How to avoid agency disasters

How to avoid agency disasters

Becoming an agency manager or owner can mean no more working for a boss, determining your own future and the opportunity to make a lot of money. But it can also go terribly wrong.

These are some of the pitfalls to avoid:

Over-servicing clients

Founded in 2010, GingerMay won its first major client soon afterwards. But Victoria Usher, CEO and Founder (main image), says, it was a lesson in clearly defining programme outcomes and deliverables as over-servicing became the norm.

“At the time, we were a small team and adding a well-known brand to our roster was a huge milestone for the business. The brand name alone introduced a wealth of leads and, in return, we went above-and-beyond to service the client’s needs,” says Victoria.

Scope-creep and over-servicing was evident but it took confidence to raise it with the client – even when the data showed GingerMay was over-servicing the client by 800%.

This was raised with the client but there was no movement on the budget to reflect the work by Victoria’s team. So after taking a deep breath, the agency resigned the account.

But did it damage the business?

Victoria says, “No, in fact, it benefited us. We introduced four new client accounts without needing to recruit any more staff and learnt a valuable lesson that we’ve carried through our business over a decade later.”

Success can breed complacency

Swift financial success can also inspire some poor business decisions.

Paul Williamson, Managing Director of Realia Marketing, says, “I always say that an agency manager is only three bad decisions away from selling The Big Issue.”

Paul Williamson

Realia went from a turnover of zero to almost £1 million in its first three years and this had a dizzying effect on Paul, he admits.

“I thought I was ‘the big I am’. I bought a nice guitar. Thought I could have big lunches and schmooze. It took six months to lose the lot,” says Paul.

"An agency boss is only three bad decisions away from selling The Big Issue.”

During that period when he lost his focus on the business, the agency went from 11 people to two in just six months.

He says, “It was all of my making. Letting people go because you can’t pay them is not a nice place to be. I always feel now that I have 10 mortgages to pay, not just one.”

Paul has learned that lesson the hard way and Realia is now an award-winning agency at full strength.

Listening to the wrong inner voice

It takes a self-assured personality to run an agency, right? Apparently not.

Graham Goodkind, Founder and Chairman of Frank, acts as a ‘Dutch Uncle’, a non-executive advisory role for marketing services companies. He says a lack of self-belief is the most common mistake he encounters among marketing CEOs and founders.

“This manifests itself as undue nervousness in respect of decision making, self-doubt and a lack of confidence,” says Graham.

He adds, “Taking that first step in terms of starting something up is a big one. I think so much so that a lot of founders then find themselves thinking that they should be listening to that other voice inside that says 'no, that will never work' or 'I'll wait to do x until y happens' and as a result progress and growth sometimes gets hampered. They lose the momentum and it is quite hard to get going again.”

Laura Sutherland

Grasping the business of the business

Laura Sutherland, Chief, Aura, says she spent time learning business fundamentals before launching her own venture.

She says, “Finance is a huge one. If you don’t understand cashflow and P&L, you’re not going to understand how VAT and TAX works, which could have a serious impact on running the business and being profitable.”

Similarly, Brendon Craigie, Co-Founder and Managing Partner, Tyto, warns that managers need to understand both their own cash flow and that of clients.

“If any of your clients run into financial difficulties then it can start a domino effect which can leave a hole in your cash flow. In an ideal world you maintain enough cash reserves to cope with this. But prevention is better than cure and you should be extremely cautious about taking on any clients with questionable liquidity or seek payment in advance to safeguard against this happening,” says Brendon.

Agency management is never easy. But learning these lessons will make it easier.