Maybe it’s time for me to exit the agency business and do something else?
I’ve heard these words more than a few times in the past few months. It’s understandable. The pandemic has not only disrupted our personal lives, it’s affected every business.
COVID-19 has brought few positives. If there are any, it’s the way it’s encouraged us to reflect more. What do we want from our lives? Are we happy? What’s important to us? What are our priorities now?
The virus has led all business owners to take stock. Some of you will be more positive about your business than others. But it’s not surprising many are considering making big changes. Including taking their agency, or even themselves, in a completely different direction.
They say there’s always somebody in a worse position than you are. Whilst the agency sector has been hit hard, at least our business model allows us to react quickly to things. Even when those things are unprecedented global pandemics.
Whilst I’m sure it’s little comfort for those of you in survival mode and/or facing difficult decisions, there are industries with more challenges than agencies. You only have to look at the hospitality, events or travel sectors to see this. Agencies are fortunate in that we’ve been able to furlough staff and reduce a large part of our running costs. We haven’t had to sit and watch perishable stock spoil and become worthless. We’ve not been closed down or forbidden to trade by law.
There are positive signs for the future for us too. We’ve seen a massive acceleration in the adoption of digital technology. Businesses that were previously operating without digital capabilities, have made huge strides. The general public have become more digitally savvy. This digital leap forward is bound to present opportunities for agencies in the coming months.
Green grass syndrome
Agency folk are a resilient bunch. They have to be. Even without a pandemic to contend with, the life of an agency owner is a rollercoaster ride. Massive highs are punctuated with significant lows. High profile client wins can be soon be followed by sobering client losses. The euphoria of winning an award can be quickly dampened by the unexpected resignation of a key team member.
Sadly, even before COVID, it wasn’t uncommon to hear agency owners thinking of making a change and coveting greener pastures…
“There must be easier businesses than the agency business?”
“I want to run something that is scalable and less hands on”.
Sound familiar? I’ve heard these sorts of statements many times. And yes, I admit, I’ve uttered similar things myself in the past (usually after a few beers at the end of a particularly tough week).
I understand these sentiments, but it’s taken me 25 years in business – not a pandemic – to realise that they’re misplaced and wasted words. The grass is rarely greener elsewhere. A global recession or not, no business is easy. Whilst other types of businesses might be more scalable, it is possible to grow an agency. Most importantly, I’m a passionate believer that no successful business can be run with a “light touch”.
In search of the perfect business model
It’s never been easy and it’s rarely dull. Running an agency requires guts, determination and resilience. Whilst most of you will have dusted yourselves down, summoned these traits and already be going again, what about those that are feeling that the agency business has lost its allure? What are the alternatives?
Earlier this week I started to ponder the perfect business model. If the agency business wasn’t it, what is the ideal type of business to run? Whilst I quickly concluded that the perfect business doesn’t exist. I did draft a set of 12 criteria that if, if satisfied, would get you pretty close.
So if I was aiming to find the perfect business – any business – in 2020, what would it look like?
What attributes would it have?
Can an agency business measure up?
1. It would sell a product that people need or desire at almost any price. My son is doing Economics A Level and tells me this is called inelastic demand. Clever lad, it’s a big ask though!
2. It would sell to an unlimited global market. A little easier to achieve. The world gets smaller everyday. Better suited to service based businesses too.
3. It would sell a product that cannot easily be copied. Or at least it can be copyrighted or patented. Unique products are hard to find, but IP can be established and protected.
4. It would be a business that is moveable. It would not be fixed to a single location and could move with the business owner or be operated remotely. Flexible working even extends to business ownership these days.
5. It would enjoy low overheads. It wouldn’t need large amounts of raw materials or a large stock inventory etc. A business with high overheads is less agile and can’t adapt to changing circumstances or environments.
6. It would satisfy the intellectual needs of the owner. Boredom is the scourge of many business owners. There is nothing better than being fascinated by what you do.
7. It wouldn’t be capital intensive. It wouldn’t require large capital investment in equipment, R&D or product development. Funding is not going to be easy to find in the next few years.
8. It would be relatively easy to get paid. A perfect business shouldn’t have to wait too long to get paid or use complex credit terms. Cash has always been King but this applies now more than ever.
9. It wouldn’t be reliant on large numbers of people to operate it. The fewer people the better. Less headaches, less management time, less cost.
10. It wouldn’t be limited by the personal input of the owner (time and attention). A business that can operate and grow without you at the helm 24/7.
11. It would be – truly – scaleable. It can serve 10,000 customers as easily as it can serve 1. Scalability is not the same as growth.
12. It wouldn’t be heavily regulated. It would be largely free of government restrictions, laws or regulations. This is not as straightforward as it was 6 months ago!
How does your agency perform?
So there you have it, the 12 ingredients of a perfect business. Does your agency business perform against all 12 criteria?
Congratulations if it comes anywhere close. The reality is even the best businesses will struggle to tick all those boxes.
When I did this exercise, what surprised me wasn’t that I couldn’t think of a business idea that met all those lofty expectations. What surprised me was that I felt that if I ran an agency business at the moment, I would actually be quite pleased at how well it stacked up.
Whilst clearly most agencies are reliant on people and their owners, the agency model has its benefits. Low overheads, low regulation and flexibility of location are all strengths of an agency. They don’t need high capital investment, there are low barriers to entry and they can sell to anybody – even global markets – with relative ease.
What stood out for me most though was the importance of the intellectual challenge. Owning any business is certainly not dull at the moment. What I think matters most in running an agency business is that you love the work. If you’re fascinated by what you do, or could be again, it’s one of the most important and satisfying factors of running any business.
So what is my message to those people who are thinking looking outside of the agency business for their future? It’s very simple. Please make sure you’re not being tempted by green grass syndrome and that your agency mojo has completely gone before making a big decision. These are tough times for everybody, but agency businesses are very flexible. If you4 agency doesn’t quite meet every criteria above, which ones could you work on? Could you develop your own IP? Sell to different markets? Structure the agency so that it could at least run with not quite as much of your input in the future?
Whatever you do or decide….enjoy the journey.
AGENCY HEALTH CHECK
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