Is your marketing agency taking advantage of every possible tax break? Did you know you could get up to $250K in tax credits? A lot of agencies are actually leaving money on the table in the form of an R&D tax credit. So, let's dive in, and break down some actionable steps that any agency can take to cash in.

In this episode, we'll cover:

• Tax credits vs. tax write-offs.
• #1 tax credit agencies can take advantage of.
• 4 steps to claim the R&D tax credit.
• When to claim the credit and when not to.

Today, I talked with Jim Morrow from AATDM where he does tax consulting and CFO reporting for digital media companies. I actually met Jim after a conference; he gave me a ride to the airport. After figuring out he was an accountant, we talked shop for the entire trip and I just knew I had to get him on the podcast. Tax credits are one of those things that too many agencies just aren't taking advantage of, which is just like throwing money away. Jim is here to tell us how you can take full advantage of tax credits that you're due.

Today, we're going to get hyper-actionable, and show you how you can save your agency some money!

Tax Credits vs. Tax Write-Offs

Agencies need to be paying more attention to available credits. Credits have some significant benefits over write-offs. Here's the difference.

Tax credits are dollar-for-dollar reductions off your tax. Which means credits are basically free cash! If you have a $10k credit, you get $10k off of your paid taxes.

Write-offs — or deductions — lower your taxable income. So, let's say you made $150K, but you had a $50K expense. That $50K will lower your taxable income, but not lower your actual taxes.

Make sure that you look for those tax credits!

#1 Tax Credit Agencies Can Take Advantage Of

Jim talked about a tax credit nearly every marketing agency can take advantage of — the R&D tax credit. The R&D tax credit — officially known as the Credit for Increasing Research Activities — can refund your agency as much as $250,000 a year! That's money-in-the-bank!

The R&D tax credit is federal (though some states let you "double dip") so it's folded into your federal tax return.

To qualify for the R&D credit, your agency has to be "experimenting" with technology with a qualified purpose. Basically, anytime your agency is devoting man hours to either:

1. Building your own technologies (CRM, databases, marketing automation, etc.)
2. Customizing out-of-the-box technologies to capture unique analytics.

So, all of that hard work your agency has put into customizing your Infusionsoft or HubSpot software would count towards the credit.

The credit is also great for those of you in tech-heavy niches — like VR or AI. But, let's be honest. Almost every agency is going to devote some man hours to, at the very least, customizing out-of-the-box software.

Here's how it works.

Let's say you spent 7,500 combined manhours customizing your CRM (not unheard of,) you would get 10% of that 7,500 hours back as a credit. So, if your employees get paid $35/hr, you would be looking at around $262,000 total. That means your credit would be $26,200. Not bad! That's a pretty significant tax credit which you could be missing out on.

4 Steps to Claim This Tax Credit

Since the R&D tax credit will reimburse you 10% of your R&D cost, and the majority (if not all) of those costs are going to be attributable to manpower, the main two documentations that you need will be timesheets and payroll.

Here are some steps Jim provided which will help you take advantage of the R&D credit.

1. Find an accountant who understands R&D tax credits. Sure, you could use your regular CPA, but why wouldn't you want someone that specializes in tax credits to handle it for you? Same reason niches work in marketing — if someone specializes in a few things, you know they do those few things well.
2. Figure out your associated costs. Your accountant will probably do this for you. Most of the time, these costs are going to be manpower-related.
3. Have your tax specialist fill out Form 6765.
4. Claim previous years. This tax is retroactive so you can claim the last 3 years at the same time if you haven't done it before.

Most of the steps will be handled by your tax specialist (if you hire one) so you shouldn't have to put much legwork in. The only problem you could run into is payroll and timesheet related. If you don't keep timesheets or super-accurate payrolls, it may not be worth it to apply for this tax credit.

It's a large tax credit, so the IRS will probably be looking into it. If there isn't something concrete to back up your claim, you'll probably get denied and throw up a red flag. (Here's more on how to avoid an audit!)

When to Claim the Credit and When Not To

Let's go over the caveats. When should you try to claim the R&D tax credit and when should you not? Jim went over some of the "magic" numbers with us.

You should try to claim the tax credit if all of the following are true.

1. You have around $200,000 in R&D related expenses, or you spend money on R&D every year.
2. You have timesheets or expense reports that show definitive spending.

You probably shouldn't try to claim the tax credit if any of the following are true.

• Your total R&D expenses are under $100,000 (unless you have 2 or 3 years to proactively claim).
• You don't have hyper-accurate timesheets or payroll.

Since you're going to have to pay your accountant, gather some timesheets, and spend a little time on the credit, you'll probably just break even if you're trying to go after anything under $15k. That is, of course, unless you're proactively claiming it for a few years or you are planning on having R&D expenses each year.

Related:  What is a Healthy Profit Margin for a Digital Agency?

Ready to Grow Your Agency, but Not Ready to Hire?

Hiring freelancers can be frustrating. You post your job, wade through hundreds of proposals, and hire a few before you find the right fit. You want to scale your agency by outsourcing, but wonder if this dreadful process is worth it. That's where Freeeup is different. Instead of wading through freelancers yourself, FreeeUp does all that for you.

They have a network of the top 1% of freelancers, so everyone you hire is top notch. Depending on what you need, FreeeUp connects you with a freelancer who can make it happen. And just for Smart Agency Master Class listeners, create a Freeeup account and enter code "JSwenk50" for $50 off.

Does your agency struggle with an outbound sales strategy? Do you even have an outbound strategy? You can build a scalable outbound strategy using LinkedIn by making connections and delivering those prospects critical content. If your LinkedIn profile isn't getting you the results that you need, or if you're looking for a way to boost your sales, check this out. You don't need a big budget to grow your agency using outbound marketing. With a solid plan, an ideal client in mind, and a little finesse, you can use LinkedIn to dominate outbound!

In today's episode, we'll cover:

• Does your agency really need a LinkedIn outbound strategy?
• #1 biggest mistake you're making on LinkedIn.
• How to create a LinkedIn job story.
• Why getting rid of connections will land more new business.
• Bonus: Joey's super-secret growth hack!

Today I chatted with Joey Gilkey founder of Tribe Prospecting; his agency which provides done-for-you prospecting and marketing solutions. Joey comes with a solid sales background that eventually turned into a love for marketing. He leveraged that into a position as a growth hacker and growth strategist with a HubSpot agency. Today, he's crushing it over at Tribe Prospecting, and he's here to share some tips on how to dominate outbound using LinkedIn.

It's always refreshing to hear from someone who loves outbound marketing because I think that too many people gloss over it when it comes to generating leads.

Let's dive right in... and make sure you follow us to the end for a great LinkedIn hack from Joey that will help your agency immediately start reaching out to clients in an impactful way without breaking the bank.

Does Your Agency Really Need a LinkedIn Outbound Strategy?

There are way too many agencies that have absolutely no outbound sales strategy. We all like to pour over the inbound marketing blogs then run out there and smash ads on whatever is this year's biggest trending inbound strategy is (I think you're supposed to be throwing money at micro-influencers this year?), but when it comes to having a dependable outbound strategy, most of us fall short.

The problem with outbound marketing is lead generation. You spend tons of money trying to get customers to your landing page so that they can start slowly worming their way down your funnel.

Now, imagine that there was a platform that was saturated with potential clients, lots of those potential clients were decision makers for their company, and those clients were already sharing content and looking for solutions. Ok great! Now, imagine it's totally free!

Here's why you should be hyper-involved with LinkedIn outbound marketing.

• It doesn't have cruise control. You control the speed of your outbound marketing campaign. Unlike referrals or ads, you are completely in control of the growth and scalability of cold emails, calls, etc.
• It's predictable and dependable. Sure, there are definitely nuances that come with outbound marketing, but, as a whole, outbound is much more predictable than inbound. Want to connect with only dental assistants and deliver content directly to them? Great! LinkedIn lets you do that. Do you need to meet an aggressive sales quota? Great! Outbounding marketing enables you to be as aggressive or passive as you need to be.
• It's free! Seriously, LinkedIn is one of the best platforms for growth-stage companies on a budget. You don't have to pour money into the ad or lead machine to get results.

#1 Biggest Mistake You're Probably Making on LinkedIn

Stop using LinkedIn as a bragging platform!

Utilize LinkedIn as a lead generation tool or a landing page. Don't just talk about how amazing you or your agency is --- talk about the customer's needs. Give them a reason to want to stay and learn more.

Joey tells us to use a specific framework when you build out your profile:

1. Use your headline to call your customers out. Don't just talk about how you're the greatest thing since sliced bread, talk about what you can offer your customers. Don't say "I'm the world's greatest inbound marketer, and I own a multi-million dollar marketing agency." say "I help CMO's around the world generate leads effortlessly using omnichannel marketing dominance!" Who are they? CMOs. What do I do to help them? Using omnichannel marketing dominance. What will they get? Leads.
2.  Your summary should have empathy and authority. When it comes to your summary, use empathy and authority to drive the point home. Empathize with their issue and tell them how you will solve it. Now, I always say to keep the authority light. Writing with authority is like using salt in food. Too much of it makes the whole thing taste horrible, but a little adds some depth of flavor.
3. Lead up to a failure or fear of not working with you. After your CTA in your summary, lead the customer to a failure. "I help you create a growth-driven marketing strategy that literally shoves leads into your funnel and forces them down, so you don't go out of business!" No one wants to lose their job.
4. Don't be afraid to add a prospect qualifier. If you are only looking for certain budgets or firm sizes, add a qualifying statement. Let them know that your agency is not going to waste your time with low-budget firms looking for growth-hacks if you're an inbound marketing agency working with multi-million dollar companies.

How to Create a LinkedIn Job Story

We all know that you have to identify and understand your ideal client - those are the ones right in your agency's sweet spot. But, Joey talked about his pro-tip for helping you really focus in and get super specific. This trick will help your agency zero in on their pain points and motivations.

A job story is one sentence about your ideal customer that breaks down into 3 parts.

The formula is:  When ____ + I Want _____ + So I Can _____

• When: Why your customer would be looking for your product/service. ("When I am deciding on which sales software will help my startup the most...")
• I Want: Why your customer would buy your product/service. ("I want a sales software that connects my sales team to potential customers the second that they fill out that landing page contact info.")
• So I Can: What your customer's expected outcome of using your product/service is. ("So I can crush my sales quota this year!")

The full example of this job story would be:

When I am deciding on which sales software will help my startup most, I want a one that connects my sales team to potential customers the second they opt-in so I can crush my sales quota this year!

Why Getting Rid of Connections Will Land More Business

LinkedIn connections are a vanity metric. If you have 5 thousand connections but only 10% of them fit snugly into your ideal client's persona, start deleting. LinkedIn's algorithm likes to push your content out to a small sampling of your connections and see if it engages them. If half of your connections are doctors, but you want to target veterinarians, your white paper on neutering probably isn't going to generate a bunch of clicks. (Remember to use that job story!)

You want to make sure that you have a hyper-targeted connection list — one that you can push those sweet eBooks that you wrote onto. If you find connections that aren't relevant after you've pivoted your ideal client's persona, be merciless.

If you have quality connections, connecting to them is much easier. You can send them a message, share their content, give them content without bothering them for their email address because you already know that they are a perfect fit for you.

Having quality connections makes nurturing those connections a breeze.

Pro Tip: Joey's Super Secret Growth Hack!

Being the super cool guy that he is, Joey shared a little trick his agency uses to generate leads. This method takes advantage of LinkedIn, Facebook, and cold emails do you can triple down on outbound efforts.

Here's the rundown.

1. Go to LinkedIn and click settings. You should be able to download all of your LinkedIn data. You will get the email addresses of all of your first-level contacts.
2. Create a spreadsheet using that data with your contacts emails.
3. Find someone (or do it yourself) to go through the list and pull out all of your ideal customers. This will be easy if you have quality connections.
4. Go out and find a personal detail about everyone on that list. Do they love golfing? Do they know your cousin? Great! Use it.
5. Drop those emails into a sales email automation platform (whichever one you like,) and then create a magic field (custom field) so you can put a sentence or two in each one that's super relevant and personal to that particular individual.
6. Send out the emails.
7. Here's where it gets juicy. Drop those same emails addresses into Facebook and spend a few bucks a day targeting ads to those people.
8. BOOM! You're connected to them on LinkedIn, you've sent them some personal cold emails, and you're in their face when they're on Facebook.

Want more on LinkedIn lead gen strategies? Check out these posts/podcasts:

3 Steps for Using LinkedIn to Turn Connections Into Clients

5 Steps to Generating New Agency Business On LinkedIn

Ready to Grow Your Agency, but Not Ready to Hire?

Hiring freelancers can be frustrating. You post your job, wade through hundreds of proposals, and hire a few before you find the right fit. You want to scale your agency by outsourcing, but wonder if this dreadful process is worth it. That's where Freeeup is different. Instead of wading through freelancers yourself, FreeeUp does all that for you.

They have a network of the top 1% of freelancers, so everyone you hire is top notch. Depending on what you need, FreeeUp connects you with a freelancer who can make it happen. And just for Smart Agency Master Class listeners, create a Freeeup account and enter code "JSwenk50" for $50 off.

Do you want to find a niche that you can carve out? Do you want to dominate a specific gap in the marketplace? This week we talked to one agency that picked a niche and is dominating their market. They have hyper-specific goals, achievements, and clients, and that exclusivity is propelling them forward as aggressors in their market space.

Today, we'll cover:

• 4 benefits of operating within a niche.
• Overcoming the obstacles of niching down.
• How to dominate your competition.
• The #1 pain-point of operating within a niche.

Today I chatted with Adam Draper CEO/Owner of Gladiator Law Marketing. Adam's digital agency operates deep within the law firm niche, and, recently, he's been crushing it. His agency is rapidly growing, focused on small to medium sized law firms. He's here to share some of his keys to success, specifically how his niche is propelling his agency forward.

4 Benefits of Operating Within a Niche

Why would an agency want to specialize? Doesn't working in a niche limit you from reaching clients outside of your niche? Doesn't specifying a niche mean losing out on potential clients outside the niche?

First, it's crucial that we all understand that finding a niche isn't only beneficial, it's critical in the current agency atmosphere. Being able to dominate a specific industry is more feasible than dominating the entire agency atmosphere; it just is.

Let's go over four critical benefits of operating in a space where you can specialize your services.

1. You have a roadmap. If you start providing a service that's specialized to service everyone, you can lose track of what you're doing and where you're going. You have to find a way to position your service to clients without giving them a good example of why your service is more beneficial than your competitors. Finding a niche allows you to target specific pain-points and polish your service.
2. You can predict outside influences. Being in a niche allows you to predict and adapt to outside impacts. You can position yourself more clearly because you're a master-of-one, not a master-of-none.
3. You have killer growth potential. Because you can create a more actionable to-do list and you understand the exact nature of your services, operating in a niche can help you grow your businesses faster with higher ROI.
4. You know your competition. When you wedge yourself into a specific gap in the market, you can really start to study your competition. You can understand precisely what services your competitors offer, and convince clients why your service are unique and have a higher value.

Overcoming the Obstacles of Niching Down

Adam and I talked a bit about overcoming those initial obstacles. I see far too many people get caught up in that one bad client. It's sad, and one ruthless client shouldn't ever defeat your self-worth. Here are some tips for overcoming those initial obstacles that are holding you and your overall growth back.

1. Make sure that your client is a good fit. If you're too focused on the financial aspect of your business, you might be taking on all comers. Don't do that. If you feel like your client won't benefit from your services, don't take them on. It will end up biting you in the end (confidence, churn rate, etc.)
2. Find out where your bad prospects are coming from. Pinpoint the avenues that are drawing in bad clients, and try to reduce negative experiences (even if that means an initial profit hit.)
3. Learn your industry inside and out. Adam talks a bit about the obstacles that are generated due to him being so focused on one specific area of business. He says that you need to really learn the business you're in and plan accordingly. If there are any potential threats to your business (even if they seem far-fetched) create a contingency plan.
4. Be on the lookout for new technologies. Keep your eye out, there could be upcoming technologies that will impact your area of expertise. Learn them before your competitors do.

How to Dominate Your Competition

When you're starting out in a niche, competition is heavy. Here are some tips on how to dominate your competition.

1. Stay focused on your clients. You know that iconic photo of South African swimmer Chad le Clos watching his Olympic competitor, Michael Phelps? During the whole race, his eyes were so focused on Phelps that he was looking at him even while swimming. Of course, Phelps won. That's because Phelps was more focused on the prize than on his competitors.
2. Think 2 years ahead. Since you can heavily focus on one specific area when you operate in a niche, start to think years ahead. Don't get caught up in the now and forget to plan dominance in the future.
3. Turn down work. Remember, make sure your client is a good fit. Let your competitors get greedy and take on the bad clients. Not all clients are good clients. And when you spin your wheels working with the wrong ones, you're turning down some of the right ones.

The #1 Pain Point of Operating in a Niche

The main pain-point of working within a niche is that you're at the mercy of your niche. Whatever industry it is, is now completely in control of you and your business. If laws change, it impacts you. If the industry slows down, it impacts you. Make the niche your victim - not fall victim to it.

Related:

3 Big Benefits of Declaring Your Agency's Niche Market

Why Your Agency Needs to Start With One Niche at a Time

Looking for a Payroll and HR Solution for your Agency?

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The creative landscape is changing. Is your agency keeping up? Are your creative people struggling to stay fresh? It's easy to become overwhelmed with change and uncertainty. Learning new trends and technologies can be challenging. However, there are massive opportunities available in our day and age. It's good to be a creative right now, and there's no excuse not to create!

In this episode, we'll cover:

• Why it's never been a better time to be a creative.
• Why you're out of excuses not to create.

Today I chatted with Sean Womack, founder, and CEO of Smack, a media agency, and author of the novel, The Six Sides of the Black Box. That's right, Sean wrote a fiction novel (not a business book!) which provides a glimpse into agency life and illustrates 6 lessons learned. Sean's interesting and extensive background a creative in the agency space speaks for itself. On today's show, Sean shares his interesting backstory and the excitement of being an agency creative in today's landscape. He also touches on the evolution of being a post-40-year-old creative person as well as give us some fresh insight on being creative in our crowded agency world.

With the ever-changing technology and fast-paced nature of our industry, it's refreshing to hear from someone who has navigated successfully and reminds us why it's an exciting time, no matter your age.

It's Never Been a Better Time to Be A Creative

Are you a Gen-X-er?

If so, then you remember the "Don Draper way" of pitching creative ideas to the client. As a Creative Director, you show up to a meeting and tell a compelling story to get a client to buy the idea. Not so much anymore...

Today's philosophy is to create as many ideas as possible. Then those ideas go into a system to be analyzed and tested in the marketplace and see which one(s) will fly.

That change has been radical and it's impacted the entire industry. Change can be difficult and scary but we have to remember all the positives that today's technology brings.

If you are (or if your agency has) an awesome creative who love creating stuff but feel guilty about not really knowing which idea will work...then this is the best time ever to be a creative! Not only do we get to generate as many ideas as possible, but we also get to put them into a system to be tested. That system is able to tell us which idea worked and with whom.

It's pretty ideal - the system always needs new creation in order to test and improve. So keep creating!

Why You're Out of Excuses Not to Create

1. There's plenty of material.

Today, creatives get to work directly with a ton of different people, from engineers and business people to artists and storytellers. Everyone comes together and mixes it all up to create an interesting and rich creative environment.

2. There's plenty of resources.

Let's not forget all the different mediums and platforms right at our fingertips. In recent times, a creative's job has expanded. You might be thinking of writing a book and you know that actually writing the book is just step #1 of like 20. But the amount of tools at our fingertips makes our expanding jobs easier... that's to technology and social media we can reach the masses at lightning speed.

No excuses... Now is an exciting time to be a creative!

Looking for a Payroll and HR Solution for your Agency?

Payroll and benefits are hard. Especially when you’re a small business. Gusto is making payroll, benefits, and HR easy for small businesses. You no longer have to be a big company to get great technology, great benefits, and great service to take care of your team.

For a limited time, Gusto is offering a deal to Smart Agency Master Class listeners. Check out Gusto.com/agency for 3-months FREE once you run your first payroll with them.