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agency coach

Challenges, opportunities and priorities for agency leaders

I was a guest on The Digital Marketing Hub monthly webinar last week. The brief was to give my views on the challenges and opportunities for agency leaders both now and beyond the crisis. A – very – tough brief.

Here’s a summary of my thoughts: 

Where to start?

To begin with a positive, I certainly think that this crisis has brought the agency sector together more (as it has our society as a whole). Despite the restrictions, I’ve seen more agency owners talking and trying to help and advise each other than ever before. Nobody would want these circumstances, but it’s great to see this in what is a very competitive and often protective industry.

People have said to me that agencies are all in the same boat. I don’t agree. I think we’re certainly all in the same storm but each agency (and business) has its own unique circumstances. Some are in small agile boats but without a lot of fuel, others are larger vessels that are harder to manoeuvre. Most are somewhere in between. 

As things stand…

Because of this dynamic and the unique situation, it’s extremely difficult to offer general advice or guidance to agencies. This is far from a factual study, but from the people I’m talking to, numerous webinars I’ve attended and several surveys I’ve seen both here and in the US, the sentiment amongst agencies appears to me to be as follows:

60% think that they’re (sort of) OK. It feels like just over half of independent agencies are – reasonably – comfortable. Don’t get me wrong, I don’t know anybody that’s happy or thriving, but these agencies think they can weather the storm.

30% of agencies are struggling and are in survival mode. They’re taking drastic action including furloughing large numbers of staff and cutting costs. These agencies are either usually relatively new or have had significant client work paused or cancelled altogether. 

10% of agencies are already in big trouble. They’re already saying that it will be a miracle if they can survive, if not the lockdown period, but certainly the economic conditions that are going to follow. Lack of cash is the main reason for their sensitivity to the situation.

This is broadly how I see the market at the moment. Whether you agree with my “temperature check” or not, I hope your agency is in the 60% group (or at least can make it into it). Sadly I’m sure that in the next 12 months we’ll see many agencies struggle and the 10% group may well increase.

Challenges & Opportunities

Individual agencies in unique situations are facing a perfect storm that the entire world is locked in.  General advice is difficult but despite the nuances and complexity of the situation, I’ve attempted to capture what I see as the Top 3 challenges and the corresponding opportunities for independent agencies.

1. Leadership

Effective leadership is an important ingredient for any successful business of course, but in testing times it can be the thing that decides whether the business survives or not. There has never been a bigger challenge for agencies than there is now. Leadership could be the difference.

Providing leadership is extremely tough at the moment though. It’s incredibly difficult to plan at the moment. Uncertainty is literally everywhere and providing your team with a vision for the future is hard many of our lives practically on hold.

Leaders know that this is a situation that will not be over quickly. Even when some sort of normal working conditions return, the economic backdrop will be extremely tough. It’s going to be a long haul and agency leaders will need immense stamina, guts and determination to see it through.

A leadership role can often be lonely, but the current crisis exacerbates this. For agency leaders, the stress of trying to make tough decisions whilst remaining motivating and optimistic can be difficult to cope with. For agency staff, the future of the business is important. For agency owners it’s often their entire hopes and dreams.

Working from home under lockdown has been difficult for most, despite what technology has enabled us to do. I’ve spoken to agency leaders though that are finding it a real challenge. They want to be with the team in person, they’re working harder than ever, and as many have pointed out to me, they feel they’re always in the office. Even when they’re away from their home desk for a few hours, people have said they feel guilty as they wonder if they could be doing more to support the business.

On a brighter note, this period is a challenge but also an opportunity for agency leaders. If your agency can survive this situation, the experience and knowledge you will have accumulated will make you a much better leader for the future. Personal growth often comes out of adversity.

Whilst nobody is happy, I’ve seen some agency owners energised by the situation (to some degree). I’ve seen enthusiasm come back from people running agencies that were perhaps a little demotivated and coasting before all this happened. The fire is back in their bellies. Long may that continue, it will be needed.

2. Operations

Clearly there are some huge operational challenges for anybody running a business at the moment. As agencies, unlike say the hospitality sector, we are at least able to operate from home and at a distance reasonably well. Nevertheless, it’s a real balancing act.

People are the lifeblood of agencies, and looking after them in these difficult times is a priority for every agency owner. Furloughing and other measures have been adopted by many, but it is incredibly difficult to choose the right course of action for both the agency and the people within it.

Most agency leaders I speak to have had their clients pause work in some way. Either retainers/fees or project work. Some agencies have been heavily impacted by this, others only mildly so far. All agency leaders understand their clients’ situations and emphasise with them. Nevertheless, it’s causing huge difficulties in deciding what people resources an agency needs to operate effectively during the lockdown.

Agencies have all been forced to review their entire cost base and do some really detailed financial planning over the past few weeks. Most now have a clearer idea of what cash runway they have and what steps they need to take. Unfortunately, we all know this crisis will have many twists and turns before it is over. Many agencies will find the forecasts impacted by clients failing to pay when they said they would. Some clients may not even survive themselves, of course, leaving a hole in the agency cashflow and future revenue.

Agency leaders are facing really tough decisions, but as an owner of a business, there’s a real balance between making tough decisions and being optimistic and positive.

The opportunity here is to come out of this with a different business. One that may be smaller than before, but will also be leaner and more efficient. This is inevitable for most, as the world will not go back to complete normality. Many of us will come out with different businesses, different business models even. All of us will come out with different ways of working.

I know a few agency leaders who were quite sceptical about utilising remote working before the crisis. I admit to being in this mindset myself a few years ago. The power of the agency has always been the interaction of the team all together in the office for me. These agency leaders though are now often buoyed by their team’s approach and attitude during the pandemic and some have become complete converts to the remote working model. That said, on this particular issue, a do think there is a bit of honeymoon period that is starting to falter. People and productivity are becoming a little strained in some cases.  

3. New Business

Finally, last but by no means least, the third major challenge I see is the need for new business. Franky, new business would have featured on my Top 3 list of agency challenges before the virus. It’s a constant issue for all agencies. Almost overnight, it’s suddenly become even more important, and – if it were possible – even more competitive than ever.

I’m seeing all agencies up the ante on new business. Many of them are not necessarily desperate to gain or replace new business right now. They simply recognise the challenges ahead and know from experience that new business is often a long sales cycle.

I’m also seeing many agencies reporting that whilst their new business pipeline has not completely dried up, there has been the inevitable pausing of decisions. What was once warm leads have suddenly gone quiet. Just like existing clients pausing work, agencies can appreciate the reasons for this of course. Prospective clients are, like the rest of us, are occupied with operational issues and trying to get their company through the lockdown.

Perhaps the most distressing thing I’ve witnessed is agency owners realising that their new business pipeline, and maybe even the people and processes they have in place in this area, are not what they thought they were. Having reviewed all aspects of their operations, some agency leaders have been shocked to find the pipeline wasn’t as healthy as they thought – or were being told – it was. That said, I also know many people that have got a good pipeline and they’re pretty positive about it. Indeed, I’ve seen agencies pitch for and win some significant new clients and projects in the last few weeks alone.

I think the opportunity out of this is to come out with a sharper and more focused business. An agency that is better positioned more effectively targeted. A business that is more strategically aligned but also more executionally sound and fit for the future.

What to prioritise?

What would I be prioritising as an agency owner right now? 

  1.    Planning – All agency leaders and business owners I’ve met have developed some sort of emergency plan for COVID-19. Most have a had a decent go at planning the next 3 months. We all know these plans will change, but it’s vital to have some sort of roadmap. Whilst I see lots of people with a Plan A, I don’t see as many with a Plan B or a Plan C (different scenarios based on further account losses, pausing or none payment of invoices). This clearly involves both more work and confronting more scary outcomes, but I believe its a worthwhile exercise to be better prepared. Whatever you do as agency leaders, even if you have a robust plan, stay close to the detail for the foreseeable future. Now is a time for stepping in, not stepping back.

 

  1. Regular transparent communication – You can’t over-communicate to your team, clients or suppliers/partners at the moment. Even if you’ve not got anything particular to tell them, make sure the channels of communication stay open.  If you just don’t know what to say, I suggest briefing your team on some scenarios to explain what might happen i.e. if x happens then we’re going to do y. People, in particular Gen Z members of your team, would prefer to understand the full picture than being left in the dark. Don’t protect your team from the realities of the situation you are in. They need – and want – to understand 

 

  1. Lead Gen and New Business – If you had previously stepped back from the frontline of this and/or are less than 100% satisfied with your sales team then as the agency owner any remaining time you have would best be spent in this area. Even if the lead gen work is covered, re-thinking and improving the new business strategy and providing input into current opportunities are all time well spent for agency leaders under the current restrictions.

Final Thought

The Stockdale Paradox is a quote by Admiral James Stockdale, a POW in Vietnam. It was referenced in Jim Collin’s book Good to Great. Admiral Stockdale said:

“You must never ever ever confuse faith that you can prevail in the end with the need for the discipline to begin by confronting the brutal facts, whatever they are.”

The people who own and run agencies tend to be a positive, optimistic bunch. It’s one of the reasons why I love the agency world and it’s what makes agencies great places to work.

In times of hardship though, whilst you have to be able to retain a sense of optimism, you can’t let it cloud your judgement or stop you confronting and acting on issues quickly and decisively.

Referring to his time as a POW, Admiral Stockdale said that the ones that didn’t make it out of the horrors of captivity as well as he did were the optimists. He said “The optimists…they were the ones who always said, ‘We’re going to be out by Christmas.’ Christmas would come and it would go. And there would be another Christmas. And they died of a broken heart.”

Optimism is crucial when you leading a team, but I don’t think we’re getting out of this situation – fully – by Christmas. Balance your optimism with the courage to confront the challenges your agency faces swiftly and head-on. You will get through this crisis and you will be a stronger agency and leader for it.

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Gareth Healey
Gareth is the founder of Beyond Noise. He has 25 years experience in the agency sector. A business coach and mentor, he works exclusively with ambitious owner-directors of established independent marketing agencies.

Coronavirus Advice for Agencies

Disclaimer…

This is a summary of our understanding of the current support being proposed by the UK Government as things stand 21st March 2020. It is intended as a quick guide for UK based SME agencies only and does not constitute financial advice.

You should check the details yourself or via your accountant before acting upon any of the information listed below.

This article is intended to make sense of the current support and give UK agency owners a helping hand as they cope with the changing world around them.

Wage Bill

The UK Government will cover 80% of the salary of furloughed workers (to a max of £2,500 per month) through the Coronavirus Job Retention Scheme. Currently, this will cover 1st March to 31st May (but may be extended). Employers can choose to top up the salary (or not). Furloughed means that staff have no work and are not working for you. They will effectively be on a temporary leave of absence (they are not sick or on annual leave). You will need to designate affected employees as “furloughed workers” and notify them of this change. You will then need to submit information to the HMRC (details coming next week). It appears that the payments will be reimbursements i.e. you will need to pay staff first and claim back from HMRC.

Cashflow

If you have an existing loan, contact your provider and enquire about a repayment holiday and/or the Coronavirus Business Interruption Loan Scheme. The scheme will be administered by the British Business Bank but provided by 40 accredited lenders. You may have a relationship with one of them already. Finance products such as term facilities, overdrafts, invoice financing and asset finance will be available. More details will be available next week.

Eligibility criteria will apply but it’s designed for UK SMEs who will be unable to meet a lender’s normal lending criteria for a commercial loan or other facilities (but whose agencies are considered viable in the longer term). These facilities will be debt and the borrower will remain 100% liable for the debt. The Government will guarantee 80% of each loan giving lender’s security to make quick decisions. The Government will also cover the first 12 months of interest payments so businesses will have lower initial repayments

Tax

Agencies in financial distress with outstanding tax liabilities or those that are unable to make their next payment may be eligible for the HMRC’s Time to Pay scheme. Call HMRC’s dedicated helpline 0800 0159 559.

VAT

Payments will be deferred for 3 months (covering 20th March until 30th June). No application is required. You will not need to make a VAT payment during this period.

Sick Pay

Some agencies will have employment contracts offering more than SSP. If your agency only pays Statutory Sick Pay (£94.25 per week) this now comes into affect on day one of the employee not reporting for work due to COVID-19 (or choosing to self-isolate). The Government will refund up to 2 weeks SSP per eligible employee who has been off work due to COVID-19. Employers will need to pay the employee and reclaim from the Government.

Business Rates – If you are a small agency and already qualify for small business rate relief (SBBR), you may be entitled to a one-off grant of £10,000 to help you meet your ongoing costs.

Business Rates

If you are a small agency and already qualify for small business rate relief (SBBR), you may be entitled to a one-off grant of £10,000 to help you meet your ongoing costs.

Gareth Healey
Gareth is the founder of Beyond Noise. He has 25 years experience in the agency sector. A business coach and mentor, he works exclusively with ambitious owner-directors of established independent marketing agencies.

What makes an effective agency NXD?

What is an agency NXD?

Agency NXD, Non-Executive Director, Non-Exec, NED. Whatever terminology they use, many agencies are now utilising the skills of an experienced person who is not directly involved in the running of the business but supports the directors in its development.

NXDs are not the sole preserve of the agency sector of course, far from it. The role of an NXD originated and is widely used in larger companies and in particular PLCs across sectors. Indeed, an independent director who oversees the executives’ management of the company is a key requirement for many organisations whose shares are publicly traded.

Historically, these NXDs were very experienced retired or semi-retired former executives. Increasingly, NXDs are now younger and either employed as an executive at another company, running their own business or even operating as a portfolio NXD.

There are many benefits to having an NXD. They are particularly highly prized in larger companies. Stakeholders can take comfort in the fact that there is one, or often several, NXDs monitoring and challenging the activity of the executive team. As NXDs are not full-time they are comparatively cheaper and can act as a sounding board for directors and a safety net for non-director shareholders.

The role of an NXD

The role of an NXD is to hold the executives to account for the delivery of the business objectives.

NXDs are focused on 2 areas; governance and growth. Whilst good governance is crucial to any organisation. In a smaller business, and in most independent agencies, it is the pursuit of growth that usually takes precedence.

Running any business can be exhilarating, fulfilling, challenging and frustrating. When you’re running an agency you can experience all these emotions in a single afternoon! 

Its a cliche of course but it can be lonely at the top of an organisation. As an agency principal, even if you’re not a sole director, it can feel like you have nobody to turn to for advice or counsel. Balancing the demands of your clients and your people can seem like an impossible task.

Having a supportive agency NXD who understands your challenges and has walked in your shoes can be of great asset to your business.

It is appreciated that NXDs cannot give the same continuous attention to the business of the agency. However, it is important that they show the same commitment to its success as their executive colleagues. 

The characteristics of a good NXD

NXDs are usually selected for their personal qualities, experience and specialist knowledge. Its vital that they not only possess wisdom, but are familiar with current trends and developments.

Some of the key characteristics of good NXDs are:

– Independence – it’s crucial an NXD has a strong relationship with their exec colleagues but retaining a level of independence is key. It not only provides objective scrutiny but enables the NXD to maintain a “helicopter view”. They must not get too close to the business so that they can’t see the bigger picture. This is usually why the directors need an NXD in the first place.

– Challenging but supportive – the NXD must be able to probe and challenge without creating conflict. They need to be constructive and diplomatic so they can ask difficult questions whilst offering support and guidance on problematic issues.  Mutual trust is vital.

– Courage and integrity – NXDs must have strong principles and the courage to stand up and say if they feel something is wrong or risky. Despite being engaged by the business, they require the courage to disagree.

· Great communication skills – they must be able to communicate complex ideas clearly and without being dictatorial. They should command respect but listen and absorb information as much as they talk and have input.

– Deep understanding of the business – whether they have industry experience or not, they need to quickly understand the products/services, the culture, the management team and the customer base. 

– Breadth of experience – we are faced with more operational issues than ever before. Reputation management, health and safety, ethics, social responsibility, risk and technology are all vital areas to observe when running a business. Companies need NXDs with specific knowledge and experience to frame discussions around these areas.


My own experience

We had a total of 6 people who operated as our agency NXD over the 15 years I was running my agency.  A number of our NXDs had agency experience, others had very little agency knowledge at all. At the time, this was a conscious decision on our part. We wanted to work with people who had different perspectives. This included other agency experience but also client-side and similar businesses operating in different sectors.

Looking back, I consider the people with agency experience to have been more effective as they hit the ground running and needed less context around some of the issues we discussed.

We chose to work with one NXD at a time, but we could have appointed more than one person.  In hindsight, I think this would have further supported and accelerated our growth. That said, we were in a fortunate position. Not every agency has the ability to invest in one agency NXD, never mind two or more.

The benefits of an agency NXD

In addition to the benefits to the agency outlined above, one of the key things myself and my business partners wanted from an agency NXD was personal growth. We recognised that even if you are not the sole director, leading an agency can still be a lonely role. It can also be a hard position from which to achieve progress in personal development. You’re often fire-fighting and switching your attention between interacting with clients and staff. It can leave little time or outlet for you to develop your own skills.

I’m a believer that you can learn something every day from anybody, but even if you are working with incredible people as I was, there is a massive benefit to bringing in external knowledge, experience and opinion. It’s not just about expanding the gene pool though. You can get very comfortable and familiar with your business partners and work colleagues. Too comfortable. Challenging them and yourself to improve your performance in the agency can become harder as time goes on. 

When we sat down in a board meeting it was hard for us to challenge each other if certain actions hadn’t been completed. We usually knew what had taken priority instead and invariably we ourselves were in a similar situation.

With an NXD in attendance, we knew that they wouldn’t be aware or concerned by the reasons why certain objectives hadn’t been met. We all raised our game when it came to these meetings as we knew an external person was attending and we wanted to ensure we continued to make a good impression on them.

Thinking back to the non-execs we used, whilst they all brought different perspectives, support and additional knowledge to the table, the real benefit for us as directors of an agency was the added accountability they instilled in the business.

This was the real value I got out of working with an agency NXD.

Do you need an agency NXD?

If you’re agency owner considering working with an NXD, I would ask yourself 3 questions:

1. Why do I need an agency NXD?

2. What benefits do I want them to bring to the agency?

3. What sort of person do I want to work with?

The reality is nobody needs an agency NXD. They need somebody to help the problems they are facing.

I see a lot of agency owners considering agency NXDs as a new business channel. Independent directors can bring a larger network into your agency and this can, in theory, bring new client opportunities. In reality, I’ve never seen this really bear fruit. If this is the primary reason to appointing an agency NXD then I would think about the position again.

No matter what level of experience you have, there is always an opportunity to learn from others. Whilst an agency NXD is likely to have more experience than you, even if they don’t, they will definitely have different experiences than you. That said, it’s vital you think through and articulate what value you want them to bring to your business. How will you – and they – measure their success?

As with all recruitment, nobody really wants additional headcount. You want the value that a person can bring, not the role itself. Good chemistry is crucial though. You must connect and enjoy working with the agency NXD as much as you do the other members of the senior team.

Gareth Healey
Gareth is the founder of Beyond Noise. He has 25 years experience in the agency sector. A business coach and mentor, he works exclusively with ambitious owner-directors of established independent marketing agencies.
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