So you’ve moved from complaining about your job and boss in the pub to deciding to take the plunge and start up your own agency.
You’re dreaming of being your own boss, winning your first client and taking expensive holidays that your new salary will pay for. This is also the time to take a long, cold, hard look at the realities of running an agency.
Guess what? You’re not the first person to have this idea and your new baby is being launched into a highly competitive market with every conceivable proposition on offer. So what do you have to do to make sure that your plunge into the world of entrepreneurship is a success?
Let’s start with you. Be honest about your personality and what you like doing and can’t abide. If you are not a completer/finisher by nature, make sure you team up with a partner or that your first employee has an eye for detail. I’d strongly recommend that you don’t start up on your own. Even the most driven and tenacious owner-manager can find the vagaries of consultancy life a bit overwhelming at times. Having a trusted partner provides you with someone to give you a lift after another failed pitch or difficult client meeting.
The next step is to have a very clear idea of what you are creating. Is it an agency that you will want to sell in the medium term or a business that will fund a good lifestyle for you until you retire or decide to do something else? Both of these are perfectly legitimate approaches but which one you choose will have a big impact on almost every facet of your plan, including agency structure, recruitment strategy, your location and maybe even your proposition.
Having worked out what success looks like you can now decide what you are going to sell and how you are going to differentiate yourself. The sector really doesn’t need another vanilla agency. But there is always room for a new firm with a proposition that firmly addresses an identified client need, supported by ‘sticky’ services that keep the fees flowing and make you invaluable to the client.
Make sure you are clear why a prospective client would choose your agency over an established one. If you can’t come up with a good answer, with clear evidence to support it, then more work is needed.
Don’t underestimate how hard it is to develop a robust and differentiated proposition but with a little thought, research and creativity it is possible to build an offer that will give you the best chance of winning those all-important first clients and make it easier to attract the right team.
Plus spend some time on your agency name. Ideally you want something that can be developed into a brand with all of the all associated benefits in terms of premium pricing and recruitment. Three of my favourites are Brands2Life, Man Bites Dog and Blue Rubicon.
The next step is to be absolutely crystal clear about to whom you will be selling. Not every organisation in the UK or Europe is a prospect. The fastest growing agencies know whom they want to work for and are methodical and tenacious in the pursuit of them.
Having a pragmatic process for the identification, contact and pitching of prospects makes it part of everyday life within your start-up. And that is what it has to be if you are to avoid periods of panic as you stare at an empty pipeline after a particularly busy period and wonder how you are going to pay the next month’s salary bill. I’m a big fan of the PACE model for sales management, but there are many alternatives available.
Lastly you need to get the numbers right. It’s a bit of a cliché that lack of cash is the big killer of star-ups, but it is spot on. While you are building your first profit and loss sheet, make sure you do two versions: your most ambitious one with your dream level of fee growth and new employees, and one that halves the fee growth, delays new business wins by three months and doubles your overheads. If the numbers still stack up you are probably on to something.
Make sure that you have robust cash flow reporting and that you are super careful in terms of financial commitments to offices. Agencies are hard to kill off – they just keep shrinking until the founder is working in their kitchen – but an unaffordable lease that has been signed for emotional rather than business reasons spells disaster.
And of course, lastly, get yourself a great non-executive director. I know one I can recommend...
Richard Houghton is associate partner at Agency People
See Business feature for more tips on starting up your own agency