Growing a small agency
Whilst my own experience was running a big business (£12M+ Turnover and 175 staff), as an agency coach I love working with people growing a small agency. Owners of smaller agencies are usually bright, driven and eager to learn. What’s more, they can make decisions and act fast. They don’t need to consult or engage other people. As a consequence, I can usually make a bigger difference, more quickly, to their business
Whilst small agency owners share some positive traits, they also make similar mistakes. Growing a small agency is hard. Each business is unique, but you can fall into the same traps or run down the same blind alleys. One of my roles as an agency coach is to help my clients avoid these. A mistake I often see is the fixation people have with the concept of working on the business not in the business. The mistake is not in embracing the idea itself, it’s the way people often misinterpret the concept. They also overlook a fundamental challenge they need to overcome first. Before you can work on the business, you first need to get to a position where you are running the agency (and not delivering the work).
The concept of working on the business not in the business is well known, but fewer people are aware of its origins. The idea was from Michael E. Gerber in his 1986 book The Emyth. Whilst the book is over 35 years old, the concept is the most famous of many ideas it promotes that still apply today. Working on the business i.e. spending time thinking about the future of the business growth and development of the agency, is a sound concept. But for people growing a small agency it’s difficult to achieve.
In The EMyth, or Entrepreneur Myth, Gerber claims it’s a fallacy that most businesses are started by entrepreneurs (people who go into business with a vision of a company they want to create that doesn’t rely on their own ability to produce results). I find this particularly true for agency owners.
The Practitioner's Curse
Most agencies are started by what I call “practitioners”. People who create a business so they can work for themselves. This is a very different mindset to the entrepreneur who creates a business to work for them. Practitioners assume that understanding the technical or creative output of their business means that they’ll be able to grow an agency around their skills. It’s an assumption that’s not true.
You may be a great graphic designer. You may have the technical skill to produce brilliant visual communication through type, photography, and illustration. But it doesn’t mean that you understand what it takes to build a graphic design business. Nor does it mean you will be great at managing other people doing graphic design for you. Neither does it guarantee you have the technical skills, or desire, to operate the finance, marketing and operational functions of an agency.
Gerber claims the Emyth is the primary cause of the failure rate of businesses. According to Fundsquire, 60% of businesses don’t make it past the first 3 years. Twenty-three per cent of these fail because they don’t have the right team running the business.
Agencies have an advantage over many types of startups. They don’t have a capital intensive business model and can operate with more agility than other types of businesses. I’m sure many agencies have failed for the reason Gerber suggests. I’m certain many more are trundling along with founders that have lost their passion, or aren’t enjoying work anymore. The “Practitioner’s Curse” as I call it is why people struggle growing a small agency into anything of significant size.
The key to growing a small agency...
If you are intent on growing your small agency into a larger business, you must do 3 things:
1. Change your mindset – If you’re in practitioner mode, you will never grow your agency. You must except that to grow your agency you need to grow yourself. You must do things differently. What got you to this point, will not get you to the next stage. You need to escape the Practitioner’s Curse.
2. Come off the tools – Before you can work on the business you must get to a position where you’re spending most of your time running the business. If you’re a practitioner you must first come off the tools. A friend of mine runs a construction business. He built it from the ground up. Years ago he worked for other people laying paving stones. Skilled and physically demanding work. He refers to his own progression, and those of the people he now employs as foremen to manage his teams, as coming “off the tools” i.e. managing not delivering the work. Many smaller agency owners overlook the difference between running the business and delivering the business. They exacerbate their situation by making the wrong hires. I know small agency founders who have hired operations and admin people whilst they themselves remain as the key point of delivery. They wonder why they can’t grow the agency, but they’ve created a business where they’re effectively working for the people they employ. They are on the tools themselves and are being fed more and more work creating a capacity and management nightmare. I know other agency owners who don’t want to come off the tools. They’re afraid that if they don’t design or code they’ll lose their technique or be passed in skill by others. They might be right, but if they don’t stop being a practitioner, they never start growing a small agency.
3. Work on the business – Once you are not delivering and running the agency, you can’t start to think about growing and developing it. Beware though, this is a transition. Many agency owners I meet try and change their role completely. They make the mistake of thinking that, overnight, they should delegate all operational tasks and focus solely on the future. This is foolish and almost impossible to do in a small people-based agency. As a founder you will have to find the time to do both. The key to devoting the time to thinking about the business and the future is prioritisation. You can’t always let operational work get in the way. This is where an agency coach or mentor can help you.
Are you working on your agency or in your agency? More importantly, are you working for the agency or is it working for you? Are you still trapped on the tools yourself? If so, your first job is to escape the Practitioner’s Curse.
If you want to grow your agency, you must spend time away from running the day to day. But you must first ensure you fill in behind you and make sure you’re not delivering the day to day. Don’t paint yourself into a corner where you remain the key point of delivery. Your priority must be to extract yourself from the delivery in favour of the running of the business, then move from running to managing the agency. Only then can you think about developing and growing it.