Why One Agency Closed and How to Avoid Their Mistakes
Do you find that no matter how hard you work, you’re just not profitable? Are you spending too much time on the wrong things? If you want to be successful, you need to evaluate your priorities and get rid of the stuff that’s dragging you down. In this episode, you can learn the mistakes from one agency and how to avoid making them.
In today’s episode, we’ll cover:
- 2 lessons on reinvesting agency profits.
- Why investing in the right team is the key to growth.
- Why your agency must embrace change.
Today I sat down for a really informative chat with Mark Bower, managing director of Woven, a brand engagement agency. After 20 years in the industry, Mark recently had to close shop on the agency he started. Now, with a new agency, he’s here to share what he’s learned and what he would have done differently to put his last agency in a better position.
2 Lessons on Reinvesting Agency Profits
When you’re in the thick of building an agency, it’s far too easy to become fixated on growth, growth, growth. You get so consumed with getting bigger and more successful you justify putting everything back in the agency to promote even greater growth. But if you’re not careful, this approach can land you right where Mark was. He had a few really good clients, but nothing to show for it. So how do you avoid this?
- Know where your profit is coming from: Sounds simple, right? The mistake Mark made was taking the profit from the larger, more successful clients, and reinvesting it into the ones that weren’t doing so well. Watch out for this. Do an audit. If you’re losing money because you’re spending too much on clients that will never be profitable, know when to let them go.
- Give yourself a rainy day fund: Mark says he took everything he earned and put it right back into the agency. When the agency began to fail, he had no way to bail them out. Take some of your profits and put it aside, whether it be in property, equity, or even the bank. And, I often tell my clients to take a line of credit when you don’t need it. That way it’s available when you do.
Why Investing in the Right Team is the Key to Growth
It’s tempting to try to fix something that doesn’t work. As humans, we’re natural people pleasers. Letting go of a client, or team member can feel like a failure and cause awkward confrontation. But when you invest too much time forcing a relationship that isn’t the right fit, you lose more than just money.
Mark says a lot of his agency business was project-based. There’s nothing wrong with that. However, the team never had enough time to fill the pipeline. When your team devotes most of their time to putting out fires, they’re unable to build relationships and generate more business. On the other hand, if you focus on what does work, you can invest in the right people who can help build and grow your agency.
Why Your Agency Must Embrace Change
Have you ever heard this phrase: “That’s just the way we’ve always done it”? If those words have come out of your mouth, eliminate them from your vocabulary now.
As an agency owner, it’s important to have clarity. But you also have to be willing to change directions. Decide what you want to achieve and how you want to achieve it. Then, be willing to change your strategy completely in order to do so.
The market is constantly resetting. If you don’t reset, your agency might become irrelevant. Embrace opportunities to reinvent yourself and surround yourself with people who will do the same. Not everyone will stick around when things change. And that’s okay. Those that leave will be happy somewhere else.
It’s important to put back into your agency, but it’s even more important to do it right. When you take the time to focus on what works and what doesn’t, you’ll find it easier for your agency to grow.