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Would you like to 4X your digital agency in less than 3 years? Joe Shelerud is the co-founder of the Amazon advertising agency Ad Advance. Joe was on the podcast two years ago talking about using automation to retain agency clients. Since then, he and his partner have managed to 4X their agency and have really seen the results of the processes they were just starting to implement two years back. In this new interview, Joe talks about growing the team, the agency's first key hires, the processes they implemented to train new team members, and much more.

3 Golden Nuggets

  1. First key hires before scaling. It has been two years since we last spoke with Joe and he has managed to 4X his agency in that time. According to him, one of the key things that he was focusing on back then was building out the automation, the systems, and the structure for his agency. He and his partner were still managing all accounts and the first step for them was to look for ways to reduce the amount of time they spent on daily tasks. Because of this, some of their first hires were developers to make sure they were building those systems and that structure.
  2. Hiring for culture first. When it came time to start building the team and start growing, Joe decided that the priority would be hiring people that were a right fit for the team. “Experience is great,” he assures “but at the end of the day, if you get that one wrong fit within your agency or your group, they can take down the entire group.” This is why the agency has mainly focused on 1. People who meet the culture bar, where experience is an extra piece of the puzzle, and 2. Hiring locally, which has worked better for their team.
  3. Establishing a training process. As they started hiring new team members, it was time to put together processes that would help them get up to speed efficiently. They started analyzing what day did every day in terms of client interactions, picking apart different pieces of tasks that we knew that they could no longer support in the long term. As they were able to do that, each of these little pieces became documents or little training videos, and eventually will be an entire training course.

Sponsors and Resources

E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design and development agency that has provided white label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service.

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4X Your Digital Agency in  <3 Years & Build a Great Team By Hiring For Culture First

{These transcripts have been auto-generated. While largely accurate, they may contain some errors.}

Jason: [00:00:00] What's up, everybody? Jason Swenk here and I have another amazing episode for you. We're going to bring on a past guest from two years ago, who 4X their agency. So we're going to talk about how they've 4X their agency, grown, outgrown, many offices and lots of cool things. So you can grow faster in your agency.

So let's go ahead and get into the episode.

Hey, Joe. Welcome back to the show.

Joe: [00:00:31] Yeah. Thanks for having me on again, Jason.

Jason: [00:00:33] Yeah, man. I'm, I'm excited. So for the people that have not listened to the first show and we'll link that in the show notes if you go to jasonswenk.com, but, um, go ahead and tell us who you are and what do you do?

Joe: [00:00:44] Yeah. So for those who don't know me, I'm Joe Shelerud. I'm located up in Duluth, Minnesota. So we're up, but kind of on the tip of Lake Superior on the Western edge. You can take i35 up to where it ends and that's where we're based out of. I got my start in e-commerce actually selling on Amazon. I've got a chemical engineering background. And so I was selling these organic chemistry molecular model kits, and they're used for organic chemistry courses when you go through something like chemical engineering.

And as I was going through that journey of building out my seller business, um, started really focusing on the advertising side. And as I was reaching out to different agencies to try to manage my own what I found is that the tools that I had built up in the strategies I put in place was actually a lot more complex than what I was seeing these other agencies that they were offering.

So at that point I got this idea that, you know, maybe, maybe I could help out other sellers. So that was about five years ago. I combined up with, uh, Matt Wicklund who's our co-founder at Ad Advance. And since that point we've been really focusing on first on Amazon advertising, but now really branching out into all forms of e-commerce advertising.

So, yeah, now we've had a lot of growth in happy to talk to you about it today.

Jason: [00:01:58] Awesome. And yeah, I mean, well, I mean, the big thing that I want to know more about is, you know, it's been two years since you've been on the show, so, and you were like, we've 4X our agency since then. So what were some of the reasons, what are some of the systems or what are some of the things that you've done that you can contribute to that?

Joe: [00:02:17] Yeah. Yeah. So it was really fun listening back cause it was about two years ago exactly that we recorded our last episode. And when we were doing that, one of the key things that I was focusing on is just building out the automation or the backend, the systems and the structure for your agency. So in the first three years that we had built up Ad Advance, Matt and I were managing pretty much all of our accounts.

And over that period, we were really focused on, all right, we're in their day-to-day, how do we make our lives easier? And how do we make sure that we're getting that massive value that we can get to our clients while also reducing the amount of time that it manually takes to do all these pieces?

And so since we were doing it day-to-day, it was a great driver to really develop those systems in that structure. So before we even started scaling the agency, some of our first key hires were actually developers, versus account execs. And so we spent a lot of time developing the technology that goes into the backend to automate the pieces that should be automated, all those pieces that are just manual tinkering so then we could really focus on the core things that we do well as an agency.

And that's really working with our clients, setting the right goals, building the relationships. So that initial first three years, kind of going up to when we recorded our podcast, it was really focused on the process and getting that all in place.

Since then, now we've been on this big scale phase where we've been able to leverage that technology, um, and really grow it our agency.

Jason: [00:03:53] And so the team has probably grown in the past two years as well?

Joe: [00:03:58] Yep. So two years ago it was Matt and I, and we had just hired Eric. Eric was our first local hire. Since then, now the office in Duluth, every new hire has been local and we now have 14 people in the office here. We've gone through three different offices since two years ago because we keep outgrowing them. And so it's been really fun to watch and see this team expand, but implementing the same practices that we built up from day one.

And really delivering that performance that Matt and I personally could do, but being able to transition it to this big team, um, and really seen that succeed overall.

Jason: [00:04:36] What was the stages of the different roles that you were hiring that you brought in since the, you know, it was the three of you now it's the 14 of you?

Joe: [00:04:46] Sure. As we were scaling up, um, the, the core people that we were hiring were our accounting execs, um, to work directly with our clients and kind of overtake that role that Matt and I were initially doing from the start, which is working directly with our clients as we go.

And so one of the key pieces that we took into account is hiring for culture first over experience, and it's really worked out well for us overall. So any interview that we had do, like experience was great, and we do have a lot of people with previous digital advertising experience, which is awesome, and they can bring unique perspectives to the table. But at the end of the day, if you get that one wrong fit within your agency or your group, they can take down the entire group.

So we've really focused, first, you have to meet the culture bar to get into Ad Advance. And at that point the experience is just some extra pieces that go along with it. And the other piece that we probably gone against the grain for, especially over the last year, is we are just hiring locally. So we work all in the office and we've had to transition back and forth with COVID as we can.

But what we've seen is when we're all in the office, you get all this collaboration that is so hard to drive when you're working remotely. And you see this support in just this organic group coming together that again, it's really hard to drive when you all work in remotely. And we had some awesome case studies for this too, because we had to go remotely for a couple of months and we had to onboard some people remotely.

This is a lot harder than being able to just look over to the person next to you and yeah, just talk through things. Or we're in kind of an open area in our latest office, you can overhear some conversations and so when somebody else is talking to a client and they say something awesome it's like, oh man, like, yeah, that is a great strategy or I love that approach that you took.

So it's really that culture-first approach that we've found has worked really well for building out our, our agency. And then also going locally, it's worked great for us in that collaboration that you get. It just seems. It seems to have so much of an impact for us.

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Yeah, I love that you started hiring first to replace client interaction that you and your partner had, because now you can concentrate more on your business and building that, versus building other people's businesses. And that's usually kind of a trap that a lot of people get into.

So how’d get the account managers up to speed? You know, what was like kind of the training regimen or were you hiring people that have the skills? You know, after the culture obviously fit, you know, tell us a little bit more about that.

Joe: [00:08:43] Yeah. So we have some people like our initial local hire. He had a lot of digital advertising experience. So getting him up to speed was pretty easy from a technical standpoint.

But overall, what we started to do is each day analyzing what we're doing for client interactions, and then trying to document that or trying to transition that over. And it was just picking apart, different pieces each day that we were doing that we knew that long-term, we could no longer support.

And as we were able to do that, each of these little pieces became documents or little training videos, items like that.

We had a recent hire and he's got an education background and so he came in and he was super fired up to put all these things together into a nice learning management system. And so now we have this structure training program, so everybody can go through their Ad Advanced university training and get certified, gone through all the different steps that we have.

And again, each piece how do I leverage what I'm currently doing and can expand that to many, many people as this agency keeps growing? It's really interesting that the first person that we heard locally, how much time Matt and I had to spend with them directly versus now when you have 14 people in there, you've got to find other ways to do it.

So it's a constant challenge, but it's constantly, it's a fun little adventure to figure out how you can transition each of these little learnings or pieces of information to the team as we keep growing.

Jason: [00:10:14] I love it. And I love that you mentioned kind of a learning management system and a trainer, obviously. When we were building our sales team, we had a sales trainer. That's how you do it. A lot of people think, oh, I'll just bring some skilled people in, and then you're wondering why everybody's doing things all differently. And even if you do have SOPs for them to follow, they're just literally going to be like, oh my gosh, like, how do I, how do I scale this digital agency? And then they start thinking bad thoughts.

Joe: [00:10:46] Yeah. And that's what we've seen too. As we've implemented the learning management system. It's great for the nuts and bolts on what you need to do, but there's gotta be that support that goes along with it. And so another piece that we established is everybody who comes in as they're new with the team, they have an established mentor and they sit next to that mentor for the first two to three months.

We did this weird thing where we'd love to, we switched desks every month to just to build relationships with different people. We just randomly draw for desks in the office. But they stay with their mentor each month for that first two to three months and make sure that they're getting the support as they go, because you can read all these SOPs or these documents or watch videos, but putting them into practice and then dealing with different circumstances that aren't specifically covered.

These are all the pieces that, you know, that's why we value just being in person so much too, is you just get that interaction and having that established mentor, it’s just somebody that they know that they can go to, to, to build up the skills.

Jason: [00:11:46] Yeah, I love it. Well, is there anything else that I didn't ask you that was, that contributed to, you know, 4Xing your digital agency in the past two years?

Joe: [00:11:56] I think the last thing is, you know, we focused a lot on the tech and the process as we started scaling and that system has worked out really well. It's going to pull out, you know, typical reports or client dashboard where people can log in to pull the information they need, bidding optimization, stuff like that we can incorporate in.

But the other major piece when you're establishing it is always asking the question should this be automated? Should this go into the software? People hire people to make sure that they've got another member of their team. And so what we want to do is you want to be very, very clear on what should go into the process versus what should go into human intuition and experience.

And so we try to make sure that's very clear, the goal setting, the relationships, you know, all those key aspects and how advertising ties into the business as a whole. These are all the things that people are hiring us for. So I'd say probably my last word of advice is just making sure you've got a really clear line in the sand as you build out these processes.

Really what should be automated versus what comes down to us and why we're being hired to do the job.

Jason: [00:13:04] I love it. What's the website people go and check out the agency?

Joe: [00:13:08] Yeah. So you can go to adadvance.com. Feel free to follow me, Joe Shelerud on LinkedIn. Um, yeah, we've got a lot of good resources and information there.

Jason: [00:13:16] Awesome. Well, Joe, thanks so much for coming on the show and I'm thrilled with your growth with your digital agency over the past two years. Hopefully, I'll be back on in the next two years and you'll have even bigger growth. So make sure you go check that out. Now, if all of you listening, if you guys enjoyed this episode and you want to be around amazing agency owners on a consistent basis where we're constantly, you know, seeing the things that you might not be able to see and sharing the things that you actually need to do so you can have the rapid growth that Joe had.

I want you all to go to digitalagencyelite.com and fill in an application. And if we feel that you're right for the mastermind, we'll have a conversation and see if we can have some fun together.

So go do that now and until next time have a Swenk day.

Direct download: How_to_4X_Your_Digital_Agency_By_Establishing_the_Right_Processes.mp3
Category:general -- posted at: 7:00am EST

Are you looking for opportunities to make more connections? You could be just one conversation away from your next big client success that leads to scaling faster. Tom Schwab started his agency Interview Valet in 2014 with the theory that targeted interviews on established podcasts could be used much like guest blogging. This podcast guest strategy has grown into a business that provides the fastest way for authors, speakers, coaches, consultants, and brands to maximize the benefits of podcasting. In his interview with Jason, Tom expands on how to start conversations that lead to success in your business, how to get the contacts that will lead to those conversations, and why you should look for a true connection to get people interested.

3 Golden Nuggets

  1. Conversations that lead to success. The idea behind Tom’s podcast marketing service is that everything great in his life has come from a conversation. He believes that in your personal or professional life you owe your most important connections to that initial conversation, it could be a customer you really wanted to work with, a business partner, a great employee, your best friend or spouse. “It wasn't a funnel. It wasn't a, you know, social media strategy. It was conversations.” Because of this, he wants to emphasize the importance of human connection as something that can’t be replaced by automation.
  2. How to get more conversations. Remember that more is not better, better is better. Tom tried to keep in mind that you can never say enough of the wrong things to the right people or the right things to the wrong people. So you should always make sure that you’re talking to the right people in the first place. Are they interested? Make sure they're interested in having that conversation and then make sure it is a conversation by asking their thoughts on something, as opposed to just asking the same five questions and them just giving talking points.
  3. Look for a connection. How can you get the connections that will lead to the conversations you want to have? Try to figure out who you're going after and who's connected to them and see if they can connect you to them. You should look at putting together a targeted list and go over this with your sales team. But whatever you do, don’t just treat it like a spam list. Figure out what's the connection? What's that degree of connection? And then ask. Remember that people usually want to have their friends, their friends of friends and people they want to be their friends on their podcast. So figure out how to fit in one of those groups.

Sponsors and Resources

Verblio: Today's episode of the Smart Agency Masterclass is sponsored by Verblio. Check out Verblio.com/smartagency and get 50% off your first month of content creation. Our team loves using Verblio because of the ease in their process and their large pool of crowd-sourced writers.

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Being One Conversation Away from Scaling Your Agency Faster

{These transcripts have been auto-generated. While largely accurate, they may contain some errors.}

Jason: [00:00:00] What's up, agency owners? Jason Swenk here and I'm excited to have another amazing guest. And we're going to talk about how you can scale your agency faster through one conversation. You're one conversation away from scaling faster.

So let's go ahead and jump into the episode.

Hey, Tom. Welcome to the show.

Tom: [00:00:26] Hey, Jason. I am thrilled to be here.

Jason: [00:00:28] Yeah, I'm excited to have you on. So tell us who you are and what do you do? For the people that have not heard of you yet.

Tom: [00:00:34] I am Tom Schwab. I'm the founder of Interview Valet, a podcast interview marketing service. We help authors, coaches, speakers, brands, get their message out on targeted podcast interviews.

And I'm here in Kalamazoo, Michigan, which proves if you could do it from Kalamazoo, Michigan, you could do it from anywhere.

Jason: [00:00:54] Oh, that's awesome. Well, let's kind of jump into it. You talk about kind of you're one conversation away from really hitting it out of the park. So I guess elaborate a little bit more for us.

Tom: [00:01:05] Yeah, as I look at it, everything great in my life has come from a conversation. And that could be that big customer that you acquire. It could be that partnership that you have. It could be that great employee. Heck, take it personally, right? Your spouse. It was probably a one conversation that connected you with them.

It wasn't a funnel. It wasn't a, you know, social media strategy. It was conversations. And I think one of the things, while I'm a big proponent of automation, I think it can't replace human connection. And I think the bigger the sale, the bigger the relationship, the more trust is involved in it. We need to focus on conversation as opposed to just automation.

Jason: [00:01:48] Yeah. You know, I just got off a sales mastermind call. So for our mastermind, we have our own little mastermind just for their salespeople that they can call. And one of the members was talking about, well, hey, I'm taking this course on doing videos to sell better. You know, selling through video and I told them, I said, let's step back.

You shouldn't use video to sell someone off the first conversation. You should use it as, how can I get a conversation in order to just say, yeah, that sounds kind of interesting, let me chat a little bit more. So I totally agree with you about one conversation.

Tom: [00:02:30] And the whole idea of people can see the sales pitch coming. And I think they want to know who they're working with. You know, HubSpot years ago did a study and they found an about the founder page was highly indicative of a buying decision. And so, you know, the bigger, the decision, the more you want to know what this person is who their heart is. Why do they believe at this way?

And if you think about it, you know, from branding, you think of all the big brands today. If I say one, you know, you could probably say the person that goes along with that, and it doesn't come from a 10-second social media ad. It probably comes from you hearing a conversation with them over the years.

Jason: [00:03:11] Well, how can, you know, because that's a question I get a lot from our members and other agencies I chat with is, you know, how can I get more conversations?

Tom: [00:03:21] Well, I would say always remember more is not better, better is better. And then what is a conversation, right? So you want to have the conversation with the right people, a mutual friend, Shane Duffy, out there in Texas, I always remember something he told me. He's like you can never say enough of the wrong things to the right people or the right things to the wrong people.

So make sure you're having the conversation with the right people from the very beginning. Are they interested in this? Just because you can yell to 3 billion people through the internet, doesn't mean they want to hear you. So first make sure that it's focused in there that they're interested in having that conversation and then make sure it is a conversation.

Like here, podcast interviews, I understand what the word comes from, but to me, the best interviews are more conversations, right? It's not, you're asking the same five questions and I’m giving the same talking points. So have that back and forth. You know, if you've got a client that asks you a question, well, instead of just answering one, jump off on a video and say, hey, you know, Jason just asked me this question. I thought it was great. I had to think about it myself here is my answer.

And then encourage people to say, what are your thoughts on it? You know, start that conversation. Sometimes people will say, well, that's not scalable. I don't know if it's scalable or not, but it's effective and I'd rather have effective than ineffective and scalable.

Jason: [00:04:56] Oh, I totally agree. And you're really a great connector and you're connecting a lot of these great people together to have these conversations and then people kind of go, oh man, I had a great conversation here. And then they relate that to you. Is that something that you've had to work on in order to do that better and to continue to do that?

You know, that's something I always struggle with.

Online Training for Digital Agencies

Tom: [00:05:20] Well, first of all, thank you for saying that I'm honored by that. And I think it's come with time also, because one of the things that I thought of is that the best gift you can ever give somebody is an introduction to a new idea or a new person. You remember that professor in college or the teacher in high school that really opened your mind to something, or once again, going back…

Jason: [00:05:43] Still waiting, still waiting on that one.

Tom: [00:05:47] How about the, the person that introduced you to your spouse, right? That's not something that you could do for yourself, but it changed your entire life. And I've always loved that of getting introduced to people and getting introduced to ideas. And I think we're blessed to be a blessing so trying to do that for other people too.

And that's one of the biggest thrills I get is listening to podcasts right now and hearing a podcast host, you know, say, oh, this is my friend so and so, and that they build up a relationship there and going my company Interview Valet had a small portion in making that happen. Once again, uh, another mutual friend of ours, Morgan Wright, he pointed out to me years ago, well it was like a year ago, that remember we used to play that six degrees of separation with Kevin Bacon?

Jason: [00:06:36] Yep, Kevin Bacon. Yep.

Tom: [00:06:37] So Y2K. Right now it's like 2.3. So with that you're 2.3 degrees of separation from anybody in the world. So right? If you want to have a conversation with them, well, then you probably should go on LinkedIn or think who could introduce me to, to Jason Swenk? Who knows him? Right? Because you'll get a lot further with that conversation than you will just with some spam email.

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I'm glad you mentioned that because that was something we did in the agency a lot. Especially when we wanted to reach into brands and I tell people to do this in the mastermind all the time, like, come up with your top a hundred hit list and then start going who's the contact in that hit list? And then who do I know that knows them that can connect us and create that conversation that we've been looking for?

Because people think that... one of the excuses today, you know, on the mastermind call was like, well, I can't send a strategic gift because no one's working in the office. They're all at home. But like we were talking about like, hey, what, if you figured out who you're going after and who's connected to them and seeing if they can connect you?

Cause that's how we landed some big accounts.

Tom: [00:08:53] You look at that at one side, you know, it's that account-based marketing. I would say that's even more granular than that, right? Of the relationship at an account-based. Whereas you look at that and somebody else comes and says, well, you know, I can buy this list of, you know, 5,000 companies and, uh, I can scrape this database, so can everybody else, right?

And they're probably doing it also. I, I laugh. You know, I get pitched to be on my podcast about four times. Jason, I don't have a podcast, right? But everybody loves it and wants to be on it. And I wonder how many good clients are getting the same thing where it's just another email that somebody is just spamming them wherever it's an introduction from a friend.

Yeah. It's almost like the mob, right? If Jason vouches for them, I’ll take a meeting with them.

Jason: [00:09:48] Yeah, exactly. I just think that's some low-hanging fruit, for all of you listening, that you should look at of going do we have a targeted list that we're going after? Or have this go over this with your sales team, which you should have a sales team. You should not be doing the sales, but that's another story, and that's another episode we can chat about.

But then identify what's the connection? What's that degree of connection? And then ask. And I think you'd be really surprised if we come back, if you look in two weeks, do this for two weeks, I think you'd never stopped doing it again.

Tom: [00:10:22] We teach the same thing in podcasting, right? People will spam list and I'll always say, you know, come up with a target list of 10 podcasts and then think about it. What are the three types of people that people want to have on their podcast? Their friends, their friends of friends and people they want to be their friends.

So figure out how you can figure out to be in one of those groups.

Jason: [00:10:44] Exactly. Well, this has all been amazing, Tom, is there anything I didn't ask you that you think would benefit the audience?

Tom: [00:10:51] The one thing that I would encourage people, you know, we're blessed to be a blessing and a lot of times people will say, well, what I know everybody knows, right?

I, I've got nothing special in a conversation to add. That's not true, right? You are an expert on something. You look at the legal definition of an expert, is somebody by their training, their experience, their life knows more than the average person. I guarantee you, you're working 16 hours a day, sometimes in your business, you know more about your business. You know more about your industry.

GoldenNow, are you the one expert? No, there's not one expert, but you are an expert. And what you know could really help people. What's ordinary to you is amazing to others. So share that, you know, he's there as a podcast guest, as a podcast, host doing blogs, videos, whatever it is. I think you'll bless a lot of people, but you'll also be amazed at how it comes back and helps your agency.

Jason: [00:11:53] Awesome. Well, Tom, I know you have a book that came out, so tell us where can the people listening get it?

Tom: [00:11:59] Uh, yeah, so, um, we got a book called One Conversation Away. It's my second book, Podcast Guest Profits was the first one. Uh, you can get all of those. I'm not here to sell books. I sell some, but I give a lot more away.

If you come back to Interview Valet, with a v.com, forward slash swenk (interviewvalet.com/swenk). We'll put everything there. I'll put my social media. Uh, if you'd like to talk about how your agency or your clients could use targeted podcasts or interviews, I'd be thrilled to talk with you about that also.

Jason: [00:12:28] I thought you were going to be like I'll put my social security number there. I'm like, like don't put your social security. I just mentally that my mind went there, but awesome. We'll go check that out. Thanks so much, Tom, for coming on the show.

And if you guys want to be around amazing agency owners where they're sharing, what's working and then also have a mastermind specifically for your operations, for your sales team.

I want you all to go to digitalagencyelite.com, request an invite and start applying, and maybe you'll be the right member for us and, uh, we will chat soon. So go there now. And until next time have a Swenk day.

Direct download: Are_You_Just_One_Conversation_Away_from_Massive_Agency_Success_.mp3
Category:general -- posted at: 7:00am EST

Do you know the value you provide to your agency clients? Is your agency getting paid what you're worth? Do you always ask for the budget before presenting a proposal? Stephen Brown used to think that just doing good work would get clients to pay the right value, but his position at Cookerly PR, a public relations agency based in Atlanta, helped him understand a lot about charging what you're worth and how to ask the hard questions to determine if you are budgeting the right way. Today he sat down with Jason to discuss how to charge what you're worth by understanding the value your agency provides, how to get your first big clients, how being rich in process will help you keep your deliverables consistent, and much more.

3 Golden Nuggets

  1. Charging what you're worth. Stephen used to think that just doing good work will get clients to pay what he’s worth, but eventually he learned that he needed to have a sense of that worth first. You should always have a pulse on your industry and an estimate of what others in your sector are charging. Also, one of the most important things he learned with experience is that you should always ask for a budget or at least a minimum amount of what the client is expecting to spend. In Jason’s experience, less than half of agency owners do this.
  2. Getting the bigger clients. A lot of small agency owners want to know how they can get their first big client. It depends. Some of our guests did so through connections in the business, others target a couple until they get a big brand. Stephen believes that doing great and consistent work will lead you to the bigger brands you want to be working with. “Start small,” he advises,  “and it will start laddering up”. Start with something you can handle. People will start seeing what you did for a smaller brand and start and ask if you could you pilot that for our bigger brand.
  3. Keeping deliverables consistent. According to Stephen, his agency is very rich in processes, which is a big part of how they can keep their deliverables consistent. Things don’t change depending on who is in charge of a certain department. Instead, everyone is kept accountable and communicates new developments in their weekly meetings. Also, at the end of the month they send each client an account summary that contains details about each campaign being put together so that no client will ever have to ask what is their agency doing for them.     

Sponsors and Resources

E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design and development agency that has provided white label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service.

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Are You Charging What You're Worth?

{These transcripts have been auto-generated. While largely accurate, they may contain some errors.}

Jason: [00:00:00] All right. What's up, agency owners? Jason Swenk here and I have another amazing show for you and an amazing guest where we're going to talk about how do you know what to charge? And charging what you're worth and budgeting and making sure that you're extremely profitable. I have a great person on that's going to get into this so let's jump into the show.

Hey, welcome to the show.

Stephen: [00:00:27] Jason, it’s a pleasure. Wonderful to see you.

Jason: [00:00:30] Yeah. Awesome to have you on. So tell us who you are and what do you do?

Stephen: [00:00:34] Absolutely. So I'm Stephen Brown and I am the President of Cookerly PR. We're based in Atlanta, so we're a one-city agency that represents national campaign. So we do a lot of national and global work, but we are strictly based in one city and have our staff of about 22 here that do crisis work and creative work, depending on which client you've got.

Jason: [00:00:57] Awesome. Well, let's get into it because, you know, we were talking kind in the pre-show, you know, a lot of my mastermind members when they come in or a lot of agencies when I chat with them I find out they're not charging enough. They're really bad at budgeting and really they're not profitable. And you guys are extremely profitable, which congrats on that.

So what are some things that you've learned over the years in order to do that right?

Stephen: [00:01:21] Sure. Well, the naive me, the one that worked at a bunch of multinationals over the years was always like, oh, just do good work. Do good work and the money will follow. And I learned my lessons over the years and under the tutelage of Carol Cookerly at our firm, learned a lot about charging what you're worth and actually stepping back and asking all the hard questions to determine if you are budgeting the right way for a project.

For instance, we do some work that is project-based fixed fee base that is very predictable. Um, it can be a media relations or social media campaign where you know you're doing it for a certain amount of time.

Then we have those other things that just come out of nowhere. Yeah, the oil spill, the having to, um, help a company out of a crisis, and those are drop everything and charge crisis rates type of opportunities. And so we really have to look at the project at hand and determine with the staff that we have the people that we have, is that something that we can fit into our portfolio or is it something that we need to be charging extra, even have extra people for, um, to be able to handle it?

So it's been very important for us to get our financial house in order on any type of initiative that we do.

Jason: [00:02:32] How do I figure out what I'm worth and when I should actually be charging? How do you guys do it?

Stephen: [00:02:37] Sure. Well, there's some sense of benchmarking. Um, you know, we have our ways of finding out what others in the industry are spending.

Um, as I was telling you, at one point we, we know a young lady in our, in our own city, that's charging way too little. And I think to a certain extent, you don't want to bring down the whole vibe of your industry, the entire collective bargaining power of your industry by charging too little. Um, you definitely want to have a very good hourly rate that you could actually make a good profit margin off of.

And you want to have a variety of people at different spectrum. So you may have the senior, most person, the senior council all the way down to some more junior folks that might do some of the monitoring, might do some of the research, some of the early forms of writing. So you have to make sure you've got a spectrum of that in an agency, I guess, we’d be considered a mid-sized agency.

And in that you have to have all those different areas represented with a price of fixed age.

Jason: [00:03:29] What are some things that you guys picked up along the years about budgeting? I remember, I've chatted with people and I remember how we did budgeting before we were got a little bit smarter. I would just look at the bank account.

Stephen: [00:03:44] Absolutely. I think we've found that we don't want to be the kind of agency that's the training wheels for somebody. We're better off when someone has worked with agencies before, maybe didn't get everything they wanted to, but they got the very notion that working with an agency was going to be able to help them. It was just the wrong agency.

So with us, you know, we usually say like, you know, do we have a minimum amount? Because, uh, to a certain extent you're going to work just as hard for that one that is coming in under your minimum, um, as the ones that are actually paying you what it really takes to, um, to put a team together.

Um, we're usually telling our clients that, you know, hey, to, to be able to do reserve a team here that's going to work all the time on your behalf, um, it's really going to be a certain amount. And that's going to be able to get you those two to three people that are going to be consistently reachable that are going to be very knowledgeable about your business, um, and an ongoing basis. You know, whereas something else that's just sort of coming in over the transom, as they say, that is something that we've not known the person before and are just starting to sort of suss out what it might be that they want to do.

They might come in and say, well, we only have this much to spend. And then sometimes during, uh, you know, low economic times, you might be willing to take something like that in. But I would say before, you're willing to do that, think twice about like, you know, is it worthy of your firm's portfolio and is willing to spend what it takes to really get the job done?

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Yeah, one of the things I always train my salespeople on, I had always say, hey, you got to ask the budget. Before the pandemic, I was in New York speaking in front of like 800 agency owners. And I asked them, I said, how many people ask for the budget, you know, in the first meeting? It was about 50% of the room.

I said, how many actually get it? And about another half of that, so a quarter actually would get it. So that means 75% never actually knew the budget. And I would just be like, you got to ask the budget and then come up with a way in order to be like, what are you trying to stay around? And I always would do it like, are you trying to say around a billion dollars, a million dollars, a hundred thousand?

And it just worked my way down in order to figure it out. And usually 99% of the time it would work and then I chatted with Berkshire Hathaway, I think they're still in Atlanta, but many years ago, maybe like 20 years ago, they called us up for a website and I'd never asked the budget up to that point. And I pitched them a website for like 20 grand and they laughed me out of the office cause they were expecting 300 K.

So then every time after that I was like, what's your budget?

Stephen: [00:07:32] Yeah, there's nothing worse than finding out that you've really undersold a project. We found that out one time where we put together what we were defining as branding versus what someone else was referring to as branding and ours was sort of a early messaging, early branding, sort of several workshops.

And we were competing against two others that had extended it into a six-month-longOnline Training for Digital Agencies process with more focus groups than you could ever imagine. And that prospect wanted to hear that. They wanted it to take a long time and involve a lots and lots and lots of arduous activity. So we're used to a lot of public relations clients want to move fast and we want to fast-track the research to get enough to be dangerous, in some cases.

And, um, but it is interesting. You know, one of the first questions we do have to ask in a prospecting call is that, do you have a range in mind? Um, do you have a budget in mind? Most of us were applauded or got into this public relations field, because we were great communicators or brainstormers are very verbal or great writers.

Um, it isn't the cause necessarily we were good at calling the question for money. So that is one of the things that Carol Cookerly has taught us all that we really have to really know how the business mechanics work for a company and in doing so you really have to know who's paying for this. And how much is it worth to preserve the wealth of your company to have a public relations firm build your brand, handle your brand well?

Um, it's one thing to just say, hey, let's contact the Wall Street Journal for you. It's another one to say, hey, let's contact the Wall Street Journal with these precautions and knowing that we're contacting them for a story and it could go south, you know, we're going to actually work with you to find the seven reasons why that story could be great and help you make sure that those three reasons why that story could go south don't happen.

And so we're definitely having to mitigate risk and determined that we want to take an endeavor forward based on our knowledge and based on research. So that definitely takes a lot longer than somebody else who's just like, oh yeah, I'm going to just call the person I know and try it out. So it's a whole different approach to PR for sure.

Jason: [00:09:38] Kind of switching topics just a little bit outside of budgeting, but you guys have worked with a lot of big, big companies and a lot of people want to know, you know, how did you start getting the bigger company? With me, it was, we targeted one or we targeted like five. We got one and then use that to get another one.

What worked for you guys in order to get some of the big brands?

Stephen: [00:10:05] Sure. I think part of it is just doing consistent great work. It starts leading to the things that you really love. I've always wanted to work on campaigns, companies that were launching something and you start launching a few things that maybe aren't that renowned, aren't that big of a deal.

And then all of a sudden you're finding yourself launching in the big leagues. So launching Mercedes cars, you know, launching new products for some of our clients, the Georgia Pacifics or the Novellas of the world where there's a lot bigger stakes and a lot bigger environment to do so.

Where you're actually gonna be, hey, could we launch this new car in Las Vegas? Could we launch this, a new aluminum recycling program at the Kentucky Derby? And all of a sudden you're kind of taking it up a few notches. So I think you do have to start off by going a little small, making sure that you can get that right with that, you know, that local restaurant before you are doing something chain-wide for a chain that has hundreds and hundreds of locations.

So I'm, I think, you know, you just start with your passion, start small and it will start laddering up. People will start seeing what you did for a smaller brand and start saying, hey, could you pilot that for our bigger brand?

That works well, hey, could you do that for our whole chain? And so that's the way we've seen a lot of our areas grow and people coming back to us for more.

Um, we had a really great, um, event last night where we launched our Novellas client, did an event to be the official recycling partner for state farm arena here in Atlanta, uh, with the Atlanta Hawks.

And, um, you know, it was one of those things where one of our clients was like, wow, this is the first time I was in sports illustrated. He'd been an athlete growing up and he's like, I'm in there for an aluminum, you know, cup, that's going to be at arenas. But the notion that that's just a Monday night for us to be able to have a great announcement like that for, um, a great company like that is very exciting.

And we have some folks off this week at an electric vehicle show to be able to just show off some fantastic new innovations. And it becomes really nice when all of a sudden you've got people in multiple cities. One's launching the global water center in Nashville while the other folks were in Los Angeles and while we're doing some events in Atlanta.

So it becomes very exciting to be in multiple places, um, launching, um, major activities.

Jason: [00:12:25] Last question I have for you is as you're working with these big brands and you're building the team, how do you guys make sure that your deliverables are consistent?

Stephen: [00:12:37] Our company is rich in process. So I think unlike a lot of places where I've been before, where it's sort of, depending on who's in charge, it could be a lot of different ways. We have a very rigorous process here. We have what's called our scheduling update and every Monday morning we get together at 10:15 precisely. And we go through everything that's in the shop.

Every activity has initials by it. So everybody is very accountable to what's being done. Then at the end of the month for all of our clients we send them something called an account summary. And that's got every item, every reporter we're contacting every store that's in the works, every campaign that's being put together in extreme detail so that no one ever has to ask, hey, what is that agency getting us?

So for us, we have a very, very rigorous process, um, along the way, uh, the status calls where we're pretty rigorous about our agenda. And so that helps us be able to make sure that we're always moving our clients forward and it's working well for us.

Sometimes you're in the brainstorm mode where it's blue skies and any ideas is great. But when we're in that scheduling update or we're in that account summary world, we were very linear, very, very process-oriented.

Jason: [00:13:47] Very cool. Awesome. Well, this has all been great, Stephen. Is there anything I didn't ask you that you think would benefit the audience?

Stephen: [00:13:54] I would just say that those of us in PR at agencies, marketing firms, we're all looking for those folks that have great writing skills.

We're looking for those folks to have great media relations, social media, marketing, research, content analytics. And I would just say that, um, you want to look for people in your firm that, uh, possess a lot of different side passions as well.

So as we been looking for people lately, it's been folks who have all the aforementioned skills or some of those in great abundance. But there's also folks who have just a lot of interest in life. And we've got folks here who are sports experts, movie aficionados and a voracious readers, voracious athletes. And that's just very important to be able to pull off what we do for companies, um, day in, day out.

And so I think that's the greatest thing is like recruiting this next generation is going to require people who have the direct skills, but also have a lot of, um, a lot of side passions to bring to those great brainstorms and those great campaigns.

Jason: [00:14:52] Awesome. What's agency website people go in the checkout the agency?

Stephen: [00:14:57] Sure. So you can find Cookerly PR at cookerly.com. So it's C O O K E R L y.com. Carol Cookerly is our founder. So that's where the name came from. And, um, we're 30 something years in business and look forward to working with a lot of new folks.

Jason: [00:15:12] awesome. Well, thanks so much for coming on the show and if you guys enjoyed this episode and you would not want to miss out on any other ones, make sure you guys subscribe. So you hear the amazing guests that we have.

And if you want to be around amazing agency owners, I mean, literally the best of the best, where they're constantly sharing, what's working and what's not working and being able to see the things you cannot see, make sure you go to digitalagencyelite.com. This is our agency mastermind that might just be able to help you out and might be getting you to the next mountain summit that you need.

So go there now. And until next time have a Swenk day.

Direct download: How_to_Increase_Profitability_By_Charging_What_Youre_Worth.mp3
Category:general -- posted at: 7:00am EST

Do you want to get your agency to the eight-figure mark and beyond? What are you doing to get to that level? Erik Huberman had started a few e-commerce companies and was unimpressed by the agencies he had worked with, so he decided to form a small team that could assist his clients. He quickly saw a positive response and created Hawke Media, an outsourced CMO and marketing team that customizes data-driven, performance solutions to help launch, scale, and invigorate businesses.

In this interview, Erik talks about how setting financial goals helped him grow his agency to over $40 million. He also shares his marketing methodology and his book, The Hawke Method.  Plus the mistake many agencies make when they start growing, and much more.

3 Golden Nuggets

  1. On goal-setting. During the first year of his business, Erik saw things were going well and decided to set financial goals for the next couple of years. He met every one of them, so he believes there’s a lot to be said about setting a goal and striving to hit it, and having incremental goals to get there. This will force you to step up when you're falling behind and keep you proactive in the market. In his case, he mainly used it as a scoreboard, as an indicator of growth. It really helped during the agency’s first years and he noticed a difference when he stopped doing it around year six.
  2. Agency mistakes. According to Erik, some agencies tend to protect themselves a little too much once they get good and do it too soon. They start throwing out long contracts, high minimums, they go upmarket, they only want to work with fortune 2000,” he says. He believes that this behavior alienates the people that got the business to that point. It is a solid way of doing business and works for many agencies, but Erik decided it wasn’t for him and went on to build his business model on challenging himself to consider can you be one of the best marketing companies out there and still work with small and medium businesses too?
  3. Understanding the purchase cycle. A lot of marketers and agencies fail to understand the idea of a sales cycle or a purchase cycle. Many times agencies advertise for clients that ask for daily performance reports. “The problem with that,” he explains, “is that what we’ve seen in e-commerce is that for a $50 average order value will be about a three-week purchase cycle and about five weeks for a hundred dollars,” so understanding the purchase cycle will be critical for the agency-client relationship and a big part of setting realistic expectations about the work.

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Getting to $40 million by setting financial goals & understanding the purchase cycle

{These transcripts have been auto-generated. While largely accurate, they may contain some errors.}

Jason: [00:00:00] What's up, agency owners? Jason Swenk and I got another amazing guest. And we're going to talk with Eric of Hawke Media and how they built an almost $40 million agency, or probably by now, they're already over 40 million and cresting the many, many commas, whatever in there.

So, excited to get the episode. Let's jump in.

Hey, Erik. Welcome to the show.

Erik: [00:00:29] Thanks for having me.

Jason: [00:00:30] Yeah, man. Excited to have you on. So tell us who you are and what do you do?

Erik: [00:00:35] Sure. Uh, Erik Huberman, co-founder and CEO of Hawke Media. We're basically an outsource CMO and marketing team to companies. So we go into brands, identify full-time marketing and spin up different experts. All à la carte month to month. So it could be a Facebook marketer, email marketer, web designer.

We've been around about eight years up to 70 full-time people. We run marketing for about 600 brands. And then we also have a venture fund and a financing arm as well, amongst many other things.

Jason: [00:01:01] Awesome. And so why did you guys start an agency? What got you into it?

Erik: [00:01:06] I built and sold a couple e-comm brands and through my own experience, as well as then I started advising and consulting for a lot of other brands found out that 99% of agencies out there for lack of better word are full of shit. And kept getting frustrated over and over again and went screw it I'm just going to hire my own small team to help these companies.

And so built my little SWAT team and immediately saw the benefits. Like my clients started to like what we did. They started to grow and we started to need more and more people and just started to grow from there.

Jason: [00:01:35] Awesome. So you guys have been doing it for eight years. You guys are almost 40 million or maybe over it.

Talk about some of the progression that you guys went through. Like how long did it take to get over the million mark? Was it fairly quick? Did it take long? Like what clicked? That kind of stuff.

Erik: [00:01:53] Yeah. In the first week of business, I shouldn't say first week, I think it was like… a month in, because for the first month, I wasn't sure… I was like I built this team. I started working on clients and I was like, maybe I'll build my next company and then turn this team into my own team. And so I wasn't sure what I was going to do there.

And then after a month I was like, wow, this is really working. I should double down on this.

And so I set a goal and I would put it on a thermometer. I was like, all right, the first four years we're going to do one, two and a half, five, 10 million. That's, that's the goals. And we came within 1% of all four of those goals.

So I think there's a lot to be said about setting a goal and then really driving to hit it and having incremental goals to get there so you know how you're tracking against that goal. Because it forces you when you're falling behind to step up. If it’s too easy of a goal, you actually end up, well you will hit that goal is still. Like it's, I don't think when you set a goal, you ended up blowing past it, you manage accordingly.

So setting those goals really helped the first four years. And frankly, we didn't set goals for years five and six. And I saw the downside of that. I saw us not grow as fast, not do as well and not really know which direction we're going. But also, at that point we were big enough that it felt weird to just set another financial goal.

It's like, yeah, but what are we really trying to do? And it took a couple of years to develop that, but now we’re pretty clear.

Jason: [00:03:07] And you listed out financial goals. Were there any other goals? And not talking about the incremental goals, I want to get to those in a second. But was it just revenue goals? And then, hey, what are the little ones that we need to do to get there?

Erik: [00:03:19] Yeah, frankly, it was because that was the best scoreboard we had it. It wasn't any… It was intrinsic in the sense of like the goal was a goal cause it was the goal. It wasn't because then we could afford this or if you could do that. It was more of just an indicator of growth. And we assume that if we're hitting those numbers, we're also growing in the ways we need to be growing.

And so we knew what the levers that we needed to pull were between bringing in new business, retaining our business, retaining our people, all sorts of specific metrics that helped us hit those goals. That became a factor of it. But it was, that was the end scoreboard. That was sort of the result that we were looking for.

Jason: [00:03:50] So let's talk about the incremental goals at the stage to get to the million in the first year. And then let's talk about the incremental goals after that for the two and a half to five. I think that'd be interesting.

Erik: [00:04:01] Sure. Yeah, we just knew basically, and this is a rough number, we actually got, every year, we got better and better at this in terms of like, where do we need to be this month, next month? How do we need to be tracking?

But I also knew where were we six months in needed to be basically the run rate, assuming we went from zero to, you know, like the run rate for a million bucks is what? 80?

Jason: [00:04:19] 82, 50. I think.

Erik: [00:04:21] A month. Is that right? Yeah.

Jason: [00:04:23] Don't make me do math on the podcast.

Erik: [00:04:26] There we go. 82,500 a month. So anyways, we, I knew around 80 grand and so I was like, okay, so we need to be there within six months because then we need to make up for not being there the first six months. So we need to balance it out and assume that if we're going growing steadily, that'll be where we can do it.

Now, in marketing Q4 is usually a little better, so we ended up going up. But, yeah, I mean, first year we did $1.01 million. Like, literally just beat it. And it was surprising, but we did it and it was all around uh, yeah, just aiming for it.

So like when we, and again, I don't remember, it's been seven and a half years, but I, you know, assuming there were months where we were falling behind a little bit, that's where we ramp it up and be like we got to bring in more business, we got to retain, what are we going to do to make sure we hit these numbers?

And so we would, it would light a fire under our ass to hit it because also those were ambitious goals to grow that fast. And to grow 150% next year and a hundred percent the next year and a hundred percent the next year we had to do a lot. So anytime we were off track, it just kicked us into gear that we have to hit that.

Jason: [00:05:27] And I like that, you know, too many people set out a goal, but then they don't have an action plan in order to hit it or a place where they can measure it. And they just look, oh, January came, oh, we didn't hit it. Well, no shit. Like you, you were reactive to the market. You weren't proactive. You didn't try new things. You just kind of sat back.

Erik: [00:05:47] Yeah. The term I hear from the best operators out there is leading indicators. What are the actual controllable leading indicators and get to that result?

And in the first year we had no idea because like, I don't know how many people I have to talk to you to how many leads we get to… Like, we didn't have a funnel built. But I did know when we weren't hitting it the levers to pull. So I didn't have it down to a science yet. Now we do. Now my forecaster can give us our revenue within 1% and its forecast to the entire year accurately based on what the inputs are.

And then it's just a function of manage, you know, being disciplined about the inputs is how you scale a business at this size. And even earlier, but statistics play out the bigger you get too.

Jason: [00:06:23] Yeah. What are some of the, now that you guys have figured it out up till this point what are some of the leading indicators that are really important for getting over the eight-figure mark?

Erik: [00:06:34] Yeah. So I would say having a really good handle on your average retention of a client is number one. How much… those clients once you have the retention. But it depends on your agency. We run an agency with that's a different type of scale. We have 600 active clients. So if you're running more of a traditional like creative agency, or if you have bigger clients, but smaller amount, the statistics get a little harder. But for us, because of the scale averages play out. And so we know our average lifetime value of a customer, we consistently try to improve that, but we know where it is and we measure against it constantly so that we can improve it, know that we're doing things that improve it.

And then what's your cost to acquire a customer and what your pipeline looks like and what are your conversions on the pipeline? So from lead to qualified lead to, for us proposal, to service agreement, to verbal commitment, to assign the commitment, what is the breakage at each of those stages? And then we know based on the pipeline we have, how much business is going to come in the next month or two.

And then we can also then know what does it cost us to get a lead? How much are we investing in marketing? Which ways are we going to drive those leads? So how many leads about can we assume? And then you get that waterfall when you can start to anticipate how many leads do you need, and then you manage against that.

Okay. So we're going to need… whatever it is, a thousand leads this month to hit the numbers we want to hit next month. Let's go make sure we get a thousand needs. What are the ways to do that? Well, we have outbound marketing. We also have outbound sales. We have partnerships, we have every type of inbound marketing, advertising, etcetera.

These are all things we can… leverages we can pull to make sure we hit the lead count we need to. And then frankly, at this stage all leads are not created equal. So we actually measure different leads at different values.

Jason: [00:08:08] I love it. I love that you look at the leading indicators because then you can make the adjustment rather than wait, wait to the very end.

Let's kind of switch focus, or maybe not switch focus too much, but let's talk about the Hawke Method. Tell us a little bit more about that.

Erik: [00:08:23] Yeah. So it's been, you know, basically our marketing methodology that I've leveraged right now. It's been how I look at marketing for a dozen of years, but pop media has the entire time.

I've spoken about this hundreds of times at different conferences and we decided to put a book together called “The Hawke Method” that we just pre-launched that's coming out in Q1 that basically kind of digest… In a really easy-to-digest way everything we think of when we're looking at a company and their marketing. So how do we look at their strategy? How do we assess what they're doing? And how do we know where to invest? Where to pull back? What channels to use?

And so it goes from like the very high level, we call it “awareness, nurturing, and trust” the three pillars of marketing. And so we look at, are they covering those three pillars? Where are they not covering? And then we dive into and that awareness breaks down into advertising and PR and word of mouth and a few other things.

And then even in advertising, where do you advertise? Is it Google? Is it Facebook? Is it Tik ToK, Snapchat, etcetera. And so we break down into how to look at all these different things in a way that we try to make it replicable as things change, meaning like it's a thesis and a methodology. It's not a tactic that works right now and won't work a year from now.

And so, yeah, we basically put that together in a 200-page book and are putting it out there. And working on selling 20,000 copies and making it a New York Times bestseller, and we've already had several universities picked it up, like we're really making traction on getting it out there as a new way of looking at marketing.

Jason: [00:09:50] What are, I mean, obviously you've seen a ton of agencies and you guys have acquired a bunch from what I've heard. What do you think a marketing front agencies do wrong for themselves?

Erik: [00:10:04] Interesting. I… So this is my, a very controversial statement, but I think that they protect themselves too much when they get good.

I think that the, what I see happen with agencies that I don't agree with that has worked for plenty of people, so I'm not saying that never do this, I'm just saying this is my own view. Every agency that gets good and gets a good reputation, starts to be seen well in a, you know, sort of in the ecosystem, they start protecting themselves.

They start throwing out long contracts, high minimums, they go up market. They only want to work with fortune 2000. They do all these things that yes, they created, that's a solid way of doing business. I get it. But it alienates all the people that got you there. So I’m always kind of turned sideways to that. Why can't you build a business model and now thankfully we have, but this was our thesis, but why can't you build a business model of still being one of the best marketing companies out there, but still working with small and medium businesses too?

I’m not saying don't work with Nike and the big guys, but you can work with small guys too. And so that's really what built it. I think that a lot of times is interesting. I watched a lot of agencies struggle to get up to the eight-figure mark, because they get a little pretentious and they in too early.

There's agencies that are doing eight figures that I know that get pretentious and do just fine with it cause they can be. I'd say WPromote, you know, in the market they're constantly trying to go up market and stop working with small and medium businesses.

They, you know, got, I think it was Gartner to rate them as one of the best digital agencies, like few years ago. And like, so they started getting a bunch of Fortune 500 interest and leveraged that. I don't know how it's gone for them in the past couple of years because actually those agencies hurt really bad in COVID.

But I think that, you know, there's reasons to do it later, but a lot of companies jumped the gun and then they're like, oh, well, you know… One of my favorite things is like, we're staying small and boutique because we can serve our clients better. And I always go, okay, so you're telling me that I should hire you to scale my business and you don't know how to scale your own. Like, explain that one to me.

Now, if it's a creative agency, different story, but I'm talking about like the growth and performance agencies that say they're staying boutique, like then you're not good because you don't know what you don't understand growing a business.

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Well, I think what happens is they hit, like, I look at it as like six stages of scaling an agency and they get to a point where their business doesn't have the right systems in place. Everything relies on them, they haven't shared the vision with their leadership team. They don't have a leadership team, right?

They've gotten to this point by accident. And I think you can get over the couple of million by accident. Getting to the eight-figure mark is not by accident, but to stay there is true skill.

Erik: [00:13:41] Yeah, you brought up this point earlier that I actually think relates to that. So I drove, uh, 85% of our business up until we were about a 7 million runway.

And then it was the most ridiculous story, so I'm gonna skim over it. But I was hanging out in Monaco during the Grand Prix and saying the most, the richest people in the world, living their lives and went, yeah, I'm never going to be that in the way I'm operating right now.

And not that that's actually my goal. It's not really a monetary goal, but it's more like I want the option. And so I immediately objected out of sales completely. It was scary as shit. Like I had a few sales guys. I was like from now on all my leads go to you. At this, I was keeping my better leads because I could close them better, but I'm like, but if I give them the sales, like they're still going to close a lot of them, right? Hopefully.

Took that leap of faith. Thankfully had a good small group of guys that, uh, ended up doing really well with those leads. But we did dip. We went, that was June, July and August were down months for us and a little scary. And then we recovered and started scaling again. So, that was what got us into eight figure range, because that was the last piece.

I never, on the execution side, I immediately brought on a partner that's my co-founder that did a great job of, as he put it, I'd made promises and he'd deliver on them and…

Jason: [00:14:52] You deliver broken promises without him?

Erik: [00:14:56] Yeah, exactly. You got to know your strengths, but, uh, he, he definitely did a great job on that side. And so we were able to scale that side from the beginning pretty well.

So delivery wasn't as much of an issue. Cause I also, because I was the one driving sales, I did a lot of things that helped us sell. So I productized our offerings. I made things really easy to sell and really easy to put together and then build a team around that. So when I built a sales team, it was teed up for them in a way that was great too, which now we have one of the more higher producing sales teams in the industry period, or, you know, bringing on 80 new clients a month.

So that was built because of that, but it took that leap to be like, all right, I'm done. I can't do this. And I continue to do that. And that was three and a half years in. And that became a good lesson, that over and over again, when I find myself, you know, diving into something, that's taking a lot of my time, if I can out eject, eject, whatever that is, and continue to hone in more.

Like my focus more today is like a third strategic and working with our executives online, bigger initiatives to grow the business. A third growth, what expansion can we do? Whether it's M&A, whether it's launching a fund, what else can we do to build off this business? And a third promotional being on podcasts, you know, writing a book, that kind of thing.

And that becomes more and more my focus. When I find things now pulling me out of that, I look for who else could have that.

Jason: [00:16:08] Yeah. I always tell everybody your goal is to transform from the owner to the CEO. And like you said, it's kind of like four or five roles set the vision of the agency…

Erik: [00:16:19] I went to a program two weeks ago that actually said the exact opposite.

Jason: [00:16:22] Oh, really?

Erik: [00:16:23] Yeah. Cause they said your goal is to transform from a CEO to an owner, meaning your business should be working for you, not you running the business. And I think the problem is what do people, you know, the CEO of your own one person company. But when you're an owner and you're just, you're, you know, you treat yourself as a chairman or an investor, the way you operate is different.

And we're getting there. Like that's been, that was the goal for this year was to get our executive team in a place where I didn't have to do a lot of what they do. And we're there and we have a great executive team. We brought in COO two months ago. And so he's now stepping up and the goal was for him to run the day-to-day of Hawke Media so my focus can be on doing a better job for our clients, expanding the business.

So again, strategic and growth, not managing the data that like, whereas our accounts receivable.

Jason: [00:17:09] Yeah. And I remember I was chatting with one of my clients for many, many years. He started out around 300,000 now he's well over, they figure mark.

And I remember telling him when you transform from the owner to the CEO, congratulations, you're going to be depressed. And I remember going through this, like I would go into a meeting and they go, Jason, I don't need you. And then I go to the next one, Jason, I don't need you. And I'm like, shit, the business doesn't need me. Like, what the hell do I need to do?

And then someone's smart that run another agency was like, no, look, set the vision, communicate it often. Be the face of the organization. Coach your leadership team, you know, assist sales when you need to like add color, right? That's, that's all I'm good at if you want me to do follow up and that shit like, nope, like…

Erik: [00:17:53] You were probably really good at it at one point.

Jason: [00:17:55] Oh yeah, well, when you had to be, right? But then, then when you start tasting that really fancy champagne, I don't drink champagne, but I guess when some people drink fancy champagne or what is it Don Perignon or I don't know. I drink the Coca-Cola's I guess, right? I drink about a thousand of those a day.

Erik: [00:18:15] There’s gotta be something unhealthy about that, but I don't know.

Jason: [00:18:18] Someone told me it rots your teeth eventually. I'm like, I don't care. The Coke I used to clean my race car engine, so I might as well stop drinking that.

Erik: [00:18:15] Yeah, that’s probably a good idea.

Jason: [00:18:18] Awesome. Well, Erik, this has been great. Is there anything I didn't ask you that you think would benefit the audience?

Erik: [00:18:35] Yeah, I would say the one big thing that every, or not every, but most marketers miss that is just a huge one for agencies too is the idea of a sales cycle or a purchase cycle or consideration period where… When you advertise for a client, they're looking for daily reports on the performance. Yet what we've seen in e-commerce specifically is for a $50 average order value it's about a three-week purchase cycle. For a hundred dollars it's about five weeks. For $200 it's about six weeks.

And then it goes between two and three months from there. The issue there is like, if, so, if I raised your budgets today, you're not going to see the performance on it for months potentially.

And so understanding that purchase cycle so that you report against it is critical in the agency-client relationship, as well as just clients understanding the market. And we see this, we get into this fight a lot where it's like our ROAS this it's like that's a seven-day fucking window. You have a $400 product. What are you talking about? So…

Jason: [00:19:26] Well, it's about too knowing the right clients to bring on. Cause, you know, I always say there's no such thing as a bad agency client, there's only a bad prospect or a bad process, and you've got to kind of figure it out and be like, hey, if this is a bad prospect, let's not let them in.

And like, I'm like, dude, if you're at zero ROAS, eventually you're going to be so far in the green, who cares? You're getting free advertising.

Erik: [00:19:55] A hundred percent.

Jason: [00:19:56] So one last question I had, I lied, I guess… I remember maybe sometime back and maybe you've changed this. Do you guys still not have any contracts or long-term contracts?

Erik: [00:20:06] Yeah. We prefer month-to-month.

Jason: [00:20:08] Why is that…? Obviously, it's working well for you. I've seen some people struggle with it. I've seen some people love it, so…

Erik: [00:20:16] Yeah. It's not easy. I was on the other side and everyone was asking me to get married before they ever went on a date with me. Just felt screwed up. I'm not here to protect my vendors is kind of how I felt about it.

And I, sorry to use a derogatory term in our space, but if I'm running a brand and I'm hiring you to do my marketing, I don't give a shit if you want a long-term contract, I'm not signing it. And we still stand true to that. When people try to give us longer contracts we just say no, and if you don't want our business, that's fine.

We walked away from a few software companies who were like, we have never used your software so like if you want to give us a three month trial we'll do. Because as they said, it's not enough time to ramp up in a month. I'm like, if you want to give us a three-month trial we'll do it, but I'm not signing a three-year contract. You're out of your fucking mind.

Like, that's just doesn't make sense to me and so we just stuck to that. And then right now, or like our mission statement is accessibility to great marketing. The idea is we want to be nimble, flexible, accessible, and built that way and be the best at what we do. So by being month to month it forces us to be able to be flexible and nimble. We're just used to it. Our business has to function that way.

Jason: [00:21:16] Yeah. And then going back to, you know, your leading indicators and knowing your lifetime value of a client like you can calculate, like, when I look at, you know, our mastermind average member is in their 24 month. And like when you know that that's predictability, because I always tell people, you know, when we go to buy an agency, a lot of times, you know, when you acquire agency, you want to know predictability.

The longer-term contracts, a lot of times you'll get a higher valuation because of the predictability is there. But if you can show a track record of having your clients stay this long, that will act the same way.

Erik: [00:21:51] And I will say, cause we've dealt with all those conversations. Like if you're looking for an investor to value or a buyer, get a smart one that understands your business.

Don't go with someone that's using a cookie-cutter approach to buying the business because you're not going to get a good valuation. And my wife's a senior executive private equity. We have a venture fund. I look at those numbers all the time and it's like, I've had all those stupid conversations. I had… You know where it's like either you're stupid or you think I'm stupid because this, what you're saying is not actually how it works in this world.

And that's another good piece of advice I got a long time ago is have your pulse on, if your plan is to sell, which thankfully is not ours, but I get it for a lot of people. Have your pulse on the industry, know what it is to do M&A in your industry.

Talk to a banker once a quarter, talk to people, keep your information so you know what the multiples are, you know, what's happening, you know, who the buyers are having a relationship with them. And if again, your goal is to sell, call the people that would buy you and ask them what they would want to buy and just build that. It becomes really easy.

Jason: [00:22:45] And I love that. I'm like, yeah, if you know, like make a target list now of the people you have love to buy you and start forming a relationship with them now.

Erik: [00:22:54] Yep. It makes it so much easier to get a deal done. And then, you know, you can trust them. They can trust you. Like that part is so important and yeah, I mean, there's no reason for them not to tell you exactly what they want to buy. You just make it easy for them.

Jason: [00:23:05] Unless they don't know what they want to buy. And there's a ton of people out there like that.

Erik: [00:23:10] Yeah, then don't sell to them cause you don't want that type of buyer. You want someone that's very confident and knows what they're doing so that you can able, depending on what your outcome is too. The only thing I'd say the caveat is if you're really looking at just straight exit debt out and it doesn't matter as much who the buyer is, but that's a hard thing to do with an agency. And you're probably going to do a lot of headaches with an uneducated buyer.

Jason: [00:23:29] Well, yeah, and you're not going to get the valuation or the money that you want. If you want straight out buyers like us, we'll be like, all right, what's wrong? Like, what are you not telling us?

Erik: [00:23:40] Yep. We've looked at those deals. We actually, funny enough, we just passed on one. We look at those deals, but we offer less. We're like, key, like if you're not there, you're, there's a loss in value.

Jason: [00:23:51] Yeah, exactly. And that should make you feel good.

Erik: [00:23:53] The fact, especially if you're a sub eight-figure agency, like you can't tell me that you're not driving the boat.

Jason: [00:24:00] Yeah, exactly. What's the title of the book and where can people get it?

Erik: [00:24:03] You can get it at hawkemethod.com, hawkemethod.com.

Jason: [00:24:07] Awesome. Well, everyone go check that out. Erik, thanks so much for coming on the show. And if you guys want to be around amazing agency owners that have been to where you want to go and be able to see the things that you might not be able to see and just have a lot of fun and share the strategies. I want you to all, to go to digitalagencyelite.com.  This is our exclusive mastermind for experienced seven and eight-figure agencies and beyond.

So make sure you go there now, go to digitalagencyelite.com and until next time have a Swenk day.

Direct download: How_This_Agency_Got_to_40_Million_by_Setting_Clear_Financial_Goals.mp3
Category:general -- posted at: 7:00am EST

Are you growing your agency to sell it in the future or prefer the idea of building a lifestyle business? Maybe you don't have to choose. When Anna Mannerfelt created Wired Mustang, an agency specializing in brand development and equine marketing, she decided selling her business was not the ultimate goal. Instead, she created a business to support her lifestyle. In today's episode, she sat down with Jason to talk about her negative experiences with agencies and why she fired a few plus the two-fold job of agencies. She also discusses why creating a lifestyle business doesn't mean you can't one day profitably sell it.

3 Golden Nuggets

  1. Why clients fire agencies. Before starting her own business, Anna dealt with many agencies and even fired some after growing tired of a common mistake: the over-promise. Agencies assured they had the capabilities and experience to take on the task and then ultimately would not deliver. “It’s like dating,” she says, “anyone can be a good salesperson, but can you actually deliver what you promise?” Make sure you’re really good at something before you find yourself in a situation where you can’t deliver on promises to clients.
  2. The two-fold job of agencies. In her opinion, an agency should, first of all, make their clients look good, whether by brand design or website or billboards. But most importantly, an agency should increase their clients' sales. Analytics is all good but by the end of the day, are you increasing sales? She makes sure to ask clients if her agency is getting them more business. And if not, it’s time to find out what they are doing wrong.
  3. Having a lifestyle business. We usually talk about the mindset of growing an agency to then sell it and enjoy the lifestyle you want. Anna says she would be bored out of her mind without something to do and preferred to build a lifestyle business. In Jason’s experience, we should all strive to design our business around us rather than having a business that controls us. There are a lot of negative ideas about having a lifestyle business but you could also sell a lifestyle business if you choose to. After all, any business is about setting up the right system and the business operating without you.

Sponsors and Resources

E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design and development agency that has provided white label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service.

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Building a Successful Lifestyle Business That You Could Sell in The Future

{These transcripts have been auto-generated. While largely accurate, they may contain some errors.}

Jason: [00:00:00] What's up, everybody? Jason Swenk here and got another amazing episode for you. We're going to talk about growing and scaling your agency and really creating an agency that's a lifestyle business. I know a lot of times we talk about growing an agency building up real big and selling it, but what about if you just want to do a lifestyle business? On today's episode we're going to talk exactly about that, so let's go ahead and get into the show.

Hey, Anna. Welcome to the show.

Anna: [00:00:31] Thank you, Jason. It's great to be here.

Jason: [00:00:34] Yeah. So I'm happy to have you here. Tell us who you are and what do you do?

Anna: [00:00:38] Sure. I'm Anna Mannerfelt. I’m the co-founder of an agency called Wired Mustang and we're based out of Denver, Colorado.

Jason: [00:00:46] Awesome. And, uh, tell us, how did you start the agency and why did you do it?

Anna: [00:00:50] Oh, my goodness, Jason. So I've been in marketing for 30 years, started way back when in Sweden and advertising. And then when I came to Colorado a few years ago now to start over, I saw there was a need for businesses to be represented correctly online with actual professional digital marketers. And having hired and fired a lot of agencies throughout the years, I saw there was a gap for this and a need for it, and also, uh, an opportunity for us to set up a business that we feel very, very strongly about, but also more of a lifestyle business that coincides with our personal interests with horses. So, there you go.

Jason: [00:01:31] That's awesome. And what were some of the things that when you were working with agencies and in your past, you said, I fired a lot of them. What did they do to get fired? Let's start it there.

Anna: [00:01:43] The over-promise. They said, we can do this or we've done this a gazillion times. They over-promised and they come in and do, it's like dating, you know, you go in and you work for the agency.

They, they, they're singing and they're dancing and they show their pretty graphs and analytics and all that goody stuff. But most of it was just show. It was all bullshit. I don't know if I'm allowed to curse. I'm sorry if I do.

Jason: [00:02:03] No, you’re allowed to.

Anna: [00:02:05] Okay. Awesome. It was just smoke and mirrors and it's just like any relationship. Anyone can be a good salesperson, but can you actually deliver what you promise? So that was something that, uh, throughout the years and in the advertising agencies and also in marketing, when I was on the corporate side, it was just very frustrating because you get sold this big hoopla of we’re going to do this for you.

But by the end of the day, Jason, in our view, in my view and agency's job is twofold. Number one is to make you look good, whatever that is. If it's a brand design or website or billboards, whatever it is that you are a professional at. Then, more importantly is two, are you increasing your clients sales? Not just make you look good.

That's something that we are super stickler at over here at Wired Mustang. We are a little bit of control enthusiasts, some will call you a control freak. I say that that's awesome. Analytics is all good, but by the end of the day, are you increasing sales? We ask our clients, are you getting more patients? Are you getting more signups with your insurance?

Are you getting more of this and that? And if not, what are we doing wrong?

Jason: [00:03:15] Yeah, that's kind of the thing that I've seen over the years when we're interviewing agencies for the show or for the mastermind, you know, the prerequisite is, is like, are they delivering the results? And I have so many people that go to me and they're like, hey, um, does your training show me how to do a particular service?

I'm like, no, it doesn't. It shows you exactly, like… It's already assuming you know how to do something really well. You shouldn't start an agency if you're not really good at something. I see these people creating courses, going live anywhere, travel the world. Own an agenc… like, I'm like, no, I don't do that.

So let's switch to the lifestyle part because I liked the lifestyle part. Because a lot of us think, let me sweat in blood guts all over the place for five, 10 years, build up an agency and sell it. And then I can have the lifestyle I want. Why did you decide right off the bat to create a lifestyle business for your agency?

Anna: [00:04:15] First of all, I'll be bored out of my mind if I retired on nothing to do. That's number one, you have to have something to do. And when it's a lifestyle business, it doesn't feel like work, Jason. It's we get up in the morning at 4:30, we go to the gym cause we all have to stay in shape, right? The older you get, the more you have to work. Same goes with your business.

We start at 6:30, 7 AM every day, but it doesn't feel like work because it's work, but it's just part of it. You become so close with clients that you're feel that you're part of their process of becoming successful. And when you share the same values of whatever it is that their products, goods, and services are, it's so easy to just become part of your everyday without feeling it it's a job.

And working in corporate and worked for agencies and you, you don't work for anyone. We're all working for our clients, but it doesn't feel like a job. And a lifestyle business is something that when we repositioned Wired Mustang, we said, you know, this is our lifestyle.

We do this so we can ride our horses so we can be part of the equine industry and build brand successfully, and also be better for even smaller brand owners out there to help them to be better with their business.

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Well, yeah, I believe everyone should design their business around them rather than have their business control them. Because you know, for many years I thought the opposite. I thought, you know, I'm going to build the business to sell it and basically created this huge prison around me. And then when I did sell it, I was depressed cause I, I did want to work.

You know, I didn't want to work as much, but I want to be able to pick and choose. And I think just the stigmatism when people are like, oh, I have a lifestyle… It’s like, this is a lifestyle business now, but it's a big business. And it fuels a lot of different people and industries and all that different kinds of things.

So, but I designed it around my lifestyle, but then it has to help out other people and just go around and around and around.

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Anna: [00:07:32] Right. Everyone’s probably heard of operating within your sphere of genius. And then that's so easy to do that. And you are operating within your sphere of genius and so am I. So it's our team.

So I mean, that's, that gets their blood, sweat and tears and some days I just kind of wish I'm like, why am I doing this? Why am I not back in corporate America and the next second I go, oh, here's why.

Jason: [00:07:54] Yeah. And, and I feel you can sell a lifestyle business if you want. It's all about… Any business is about setting up the right system and the business operating without you.

Because when I look at a lot of lifestyle businesses, I look at, wow, man, they have a lot of freedom to do other things because they have allowed it, and it's not all dependent on that owner or that one particular person that does everything. So it does open up the door, but I just wish people would not say lifestyle businesses are a bad thing. I think it's a really good thing.

Anna: [00:08:28] Oh, no. As long as you have your brand lingo and your brand positioning, you can let someone else run with it. And I think that's why we're doing, I'm knocking on wood here, knocking on wood, whatever I'm doing. It, it works for us, uh, really, really, really well because everyone within Wired Mustang, they know our brand lingo, our tagline is increased online horsepower. Yes. We trademarked it.

And I've seen other agencies out there that have genius positioning because they stand on and then it makes it so much easier to not have to be involved in everyday. And whomever is taking over, stepping in, if it's a project manager, does that, they know there's certain look and feel with Wired Mustang probably was saying with your business, you know?

Jason: [00:09:11] Oh, yeah. And there's freedom in that. And one of the questions I ask a lot of people is like, like, how happy are you in your business? Like, on a scale of one to 10. And like, if all of you listening, the two people listening out there… So if you really are honest with yourself, like give yourself like 10 being the best one being the worst, uh, seven is a cop-out number. You're not allowed to do seven.

Where would you rank your happiness in your business? And I think a lot of you would find that you're in a failing grade. And so what are you going to do about it? Especially with, you know, new year coming up, you know, or new year's already here depending on when they release this or when you listen to it. Yeah, you need to figure that out and make those adjustments rather than the reactive, because I find too many people being reactive out there.

Anna: [00:10:00] Yeah, you'll have to be proactive. I mean, it's, it's, you can sit on the pity train or you can get off it and do something proper. No, no one's going to, and that's the benefit of being a business owner and you probably agree with this, Jason, is you have the power to do whatever you want to change it. If it's not for you, you can always go and work at… I don't know, Starbucks or Walmart or whatever you want to do, or step back to corporate, if you do that, but you have to give it a go if you're brave enough to do it, you won’t regret it.

Jason: [00:10:27] Yeah. There's always something else and there's always multiple paths that you guys can choose. Well, this has all been amazing, Anna. Is there anything I didn't ask you that you think would benefit the audience?

Anna: [00:10:37] Oh, my goodness. That was a, that was a very pregnant pause right there. No, not at this point, but one thing I think is super important. You have to stick to the benefit for the audiences that if you believe in doing something, go for it. There's always going to be a Debbie downer saying, oh, you can't do that.

Of course, you know what? If someone says, I can't do it, I'm going to prove you wrong. I'm going to do it even better. And I think that's something that when people say can I do this? Can I do that? Of course you can. It's, it's all in your head.

Jason: [00:11:03] Yeah, exactly. I love it. What's a website, what's your website where people can go and check out the agency?

Anna: [00:11:08] Well, it’s www obviously, but wiredmustang.com and focusing predominantly on the equine-related businesses here in America. And it's a big business, uh, not just horses and tack, but everything around it. So, yeah, anyone want to feel free to go there and feel free to shoot me an email as well, if they want to.

Jason: [00:11:28] Awesome. Well, thanks so much, Anna, for coming on the show. If you guys enjoyed the episode, make sure you subscribe, hit that little bell button so you don't miss out on any episodes. And if you want to be around amazing agency owners that can see the things you might not be able to see and show you the things that are working for them and others, where you can have a hypergrowth and scale faster and scale smarter and have a lot more fun, I'd love to invite all of you to go to digitalagencyelite.com and check out that page for you.

That might be the thing that's looking or that you've been looking for to get you to the next level you might've reached your top of the mountain that you think of, but I can promise you there's a mountain behind you that we can help you out.

So make sure you go there now and until next time have a Swenk day.

Direct download: Can_You_Build_a_Successful_Lifestyle_Business_To_Eventually_Sell_.mp3
Category:general -- posted at: 7:00am EST

Is your leadership style genuine and sincere? Do you have empathy where your team is concerned? Do your clients display empathy for their end-users? When Lonn Shulkin first started working at Bam Strategy, they had just lost their biggest client and were in the process of pivoting and taking the opportunity to shift their focus to find their ideal customer. Eleven years later, Lonn is now the CEO  at Bam Strategy and is dedicated to motivating consumer behavior through strategy, media, platforms, and creative initiatives. He sat down with Jason to discuss how they went from losing their biggest client to getting to eight figures, how they started building their sales team, and how empathy has helped them increase client and employee retention.

3 Golden Nuggets

  1. Building their sales team. Losing a client that represented 70% of their business meant the agency had to find a way to pivot and use that experience with a global client to diversify. After realizing what they were great at, they got specific on who their perfect audience was and then focused on the business development side to build the sales team around that.
  2. Investing in leadership. This agency has been able to improve its employee retention by understanding that each individual employee needed the time and attention and the effort from them to understand their role in the company. They worked to create an honest relationship where an employee could go to them if they had other job offers and give them a chance to discuss why they should stay. They also started doing more social activities as a group to create bonds and created leadership programs to start building up their leadership practice. Putting in that work results in a culture fit that permeates to all employees.
  3. Teaching their clients empathy. Just like they built employee retention and loyalty by implementing empathy into their company culture, Lonn says they now try to extend that concept to clients to teach them how to care about their customers in the same way. It’s been a big driver of growth and success caring about the end-user in the same way because that's what creates brand loyalty today.

Sponsors and Resources

Verblio: Today's episode of the Smart Agency Masterclass is sponsored by Verblio. Check out Verblio.com/smartagency and get 50% off your first month of content creation. Our team loves using Verblio because of the ease in their process and their large pool of crowd-sourced writers.

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Grow Your Agency & Increase Employee Retention Through Empathy

{These transcripts have been auto-generated. While largely accurate, they may contain some errors.}

Jason: [00:00:00] What's up, agency owners? Jason Swenk here, and I have another amazing guest who has grown an eight-figure agency, very, very profitable. Done it through amazing team, amazing systems and done it with empathy. And so let's go ahead and get into the show.

Hey, Lonn. Welcome to the show.

Lonn: [00:00:28] How's it going? Great to be here. Thank you for having me.

Jason: [00:00:31] Yeah, man. Uh, so tell us who you are and what do you do?

Lonn: [00:00:34] Uh, so Lonn Shulkin. I am CEO at Bam Strategy. Been with the agency for 11 or so years, and just very passionate about growing teams and certainly what we do, which is working as an agency with pretty large customers bring brands that you would know that really focuses on digital experience. So not necessarily the UX stuff, but how we can actually engage customers and communicate with them on a one-to-one basis.

Jason: [00:01:05] Awesome. Tell us kind of the progression or the different cycles that Bam has actually gone through in the past… I guess two decades.

Lonn: [00:01:14] Yeah, it’s quite the ride. I'm sure it's a common ride as a, as I've heard from other guests on your show. But, um, when I joined 11 or so years ago, we had that, that one really big flagship client was taken up 60 or 70% of the business and… yeah it was pretty scary times. And I think at the moment they had actually told us they were, they were a global brand and they had told us that they were going to consolidate all of their marketing in the US and we're based in Montreal in Canada.

So that was a moment where I had just joined the company and we had to figure out how we were going to, um… Luckily, we had a bit of a runway from the client, so they gave us a couple of years notice there, but usually you don't get that in my experience. Um, but we had to figure out, you know, how we were going to pivot and shift and how we're going to use a lot of our experience with this big global brand to diversify.

And so that was probably phase one coming in… the agency is actually 25 years old so coming in as sort of the new guy, there was a lot of work to do as far as aligning teams. And, and for me as a new leader, just sort of figuring out who are my people who share my vision and who buys into that and who can help me craft the company that we, we want it to be and grow it, because at the time growth was not always in an upwards sort of direction.

So lots of up and down. And then we had that big client and so really shifted to focus on those leaders in the company. And that's when I'd say we started shifting into phase two, which is more focused on biz dev, not a ton of RFPs, I would say, although we won a few. But a really big focus on when we had opportunities going all in and choosing those right opportunities cause we started to understand a little bit of what we were great at at the time.

And just putting our all into the pitches that made sense and throwing away the ones that didn't, and I think that was really key for us. And that's when we started winning a few and got a little bit of diversification.

Jason: [00:03:25] I like that you got specific on who your perfect audience is. It sounds like. And then you built the sales team around that. Too many people go, oh my God, I'm gonna lose my biggest client. And my gosh, that was so nice of them to give you a huge runway. And that doesn't happen. I've seen so many agencies go in there. They give you a good runway. And I liked that you focused on the sales team because a lot of times people just say, hey, sales, go find business, but they don't give them direction.

So let's talk a little bit more about the sales team that you guys created. Were these hunters? Were these farmers? Talk about the makeup of what you guys did.

Lonn: [00:04:09] So we've tried everything, as a joke between my partner and I, I mean, we played with the concept of telemarketing having hundreds of calls going out. We had a junior or mid-level salesperson. We had a software sales guy at one point who was more senior and, but it was still outbound calls.

And what we found time and time again is that, and it's still like this today as we've grown to be much bigger, we have our core what I'll call farmers who are really good at client relationships and growing those relationships.

And as I guess, leaders of the organization, what we need to do is leverage those farmers to develop leads as well as our own networks, because the blind pitches, while we've won some, and they are, you know, if I listed our clients, they would be some of them, the longest standing most meaningful relationships we've had have not been what I call formal pitch clients. Or formal RFP that goes out to 20 agencies.

So we don't have this Biz Dev person sitting here who just, all they do is call people and try and get opportunities for us. We've just not seen that deliver the kind of results we want. And we find that it, um, we still get the word of mouth leads that we would get, and we still get the blind RFPs that, that we might get, but we tend to just build on those relationships we have and get referred and find leads that way. And that's, that's, what's worked for us.

Jason: [00:05:49] Do you know, there's two winners to every RFP?

Lonn: [00:05:53] I'm sure.

Jason: [00:05:55] There's the one that wins the project and the first one out. Like, I always hated RFPs and I actually always turned them down. I just realized that RFP stands for like requests for punishment, real fucking problem.

Like it was just like, I hated RFPs because just like you were saying, unless I had someone on the inside or we wrote the damn RFP because that's usually who wins the RFP.

Lonn: [00:06:23] Yeah. I mean, listen, you can, you can sell your soul to the devil in an RFP and maybe get a pretty serious look on price, but then you're not happy that you have the business.

Jason: [00:06:33] I was chatting with a guest not too long ago, and he was telling me after the show… I wish I recorded after the show. I think maybe that should be a whole new segment because that's when a lot of the good stuff comes up, but he was telling me he on a lot of pitches, sometimes they'll spend a million dollars on a pitch.

And I'm like, holy cow, like that's a huge gamble. He's like, well that’ll win like 3 million for the year. I'm like, that's not a gamble I would do. And I do a lot of dumb stuff.

Lonn: [00:07:03] No. I mean, even if you're a really great agency, I can understand the margins on that would not work. So I think we need to be able to show in the pitch that we care.

And if they don't give us an opportunity to do that, we're out of the pitch for sure. Like that's, it's just either, it's going to be so easy that I can just send a spreadsheet in an hour with, with some sort of price and I'll just take a shot at it. Or I really need to be able to show who we are and showing who we are comes as you know, from a lot more than some document.

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Jason: [00:07:33] So now that you started building the sales team that are farmers, what was the other part of the teams that you actually your leadership that you started putting together in order to really kind of take the agency to the next level?

Lonn: [00:07:47] So Chris, our founder, had always created this… I joined a company that had an incredible culture. Let me, let me start with that. And there was, I'd say for the size of the agency at the time we had more of an investment in HR and leadership, than other companies I had been at. And so my background previous to them had actually been at a company that sold HR solutions specifically around motivating and engaging people.

And so I would say that with me coming in, we, we doubled down on that. We doubled down on the concept of having more HR investment than other agencies. We figured out that if we could get really awesome people in and keep them here, because that's a huge problem for agencies, that alone would allow us to have sustained relationships with customers.

And that has proven time and time again, to be an awesome investment for us.

Jason: [00:08:43] Give us some examples of what you doubled down on in HR.

Lonn: [00:08:48] So at first we thought, uh, and this it sounds funny and COVID times, but at first we thought that ping pong tables and fruit and all those things were important. And they were.

We quickly shifted to understanding that each individual employee needed the time and attention and the effort from us to understand their role here, what they actually were going to do and how they were actually going to grow. That was critical. And so every single employee had a performance discussion. And so HR would get very involved in creating those forms and making sure that every person had those discussions.

And we would do those multiple times for per year. And we still do those. We, we changed them from very formal and like scoring based to much more conversational, getting to that human side of things and actually understand what makes the person tick.

And with the ultimate goal of, of course having great people and them being happy, but ultimately knowing the market that we're in and how much people get poached and move around to, to make more money we wanted, I guess that goal was to have a chance when someone was poached, we wanted them to either say no, or give us the first chance. That was sort of my, always the, the goal I put out there is that I want it to be so good that someone would even with a big paycheck in front of them, someone would come to us and give us a chance, basically.

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Yeah, I was going to say in our mastermind, one of our members, he always does this and I always preach this to the mastermind. He always said to his employees, if I do anything or anything happens in the agency that you don't like that demotivates you, or you're not happy with where you think "I need to go take an interview", or "I need to get my resume ready", come to me right away and let's chat about it.

And there's been so many people, so many mastermind members that have saved great employees from literally just starting the interview process, because once someone gets an offer somewhere else and then they tell someone about it, dude, they're gone.

Lonn: [00:11:57] Yeah. It's tough. It's tough at that point. So we started recognition programs. We started doing a lot more social activities as a group, so to create bonds, to create… There's a great book actually called, um, 12, which is by the Gallup organization. That's just about the 12 reasons, 12 things that motivate employees that are non-compensation based. And we started doing that with all our managers.

We started doing a leadership program internally with our managers, where we would go through personality types and conflict types and all the classic leadership programs to start building up our leadership practice so that, that could trickle down to people. And that retention, I think is a huge driver of client retention.

Jason: [00:12:43] Yeah, I think that's huge because you know, I look at there's six stages an agency goes through and the last stage is really building the leaders in the organization.

It's kind of like, you know, in the very beginning, it's kind of getting leads. Having a sales system and then the owner gets to a certain level, but, and then a lot of times people stop there. But if the leader that one leader is smart, they'll try to build multiple leaders where they're not the toll booth.

And that's, that's really pretty smart about figuring out what works because everyone's different. But the people you hire, I find if you hire on values, they're going to be very similar in their values, but different in skill set, different in everything else.

Lonn: [00:13:31] Yeah. And so that culture fit, we always emphasize that and we call it being a Bammer, but that's critical.

And there's been a big shift in that permeating from me and our leadership team to now everyone knowing what that feels like. And we can't necessarily articulate it, but it feels like something. It's very cool to see that permeate down to, to everyone, even a new person who comes in and they're like, oh wow I, I feel it too.

And we're on zoom every day right now, so it's, it's very cool to see that start to happen. And the other thing I'll say that I think is really interesting is that as we've grown those people, we invested in as leaders, 10 years ago, our, our leadership today and so that's really cool.

They've been with us for 10 years and even if they were leaders back then they are much more mature and awesome leaders that I would be happy to give the keys to the car.

Jason: [00:14:30] Yeah. The one thing I learned about selling the first agency was when I turned into an employee, you don't have to motivate the good employee. But you have to worry about de-motivating them.

And I was de-motivated by a number of different actions. That's the biggest thing I worry about with my team and I tell the mastermind members, I'm like, if you have to motivate an employee, you hired the wrong employee. I’d tell them like, like, get rid of that person.

Lonn: [00:15:01] A hundred percent. Yeah. If they're not happy here, they, the writings on the wall, right? Like that's… We want them to go because they can be happier somewhere else. And I think that's the other concept of empathy is I would rather them be somewhere else and be happy than be unhappy here.

Jason: [00:15:15] from someone that's been fired from almost every job that is totally true. Some people held onto me too long. Wendy’s fired me the first day. So they, they had no empathy. I appreciate them because I wouldn't be where I was without them firing me and telling me I can't work at fast food anymore. So thank you, Wendy's. I've never publicly thanked them before.

Well, awesome. Um, this has all been amazing. Is there anything I didn't ask you that you think would benefit the audience?

Lonn: [00:15:48] No. I mean, listen, we're working a lot on extending that concept to our end customers and trying to teach them how to actually care about their customers in the same way as we care about our employees. And I think, you know, that's for us been a big driver growth and success now is how we actually sit with our customers and say, you, you need to care about that end person buying your product in the same way you care about your employee because that's what creates brand loyalty today.

And that's to me, the joy of, you know, the cookie going away and all those things that people are scared of is actually, we have to actually show a value now. And to me, that's exciting. And if you're an agency who can deliver value to customers and help your customers figure that out, it's a bit of a holy grail, I guess.

Jason: [00:16:31] Awesome. Well, what's the website people go and check out the agency?

Lonn: [00:16:34] bamstrategy.com. B-A-M strategy.

Jason: [00:16:37] Awesome. Well, Lonn, thanks so much for coming on the show. You did amazing. Make sure you guys go to their website, check it out. And if you guys want to be around amazing agency owners on a consistent basis, that can see the stuff that you're not able to see and be able to hear the strategies that are currently working, not strategies from 10 years ago. But are currently working right now.

And just have a lot of fun and connect with amazing people. I want you guys to go to digitalagencyelite.com and fill out an application. If we feel that you'll be right, we'll have a conversation and we'll chat about it. And then we'll start introducing you to all the other amazing members all over the world that run agencies that can help you grow and scale faster and have a lot of fun.

So until next time, have a Swenk day.

Direct download: How_Genuine_Empathy_Can_Reduce_Agency_Churn_Rate.mp3
Category:general -- posted at: 7:00am EST

Are you having a hard time hiring the right talent to build your agency team? Manish Dudhareija first started his journey as an entrepreneur nine years ago when he noticed there was a huge demand for skilled developers trained in the latest technologies and there was a gap in hiring, training that fit his expertise. He created E2M Solutions, a full-service agency that offers website design & development, SEO, copywriting, and content marketing. In this interview, Manish shares how agency owners can address the common struggle of finding and hiring new talent. He also talks about how advertising your culture can help attract the right people, and the creative ways you can make your agency stand out to top talent.

  1. Advertising your culture. We’ve talked about how many agency owners need to do more to market themselves to potential clients. Manish adds another layer to this: marketing aimed at attracting the best people to your team. You’re really missing out if you’re not marketing your culture to attract the right elements. He likes to use LinkedIn to showcase his agency’s values and says he is as interested in candidates’ personality traits as he is in their skills. In this regard, he is looking to identify do they have the right kind of attitude? Do they have the willingness to learn? Are they curious? Are they accountable? The answers to these questions will be just as important in the process of selecting a new team member.
  2. Be creative in your search. When searching for your ideal team, Manish recommends creating ads that contain some sort of challenge, like code in the case of developers. This will help your agency stand out from the many messages just stating “we’re hiring” and is a way to spark the interest of the type of dynamic and curious individuals he wants to attract.
  3. On training his team. Manish has a team of senior developers whose main task is to be constantly researching and testing new technologies. Once the agency gets a new project, the team identifies the latest technology that they could work with and try to implement it. Later, when the opportunity arises, they propose that technology to their existing clients to let them know that they are always on the lookout for new developments in their area. This is also a good way to always have someone on the team that can train the rest of the developers and are creating the processes to do so.

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Getting Creative in Your Search for New Talent For Your Agency & Advertising Your Culture

{These transcripts have been auto-generated. While largely accurate, they may contain some errors.}

Jason: [00:00:00] What's up, agency owners? Jason Swenk here, I have another amazing episode and we're going to talk about, because look, I've been chatting with so many agency owners over the past months, and one of the big things is hiring the right people and just finding the right talent.

On today's episode, we're going to talk about some ways where you can find the best talent, should you hire seasoned pros or train them up? How do you train them up? And it really cool solution at the very end. So make sure you listen to the whole episode. So let's go ahead and jump into it.

Hey, Manish. Welcome to the show.

Manish: [00:00:38] Hey, Jason. Thank you. Thank you for having me.

Jason: [00:00:41] Yeah. I'm excited to have you on. So tell us a little bit about your business. You know, you've been doing this for a while and you have over 110 people, but tell us a little bit about who you are and what you do.

Manish: [00:00:52] Sure. Yeah. So I'm kind of an entrepreneur. I started this journey nine years back, uh, in 2012. So I founded E2M nine years back. And one of the reasons I founded this company is to solve a specific problem. That was kind of seeing, like, there is a huge demand of skilled and trained, you know, people, resources in terms of technology. And there was a gap, you know, I thought we can really feel where my expertise is, uh, strategy, uh, hiring, training people and, you know, injecting the traits like personality traits and how to have the force ready, where someone is looking for, like, you know, Uh, someone is not looking to hire people and they are looking for people who are trained to work with.

So that's how I founded E2M. So it started like nine years back and we are kind of a white label, uh, you know, outsourcing company. Uh, we build websites, we do a lot of web development. With WordPress and Shopify and big commerce. And we work with digital agencies, regardless of the size, across the US and the other parts of the world.

And yeah, you know, we help them scale their agency business with our white label services.

Jason: [00:02:13] Awesome. Well, let's get into it and let's talk about, you know, a lot of agency owners struggle right now because there's a lot of demand for what we're doing, right? But it's really challenging to find the right team members.

So what has worked for you? Because you guys have over 110 people what's worked for you to constantly keep getting the best people?

Manish: [00:02:36] Yeah. That's a very interesting question. And, um, I think, you know, similar, like the US, we have an adequate role here in India and we are also facing similar challenges hiring people.

But one of the things, you know, we are trying to do something is, so we often do a lot of marketing to attend the customers, right? But we never do a marketing to attract the people, right? Because we always think like, okay, you know, uh, that early the marketing has to be only to drive in the sales and leads. But I also feel like, you know, that you should also do a marketing to attract the people, right?

So we do a lot of branding our HR team, and we have a social media team, we do a lot of granting on LinkedIn. We expose or culture, you know, more often on LinkedIn and that builds the transparency, that builds the, like, that kind of showcase what we are, what our value is, right? So, we pay a lot of attention in that we, uh, be are vocal and we speak loudly about, you know, what our culture is, what kind of initiatives we have.

So it is not just about, uh, like, you know, the team outing lunch, or get together, but it's more than that, right? So one of the things, you know, which I believe is other than the skill, the traits are very important as well. The personality traits, right. We kind of, you know, when we look for the people, we just do not look for the skill, but we also look for the traits, like what kind of traits to the have, right?

Do they have right kind of attitude? Do they have the willingness to learn? Are they curious? Are they accountable? Are they responsible? Are they good with working with the people? Are they having an open mindset? That allows us to train people faster, right?

So obviously we look for the skill, let's say, if you are looking for a WordPress developer. Yeah. WordPress is something, you know, definitely that's the reason we are interviewing them. But apart from that, we also look for the traits, right? So we are kind of a company where we pay a lot of attention and a lot of importance to the traits. So that's kind of showcase, you know, in LinkedIn.

And transparency, right? I think, you know, one of the things that… Where people love to be in a transparent culture, right? So we don't ask them, we don't lock them into the contract that you have to sign bond with us. You have to work for X number of months or years with us. It's kind of a very open culture we have where we explain them the benefits, how we are different.

Uh, we showcase and we let our other people speak, right? So we are over… uh, so we are like one hundred people right now. So a lot of our existing, we talk about how we have a higher retention ratio. The other team members, they speak about their experience openly. So these kinds of things, you know, help us attract a really, really good talent and, yeah, happy, happy people.

I would say like, you know, we get a lot of, uh, new hires through over existing members. So because they are already happily working with over here, right. So they do a word of mouth. See, it's the concept of like, you know, the customer brings some other customer happy customer will bring another, you know, a customer.

The same concept applies when you were hiring people as well, right? That, okay, if you have a happy employees, happy you happy people working with you. Obviously they are going to bring other people, their friends and family members and friends and friends, they are going to bring that right. So I think, you know, there are the companies right now facing two types of challenges.

One is hiring new people, as well as retaining existing people. Fortunately, we are only facing one problem, which is like, you know, this is a good problem to have, hiring new people, for which we are also like know, working in a way that we are getting rid of that problem, but we do not have the second problem is retaining the existing people because we have a very transparent culture in a way where, you know, people feel more accountable and responsible and they can end with them the kind of growth they're looking for.

So that is helping us a lot to retain existing talent and bringing on the new talent.

Jason: [00:07:21] I love that, you know, because I think a lot of agencies are missing out on always be recruiting. And, and be marketing to, you know, the people that you may need, because like you were saying, I think they're focused on, you know, oh, I need to market to the clients. And, and look, if we're all honest here, digital agencies do a pretty crappy job at marketing themselves, let alone marketing to the people that they want.

But you know, as, as you guys are listening to this episode, I really want you guys to go, man, this makes total sense. You know, first I need to market to, I need to do a good job of marketing to my clients, because there's a lot of agencies that are built on word of mouth. But I need to commit to, you know, going forward to marketing our culture.

Because when you market your culture to people you're trying to hire, it will actually help you with your clients, because they'll be like, oh man, that's pretty cool. Like, I want to work with this, this team. And the one other thing that we did, and you guys may do this as well, especially as, you know, your employees refer other employees to the team. We would do a commission structure or like a little bonus to them if, once we hired someone and they stayed for three months or longer.

Online Training for Digital Agencies

Manish: [00:08:38] Yeah, that's what we have already done. We already have that in practice. So it's, we also do bounty. So, you know, when you bring, refer to your friends and, you know, uh, any other candidates, if they get selected, you get a bounty of X number of amount once they complete three months. So we already had that in place.

The other thing, you know, we are doing differently is something… We know that, okay, the, everyone is using a Facebook and Instagram, right? So generally we do our services and what is meant on Facebook and Instagram. We are also doing our hiding our ads. So we have paid budget, uh, specifically allocated for that on a monthly basis where we do already creative posts, where not…

Okay, if you are looking for a WordPress developer, we put a PHP code and we say, okay, no, find an error on this. If you can find an error on this, you know, we are looking for you, right? So generally, you know, we do kind of this kind of creative ads and another example, you know, we, uh, that is kind of like, okay, our QA team is challenging that, okay, you know, if I'm going to review your code and I'm going to find X number of bucks, for sure. If you challenge that, okay. If you, if you do a code where I cannot find a bug at all, then we are looking for you, right?

So a lot of this kind of interesting ads we run on Instagram and Facebook that also helps us to be in front of, you know, people who are not even sometimes, no, they are not looking for a change, but the way we present ourselves, it makes them interested to apply for the position and change their mind.

So I'm actually reading a book right now, Atomic Habits. I'm sure you must have read. It's a really interesting book. I'm reading, you know, it's Atomic Habits. And, uh, one of the things, you know, that's book I read is see when you sell something, people are not actually interested what you are selling, but they get more curious, how you present it to them, right?

So it's like when we have an opening, we just don't say we are looking for a WordPress developer, but we present in a way that, okay, we are looking for WordPress developer when we don't write it very obviously. And that's kind of, you know, attract them. Okay. This company is standing out and that's where we are getting a lot of attractions.

Jason: [00:11:07] I love it. And I want to switch focus just a little bit, you know, as we kind of end the, or getting more toward the end of the show. How do you constantly…? Because I see agency owners struggling with constantly training their people with a new skill. So what have you seen work for you guys?

Manish: [00:11:30] That's a good question. You know, so we have, you know, different people with different, uh, you know, skill set, right? So we have project managers who just look after the projects team and like that. Then we have technical leads, they are only there to solve developers, technical problems. And then we have a senior developer, some of our developers are just working on exploring the new technologies, right?

So what we do is, you know, when we work with agencies and they are looking for, let's say they are hiring a WordPress developer with us, so then we ask them, okay, you know, there is a core vital, which is very important these days. We have started exploring onto headless CMS right now for building a fast-loading website, using react as a front end, WordPress is the backend, right?

So we kind of identify what is the latest in terms of technology. And we have a specific people who are just working on, you know, doing research and exploring the new technologies. And then when there is an opportunity, you know, we propose that to our existing clients that, hey, you know, we have been working since long and this is something new. What do you like us to try it out?

And they are always open for that. And that gives us a live project to work on. So it, it, it is kind of like, you know, we keep our eyes and ears open and we do a lot of research and we work with a lot of agencies. So we always get to know different problems than we have a technical team with just doing research, what's the latest out?

And then, you know, they learn for us because they are highly experienced and then they, you know, teach that they kind of teach that to other developers as well. And that's how we train that. One thing we do when they are doing that, they make sure to have the processes, they make sure to have documentation, right?

They make sure to have proper standards, coding standards in place. So there is documentation, there is a checklist. So the other developers who are being trained, they don't have to train on the wheel, they get drained faster. So this is something, you know, this is how we are managing basically

Jason: [00:13:41] I love it. I love it. I love that you have dedicated people to, to that, that train the rest of the team. I think that's where, you know, people make a mistake of, especially when they bring in a junior person and they think they're just going to learn up very fast. If you don't have a dedicated person or a dedicated system for training them, it's going to be a challenge and it's going to cost you more than it would of just hiring the more experienced person.

Well, this has all been amazing, Manish. Is there anything I didn't ask you that you think would benefit the audience?

Manish: [00:14:14] Yeah, I think, you know, the one thing is that, uh, we work with a lot of agencies and help them scale and grow with our white label. So this isn't like that. So in case if any agency is facing a problem with management and you know, when you have projects on board, but you do not have anyone to help you executing those projects, then yeah we help agency owners, you know, with our white label services.

So we have a special offer for our listeners today. So we are, you know, we have, we are productized our white label services. So we have different monthly plans to choose from. So if you are listening to this podcast, you can go to E2M, to our website we have specifically designed for this audience, which is e2msolutions.com/smartagency.

So that's E and 2 is a numeric and M for marketing e2msolutions.com/smartagency. If you go to that, that is so when you, you know, use this link, and if you are going to sign up for any of our plans, you will get an additional 10% discount for first three months.

Jason: [00:15:23] Awesome. Well, thanks so much for doing that for the audience. Make sure everyone goes there and, uh, check that out.culture

And, uh, I think that will be a great resource tool in helping you all build in 2022, I can't believe it's 2022. That's crazy. So go to the website now go claim that offer and Manish, thanks so much.

And until next time have a Swenk day.

Direct download: How_to_Build_an_Ideal_Team_By_Marketing_Your_Agencys_Culture.mp3
Category:general -- posted at: 7:00am EST

Are you using your resources wisely in order to scale content creation? Are you leveraging partnerships that will help you grow your agency? Content creation is following a classic marketing channel trend and continually evolving every year. If your agency is not keeping up with the increased demand, you're missing out. In this episode of the podcast, Jason talks with Laura Smous and Steve Pockross from Verblio about how agencies are helping their clients do more with content, as well as some common mistakes agencies make when it comes to content creation. They'll also share the biggest investments your agency needs to make in 2022 and how your content efforts can work with AI.

Laura Smous is the VP of Product Marketing at Verblio and Steve Pockross is the CEO at Verblio, and a three-time guest of the Smart Agency Masterclass. He believes content is still king, especially in a struggling economy.

3 Golden Nuggets

  1. Top trends in content creation entering 2022. Keeping up with content demands has become increasingly more challenging for agencies. Clients need original content, but that doesn't necessarily mean reinventing the wheel. Verblio's survey of agencies has shown the current trends include refreshing old content and repurposing content in new ways (like turning videos into blogs).
  2. Mistakes agencies are making in content creation. Verblio has identified 2 key mistakes they're seeing agencies make when it comes to content. First, an over-reliance on technology to create content results in sameness. AI has a place in content creation, but using it to create all content is a mistake. Secondly, it's important to have a content lead who sees and touches content as the core function of their job. If your agency is having people wear too many hats it becomes evident in the content output.
  3. Use AI for things humans are bad at. As Laura observed, "humans are bad at getting started." While she is not a fan of using AI to write content, she says there is a place for it in helping humans get started with content. Some great uses for AI is sales scripts, outlines, and other repeatable functions.

The Changes Your Agency Should Make in Order to Scale Content Creation in 2022

Jason: [00:00:00] Welcome back, agency owners. I'm excited, I have another amazing two guests coming on. It's been a long time since I've done a three-way on the podcast and we're going to talk about the three biggest investments you can do next year. We're going to talk about Verblio's survey that they did to all these agency owners that you need to be aware of. So let's go ahead and get into the show.

Hey, Laura and Steve. Welcome to the show.

Laura: [00:00:32] Hi! Happy to be here.

Steve: [00:00:33] Hey, Jason. Good to be back.

Jason: [00:00:35] Awesome. Well, Steve, welcome back. Laura, welcome to the show. So I'm going to start with ladies first. Tell us who you are and what do you do? And then we'll go to we'll. Maybe get to Steve later.

Laura: [00:00:48] Sure. Well, I'm Laura Smous. I'm the VP of product marketing at Verblio. We're a content creation marketplace and platform. And I've been doing some sort of messing around at the intersection of marketing and technology for over a couple decades now, with the last number of years really focused on product marketing for high growth startups. So really happy to join.

Jason: [00:01:09] Awesome. Well, welcome to the show. And, Steve, I don't know how we'd let you back on, but tell us who you are and what you do?

Steve: [00:01:20] It’s good to be back. I'm Steve Pockross. I'm the CEO of Verblio. I've been here for five years. I have been working in startups, nonprofits, and Fortune 500's for the last 20 something years, always in high-growth industries. And Verblio is the intersection of my, two of my favorite places, the future of marketing and the future of work.

Jason: [00:01:35] I love it. I love it. Well, let's go ahead and get into why everyone's listening, which is every year you guys do an amazing survey and you always find out really cool stuff. So what have you found out in the survey? What are kind of the three big investments that we need to be thinking about for 2022?

Laura: [00:01:55] Well, I think the first piece is just that the demand for content has only increased. So, uh, that's a really good thing for all of us, but it is a, perhaps a really frustrating thing for a lot of the agencies that we've been polling because they're having a lot of the, the second piece of that would be they're having a lot of trouble meeting that demand.

So, uh, whether it's hiring, whether it's figuring out how to um, assemble a team of freelancers or whether it's leveraging technology or platforms like ours, they're having a lot of trouble making it work to meet that demand. So they know there's this huge growth opportunity, but rising to the challenge is tough. And I think along with that, there's all of the change that you deal with at any time. Um, but it's just accelerated.

So, um, new content types, huge focus on video. And I think that the biggest piece is figuring out where does AI fit into this puzzle? Is it friend or foe for digital agencies and the ones who are smart enough to figure out how to leverage that are really seeing an unfair advantage?

Jason: [00:02:50] Awesome. Let's talk about how are certain things changing in our market around blog posts or landing pages or, or the use of video? What are you guys seeing?

Laura: [00:03:03] Well, I think the first is just that, you know, there was already a challenge with content saturation, um, and the, the bar for content quality and what it takes to actually get noticed and, and sort of, and maintain performance was already really high.

But I think with the pandemic, um, there's been this massive rush online, so there's just more stuff, right? So the definition of what's good, um, what's performing content, whether it be a blog post or a landing page has changed and keeps changing. I think that's, that's the first piece. And then I'm also understanding that it's not an option, really not to do video, not to have mixed media content and different ways to consume your content and to have that really be not only some standalone pieces, but part of everything you do.

So really enhancing what used to just be written form content so that it's more engaging so that more audiences can engage with it and it can live in more places successfully.

Jason: [00:03:53] Yeah. You know, when I first started in this business eight years ago, I can't, oh my gosh. I can't believe it. I don't think I had this many gray hairs, Steve or Laura, but, um, I saw so many people just writing blog posts and that's all they were doing. And I felt like there was a lot of tone being lost.

And then I also saw when I just started doing video because I was a horrible writer before we started using you guys. Like literally it was like, people were like, you're an idiot, no more writing. But I like to kind of do the combo of you know, using all of the different mediums.

When I was made aware of you guys, I really liked it because I was like, hey, I'm going to send you my videos, and then you guys kind of summarize this in a blog post, and then we can turn it into micro-content, all that kind of different, really cool stuff. Do you find that a lot of agencies that are using you or are they using you for that? Or what do you see the trends going into?

Laura: [00:04:50] I think the really smart ones are. And I think that's one of the cool things. I mean, there are a lot of, um, agencies and, and direct brands that are using us to just build their core business. They've recognized that content is not only a thing that's necessary to grow a successful business, but it can actually be at the heart of the business itself.

So we're certainly seeing that definitely with niche agencies that really, um, understand that they can focus in one specific area. They can really scale and knock it out of the park by leveraging Verblio as a close partner. But I think there's still quite a few that focus on just one content type, just delivering it in one way and haven't really looked at how do you, how do you think about content is really being, repurposable chopping it up and making the most out of basically every dollar you spend there by making sure that it can live across channels and that people can consume it, how they want to consume it.

And knowing that a lot of us are on the go, we're almost entirely on mobile devices, but we do still have that human need for a deep, rich, engaging content. So it's not one or the other. Um, and I think that that's a thing, you know, a trend that is going away is really over-relying on technology and not thinking about the fact that we do need this really well-rounded content mix to have a, to have an effective content effort.

Steve: [00:06:02] And so one of the things that it follows is content is really following a classic marketing channel trend, which is it matures every single year. And as it matures, basically things that were cutting edge before now become must-haves.

So what we're finding is you've got your marketers who are still doing the must-haves, which is blogs. It just requires more every year. So now it requires blogs, SEO optimization, more frequency, more video. And then we have this next layer of agencies that are looking at how do you actually use this really powerful channel to create more of a competitive advantage, especially as it becoming a more powerful marketing channel.

And so we have a lot of agencies that are investing in, how do you go much bigger than ever thought of before if you have a partner that can help you provide it to do hundreds of pieces a month and really create a competitive moat? Uh, and so we're seeing these really kind of these three different types of agencies.

And I think it's also one other thing point to pull out is it really depends on what vertical is your agency's looking for. If you're in a super laggard industry, you can use some of the old techniques and it still works. But if you're in a super competitive one like, you know, personal injury attorneys where everyone's fighting tooth and nail in order to be successful, you really have to be at the edge.

Jason: [00:07:12] And so is the solution just do more like more content? Is that the trend that you guys see?

Laura: [00:07:19] I think it's a little more nuanced in that. I think one piece is do more. So all the things that were true before is still true, right? You still need consistency, you still need frequency. Um, and that's kind of the bummer, right? Is those, those have become table stakes.

But now we're starting to look at things like content refreshes as important a part of your content strategy as new content creation. And so there's a, there's a level of sophistication required to understand what's the right mix for, for any given client, for any given month, um, what should you be focusing on?

And that's, I think where it's difficult, um, as an agency to, to do that without a partner, to really even understand what are the options. And then two agencies, I think in general, are somewhat risk averse and hiring more people can be, can be a real dangerous proposition if you don't know that you can maintain that.

So I think leveraging a partner that you trust that you can turn on and off scale up and down, um, over time as, as your needs change is a safer way to grow. Also to be able to bring that expertise to your agency without having to always hire.

Jason: [00:08:21] So I like that you mentioned content refresh. I did a masterclass for 50 agency owners yesterday, and I talked about the low-hanging fruit in sales.

And that's contacting your existing clientele and looking at the old prospects, right? That's a low-hanging fruit. I look at kind of content refreshing is low-hanging fruit for content you've already created. So can you talk a little bit more about how are people doing that? Like, are they looking at Google analytics and being like, man, this page is getting a lot of traffic, but like we've changed a little bit. We should maybe redo this or what?

Laura: [00:08:57] Yeah. I mean, there's a few, there's a few different flavors of it. I think that, um, the agencies that we're seeing really take the lead on content refresh, um, understand that they're talking about that and they're able to sort of templatize their strategy or process to match what they're, what they're trying to do.

I mean, there are some very straightforward ones. Uh, my people really focusing on, you know, for example, local SEO for personal injury attorneys. You're going to want to make sure that every one of those many, many hundreds of posts or pages is really hyper-focused on a danger in that area, or, you know, things that might happen, things that are really relevant to that specific location.

And just going back and making sure that that information is, you know, that the statistics are up to date, um, that it is hyper-relevant to, um, the area, all of that is, um, is working really well. And, and from a strategy perspective, that's pretty formulaic. Then you have the other ones that are going back and saying, ok, we have this really strong performing post. It's declining. How do we understand what's missing now? Maybe what other people have caught up on? What other people who are ranking have added that, you know, looking for content gaps.

And then I think there are some that recognize that, you know, content is not really precious anymore, right? They may have thought something was going to do really well, put a lot of time into it. And I think just accepting that the analytics are not telling that story and maybe it's just, you know, the search intent was not there, right? So you may have, uh, thousands of words and it should have been a listicle.

You know, something like that, recognizing we're barking up the right tree that people are looking for this, but the way that we did it, isn't working and we need to redo it and make it a better match what people are actually looking for.

And then that will, um, be much more successful as part of the mix.

Steve: [00:10:35] And we see is kind of, uh, like a it’s still formulaing how agencies are gonna work with this the most successfully.  You'll have agencies that are basically saying, hey, we're going to do our table stakes. And then everything left over we'll put into SEO content or into content refreshes.

We have agencies that are coming in and saying, hey, our policy is five to 10% of your blogs or your posts will refresh every year. And then we have agencies that are looking at it bigger and basically saying, hey, we think if we use this percentage, could be 35%, ee fresh all of these. This is the cost for all of these, this is the ROI we expect you to get in our, selling them as larger packages.

So we're, we're looking forward to the dynamic trends as they evolve with agencies.

Online Training for Digital Agencies

Laura: [00:11:14] Yeah. And we're, we're finding too that they're, their clients are open to it really, even in terms of what they're charging for it, it's almost an even swap.

They're starting to recognize the value and be as willing to pay for content refresh as they are for new content creation provided that they can be sort of walked through how that's going to impact them.

Jason: [00:11:32] What should agencies stop doing in the new year that you guys have found?

Laura: [00:11:38] Um, I think one thing is, um, maybe an over-reliance on technology. So as, um, you know, we know that the rules change constantly, the algorithms change constantly. So, um, there has been, uh, a huge sort of swarm towards really relying on those tools to tell, to tell us what to write and how to write it. Um, but that's created this sort of sameness in what's out there and, um, they’ve forgotten the human element, right?

So I think that, that complete reliance on technology to do that, thinking that it is really something that can be done without, um, having that human touch I think we'll start to go away. Because uniqueness and sort of authenticity is a piece that is still required for content to perform really well.

And you can't get that necessarily out of a machine.

Steve: [00:12:22] I'll add that I think there's like a couple of different ways that, so that we have agencies that manage us, the agencies that have a person who's senior level who's in charge of content at their agency who looks at it all the time and it's consistent perform really well.

We have, and then we'll have agencies who have a different contact for each member, for each one of their clients to work with Verblio, without having somebody oversee it and how to get the most value from their content. And so we'd really recommend that there's a content lead at your company, whether they're part of the, each one of your client representation or not.

Jason: [00:12:55] Gotcha. And for the past year, I've been hearing a lot around AI, around content writing. Where does that fit in? How do you feel that that's changing things in the industry?

Laura: [00:13:07] You know, I think for, for folks who are relying on it completely, you know, they are getting a sort of sameness or a lack of originality, uh, in the content.

So I think that is, uh, maybe not the direction I'd recommend. I would say that, um, figuring out how to use AI for the things that humans are bad at and use humans for the things humans are good at. So an example of that would be humans are bad at getting started, right? They're bad at doing that first step towards that task and AI, uh, it can really do a lot right now to, um, to give you a content outline, to give you a draft, to help you understand points, you should be hitting to do some of that underlying research, even for, you know, fairly specific topics. You know, we've, uh, we've done a lot of exploration of the tools that are out there and, you know, I could write an article on orthopedic surgery that would at least cover a lot of the bases, right?

So kind of getting you to that, uh, jumpstart, uh, is one piece. Humans are also bad at, I think knowing how, uh, how thorough they are, how closely they're following a process. You know, when you think about someone's own ability to determine whether or not they're following a sales script or something like that, not super high.

So I think just being really honest about what we're good or bad at, and then using AI for those things. Because it is really good at making sure you can be consistent, repeatable that there's some sort of ability to learn over time, um, and to actually catalog that information. But allowing humans to really focus on, you know, some of that originality and uniqueness bringing voice and tone.

AI is improving there and it may get there, but there are still a lot of challenges I think in bringing that, that originality to content that AI has not so far been able to touch. So the marriage of the two really, to me, seems to be the, the ticket.

Jason: [00:14:47] That's awesome. Yeah. I'm going to let you guys on a secret. I'm doing the Scooby-Doo moment. I'm really an AI bot. Jason's actually skating. I'm just kidding.

That would be cool. If it could do that. Well, this has all been amazing. Is there anything I didn't ask you, um, both that you think would benefit the audience before we wrap up and tell them about you guys, a special offer for the listeners?

Laura: [00:15:11] That's a really good question. You know, Steve mentioned having one person be your, you know, your point of contact, something like that, to just make sure that you can leverage efficiencies, you know, pattern match.

Um, I think just, uh, thinking about how can you consolidate the types of entities that are creating content in your organization. You know, we have a lot of folks who have internal content teams. They have external freelancers. They’re messing around with some different platforms and some different things.

They're trying, you know, the, the sort of generic marketplaces, like an Upworker or Fiverr and, um, that's a ton of overhead. And even if you get it right a few times, being able to scale that predictably is super difficult. So, you know, I think. Yeah, agencies should really focus on how can we make our own lives easier and take away some of that overhead and really focus on, um, a handful of scalable resources that can work together.

Because, again, focus on what humans are good at. That time and mental energy is much better spent thinking through a strategy for your clients and strategy for your agency growth than it is, um, just doing air traffic control. So that would be my advice.

Steve: [00:16:16] I have a totally different line of thought, which is a, I'm just thinking back, Jason, to when you were our first guest on our podcast. When we were trying to, uh, right at the beginning of, uh, March, 2020, and we were talking to about what marketers should do at the downfall.

And one of the big things that you stressed was take really good care of your clients. This is when they need you the most. This is like, this is the most important time to be authentic people, to really care about who you're working with.

And I think we're at the opposite side of that trend, which is there's so much business to be had by so many companies and we're seeing so many junior level people coming on and working at agencies and scaling as quickly as possible. I would just say, please be really conscious of your clients and the relationships you want to build on the way up. How many can you take on and really do well, because they'll remember it at the downturn too.

And we'll be having similar discussions, hopefully, hopefully not soon, but, uh, at the next downturn, we all know that they, they, the cycles keep happening.

Jason: [00:17:11] Yeah, anybody can be doing good in business right now. So I love that. It's, it's very customer-focused. Tell us about where people can go, uh, to, you know, try you guys out and tell us a little bit more about that.

Laura: [00:17:26] Well, um, anybody listening here can go to verblio.com/smartagency and get, get a nice discount on getting started with Verblio. Um, and you can also find out a lot more about what we do and all the different types of content we can help you with.

Jason: [00:17:39] Awesome. Well, guys, really appreciate you guys coming on.

Make sure you guys go to verblio.com/smartagency. We've used them for so many years. They do an amazing job. If you're not using them, go try them out.

And until next time have a Swenk day.

Direct download: How_Can_Agencies_Scale_Content_Creation_in_2022_.mp3
Category:general -- posted at: 7:00am EST

Is it time to sell your digital agency? Considering a merger or acquisition in the near future? John Burns worked in mergers and acquisitions for 15 years when he realized a gap in the market, specifically for agency owners. So 7 years ago, he started Clare Advisors, a company that provides mergers, acquisitions, and financial advisory services to privately-held digital agencies and companies in the marketing, media, and business services industries. In this interview, John discusses what owners should consider preparing to sell their agencies, the common misconceptions of when to sell, and why now is a good time if you're considering selling in the next three to five years.

  1. What you need to start preparing. There's a number of factors a buyer would potentially look at in evaluating whether or not they should buy your agency. One of them is profit margin, whether you're consistently making profit and whether your profit is expanding. Also, revenue growth and scalability, since obviously buyers want to buy agencies that are growing and have a lot of momentum. John says the important thing is considering whether you have the infrastructure in place and the right team to grow, over any earn-out or follow-up period.
  2. A common misconception. One of the most common questions John gets is around the target revenue for selling. Whether an agency should be at $10 or $5 million and then sell. “This is a common misconception from owners,” he says because people think the right time to sell is when you’ve topped out at a particular number. Many commonly look to sell a business when their lease is up, and John agrees it could be a factor, so have in mind it may come up. But actually, the right time to sell is when you have the most momentum behind the business and the most wind behind your back. If you’re not in this situation and still want to sell, remember that Jason always advises the right time to sell is when you need the money or you hate the business.
  3. Thinking about selling soon? We have a very active market right now with a lot of owners who are thinking of potentially selling. There are really low-interest rates, so cash is easy to come by, and a lot of companies have excess working capital on their balance sheets because of either PPP loans or some of the fiscal stimulus. Also, capital gains tax rates are potentially going to increase at some point in the near future. It is a very dynamic climate and John advises taking some of those factors into consideration. Don't necessarily sell sooner than you want, but it is a good time if it's been something you're considering the next 3-5 years.

Common Misconceptions About Selling & Tips to Selling Your Agency in The Current Active Market

{These transcripts have been auto-generated. While largely accurate, they may contain some errors.}

Jason: [00:00:00] What's up, agency owners? Today I have an amazing guest. We're going to talk about valuations and preparing your agency for selling and why you would sell or why you would not sell. So let's go ahead and jump into the show.

Hey, John. Welcome to the show.

John: [00:00:21] Hey, Jason. Great to be here.

Jason: [00:00:22] So tell us who you are and what do you do?

John: [00:00:25] Uh, I am the founder and managing director of Claire Advisors. Claire Advisers is a boutique mergers and acquisition and financial advisory firm that specializes exclusively in working with agencies and marketing services companies.

Jason: [00:00:38] Cool. And so why did you get into this business?

John: [00:00:41] I've been doing mergers and acquisitions for about the last 15 years. Uh, started initially working in New York for a couple of different investment banks. And about seven years ago found there was a real gap in the market in terms of, uh, resources for agency owners specifically related to mergers and acquisitions.

So I decided to found Clare Advisors in order to specifically work with boutique agency owners ann the mergers and acquisitions field.

Jason: [00:01:12] I wish you just said that, uh, I got into it to pick up women. Because I keep thinking of there's a movie going, like, what do you do? I've been mergers and acquisitions.

I've always wanted to say that. And now I'm kind of am and that's the kind of…

John: [00:01:25] I was going to say. I think you technically can.

Jason: [00:01:28] Well, but I'm married. So I can't. Let's talk about what are some of the things, if someone's listening and they go one day I want to sell. Jason, I want to sell, like you did in your agency or, or like someone else, what do they need to start preparing?

John: [00:01:49] So there's a number of factors that a buyer would potentially look at in evaluating whether or not they should buy your firm. They should be looking at profit margin specifically. So whether you're kind of making, whether you're consistently making profit and whether your profit is expanding. Revenue growth, obviously buyers want to buy agencies that are growing as opposed to shrinking and scalability, realistically.

It's very common for any deal that happens to specifically have kind of an upfront piece and an earn-out or roll-over equity piece or some piece that's based on value later in the future. And so the important thing to prepare for is that your agency is in a position where you've got a lot of momentum and where you can grow, uh, over the, over the period of the earn-out, um, in order to maximize your valuation.

So you need to really have the structure and the infrastructure in place where you're in a good position to grow.

Jason: [00:02:44] And how big does someone have to be in order to really kind of start thinking about, hey, I want to possibly sell my business?

John: [00:02:54] So there's no predetermined limit in terms of, like I said, in terms of overall value. Firms sell that are two and $3 million of revenue. Firms, obviously sell that or 20, 50, a hundred million dollars of revenue.

So deals happen at all kinds of places in the spectrum of size. The main thing I would consider if I was thinking about selling is specifically, do you have the infrastructure in place? Do you have the right team in place to be able to grow over any earn-out or follow up period? Because there will inevitably be a link between the ultimate value that you get and the ability you have to grow the agency under someone else's ownership.

Jason: [00:03:33] What are some of the criteria that go into valuation outside of profit?

John: [00:03:39] Uh, so the rate of growth, if you're, you know, if you're doubling in size every year, you're certainly going to get a higher valuation than somebody who's growing at, you know, five or 10% or who's flat. I would say the quality of the management team to a certain degree, um, whether you've got that infrastructure and that team in place, and it looks like a team that can really, really scale and really, really grow the business.

The quality of your clients is another one. Uh, buyers obviously prefer retainer-based clients. The world is looking less and less like retainers these days and more like project-based work. But then the quality of the clients becomes really, really important. Is this a client that keeps coming back to you for more and more services? Is there consistency in your clients or are you effectively, you know, recreating your pipeline every three to four months?

Jason: [00:04:26] Gotcha. And a lot of people think there's a threshold on top-line revenue for when to sell like, oh, I'll get to the million mark or is it based on profit? What, what are you seeing?

John: [00:04:39] So the most common question that I get that is a misconception is owner say exactly what you just said, which is I'm going to get to $10 million and then I'm going to sell, I'm going to get to $5 million and then I'm going to sell.

The right time to sell is when you have the most momentum behind the business. So specifically, it's not necessarily that you're at $10 million. Um, it's important to be at $10 million dollars if you think that over the next couple of years, you can grow to 11, 12, 13, and 15, because the thing that will hurt you the most is if you decline after you sell during your earn-out period, that'll financially hurt you.

And so the ideal time to sell isn't when you've kind of just topped out at a particular number. The best time to sell is when you've got the most momentum behind you and the most wind at your back, going into your earn-out period.

Jason: [00:05:31] I've been telling people the best time is when you need the money or you hate the business.

John: [00:05:37] Those are alternatives as well. Yes, I agree.

Jason: [00:05:40] Alright. But the funny thing, I remember reading a stat many years ago, they said one of the most common reasons why to sell a business is when their lease is up. And I read that… because and then I thought about it and I was like, you know, they got something there because the lease is the longest term commitment that you have.

John: [00:06:03] It's certainly a factor that's brought up, especially nowadays of the question of do you have a lease and, just because everybody's working remotely or at least partially remotely, the question of, do you have a lease? How much space is it for? Where is it? And when is it up? That certainly comes up most buyers I know wouldn't make or break their decision based on that one factor, but it is a factor.

Jason: [00:06:23] And which deals do you see most? And let's say we value the agencies under 10 million. Agencies under 10 million is it more an asset purchase or are they buying everything?

John: [00:06:36] So I would say, generally speaking, most buyers want to do asset purchases as opposed to equity purchases, but that's going to vary between buyer and buyer and specific structure.

So I don't think there's, I don't think you can put too much into that as a generalization. It's really going to depend on the individual buyer.

Jason: [00:06:58] Let's get real for a minute. Do you want help scaling your agency so you can scale it faster? Now you might've been following my content for a while and you really wanting to accelerate your agency's growth. And maybe you're just too close to your agency and not sure which areas you really need the most help.

You know, I hear this all the time from a lot of agency owners, and that's why I brought in a new team member to help you figure out your next step. Now we spent the past couple of months working side-by-side, a little too close, and now we're setting up a free strategy session so you can grow and scale your agency faster.

And so I want you to meet Darby.

Darby: [00:07:34] Hey guys, I'm Darby.

Jason: [00:07:35] If you want to walk through a framework for scaling your agency faster, Darby's the guy. He can assess what's going on in your agency and really help you figure out our next step. He'll be candid, he'll be Frank and he'll be brutally honest. Just schedule a time to chat with Darby.

Darby: [00:07:51] That's me.

Jason: [00:07:52] No strings attached. He's ready to meet with you. So book a call at jasonswenk.com/darby. That's jasonswenk.com/darby. Darby will spend a little time getting to know you, your agency, your goals together. You'll figure out your next steps for scaling your agency faster checkout and wait for Darby.

Darby: [00:08:17] Uh, am I allowed to talk now?

Jason: [00:08:19] You can book a call with Darby. Just go to jasonswenk.com/darby and…

Darby: [00:08:25] Have a Swenk day.

Online Training for Digital Agencies

Jason: [00:08:19] And I know when our agency is buying agencies we set a certain kind of requirement. You have to be close to or well, over the million in EBITDA because that's when the multiples really kinda start going up. I, I've always seen kind of anything under that the multiples are really fairly low. Are you seeing the same thing?

John: [00:08:56] It varies a little bit, depending on the specifics of the deal and the structure. I wouldn't generally say the multiples are… Generally larger firms get larger multiples, that's a fair generalization to make, but it really depends on the structure. If you are a smaller firm, you can partner with somebody and they can subsequently give you a tremendous amount of business because you do a capability that they don't do.

Talk about a social media or a digital agency kind of partnering with a PR firm as an example, if one can open up their client lists to all those services, maybe technically they're selling for a lower multiple than a much larger firm would get. But if they're able to really expand their revenue and expand their profitability in a way that they couldn't do on their own, regardless of kind of where the multiples fall, that's probably a deal that maximizes consideration for the seller.

So generally it's true, but it's, it really depends on the structure more specifically.

Jason: [00:09:53] And let's talk about what's the most common structure for something like that.

John: [00:09:57] Sure. So the typical one that you see in the market is like a three or five-year outs where you get a portion of cash consideration at close. Then there's either some kind of rollover equity or some kind of earn out over a three to five-year period.

You actually, as a seller, want a longer earn-out period, if you can do it, if you're, if the timeframe works for you, because it gives you more opportunities to grow, uh. If you have a very short earn-out period, you know, let's say 12 months and let's say COVID happens, or let's say there's a dramatic downturn in the economy, or you lose a client. It's really hard to make up that lost revenue in that lost profitability.

Having an earn-out for at least a couple of years or a few years, at least gives you a couple of opportunities in the event anything goes wrong to subsequently build back up and still try to maximize your valuation.

Jason: [00:10:47] Yeah. And I always tell everybody, you know, like the cool thing we do at Republics is where there's no timeframe on there now. It’s just when you hit it, you hit it.

And we want you to hit it. Where, when I went through, I did well, but I could have done, I lost millions in the earn-out because someone didn't tell me to think about a longer-term earn-out. And so when we were sold for the second time, that was nine months later, that sped up and it was just, it was over.

I was like, oh, wow, you douchebags sold a day after I went out of the window. That wasn't designed, was it? Um, but, uh, yeah, it was.

John: [00:11:27] Your model that you're talking about with no timeframe that looks a little bit more like what you would see from… It, it's a little bit on the unique side. I would say there's normally a defined timeframe just because there's, you know, kind of investment criteria that has to be made depending on who the buyer is.

So your model's a little bit different. It feels a little bit more like, it looks a little bit more like it's a partnership a little bit more like kind of they're rolling footy. So it's not something I've never heard of, but it's certainly more unique in the market.

Jason: [00:11:55] Yeah. Well, I mean, we look at it as we want it to be a win-win, you know, it's not, we don't want to… And, and the thing too is like, when we put the requirements on who we buy, a lot of people think oh, the market turned because of COVID, which it didn't, it actually went up. But there were thinking in the very beginning, oh, I'm going to take advantage of all these people that are losing and going down.

And I'm like, we don't want to buy agencies that are going on the down projectory. We want them to be going up so that they can speed up our, you know, success. And then we can go do the things that we really want.

John: [00:12:30] And if you buy somebody that's in a negative position or that's in a really, really desperate position, you're really not getting, you're truly not getting partnership from that owner. Realistically, that owner is looking to cash out, looking to leave. It’s not… Yeah. And it's just not a good situation for them either. So it's hard to make those situations work.

Jason: [00:12:52] Yeah. I mean, they're just, they're an anchor dragging the whole boat down and, uh, I’d just cut the line and be like, you can sync.

For the agency side. Now, if you're sinking, you can come to us and we can help you out on the consulting and you can be around amazing agency owners. But, um, let me ask you this. What is the biggest multiple you've seen for an agency?

John: [00:13:18] That's hard to say…

Jason: [00:13:20] Just on evaluation and, and I'll preface this because like you talk about different deal structures. Most people that are listening, if you think the valuation is the amount of cash you're getting, you should think again, that's just the valuation.

You'll get maybe some cash. Like, you know, a lot of times what we'll do at Republics, we'll do 50% cash sometimes a little bit more. But it depends on situations, but there's a lot of situations I've seen where people are like no cash upfront. We'll give you the valuation, whatever you want. But that doesn't mean anything.

John: [00:13:54] So the way that buyers generally approach valuation is ultimately it's gotta be a win-win for the buyer as well. Buyers are not in the business of giving away money just for the sake of giving away money. So there has to be some type of alignment between the buyer and the seller.

If you take a look at some of the publicly traded holding companies, as an example, when they buy firms, they typically would want those deals to be a creative to them. Meaning that when that profitability comes over to their publicly traded stock, they get more value for it than they paid for. What that generally means is that they should be buying companies at some type of discount of multiple to what they're trading at in the market.

So if you've got a publicly-traded marketing holding company and is trading at 14 times earnings or 15 times earnings, or, you know, something of that nature, most likely they're not going to be buying firms for, or be willing to buy firms for that multiple, because it's basically, you know, they're taking $2 over here and then moving $2 over there. It doesn't really add any value for them.

So they'll probably buy at a significant discount to that. So, If you've got a buyer, who's, who's a publicly-traded company and they're trading at 15 times, you probably, you should probably should expect your valuation potentially depending on the specifics of your company to be somewhat of a discount from that, either a high single-digit or low double-digit, depending on the buyer and depending on the circumstances.

Jason: [00:15:22] Well, this has all been amazing, John, is there anything I didn't ask you that you think would benefit agencies listening?

John: [00:15:29] I think that the, the only other thing that I would say that is relatively unique about this particular time period, that we're having this conversation in right now, post-COVID and just kind of the economic factors that they are.

It's a very active market right now. Uh, there's a lot of companies that are for demographic reasons you have a lot of owners who are thinking of potentially selling now. You have really, really low-interest rates. So cash is really, really easy to come by. A lot of companies have excess working capital on their balance sheets because of because you know, of either PPP loans or because of, you know, some of the financial stimulus that's been in the market and they've actually done pretty well through that period.

You potentially have capital gains tax rates going to increase in some point in the relatively near future. And so it's a fairly active market right now. Um, and if someone's thinking about potentially selling, I would recommend to them that they give it very serious consideration because there's a lot of people looking for companies right now. There's a lot of… the landscape is changing and people are looking for different capabilities than they were a few years ago as you mentioned earlier, is that some companies did really well during COVID.

And, um, so it's just a very dynamic market right now, so if anybody's thinking of selling in the next couple of years, I would say that they should probably take some of those factors into consideration. And effectively, uh, not necessarily sell sooner than they want to, but, um, it's, it's definitely a time to be thinking about that if you're, if you're planning on selling in the next three to five years.

Jason: [00:16:59] Awesome. What's a website people can go and check you out?

John: [00:17:02] Uh, our website is Claire, claireadvisors.com. So we're at Clair Advisors and you can, uh, you can find us there any time.

Jason: [00:17:10] Awesome. Well, thanks so much, John, for coming on the show.

And if you guys are interested in selling your agency and maybe, you know, you want to get my advice, or maybe you want us to even buy you, I want you to go to jasonswenk.com/sellagency and just a quick little form. And then if we think, uh, we can help you out or position you to a certain buyer, uh we'll we'll help you with that.

So go to jasonswenk.com/sellagency. And until next time have a Swenk day.

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Category:general -- posted at: 7:00am EST

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