coats, guys with her parka, coats and all this kind of stuff. And I did economics and politics. And I went straight out of the university to open a cafe in a restaurant and outside catering at Glastonbury and stuff. And then at around about the millennium, I was working with an agency running on the board of an agency, waiting for the millennium bug to happen, never actually happened. And since then, I've always been working with agencies. And as I said, about six, seven years ago, we realised that consultancy, running was 90% of our business was with marketing agencies, digital agencies, then the gig came with Google and then simultaneous direct and grow digital agency. And since then, upon apart from one or two legacy clients who I really enjoy working with, we just work with digital agencies.
Jason Swenk 02:32
Very cool. And so what are you finding in these crazy times? What are you seeing what's working and what's not working for agencies?
Robert Craven 02:40
Wow, I think what's working is the old stuff, which is an obsession with strategy where the heck can we go? Yeah, and obsession, why can't we sell more stuff, which they call marketing and obsession with? Why don't we get on data, which is teams and a real understanding and the money kind of beggars belief that how often people just, I'm not saying become an accountant, but just understand how the cash actually works in your business. So strategy, marketing teams, and understanding the money is what always seems to work. What's not working is putting your head in a hole and not looking at what's going on around you. What's not working is if being a technician and thinking if I do great work, then people will come and buy from me, because they won't and what's not working is not seeing the whole thing through the customer's eyes. And it just drives me mad. These websites, which just have just digital noise, speak about how great we are and awesome and the technology we use, you know, and what the actual customer actually wants. If the customer wakes up in the morning and doesn't need a digital agency, the customer wakes up in the morning and they're thinking, How do I get more customers? What's the way to do it? And our job is to answer that over here. We can help you get more profitable customers. And I think that we ended up focusing on what we do and we end up thinking about our job, as opposed to giving them what they want.
Jason Swenk 04:24
Yeah, I always look at it as a kind of Donald Miller always talks about kind of telling the right story. And I think agencies tell the wrong story where we need to as agencies, we need to make ourselves that trusted adviser, right? We need to be Alfred, but a lot of agencies are making ourselves Batman, which is making the client Robbin and no one wants I always joke around especially in our book, I'm like, no one wants to wear those ugly green tights. And I think it all happens because a lot of the small to medium size agencies look at the big Your agencies, and we go, they were like, we need to do that because all the big agencies where their websites are usually horrendous right now, and they don't get any business from their website, like if you talk to them, they're just like, No, we've already built all the relationships and strategic partners and like, all these systems, and then a smaller agencies, we look at the bigger ones, we were like, oh, we need to put a big H on the website. We don't know what it means. We'll put this big letter, because that's the first letter of our name. And we'll talk about like, I have these amazing graphics and amazing animation. And I'm like, if you just asked a question, which changed the focus on them, you do so much better. A couple other things that you unpacked in there is like, go back to the basics. And that is so true, right? Like, what got us there? How do we start, we always forget, we always try to go off to that shiny, red object. And, you know, it's sometimes works. But I remember when I was playing tennis, I grew up playing tennis, and I should be able to beat everybody. I was really, really good. And I remember my coach whenever I started losing, like, just go back to the basics. Like I was trying to overthink everything.
Robert Craven 06:17
But I think that's right, I think it's partly, you know, Facebook and Instagram and LinkedIn, don't do us any favours, because we're bombarded the whole time with do these three things to triple your turnover in the next 10 days type bit. And ironically, us Brits can't deal with that selling thing at all. But still, we still think there's a cunning, clever, faster way of doing this stuff. And there's some of some of the research around successful habits about weightlifting is what makes the the successful weightlifters where they have to go every day, eat all that food, do those ones, the successful ones, and the ones who just recognise that it's actually really, really boring doing that stuff that you just got to do. Now, when you run an agency, I fundamentally believe that the really successful agencies are the ones that do the boring stuff, they did the boring stuff, they get that they need to measure time, they need to measure profitability, they need to have contracts in place all the boring stuff. And yeah, that's not what we do. We set up agencies because we want to see graphs go like that we want to be able to, but the great ones are really good. And also, I think this thing you're saying about, it's about what is the problem that we're solving? And how do we solve that problem. And, you know, dear customer, let me explain to you how I can help you solve the problem that you have. It's all about the customer, it's not about me, and these sites and say, We were set up in 2007, because we were both vegetarian, and we both enjoyed playing soccer. And we went to see, it's all about them. And this Simon Sinek stuff about purpose makes everyone think that they have to talk about themselves the whole time. You know, but it's wrong. Because, you know, when I bought this mouse, I didn't think, what is their purpose when they make this mouse? You know, when I bought this shirt, I didn't think what their purpose was. You know, I signed up for Zoom. I didn't think what their purpose was. Some people do some stuff, it's great. Don't get me wrong. I, you know, I'm the first one to be a fan of TOMS shoes and stuff like that. But we've kind of got the management type industry education industry, is made of made people, especially agents and people think they need to be something they don't need to be.
Jason Swenk 08:57
I like what you said, like they do the boring stuff. Now, what I find is the smaller agencies that are doing that don't have the right systems in place, or the right team in place. They struggle with that, right. But the agencies, they get it, if there's something I remember, I got to a point where I wanted to quit, because I didn't want to do a lot of the boring stuff. And then what I realised is I can hire people to do that. And they love that stuff. Right? And then I can put systems in place. And because at the end of the day, any business owner what they want is they want the freedom to pick and choose the stuff that they love doing. That's it. And so if you could hire in the right place, set up the right system to do that. You can build that right foundation. And eventually you'll get to the place where you're like, you'll have a business that's predictable, sustainable, growing, and you're only doing the stuff that you love, whether that be strategy or sales or delivery, whatever it is right.
Robert Craven 09:58
That's not how they do it. What happens is they don't quite Stephen Covey, they don't start with the end in mind? They're a freelancer. I mean, like, we're talking to ourselves as well, let's be honest about it. Yeah, freelance, loving the work, get someone to help you out, take permission, get someone else, suddenly you got five people, suddenly you're not able to work. Now I call this the the valley of death. Because when you're on your own, you can earn $100,000 Just to keep the numbers simple. Give the accountant $500, take home $99,500 and your 10 people, you do a million dollars, you do 10% net profit, you take home $100,000. And in the middle, your profit goes like that. And lots of people never went into business. They never went into business, to kind of run other people to manage other people to manage accounts and they don't know how to do. And also it's just this like, Hey, I'm an entrepreneur. I'm like Richard Branson, I'm gonna end up on an island, blah, blah, blah, blah, blah. You know, don't get me in the UK, the average, you have a small business owner earns something pathetic, like 40 apology for the pathetic word. And something like 40-42,000 pounds, which is like $50,000. Yeah. Everybody thinks if like drivers, everyone drivers are above average. Everyone thinks they're going to be earning quarter a half million dollars in the first year. And it's okay to earn 40,000 and just plod along if that's what you want to do this. I've got I'm not judgmental about that at all. But I just think we're sold the story about being an entrepreneur, as opposed to being a business owner. And we think it's all about us. And it's not and for some reason, they don't read the books. They don't, I mean, whatever it is they don't. Number I've got a book list I would kind of recommend to clients in the number of times they go, Oh, wow, I've not come across this book. It's a really interesting one. It's like, it's always the same half dozen books. And it's like, really? So you've not heard of Seth Godin? No. Should I have done, I think you'd have a little look at that stuff. What about Perry Marshall?Perry Marshall, I think you need to check him out as well.
Jason Swenk 12:27
What about Jason's twigs book?
Robert Craven 12:35
I don't do this self aggrandisement. But my point is that both basics are often not done. And that's not anyone's fault, because they're all doing their best, you know, I had an economics politics degree, I saw business as a thing. And I think that's really important. You know, these kind of four levels like you work in the business. You're a manager, you're a board director, you're an investor in a business, and in each role, your mentality is it kind of different. So I've always come at it pretty much from the idea of what would an investor say, what would a board director say, as opposed to, hey, if we connect this with this, it'll be really cool. And it'll be really funky. And that's just different points of view.
Jason Swenk 13:26
Yeah, you know, I find a lot of times, they're just, they're too busy, right. And whenever I feel that an agency owner says they're too busy, it's a telltale sign, they're not charging enough. And then if they're not charging enough, they don't have the right team, the right systems in place, in order to really kind of work on the business rather than just being in it. And I always see it coming down to pricing or profitability, and they just look at, because I remember, even in the very beginning of the agency that we ran, I remember just talking about like, when I would meet people, we'd be like, were this many people. And I'd either feel small or big. And I judged ourselves based on the number of people that we had. And I also judged other people based on that, which is incorrect, because we were always profitable. But I also knew people that had huge, huge shops that were like 5% profitability, 10% profitability, which I looked at now. And I'm like, That's horrible. Like you're barely making any money. So for your clients that you're working with, in the UK, what's a good profitability, or like, you know, margin that you guys are seeing over there?
Robert Craven 14:43
So, we did a big piece of work on what we call the high performance, the habits of high performance, and the whole problem with profitability because small businesses take money out of gym membership, go through the business high. Remember, I can. So, long enough ago, my 40th birthday party was a conference and all that kind of stuff. So the money isn't quite straight with really, really tiny businesses, once they've counted straight on, you're above about eight or 10 people, really good businesses here are really good businesses, the world across actually, because we work in, we've worked in 19 countries last year is EBITDA, in the region of 28-29-30%. That's rocking. Okay, that's going to be some good agencies that you be proud to be part of about 20%. Now, it all depends on what the agency is trying to do. It all depends how it's spending its money. Some agencies are spending loads and loads of money on marketing in order to prepare for next year. So they're not going to look as their profitability isn't going to look as good. Some agencies are preparing to sell. So they're just not spending a single penny on absolutely anything to really ramp up their profitability. So their EBITDA looks good. Net Profit is good, so that their multiplier looks better. And so I think we have to be really, really careful when we talk about these profitability EBITDA numbers. But having said that, you know, I think an agency that has got his act together, is pricing properly, is going after the right clients is doing the right work has got its systems in place it is efficient enough, should be in that 20 to 30% range, if you're 15% is not the end of the world. But there's a book I read recently that kind of said that 20% net profit is the new breakeven and that the tail, you know, the victims of COVID-19. business wise, were the businesses that didn't have deep enough pockets, because that business development wasn't very good. And the pricing wasn't very good. So they didn't have enough profit. So they only had like 15 days, 20 days of money, when the business went live, that the businesses won't pop. So it's about, we'll just go back to that phrase, start with the end in mind. And I remember that first agency, I was involved with the 97-98. I remember Tim, the other guy, always saying he wanted a 90 day run rate. So if no income came in, the business would still be trading in 90 days, because he had enough money in the bank in order to do that. And that was in the early days. That was only KPI he used 90 days of cash. And then ideally, you get that 90 days up to 190. But it's cash versus profit. That difference, you know, understanding that difference? And, yeah, you've got to be profitable, cash positive, and profitable.
Jason Swenk 18:13
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Robert Craven 19:56
There's more to it than that. I mean this because people go oh But let's just keep the numbers really simple. So yeah, oh, I can sell the business and I can get a million dollars. Yeah. So what's your income at the moment? What are you taking me out of business and then I'm taking me out of the business to the $1,000 a year. That's like, so why don't you keep the business and put someone into run it turn up for a meeting once a month, come back in 10 years, they're probably better growing the business than you I get some really smart young MBA who's really wanting wants to make their point, you come back, you keep taking 150,000 out of the business, we pay them 70,000. Come back in 10 years time your business is five times bigger, that might actually be a better way of getting money out of the business. And also, if it does go a bit off, you can go in and if it goes fantastically well, you know, so often what happens is, people just run out of puff, they're on a passion, you know, we've been doing this for six years, I've now got a couple of kids. Not as much fun as I thought it was, I don't want to be travelling, like I didn't want to be doing the hours and set up the setting. Cool. let someone else take hold of the baton. So I think the idea about the exit is, again, it's the American dream, you know that the idea that every business goes from the kitchen table to the dining room table into the garage into the industrial unit, and then along comes Dentsu or publicists or Accenture. And they give you this check for $100 million. It happens to about a 1 in 500,000, a 1 in 700,000 businesses, and the likelihood of it being you is really really remote. So why not just enjoy the journey. Book I love is Small Giants by Bo Burling. And he talks about businesses who discover that they want to be not sold and shafted by the big owners, but they actually want to run the best, best little business they can and do the stuff that they want to do. Hence, the title is a small chance. And again, it's what you were saying about being locked into this idea about what the big London New York agencies do, you have to have the big offices, you don't have to have the big boardroom, you don't have to have all non executive directors, you can still we're going to give 10% of our money to the charity or not, you can still say we're not going to work on Fridays. Friend of mine in the UK, just open the business, and it's four days a week. You know, that's it, and we're paying everyone London prices there from Singapore or Bangalore, wherever it is, everyone gets paid London prices. So the reason we run our own agencies is so that we can choose our lifestyle, we can choose the agency we want to run, I think we kind of get, we go to the big conferences run by the big platform, we go there for free, remember while they try and sell us stuff. And we're sometimes sold this thing about growth, how great our agency would be if we did all the things they want us to do. Because they want us to sell that product.
Jason Swenk 23:21
I know who you're talking about.
Robert Craven 23:23
And there are several people who do. Okay, that's true. I think we should go in with open eyes that there's more than several people who...
Jason Swenk 23:32
...dream squasher about telling people they can't get 100 million? You know, especially run an agency for 12 years and selling and then doing this for like, six years. I can't believe it. I did see stat ones, like the people that truly sell a really successful agency is 1/4 of 1%.
Robert Craven 23:54
Yeah, I mean, that's one in 700000.
Jason Swenk 24:00
And those are, like, sizable transactions after it right? It's not talking about you know, hey, I merged or, you know, I kind of gave agency away.
Robert Craven 24:12
The funny thing is, that they're not that happy. You know, so I've been involved with a couple of these deals. And it's whoa, I'm richer than my wildest dreams. So day one, they mow the lawn this way, day two them that way they take the kids to school they realise that's not as much fun as I thought it was. And under the banging on my door saying is there any non Executive Director worker via consultant for you because I was in his office and 100 people and people were interested in me and now I've been interviewed.
Jason Swenk 24:43
You describe me to the tee. It took me two weeks and I was like, what like because you got to build something. You know, we're creators, we strive on that contribution and significance and you lose that And I was just kind of picturing, you know, the money afterwards. And that's all great. And then you're like, but you know the thing after though, that, then you can start making decisions that aren't money related, which, like, I wish I knew that a long, long time ago, like, you don't have to take on that client. You don't have to do that, right? Like, take money out of the equation, or take emotion out of the equation. And you can make so much better decisions. I remember, in one of our mastermind groups, someone asked a question, and they were really emotional. And you can tell the emotional decision was going to control them. And I struggle with this a lot of times. And a lot of times, we'll tell like, pretend you're going to tell Susie this, what would your advice be to her. And it's usually that's the advice because there's no emotion, there's no like, I need to take this person now.
Robert Craven 25:58
I get it, I was given a great little trick on that. Which is, before you go into those tough me, I love this before you go, and I did it last week. And it works. When you've got those really tough conversations, or you don't know quite how the conversations are gonna go, what's going to happen. And actually, let's start with the end of nine stuff. What you do is, before the meeting, you write the email, and you're going to write them after the meeting saying what you talked about. So if you want to give someone a warning that their works not good enough, unless they get themselves sorted out, you don't have to fire them. You write the email before the meeting, saying, just to confirm at the meeting, what we discussed was because of your poor timekeeping, because of your poor attitude to work, you've not been able to do the work to that level we require. And we hope that over the next 10 days, you can improve with blah, blah, blah, blah, blah. So you wrote the email first, then when you go into the meeting, you kind of go, the list is kind of there. And it may not work. But it just gets you kind of fired up, I did it the other day with someone who started renting space in my brain for free, or what I call it, you know that thing, and they put a worm in your brain and part of what they said, right, and occupant, and you're going I don't need to think about this isn't being helpful. And I wrote this guy the email, which was quite tough. Now I picked up the phone and phoned him up. And it was kind of okay, I didn't have to be quiet. So tough with him. But yeah, it's a hard one.
Jason Swenk 27:43
Well, this has been amazing. Robert, is there anything I didn't ask you that you think would benefit the audience?
Robert Craven 27:49
Well, I think in these times actually, I think you and I are both singing from the same hymn sheet is this idea that you can go alone, alone not with other people, or you can go alone as in without tools and techniques to do this stuff. Or you can do it with other people. And it seems to me it just seems to be absolutely daft. Daft that people think that they can do it alone. When they've got peer to peer support. And they've got expertise around them. I just get you know, my first business was a restaurant or cafe when I was 21. And I thought I'd do it all myself and all of these old people know about it. And these old people actually know quite a lot. They kind of, and they can shortcut it for us so much. So yeah, so that's my thinking. It's just why would you want to do it alone? There's people out there who can help you.
Jason Swenk 28:52
Awesome. Where can people get your book? What's the book so we can send them?
Robert Craven 28:57
The book is called Grow your digital agency, about a bit of SEO that, and you can get the book on Amazon, obviously. And you can go to our website, which is GYDA,. guide or initiative. And by the time this is out and live, we also have a thing called the guide member hub, which is a membership community but agency leaders. So the world of choice.
Jason Swenk 29:30
I know Awesome. Well, thanks so much for coming on the show if you guys enjoyed this episode, and you want to know the right systems in order to place in your agency. So you guys can make better decisions, you can operate, you can do the things that you really love. And you can have that freedom to pick and choose everything that you want. Make sure you guys go to Jason swank.com/playbook requested in bite for it. It's our IT system framework that I would redo or that I would do in the agency currently to grow to eight figures and beyond. So go to Jason swank.com/playbook and until next time have a swank day.