Marketing agency owners want to know, ”How can I make more money with less work for me?”. They’ve poured their hearts and souls into their business, but they keep bumping up against the $1 million dollar revenue mark and they don’t know how to break through it. Brad Farris from Anchor Advisors in Chicago helps business owners get across that barrier by restructuring and streamlining their business processes and systems.
In this episode, Susan and Brad talk about the advertising that a marketing agency needs to incorporate into its own business plan. Getting excited about having leads and sales, agency owners might have stretched themselves too thin as they chased after clients. Brad discusses the work it takes to focus on the ideal marketing client profile, and he shares a key marketing plan for agency owners that will help them move themselves further along the growth path.
- Relying solely on referrals will limit an agency’s growth, so Brad recommends adding in a health mix of outbound and inbound marketing too.
- Navigating the uncertainty of right now might require more upfront short-term sales that will build your authority and lead toward more long-term sales.
- Do you want a lifestyle business or a business that can be sold later? Because those two choices will require two very different approaches for how you structure your agency.
Hey everybody, and welcome to stop the noise. This is where we get to hear from some of the most interesting and experienced minds offering us advice and some great ideas about why and how to stop wasting money looking and sounding like everybody else. You know, in business, being the same won’t keep you safe, it will make you easy to replace, and even easier to ignore. I’m your host, Susan Tatum. Let’s get started.
Hello, and welcome back to stop the noise. I’m Susan Tatum. And today I’m talking with Brad Farris, who’s the principal at Anchor Advisors. Welcome, Brad.
Hey, thanks for having me on the show.
So you help creative agency owners get across that million dollar sales barrier? My call it
tell us a little bit about that.
Well, I’ve worked for about 20 years with agencies and all types of agencies, from web design, to PR to straight up Creative Advertising firms, those types of people. And they all seem to have a similar trajectory, whether you start out as a creative or an account person, you go out on your own, and you assemble a team, and you start to attract clients. And at the beginning, you know, most of that is driven by your own hard work and energy. But that system kind of runs out at around, you know, swung between 800,000 and a million, 2. And you as the business owner, and your business need to act differently in order to get past that million dollar threshold. And so that’s what I help people to do is to overcome that flat spot where things just aren’t growing beyond there.
So it’s a matter of helping them to generate increased revenue, as well as having the infrastructure to deliver it.
Yeah, it’s actually they typically have a lot of client flow, they’ve learned how to sell, they’ve learned how to generate leads, but the leads in that early in that startup phase, we’re kind of throwing things against the wall to see what sticks. And so we tend to attract clients that are a little all over the place where, you know, someone comes and says, Hey, can you do this, and you’re like, Sure, we can do that. But the problem with that is, a lot of times turns out that doing that is harder than we thought and we don’t make as much money as we thought and the clients not as happy with the work as we expected. And, and so after a while, people come to realize that probably I should try to try to do fewer things for fewer clients. And so that’s the first kind of shift that I see people make is that they realize that there’s got to be an ideal client profile that I’m really shooting for. And a thing that I’m really good at that I do for them over and over again,
is this something that they that they the agency owner would come to this aha moment themselves, or are they coming to you and saying, I’m just I’m stuck.
A lot of times they’re coming to me, because they’re exhausted, too much of the work is dependent upon them. And they thought it was gonna be they were gonna make more money when they had a million dollar agency. You know, a lot of times a business owner running an agency that’s a million dollars might only be making, you know, 120 $130,000. And they think, you know, I could make this working for somebody else in a lot less hours.
Yeah, that’s a lot of work for that.
Yeah. And so those are the things they usually come and ask me about, like, how can I do this in less time and make more money? And how can it be less work for me?
Okay, so in terms of the noise that’s going on out there, and and i think that what you were talking about, that they those smaller agencies are trying to do all things for all people.
And at a certain point, they either they realize or they are helped to realize that they need to focus.
that and you generally see that happening around the million dollar mark.
Yeah, some people come. You know, some people have that aha moment earlier. But it usually is born out of frustration, right? We don’t, even though one of the most common pieces of business advice that you get is to narrow your focus. And, you know, there’s riches and niches and all those kind of things. It takes a lot of courage to narrow down and focus on a much smaller target market. And that courage usually comes from desperation. But But one of the things that comes out of it, you know, I talked about people are tired, they don’t have the energy and they’re not making enough money. But when you focus down like that, when you become an expert in one area, and have a thing that you’re known for doing over and over again, you can it allows you to raise your prices pretty substantially sometimes twice what you’re charging before and so that’s one of the keys to kind of opening up that room to be able to hire some better people so that you’re not so tied up in doing the things and taking home more money at the same time.
And I would think to at least I found my Personally myself that if you focus and you’re focused on doing a few things really, really well, you become much more efficient at it,
right? Well, your whole organization does. Because you can build a team. One of the challenges when you’re when you’re the Swiss Army Knife agency, is that, you know, each one of those little gizmos in the Swiss Army Knife is a different person on your team, right? I need an analytics person, I need a someone who does web stuff. And I need someone who does print stuff. And I need a writer. Oh, but I mean, even a web writer and and copyright like, and so you end up with a bunch of people that are hard to keep fully utilized. And when you narrow things down, you can you can keep a narrow range of people, but utilize them at a higher level. And so that’s another thing that helps you to contribute to the bottom line there is that when you simplify, like you said, you can build that more streamlined system, and also gets reflected in your staffing.
So what what do you see Brad is the biggest obstacles that these owners face. At that point,
the biggest obstacle is between the owners ears. It is super hard. Well, let me back up for a minute, when you started your business, it was all about risk and adventure, and oh, my gosh, this is gonna be great. And you tried things that you’d never done before. And you’ve got yourself out over your skis, and you figured it out. And that was super fun, right? Yeah. But then once your business builds, and you’ve got, you know, five or six people on your team, you’ve come to a certain level of success. Now making changes starts to feel really scary, right? You get attached to the place that you’re in. And even though part of your brain says yeah, but it’s not really giving me what I want, still getting out of that new comfort zone that you built, that requires a lot of courage. And, again, desperation and and so that’s part of why it’s something that people have a hard time figuring out on their own, right, because it really means that you as the business owner need to change what you’re doing every day, you can’t be on, you know, you can’t be doing the work, you can’t be working in the business, you got to be working on the business, you have to focus your time on different things. And you need to measure success differently. Like when you’re still that working leader, at the end of every day, you can look back and say, Look, I designed this thing, or I built this thing or, you know, look at this report I wrote, but when you really move into that CEO role, your job is to make sure that other people do the thing. And so at the end of the day, you’re like, wow, what did I do today? I went to meetings, and I followed up on a bunch of stuff, man, yeah, doesn’t have that same satisfaction.
Is there a way to do both?
No, not not very? Well, the way to do both is to hire someone else to be the president. But your $600,000 business doesn’t $600,000 your business doesn’t have the margin to hire a president yet. And so really, the thing that’s amazing is people really say no, but I always want to be a designer. And then when we grow the business, and they’re not a designer anymore, they’re like, Oh, my gosh, that’s for kids, I don’t want to do that again.
So it’s kind of a decision between, I guess, that a business owner has to make about what kind of business they want to have, do they truly want to have a lifestyle business? Or are they trying to build something that it can maybe be sold later?
Absolutely. If you’re if you’re looking to build a business that can be sold, then you cannot be integral to the business. Because otherwise you’re you have to sell yourself along with the business. And you know, the fun I have, I don’t really understand the term lifestyle business very well, because most of the people that I’m working with, you know, yeah, they get to choose their hours, whatever, 100 hours of the week, they want to work, they can work them, but it’s not much of a lifestyle.
Well, I guess what it is a bit of a buzzword. He busted me on that one. But I guess you’re talking about the example of the person running a million dollar agency and really only winding up with 120 grand at the end of the year, you could make your agencies smaller and keep more money, I would say
Ah yes, typically, there’s something called the U curve, that when you start your business, ironically, like a year or so into it, is where you’re making the most money because you have the least expenses, right? And so pretty much all the money you bring in goes in your pocket. The problem with those micro agencies is the stability right? You can really only keep a couple of clients going and if things slow down, you go from making a lot of money not making any money. And so that’s why people start to scale is that if I can hire some people, then when things get lean, I you know, it’s harder for them and I can still keep getting paid but but what happens is the profitability drops like a you like the left hand side of you and it gets flat for a while. And what people don’t know is on the other side, it goes back up right but but a lot of people will come down to you to the flat spot and then fire everybody and go back to the top of you and then think well, but now I’m working too hard and I’m not you know, things aren’t very stable. So they hire people again, they kind of go through That up and down thing a couple of times.
So the other side of the U is when you’re, or you’re talking about the profitability. So yes, sighs wouldn’t be wouldn’t really matter.
On the U curve, if you imagine a graph that has profitability on the y axis and size of the firm on the x axis. So as you grow the size of the firm, the profitability goes down, and then it comes up again, as you get to about a million for something like that.
So I’m interested, of course, in in the business development part of it. Yeah. And so you mentioned that typically, by the time an agency gets to be a million dollars, they have a pretty good client flow that I get that right. They know how to sell, they know how to generate leads,
yes. They would say that they do. Most people say if I can sit down in front of someone, I close them, oh, if I look, if I look at the actual data in their CRM, okay, you know, they’re closing 40%. And they think that that’s good. And usually the lead flow is coming largely through referral and networking. Yeah. Which works okay, at that scale. But you know, when you need more, if you want not twice as many referrals, what do you do? Right? You asked twice as many people I don’t know. So I think that a new kind of selling is needed to get on the other side of that million dollars.
I would agree with that. You know, when when I talk to agency owners and consulting, firm owners, the referrals are, they’re good, and they’re comfortable, and they can be an easier sell. Because you’ve been referred by somebody? Yeah. But they’re a bit unpredictable. They’re, it’s hard to control it. And they’re not always your ideal client.
Exactly. Yes. I mean, no one’s gonna say give me fewer referrals, right? referrals are great. But if you decide, hey, I really want to be the best online marketing firm for dentists, referrals aren’t gonna get you there, you’re gonna have to do some outbound, you have to do some some marketing and some outreach, and that’s gonna get you more of those ideal customers, which makes for a more efficient pipeline overall.
I agree. I think it’s a combination of inbound and outbound. And I see I see a lot of agencies because they are inbound agencies that believe that they have to, and certainly I believe in using what you sell. But if they, when they don’t go to the outbound component, there’s just a lot of inefficiency, wasted time talking to people that you don’t need to be talking to, and a cyclical nature to it.
Yes, yeah. If you want to control your destiny, and one of the things that I often do with clients is help them to have a more predictable revenue cycle and profit cycle. Therefore, if you want to control your destiny, you need to control the top of your funnel, you need to know I’m gonna, I’m gonna have four new client meetings this month, I’m going to talk to 15 prospects this month, because that’s the only way that you can control your your pipeline overall.
And when you’re talking to these to the agency owners about doing this, I imagine that there’s a bit of resistance, like what a prospect
it’s the funniest thing, honestly, you’re talking to a marketing firm. And you say, Well, tell me about your marketing plan. They’re like, we don’t have a marketing plan. So if you were your client, what would you tell you? Yeah, so yeah, getting them getting their head around the fact that Yeah, yeah, your own dog food here. But oftentimes, once you call them on it, they’re like, yeah, okay, I get it.
To you, one of the things that I see is because of these are not professional salespeople, and I’m in this boat, too.
We’re great. We’re good at having conversations. We’re comfortable in front of people, but it’s sometimes hard to move it into a sales conversation or and then move it through the pipeline suggests it’s hard to make the Ask
Yes, I totally agree with you. One of the things that as we start to narrow down our ideal client and our product offering, it really helps us to come up with better offers to make to bring people across the line, right. So for solving largely the same problem over and over again, then we probably have an assessment or a tool or a cheat sheet or checklist are something that that is really good bait for people that have that problem. And so that for a lot of my clients, that makes it easier for them to make that ask instead of saying, hey, come have a sales conversation with me. They’re saying, Hey, you know, I’ve seen this problem before. Should we talk about that? Right, here’s, here’s a checklist that you can use to see if what we’re going to talk about is gonna be helpful for you.
Yeah, absolutely. Have you seen any difference in the length of time that it takes to get through a pipeline now, and I’m going to say, well, while we’re in COVID,
so the beginning of COVID, everything froze completely, like nothing was moving. And then over the summer, things started moving more like normal. And now we’re sitting here at the end of election week, and things have been largely frozen up again. for about the last month, I don’t expect that things are gonna move quickly again until after the first of the year. But that’s not a reason to not be reaching out and making offers and having conversations.
It’s just it’s much harder to get people to say yes right now. But if you do that prospecting work now, then they’re all gonna say yes, at once in January or February, when everything’s when everything’s open on,
well, you’ve given yourself time to build a relationship,
And when the pressure is not on to try and sell them something right now, it I think relationships come along a little better.
Well, I tell clients, that desperation has a stench, you know, like, it doesn’t smell good. And so it’s so much better to be selling when you don’t need business, right? Like, Hey, I’m just trying to help. This is something we found that help people like you, and if that’s of interest, great. And if not, that’s fine, too. You know, we’ll just here here’s another tool that might be working for you, you know, and like you said, build that relationship over time.
Yeah. Keep the desperation out of it.
Oh, my gosh, it’s the worst. It’s funny, because we all know it in other contexts, right? Like, if on the playground when you’re desperate to be picked for a team, right? When you’re when you’re dating, and you really want to date like all these situations, we know that this is not an attractive characteristic.
Yeah, well, and that’s sort of a mind game, too, isn’t? Oh, it’s also keeping your pipeline full, so that you don’t get to a situation where I’ve got to have this deal.
That’s right. One of the keys to making this switch of being more focused and productive in your sales pipeline, and therefore, in your operations pipeline, is being able to say no to the wrong deals, it’s at least as important to say no to the wrong deals as it is to say yes to the right deals. And the only way you’re going to have the courage to say no is if you have more leads than you can handle.
I learned that lesson the hard way the how much better it is to say no. And I still today find myself taking clients when I know I shouldn’t. But these days, it’s usually because of the client was referred to me by somebody.
Yeah, yeah, I know that feeling.
I haven’t found a way to say no yet to that if you figure it out. Let us all know.
But it’s something that I’ve found from working with clients is that when you start saying, no, it just changes the power dynamics a lot. And so fluences, one client, their pipeline has been really strong this year. And so I said, Well tell people, you can start with them in two months. You know, like, sure, we’d love to work with you. But we can’t get started until you know, February 1, then people are like anticipating, like, Oh, I can’t wait, that’ll be great. And the same thing with like, those referral leads, like if you can, if you can put some hurdles in front of them, Hey, I would love to work with you. But before we do that, I really want you to do this online course that I’ve built, or here’s some homework that I want to see you complete, just to make sure that you know that what I’m going to do is going to be helpful for you putting some of those hurdles out there, it chases away the non serious folks. And then if people are willing to jump through those hoops, I’m more willing to help them right like now we’re at a place where the relationships in a better place.
That’s a really good, that’s a really good suggestion. because like you said, they’re willing to do that, then they’ll probably be willing to listen to you when you tell them what you’re doing.
Oh, that’s interesting. So do you see a difference in what clients are buying from your clients?
Hmm, that’s a really good question. The word of the year for 2020 is uncertainty. It’s it’s not really uncertainty. Like, I don’t know how good my business is going to be in three months. It’s more like I don’t even know if this business is even going to be relevant in three months, right. Like in March, you could have had a fabulous hospitality business that now is gone. Right. And so I think that that level of uncertainty means that if I propose something to a client that’s, you know, a year long program, it’s, it’s less, they’re less worried that I’m not going to give them value, they’re more worried, is this business going to be around in 12 months, even with the best advice I can get, right? And so what I’ve been recommending to people is to make shorter offers, and more sure things. So if you think about what you’re offering, so if I talk to my clients, like what’s the thing that people get the most value out of when they work with you. And I’ve got an SEO client who said, well, the the site audit, people get a lot of value out of that they see what’s going on in their site. And there’s some really actionable things that they can do at the end of it. I said, Great, what if we just sold site audits, you know, it’s a two month engagement, it’s a relatively low price point. It gives people immediate value, it gives you a chance then to build trust, so that then when you sell them the longer program, because in the past, they would sell a long program, the site audit was just a component of that program, right? just sell that that upfront part by itself, and then see if you can sell the longer term thing because you’re going to if you get more People who say yes to the short term thing, rather than if nobody takes you up on the longer you’re gonna be in a better situation and some of those people aren’t going to convert.
It’s a it’s a matter. I think it’s focused on getting in the door.
That’s right. building that working relationship.
Yeah, it’s all part of that, isn’t it? I kind of think I expect to see that not necessarily go away, at least not for a while.
I agree with you, you know, I think we will get back to a time someday when people are like, Yeah, let’s do this. And book a year long. You know, when with my clients, they want to sell a marketing plan. And then the execution from that marketing plan is over a 12 month period. I think we’ll get back to there someday. But we have to have a environment of stability in order for that to happen.
So that I’m confident of where I’m going to be 12 months from now. Yeah, yeah. So so you’re talking about having this sort of key essential tip of the spear kind of thing to get in the door with. And I think you have one of those.
So, as I started talking to people about these phases of growth, the startup phase and the growth phase, and the key changes that you need to make I started roll that into an assessment. And so if you go to anchoradvisors.com/growth-phase, that’s anchoradvisors.com slash growth dash phase, there’s a quick 10 question assessment there. And at the end of it, it’ll give you some really specific recommendations about what you need to do to move yourself further along that growth path. You don’t have to give me an email address or anything. If you want more information. There’s an offer there. If you do give me an email address, but right at the end of the assessment, it’ll tell you what you need to know.
Okay, so this is aah no, the prospect doesn’t have to do or the person that’s interested doesn’t have to do anything, but go do their own assessment. That’s all private. And
that’s exactly right.
All right. So thank you, Brad. I think this is I’ve learned some stuff. I’ve taken notes.
I thought this was a… that’s great. This is a really helpful conversation, and I hope that people will find some value in it.
I believe they will. I hope they paid attention. I think that’ll help them stand out from the herd a little bit, and we all need that. And we’ll put all your contact info in the show notes. And thank you again.
Thanks so much.
Take care Brad.