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April 22, 2008
How to Put Your Agency Into a Crisis (Or: 10 Steps on the Way to Committing Agency Suicide)
 

Memo to agency owners and managers:

There is nothing in this article that you don’t already know about.

There is plenty in this article that you aren’t doing anything about.

We’re in the business of building other people’s businesses. In so doing we often neglect to take care of business, our own business that is. Here are ten things agencies do to hurt themselves. If you’re doing any three of them at the same time, you’re itching for a crisis.

  1. Financing your clients. In other words, not being organized and aggressive about collections. In your efforts to stay on the client’s good side you let them slide on the payment terms in your client-agency agreement (assuming of course that you have an agreement and assuming it delineates payment terms).

     
  2. Giving credit where credit is not due. Are you checking and monitoring your clients’ and prospects’ credit ratings? We’re heading into harder times – somebody out there wants to take advantage of you. Verify first, trust a little and then verify some more.

     
  3. Believing resumes. We’re in the business of creativity. All too often this extends to resumes. Ask for, i.e., demand references. And then do something really unusual: Call the references. Be creative: engage in a real conversation. Try to get more then just the usual dates of employment and that he/she is a swell person.

     
  4. Hiring too soon. Do yourself a favor: Don’t plan ahead. Seriously, we’re all optimists in this business. We assume the clients are going to spend what they say they’re going to spend and we staff up to be good and ready to handle the business. Wait! Unless your people are so over-loaded that they barely function, or you need specialists, you can get by a little longer. When the money starts coming, start hiring.

     
  5. Hiring on the cheap. You get what you pay for.

     
  6. Nickel-diming on perks. On the other hand, all work and no play makes Jack a dull copywriter. Nice work space, up-to-date technology, fun & food times, time off for wonderful behavior, etc., etc. all add up to create a culture of appreciation. Which for a lot of employees is as important as their salaries.

     
  7. Over-spending on “stuff.” Okay, so this sort of contradicts #6, but there’s a fat line between comfort and opulence. This is especially true when it comes to management perks. Treat yourself well, you deserve it. But beware of fostering a Mercedes-only mentality.

     
  8. Over-spending on spec. There are a few brave agencies that refuse to do spec. Bravo to them! But for the other 99% spec can quickly become a black hole into which all profit can fall. If your ideas are good they’ll survive a reasonably costed presentation. If the ideas are bad, no amount of presentation overkill will get you the account.

     
  9. Borrowing to survive. Borrowing to finance growth is one thing. Borrowing to stay alive is something else. If you’re in the latter mode you’re already in crisis and immediate surgery is required. Never mind the big new account that will save the day if it comes in, you need to cut out all the fat, and a generous chunk of muscle now. Reality can be a terrible thing. Especially if you refuse to recognize it. Just how are you using that credit line?

     
  10. Office envy. An agency’s home is its castle. But if the rent and associated costs of running your castle are near or above 10% of AGI you’re cheating other parts of your business in order to feather an elaborate nest. You’ve only got two choices: Get bigger. Or live smaller.

 

Needless to say there are a lot more than 10 ways to throw your agency into crisis. My website has a whole catalog of them. All of these are avoidable, if you face up to them. As my high school chemistry teacher told me as I tried to talk my way through of a little creative test-taking: “To thine own self be true.”


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Gary Lessner has over 35 years of experience in the advertising/marketing business. He is the immediate past president of TAAN (Transworld Advertising Agency Network), the nation’s oldest independent agency network, and a former agency CEO.
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