In this week’s episode of the Agency Leadership Podcast, Chip Griffin and Gini Dietrich discuss the difference between working in and working on your agency.
It is very easy to get sucked in to the day-to-day client service and management of the business. In so doing, you can lose strategic focus, fail to invest heavily enough in business development, and miss out on opportunities to innovate.
Chip and Gini discuss the importance of making the time to work on your agency and offer ideas and strategies for improving your business outcomes.
Whether you’re looking to maintain a lifestyle business or trying to grow like gangbusters, you must make the time to think like a business owner, not just a client service professional.
The following transcript was automatically generated. Please review the original audio for accuracy.
CHIP: Hello and welcome to another episode of the agency leadership podcast. I’m Chip Griffin and this week we’re going to be talking about the difference between working in an on your agency business. I think that’s a particularly appropriate topic for our second episode, but before we get in there at the end of last episode, we were talking about the Chicago Cubs and your disappointment that they were behind, but I was. I was really impressed with the way that they came back and they. They won that game and then went onto win the next series. Right? I mean it was really. It was really fantastic. No, it’s not funny. You’re not funny too soon, too soon. Way Too. I can say this because the red sox managed to come back last night. We’re recording this sun on a Tuesday and last night on Monday, the red sox had a fantastic win against the Yankees winning 16 to one,
GINI: and when I looked and it was 10 to nothing and I was like, what is happening?
CHIP: Well, I went to bed at 10 to one and was, uh, was pleasantly surprised to see that they managed to record another six runs after that. And I saw that they had a catcher pitch, which is an umpire. I always enjoy seeing things like that. So, um, yeah. Well, so I’m sorry about the cubs, Jenny. It’s,
GINI: there’s always next year, next year. You know, what’s more disappointing is we sell our parking spot for games and so now my money supply has dried up until next year.
CHIP: So there’ll be some belt tightening. It spin sucks now.
GINI: Yeah. We’re going to probably not have no more starbucks until next season.
CHIP: Well, I don’t like starbucks anyway. So yeah, I don’t either. I’ve never really understood the appeal. It’s just a watered down, burned coffee. It’s coffee. Totally burnt coffee. Yeah. Yeah. The only the only people in the world who can manage to both burnet and make it taste watery at the same time, but it’s very popular. So what the heck.
GINI: It was very popular and it’s very convenient. Very, very easy.
CHIP: Yes. In the case, this is not why people who have tuned in, but we hope you enjoyed that little wifi rep, our tay, and we will now move on to actual agency leadership topics in this case that all important question of working in or on your business. And Jenny, why don’t you explain the difference first and then we can talk about how you can actually do the right thing. This
GINI: is a really, you know, as you’re starting your agency, it’s a really good time to start thinking about it because you know, when we start our, our agency, it’s Oh you got to take anything that along and you know, you gotta get out there and hustle and you got to knock on doors and going to shake hands and you got to go to trade shows. You going to do all this stuff. And I think it’s really important to set aside and created a habit now to say, okay, x percent of my time is going to be spent on doing those things that are going to help fill the pipeline and an x percent we’re going to be spent on actually doing the client work. You know, when I worked for Fleischman, the higher up the ranks, you got them less time you were to spend on clients in the more time on Bizdev.
GINI: So as you own the business, I’d say it’s probably a good 50 slash 50 split. So if you can split your time, you know, not every week is going to be 50 percent on business development, but certainly there, there should be at least one day a week that you carve out to focus on the business versus working in it. And that really just means what am I going to do to, you know, if you want to stay solo preneur, if it’s, you know, to, to, to maintain a pipeline that’s full. And I don’t have to, you know, ride the ups and downs that are typical of our industry or if you want to grow, how are you going to do that? And you have to actually craft a plan and, and work that plan in order to do it. And you can’t do that by happenstance or just when it’s convenient, when clients aren’t calling that you have to actually crap carve out the time to do it.
CHIP: Yeah. And I think this is one of those things where it’s so easy to get sucked into working, working in the business, right? You want to keep your clients happy and you don’t want to lose them. You know, as, as we’ve talked about previously, you know, a lot of people became accidental agency owners and so their, their, their experience, their passion is for servicing clients. Uh, and so they, they often have a hard time stepping back and, and taking the broader view. I would also argue that that working on the business, not just business development, but it’s just thinking strategically, where do I want to go? How do I, how do I want to diversify? You know, where do I want to take it? And you know, even if you’re looking to have just that lifestyle business that we’ve talked about, you know, if you, if you’re just, you’re comfortable being a solo preneur or you’re comfortable, whatever size your agencies at, you still need to be doing these things in order to fill the pipeline to, to handle whatever churn you may have. Because as much as we all want to have
GINI: clients last forever, they don’t. They don’t. And Frank. Yeah. Even when you have a contract, I mean you’ll see it, I think we talked about this last week as well, but it’s, you know, there could be a ceo change or the business could be sold or you know, there’s so many things that can happen that are without outside of your level of control. So you know, you even if you have a contract that has a 30 or 60 or 90 day out, whatever it is, um, it, you know, that, that stuff happens. It just does. And it sometimes has nothing to do with you.
CHIP: Well, the reality is even if you have a 30 or 60 day or even a great 90 day out, you know, you may not be able to replace that business that quickly, you know, particularly if you haven’t already got an established pipeline and you’re just starting from, you know, a, a, a, a standing start. So, you know, it’s, it’s, it’s very important to be thinking about these things. But I think, you know, one of the things that you’ve talked about a lot in the past is the importance of diversifying your revenue streams no matter what kind of agency you are. And I think that’s, that’s an important piece of the working on your business. How do you think about how you structure your client base in order to make it more stable, more sustainable and, and that sort of thing?
GINI: Yeah, and you know, one of the things I learned when the recession hits was, you know, we were all clients service. That’s all we did. And when the recession hit, we had a three week period where we lost almost all of our clients and I had to lay half my team off and today that still is, it’s still triggers some bad emotions and because of it, it also has made me a little risk averse. Um, but I also told myself I would never allow that to happen. And so one of the things I did, as I said, every Friday, which ended up not being the great day because you tend to take Fridays off for a long weekend, but I said in the beginning, every Friday I’m going to work on the business. And during that time it was to your point, you know, maybe I was working with our, our accountant to do financial planning or forecasting, or maybe it was the more strategic things.
GINI: And then it certainly became, how do I add additional revenue sources. So my goal was to have seven revenue sources in seven years. So that was 2011 and we’re on our eighth revenue source this year, which is of course I have to exceed my goals. I can just complete them. But I think it’s really important to be thinking about those kinds of things because you know, to your point, chip, that your clients will leave there, you can’t, if you’re at a standstill, it is almost impossible to replace a client as quickly as you can, you know, I also think that the skies to the universe tends to, to help you out a little bit, but you can’t rely on that because sometimes you lose a client and something better comes along. Um, but you can’t rely on that. So, you know, using that time to really focus on where you want things to go is really, really important.
CHIP: Before I sort of continue down that threat, I’m, I’m curious, how did you come up with seven revenue streams? It’s a very, it’s a very specific number.
GINI: I’m sure I read somewhere that somebody had seven revenue streams. It was for, I don’t even remember. I read it somewhere and that was my goal. And I also knew that, you know, recessions down economies tend to happen in cycles. And so I wanted to make sure that I had enough in a number of revenue streams for the next time it happened, which I think is going to happen next year, um, or 20 slash 20 at the latest, but I wanted to have enough in the it working and making us money and all those things so that when the next recession or the next down economy happens, it doesn’t crush us like it did last time.
CHIP: By the way, I agree with you on that economic predictions. So you know, now, now we can have people tuning into this podcast for our economic insights predict. Please don’t do that. Well, I mean we’re giving tax and legal advice. We might as well. We may as well do that too. Sure. But I think, you know, when you’re, when you think about working on the business, part of it is figuring out what are those risks to your business. So you know, if you, if you spend time working on your business, then you know, you have a sense for, okay, you know, maybe I can’t do anything about this today, but at least I know that this is a risk factor. So you know, common ones are things like, you know, having to larger percentage of your revenue in a single client. That’s extremely common in the early days of an agency later on though it may be that you’re too concentrated in a particular industry.
CHIP: So, you know, tech, Pr People, uh, you know, when the Internet bubble burst got massacred, right? And that’s because they were, they were great specialists, but they were specialist in a, in a single industry that was going away. So working on the business means identifying all the risks you can think of a and then figuring out what’s your plan to mitigate each of them. You, you know, you’ll never totally eliminate risks. There’s always gonna be things that crop up some of it out of your control. You know, nobody could predict September 11th and the impact that would have for example, but the, but you know, but there are other things, you know, like anticipating a recession, you know, like anticipating, you know, maybe that the tech market isn’t gonna go gangbusters for the next hundred years, you know, whatever it is, you know, you want to try to think those things through and in that working on the business time, come up with your own plan for addressing it.
GINI: I would also say you should be thinking about the shorter term things that can affect the business to such as like, I want to say it was two or three years ago when the northeast just got pummeled. Was it two years ago? Three years ago. I can’t remember when you just get pummeled with snow and business stopped. Like there were two weeks in January where nobody did anything because nobody could leave their houses. And even though we’re not in the northeast, it affected us across the country because everybody, like you couldn’t get anything done. You, anybody you had a proposal out with was wasn’t working. Any clients weren’t working like everything came to a standstill. So I think you have to, you know, hurricanes, things like that. We all know when hurricane season and is, if you have clients or you’re developing business in Florida or across the eastern seaboard, you have to be thinking about those things. So while it’s not detrimental and it certainly won’t crush you, like a recession could, um, those are things that are going to slow business for a little bit and it’s pretty stressful.
CHIP: It absolutely is. And, and you know, I think the difference between someone who works on and versus in their business, you know, that they also take the time to look at some of the mundane things, right? I mean, how many agency owners and executives are paying attention to their own time, you know, how are they, how are they all? In fact, I was talking with an agency owner about this just today and uh, you know, I said it’s important to look at your own time allocation and figure out, you know, how can you use your time more effectively? Because many agency owners will look at their employee’s right to figure out, okay, you, how are they spending time? Although even then, I think it’s not as widespread. There is as effective as it should be, but very few senior execs want to look at their own time mostly because, you know, we’re, we’re lazy like everybody else and we don’t want to fill out time sheets.
CHIP: We don’t, you know, and hey, we’re the boss. We can exempt ourselves from that, uh, but if, but if we don’t know how we’re spending our own time and I’ll tell you, you know, whenever I do time sheets, I will confess, I am not religious about it, but I go through spurts where I do them to analyze my time and I always learned something and it’s, it’s usually pretty startling. Uh, when you sit there and you, you’re rigorously doing your time sheet, you look and say, wow, I never realized I was spending 10 hours a week on that, or five hours a week on this and it, it really can change your whole strategic plan if you, if you understand that. So I think those are the, you know, you need to be willing to get into those mundane things as part of working on the business so you know, you know what it is that’s actually going on.
GINI: And I would add to that, I had the same experience. I hired a business coach early on in my, in my business is life. And um, he said to me, I need you to track your time so we can see. And I was like, oh, that’s easy. I mean, I mean I’m super religious about it because I came from the big agency world and you had to be. And so it was just a habit and so I printed it out and I had an admin box where I would put like emails and travel and all that kind of stuff in there. And he was like, I need you to break this down. So once I started doing that, I mean 15 hours a week on email. Ridiculous. So, you know, thinking, do it too that my new Osha have a level because you’re going to find that when you’re spending 15 hours a week on email that that time can definitely be served elsewhere, better served elsewhere.
CHIP: Well, particularly if you understand what it is that you’re actually doing on email. Right? So it’s one thing to know you spent 15 hours on email, but when you find out that, you know, 10 of that was purely internal, right? And very little of it was building new relationships or things like that, you know, that that becomes even more stark. So, um, you know, and I’m, I’m a realist. I don’t think that most agency owners are going to do this, you know, 52 weeks out of the year. Um, it, you know, I think that it’s, it does need to be done far more often than it is and certainly you need to be tracking your client time so you know, what your profitability on individually with counselors, but you know, that’s not the same level of specificity is what I’m suggesting here and what you’re suggesting in order to really get in there. Get into the weeds and figure out, okay, how can you know, how can you your time more effectively and, and frankly, how do you then use that information to figure out, okay, well, you know, now I’m ready to, to hire an employee or freelancer or you know, all those other things that flow out of it. Yep, Yep.
GINI: Yeah. I think agency owner last week who said that she had not been tracking her time and had forgotten to bill a certain client. And so for nine months of, of the entire year he has gotten her time for free. And I was just like, oh no, how do you go back? How do you go back and say, so by the way, I’m, I haven’t billed you any time and I’ve been working for free all year. Like you can’t do that.
CHIP: Yeah, no, that, that, uh, that certainly is problematic. I’ve had that happen, you know, with some of my software companies where something technical glitch cause someone not to be built so little easier to go back for that. And even then it’s not, it’s not super easy. But, uh, but your own time that, that certainly is, is more problematic and so certainly, you know, if you are building clients by the hour, and honestly I’m not a fan of that, I’ve been, I’m sure we’ll be able to have a conversation and in some future episode about different ways of, of billing clients and pricing and all that. But, um, you know, certainly if you are billing by the hour, you need to make sure that you’re recording it accurately because, you know, it’s, it’s incredibly important to get a, you know, a timely payments, which again, is one of those things that working on the business will help you understand, right? If you’re working with your bookkeeper or accountant and you know, you’re looking at the aging reports for invoices and such to figure out, okay, you know, who’s not paying timely, who, um, who is right. So, you know, maybe maybe if you’re not paying timely, I’ve got to adjust your pricing up to, to factor in the fact that I’m essentially giving you a free loan. But if you pay on time, no, maybe I’m willing to cut you a little bit of a deal. Um, and those are the things you want to know.
GINI: Yeah. And I would also add to that, you know, early in my agency life as well, uh, we had to sue a client for nonpayment and we went all the way to court, which by the way is not a fun experience, but we went all the way to court and the judge wanted to see our time sheets and had we not had them, including my own time, he wouldn’t have had to pay for it, but it was very clear by the way that we kept our records from that perspective and it was retainer. It wasn’t like we were billing him by the hour or anything, but because we’d kept such clear records with, you know, very specific notes, judge was like, look, they did the work. I’m sorry that you don’t think they did, but they did. So it would have been impossible for us to go back and try to create that after the judge had asked for it. So I think there’s a lot of things in there that you should be thinking about as you’re working on the business, you know, you like to think that, I mean to, to the discussion we had last week about your Prenup, you know, with if you have a business partner, it’s the same kind of thing. Like to think that that stuff won’t happen. But Gosh, when it does and it probably will at least once in your business life, your purpose, you’re better off prepared.
CHIP: Yeah. I think just about every business has, has an issue with payment and at some point or another with a, with clients, it’s simply natural and you know, I think that at any agency owner needs to understand, you know, and have their own sort of threshold for, you know, how far behind are you going to let someone get before you stopped work? And you know, that may be, it may be client by client, you know, there, there are a lot of larger companies out there who um, you know, use their size as a weapon and you know, they pay regularly but they pay regularly very late. And so if you’ve got one of those clients and you know, okay, look there, they’re always going to be 60 days past due, but they will be, they will still pay every 30 days. So you’re, you suck it up in the first 60 days and you keep collecting it, but the client who regularly pays and all of a sudden stops will have, that’s a red flag.
CHIP: And so, you know, you want to be paying attention to, uh, you know, those accounts receivable reports that you’re getting and that right now you probably just, you know, clicking delete and say, ah, you know, whatever, oh look, I’ve got, you know, I’ve got $50,000 owed to me. I’m excited. You know, this money is going to be coming in. Well, yes, but only if you work to collect it. But, so that’s, that’s all part of sort of working on the business, looking internally. But I think it’s also important when you’re working on the business to be looking externally and understanding, okay, you know, we’re, we’re, is the overall marketplace headed, we’re is the future of communications. You know, doing things like reading spin sucks in order to be able to stay on top of the trends and being ready to adapt, right? As things come along. So you know, it’s, it’s again, easy to forget those things. It’s easy to get caught into the everyday client trap but, but look externally as part of that on the business time.
GINI: Yeah, you have to. I mean, and if like I said, if it’s how, you know, start with half a day a week, so I just blocked the half a day and you don’t take meetings. You don’t like, you know, if that’s comfortable for you or do two half days a week or something like that. You just carve out the time to look at your accounts receivable reports into, you know, scroll through quick books and look at your pnl and your balance sheet and you may not know exactly what you’re looking at it first, but learn that stuff because that’s where you’re going to start to understand, okay, this client is profitable. This one is not where overservicing this one. What do we do about that one? This one doesn’t pay on time like there’s all these things that go into running a business that you have to know.
CHIP: Absolutely, and as you pointed out, as you grow beyond the business, time needs to become even greater if you’re one of the senior leaders and so that means you also have to be prepared to let go, right? It, it, it means that you have to be willing to delegate and you have to just to be trusting the people who are working the account with you to get the day to day done and you know you can still play a very important strategic role as an owner or c level or whatever you happen to be in the agency, but you need to be really focused on, on those big picture, on the business items and you need to let your team take the responsibility that they’re going to make mistakes. I eat. You need to step that and if you’re expecting perfection or you’re expecting them to do it exactly the way you do it, like it’s not gonna happen.
CHIP: And, and believe me, I have learned this lesson the hard way over the years. I always wanted carbon copies of myself, which frankly, if I had, would drive her nuts, but I know I drive all the people in that so I can only imagine what I would do to myself that’s all your clones or drive each other nuts. It would be, it would be an absolute nightmare, but you know, you, you, you need to be willing to accept that. And, and of course, you know, anytime that you know, you’ve got an employee, they’re never as invested as the owner. Of course you and I will work till 1:00 in the morning, you know, no questions asked employees, you know, a lot of them, a lot of them will go the extra mile, but you know, they’re going to want something in return to extra day off. Right. And, and there’s nothing wrong with that.
GINI: Of course not. Right. But yeah, we don’t get an extra day opera bonus for doing that.
CHIP: No, I, I’ve, I’ve heard that people take days off. I’m, I’m, I’m very curious to learn what those are like. Probably over a decade since I took a proper vacation, been fortunate. My wife doesn’t listen to this podcast, so she admitted this to the whole world.
GINI: My, uh, when I got married very long time ago, my mom said to me, and I think it’s apropos for this, it doesn’t matter how he makes the bed, just that he made the bed and I’ve always remembered that when working with employees because it really doesn’t matter if they’re not going to do it the same way you do and no, but to your point, chip, nobody does. But the fact that they’re doing it and trying, you have to be okay with maybe them failing a little bit or not tucking in the corners the way you would, but getting it done.
CHIP: Oh, absolutely. And, and you know, frankly, you know, most clients are, are, are going to be pleased with the level of service they’re getting. You know, you and I were talking before we started recording about how nitpicky I was being about some of the things with the podcast launch. Uh, and, and you know, there are things that, um, that literally I would be the only person to notice, uh, you know, my guess is in fact, I’m sure from our conversation you didn’t notice some of the things. So, and that’s, that’s good, right? So you always want to take that pride in your work, but at the same time you need to appreciate that, you know, that everybody else isn’t paying that same level of attention and aren’t going to be as worked up about it as I always like to tell small business owners generally, you know, you can tweak your website whenever you want because you know, it’s not like your Amazon, nobody’s gonna write a story when you change where some link is, you know,
GINI: nor are they going to hit refresh over and over again to see what you mean.
CHIP: No, no. Thankfully I wish they would. That would help. Stats, you know, it would help staff. It did. And we all care about analytics. So in any case, so are there other. So when we’re thinking about on the business, we’ve sort of talked about, you know, looking at, at some of your internal processes, we’ve talked about the strategic, we’ve talked about sort of, you know, looking out on the horizon. I guess the, you know, the, the other thing that I would, I would say when you’re, when you’re looking at working on the business that you want to consider is, is partnerships. Right? And some of this falls into business development. But you know, I think increasingly this actually falls on the service side of the equation because particularly for smaller agencies and by smaller, I mean probably pretty much anything under about 150 employees. There are going to be functions that your clients are going to want, that you are not best prepared to deliver.
CHIP: Yep. And probably are not even best prepared to manage. Right. So, um, I think, you know, we’re, we’re in an environment where increasingly small to midsize players will develop partnerships with other service providers. Whether that’s, you know, someone providing a technological service or who does events or you know, does writing or creative development. You know, there’s a lot of different ways that, that as far as working on the agency, you can find these partnerships where you’ve extended your capabilities, but you know, perhaps even open the door to some new business opportunities because, you know, while you may farm out, you know, your event management practice to someone who’s a specialist in that and it’s got an agency for it, you know, they can perhaps send some business your way for whatever it is that you’re specialized in. So you know, think strategically about those opportunities, you know, during that on the business time. Because I think that the partnerships are, are an underutilized a approach for a lot of agencies.
GINI: And one of the things we’ve done is we’ve added partners is it’s been less specialty focused and more regional focus. So, you know, we have a partner agency in Singapore, we have one in Europe and we have one in Canada. Um, you know, so finding those opportunities as well because then you can go to clients and say, well actually we have international capability and you can start to compete at a larger level.
CHIP: And, and frankly, if you’re, if you’re a solopreneur, you know it’s beneficial to build some of those relationships so that you don’t have to turn away business, right? So, you know, if you, if you’ve got an opportunity that pops up and you know, you’re, you’re fully maxed out right now, but you still want a piece of this, you know, you know, you can often work with another solo, um, in order to maintain that opportunity as, as part of a shared solution or something like that. So, you know, think creatively about how you can address those. Um, I guess I would call them happy challenges when they come up.
GINI: Yeah. And I always say happy challenges are good challenges, whatever they are, they’re still a challenge. So it’s, it’s good, but it’s still a challenge.
CHIP: Absolutely. Yeah. Well, hopefully we’ve given folks a lot of things to think through on, on this episode that we’ve covered a lot of ground on the things that you should be thinking about while you’re working on your business. The most important thing though is just a carve out that time, spend time working on the business. Don’t just get sucked into the day to day, don’t get sucked just into the client service because that’s not the way to to either grow an agency or, or you know, even just maintain one that’s thriving and profitable. So carve that time out, carbon out. And with that, that brings another episode of the agency leadership podcast to a close. Again, I’m chip Griffin and I am Gini Dietrich and we’ll talk to you next week. Bye.