“I DO NOT BELIEVE IN MATERIALITY. BUSINESS IS LONG AND DIFFICULT
Agency is not only creative, but also business
Many people slip into an emotional attitude to the agent business, since it is craft. They think: if I am well versed in targeting, I have a macbook and a client who is willing to pay, then it’s time to open an agency.
To do this, it is not necessary to have an office – you can meet in a neutral territory. And in order not to pay salaries, it is enough to attract freelancers.
This is self-deception. It is important to understand that the agency is also a business.
The first question to ask yourself is: “What kind of business are you building?”
There are three options.
Earn more than hiring. You work in a foreign agency, get a certain salary and understand that every day you need to go to the office. And if you leave and start serving a couple of clients yourself, you can earn more.
Copyright business. Here everything rests on one person – the owner. If he gets hit by a bus, the agency closes. I call it the “bicycle business”: you pedal constantly, but at one point you may get tired.
System business. The owner invests money, time and effort into creating a system that can work without it.
Fedoriv is now in the process of transitioning from copyright to system business. This is a long and complex process – I’m not sure that it is 100% feasible in agencies.
Why small companies are easier
I believe that the most comfortable format of the agency is from 5 to 15 people. It’s like relaxed driving a sports car. The company is small, you all know, there are not many expenses.
A small agency ends when 20–25 people appear on the team. It is more complicated here – expenses are growing, and the goals set may remain unattained. It is important not to throw the accelerator pedal to skip this stage faster.
A large agency starts after 50–70 people. All processes are built here, but there is no mobility, as in smaller companies.
What distinguishes a company from a freelancer
At many conferences, lecturers do a disservice to entrepreneurs, saying that business is quick and easy. I do not believe in precocity. Business is long and difficult. If you decide to build a company – think about a long strategy.
Acceleration always takes time. And this is more than a few years. I started working in advertising 11 years before founding Fedoriv. He spoke at events, built relationships with customers. It’s like a marathon.
The founder of UFuture Vasily Khmelnitsky correctly says: if you want to make a big project, plan 10 years.
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The problem with many agencies is that they are not marketing. And one of the principles of marketing is not to sell everything to everyone. It is important to choose your market and consumer. This is commonplace segmentation.
Say no to a job in which you are not a specialist. The more highly specialized agency you build, the easier it will be for you to work.
When a bright specialist establishes his own agency, he begins to recruit assistants – this is how a team is formed. There is an important rule here: never hire class B people because they bring class C people with them.
For me, a team is when in addition to the leader there are 3-5 people who can be left alone with the client. These are people who are able to make decisions on their own, and not mumble.
At the start, take the time to develop products and processes. Everyone loves Apple, but no one buys it – they buy its products. Same thing with agencies. Customers come for your products. Therefore, classify them and be able to explain the difference.
Be sure to make a budget. So you clearly define the level of income / expenses and will try to match them. Even if a budget is unpredictable, you must understand the scope of its unpredictability in order to manage it.
To predict the growth of the company, I prefer the “steps” approach. For example, initially we wanted to receive $ 30 thousand of income per month, $ 10 thousand of which is net profit. When they stabilized at this level, they began to try to earn more.
6. Business model
The basic business model of agencies is that we are all sellers of time. We buy in bulk and sell at retail.
For example, you have 20 employees who work 160 hours a month. To the salary that you pay them, add overhead costs, your money – and get the price of an hour at retail. To earn, these moments need to be calculated.
Three types of companies
In the book, “Managing a Professional Service Firm,” David Meister divides companies into three types:
Hands are companies that do basic things. The client could handle it himself, but it’s easier for him to hire contractors. For example, a company may hire a cleaner, but it’s easier to delegate this to a cleaning service.
Gray hair – companies with significant experience in a particular field. For example, an agency has 10 cases of bank rebranding.