5 Solutions for Your Biggest Agency Headaches
Panic.
For ad agency owners, panic comes with the territory. Whether you’re worried about meeting payroll or losing your biggest client, you face substantial challenges every day.
What are your biggest headaches?
If you’re like most small agency owners, you’re familiar with these five stressors:
1. Cash Flow
2. Meeting Payroll
3. Gorilla Clients
4. Billable Hours
5. Working in the Business. Not on the Business.
There is good news.
First, you’re not alone.
Second, while many factors could be causing these issues, following are five tactics you can start implementing today to begin sleeping better at night.
1. Cash Flow
Late payments from clients can instantly disrupt your cash flow – and cause untold stress. If cash becomes particularly tight, you may be faced with unpleasant decisions:
Do you delay paying vendors?
Do you not pay yourself?
Do you tap into a line of credit?
Simple Tactic: Tiered Pricing
When clients ask for an estimate, most agencies do just that. They give them one price for a certain scope. More often than not, clients push back on the price.
To stop the pushback, give your clients three options for every project – and start with the middle option. This should be the option you want to sell. And the option that’s best for the client.
Why develop this option first? It’s the one your clients are most likely to choose. All of us are predisposed to pick the middle option, an instinct known as the Center-Stage Effect.
After pricing the middle option, move onto your low-cost option. Rather than simply reducing price, reduce the deliverables to create a barebones option. You’ll price this option about 20-25% below the middle option.
Finally, build the high-cost option. For this level, you’ll add more deliverables. All tactics the client could use, but more than they asked for. Price this one about 30-35% higher than the middle option.
Clients will typically choose the second option. Best of all, the haggling over price ends and the client won’t have a problem paying the price because they feel like they have better control over their budgets.
2. Meeting Payroll
When payday is approaching and cash is low, what options do you have? Not taking your paycheck? Getting a line of credit? Asking employees to wait for their checks?
Like most agency challenges, plenty of solutions exist. Here’s one
Simple Tactic: Flat-rate revisions
As an agency owner, you’ve invariably encountered situations where an AE says to himself or herself:
“The client wants to make a minor change. Why waste time and annoy the client by telling them they have to pay for this revision? I’ll just have the creative team make the change.”
The AE has the best interest of the client in mind. But allowing scope creep can quickly hurt your company’s profitability, especially if it happens project after project.
To eliminate scope creep (and the financial damage it causes), add a line to all SOW documents that describes a flat fee for changes beyond the number of changes allowed. For example:
“Estimate includes three revisions to copy and design. Any revisions after the third revision will cost a flat fee of $350.”
Flat-rate revisions not only stop the creep, they also:
Help AEs avoid awkward conversations with the client
Eliminate clients feeling nickel-and-dimed
Make sure you get paid for all the work your agency does
3. Eggs in One Basket
After losing its main client, the Michael & Elliott Co., a boutique Philadelphia agency, had to close its doors. Happily, this was a fictional agency on TV’s thirtysomething. Unfortunately, many small agencies today could encounter the same fate if they rely on one main client for the majority of their income.
What do you do if you’re in the same boat?
Simple Tactic: Riches in Niches
The best way to attract more clients to your agency – and stand out from the competition – is to define your niche and become an expert in your category. Your niche can be a certain vertical or a type of service (or, even better, a type of service for a certain vertical).
Defining your niche is simple. But it’s not easy.
The best way to start is by becoming specialists in your biggest client’s industry. For example, if your biggest client is in pharma, become a pharma agency.
But don’t stop there.
Niche down even further: Not pharma, but pharma for women over 65.
All of a sudden, your agency is no longer competing with every other creative shop. Instead, you’re the go-to agency for any client in this industry.
Best of all, you can start charging a premium for your services. It’s why brain surgeons charge more than general practitioners.
As an added bonus, having a specialty also makes your marketing easier and more focused because you’re directing it towards one industry only.
4. Billable Hours
The hard truth of agency life is that anytime an employee is on his or her phone, at the doctor or taking PTO, you’re not getting paid.
In the agency world, time is our currency.
While you can’t avoid employees taking time off, you can make sure their time spent at work is more efficient.
Simple Tactic: Use Timesheets as Data
Agencies make money when jobs come in on time and on budget. In fact, 95% of your jobs should be in this category.
By reviewing time sheets, you’ll be able to see the two main areas where problems are occurring:
Too many revisions
Underestimating for scope of project
Armed with this data, you’ll know what steps to take to resolve the issues. If you’re seeing a pattern of too many revisions, you can institute the flat-rate revisions outlined above. If jobs are coming in over budget, even when they’re not exceeding the rounds of revisions, you’ll know that your estimates are too low. In this case, you can start using tiered pricing.
Of course, the only way to gather this data is to have every employee fill out their timesheets accurately and consistently. To inspire them, offer an incentive – not for the act of filling out their timesheets – but by increasing the percentage of jobs coming in on time and on budget
5. Working in the Business. Not on the Business
Agency owners are the poster children for the “cobbler’s children have no shoes.” Owners of small shops, especially, fall into the “I’m too busy” to work on new business trap.
As a result, new clients generally come in by referrals as opposed to being generated from a developed – and executed – new business plan. Unfortunately, growing your business won’t happen without planning.
Simple Tactic: Stop Coming to Work
You know the drill, once you step foot in the office you become the fireman putting out the blazes. Handling these day-to-day issues saps your time and energy from focusing on agency growth.
As an owner, at least half of your time should be spent on new biz efforts, including:
Pitching
Calling prospects
Checking LinkedIn connections
Developing a marketing plan for the agency (aka, everything we preach to our clients)
Additionally, you should focus on current clients. Spend part of a day in a client’s environment, observing what they deal with every day. This will give you the opportunity to understand firsthand what solutions you can offer that will be relevant for them.
By taking yourself out of the day-to-day, at least a few times a week, you’ll see a dramatic shift in how much you can actually accomplish to move your agency forward.
Commit to One Tactic
Consuming content and learning new ideas is great. But, without action, it’s useless knowledge.
Commit to trying one of these tactics today.
And start enjoying the results tomorrow.
One more way to reduce your stress: Stop paying overpriced in-house writers or flaky freelancers and start working with the elite copywriters at Copy Rocket .