Day 7. I had engineered a situation that allowed me to start the business with one key client in place and enough revenue to employ a small full time team. My objective was to get the team to critical mass within 9-months. Unfortunately January 31st 2008 was officially the beginning of the recession, and our client went bust, being absorbed into a larger financial institution that had signed and sealed contracts with bigger London based network agencies.
We had to make a decision, to carry on, roll our sleeves up and build a business from scratch, or cut our losses. My little black book of contacts bore no fruit; I quickly learned that at our level no one wants to take a risk. So we cut back the team and I started hitting the phones looking to drum up some trade.
What has been the biggest threat?
The recession was the threat, and it was an economic one, because we couldn’t see how it was going to play out, or how we could influence our corner of the market. Companies were cutting their budgets and going bust, this seemed to have very little to do with their effectiveness to sell or the demand for their wares. This was a financial threat based on cashflow, available funds, mergers and acquisitions. But we later learned that we carried a single advantage. Unlike established businesses looking to weather a recession, we were able to operate and grow through it. Our overheads were small, and therefore small business wins made a big difference.
What has been your biggest achievement?
We have managed to predict early market movements and stayed ahead of competition, often out-manoeuvring fare bigger better resourced agencies. We’ve been able to do this because we have built a reputation far bigger than the size of our agency. This has allowed us to attract and recruit some of the best people in the business. As a service business we are only as good as the people we hire.
However our greatest achievement has been in seeding a culture where these people are able to thrive and collaborate, as many of them would not necessarily choose to integrate socially. Creative, Planning and Technical folk don’t always mix. We achieved this by embracing fierce honesty and conflict, both of which are necessary for effective collaboration. The result is a shared passion for what we do, an uncompromising level of service and a belief that we can and should be the best at what we do.
What of the future? What plans? What next for our featured business?
Our plans are to grow the business in line with our 5-year strategy. Our target is to be a saleable proposition within this time period. That doesn’t mean we want to sell, but if we’re not worth buying then we’re not a business to be reckoned with. This will demand annual growth of around 40% whilst maintaining net profit margins of 20%. Not an easy target given that some of our services (particularly design, digital development and data analysis) are being commoditised by single discipline niche providers. Strategically we have seen direct competition coming from management consultancies.
What is your secret of success?
There is no secret and every cliché is true. There is no substitute for hard work and the most important asset in any business switches off the lights when they leave. We have learned to celebrate the highs, because there are always lows, and it’s important not to worry about the challenges, they are there to be explored and solved, they will never disappear. I also make sure I hire people far brighter and more capable than me, in fact that’s a hiring policy we live by.
But probably the most important thing is confidence. I look around at people that I deem to have less experience, less knowledge and less acumen than me, and they run far bigger “more successful” businesses than mine. This gives me confidence by reminding me that I am more than capable of making this work.
What would you do differently if you had your time all over again?
I would increase my risk by hiring great people sooner, allowing me time to work on the business rather than in the business more quickly. We have missed too many opportunities by not having the right people in place fast enough. I still struggle with this everyday, and put off decisions too readily, based on a forecast and a spreadsheet. Great accountants do not make great businessmen.
What advice would you give someone starting out right now?
Make sure you have absolute clarity around your proposition, what you do and who you do it for. This will help shape the decisions you make and the time you spend making them. If your proposition is muddy, your business will be muddy and you will find it increasingly difficult to focus and grow.
You should also come to terms with the fact that owning a business is a purely selfish endeavour, no matter who tells you otherwise. It is the mistress that is socially acceptable, and it will and should take over your life in the early years.
What is your one regret?
Allowing one client (of then significant scale) to influence how we run our business based on their purse strings. Never be beholden to a piece of business, it’s worrying, it’s risky and it’s not scalable.
What do you predict for the future of client firms and how they will attract and retain clients?
Agencies will attract and retain good clients if they offer a service that is strategic in its intent, aligned with their clients commercial objectives and if they remain ultimately accountable. Agencies have to be able to provide services that cannot be easily replicated in-house or commoditised by the market they operate in.
They must also be able to separate good business from bad business, to build a suite of clients they can service efficiently and make money out of. Because an agency should grow when their clients grow.
Secret insider tip: What’s the one thing that every client firm needs to be up-to-speed on right now?
Avoiding commoditisation in our industry can only be found by adding value through insight. The ability to identify and effectively apply this knowledge is game changing for most clients and will directly impact their revenue stream. This insight isn’t found in any isolated research piece or IT system, it is found in the minds of the teams we employ to interrogate them – everything else is just a tool.