Make Decisions That Fit Your Growth Goals
In my experience as an entrepreneur, and through our work with hundreds of clients, I have learned that opportunity is everywhere for unique and innovative companies that bring real value to customers. However, opportunity can be overwhelming if you do not adapt to changing markets and increasing demand, and build a scalable infrastructure capable of effectively accommodating growth.
Intro to Infrastructure
Infrastructure refers to structures and systems that facilitate the production and delivery of agency services. Basically, it includes any physical or organizational element required to run and grow your agency. Core components include financial systems, information technology, management systems, and human resources.
Growth for growth"s sake, without a profitable business model, results in little more than an entrepreneurial ego boost. Expansion in prototype agencies is driven primarily by the desire to attract and retain talent. They opt for controlled growth, often resisting the urge to accelerate business development initiatives. They focus on building a stable operational foundation with nimble management systems that enable them to execute and adapt faster than the compet.i.tion. They make calculated investments in hardware, software, staffing, partnerships, advisors, and office s.p.a.ce designed to support their foreseeable future needs, while maintaining the highest levels of service quality, efficiency, and productivity today.
Making decisions too far ahead of the growth curve can cost you valuable resources now, but not planning for the contingencies of growth can be detrimental to your ability to profitably build your business in the future.
Goals, Trends, and Timing There is no standard formula to guide infrastructure investments. You have to consider your unique business goals and growth trends. For some, that means modest growth of 5 to 10 percent per year, whereas others may have aggressive growth prospects of 50 to 100 percent or more per year. The more aggressive agencies must be incredibly smart about their infrastructure choices. It is easy to spend thousands of dollars on a phone system, server, or project-management platform that becomes obsolete as you expand.
You also have to consider your timetable when planning infrastructure. I tend to look at business decisions as current (next 12 months), short term (13 years), midterm (35 years) and long term (more than 5 years). Infrastructure planning should account for current and short-term needs, with contingencies for midterm possibilities. Change velocity principles dictate that trying to plan for anything beyond three years is an exercise in futility. Have a vision for the long term, but make infrastructure decisions based on current and short-term realities.
For example, when PR 20/20 reached five employees in 2008, I began working on a 2x3x scale. This meant that for every decision I made, I would consider whether or not the solution would be viable at 1015 employees. At that time, we built out an office s.p.a.ce capable of accommodating up to 15 employees in 23 years, but we also included an option on the adjacent s.p.a.ce that would fit up to 25 employees in 35 years. We installed a sophisticated phone system, upgraded our Internet bandwidth, and set up a new server and internal computer network.
All told, we invested more than $50,000 to build out an infrastructure that was capable of handling up to 15 employees, but extendable to dozens of employees if needed. We accommodated our current needs without overextending ourselves, and put a contingency in place for future expansion. Does that mean it was a perfect solution? Absolutely not, but we had the funding to comfortably make the investments and buy ourselves a few years until we had to revisit these core pieces.
Keep in mind this was all happening within 12 months of Apple unveiling the iPhone, and more than two years before they released the iPad, so we did not have a mobile workforce accessing files, information, and applications from multiple devices. Plus, the metaphorical cloud was still in its infancy as a mainstream business concept. In other words, just three years later, the decisions I would make today regarding our infrastructure are dramatically different than those I originally made in 2008.
Lessons from the Inside I started PR 20/20 in November 2005 after 21 months of intense planning. It was the most exhilarating and exhausting time of my life. Fueled by a powerful c.o.c.ktail of youthful exuberance, adrenaline, and caffeine, I spent what seemed like every waking minute outside of my day job (VP at a traditional PR agency) building a dream.
I loved the agency I came from, but I had become convinced there was a better way. I feared that if I stayed where I was and continued to follow traditional marketing agency methods, then I would always regret not taking a chance on something in which I so pa.s.sionately believed. Besides, what did I have to lose? I was young, and my wife and I were happy living a modest lifestyle. At the time, I was making just enough money to pay our bills, put away a few dollars in a retirement account, and have a little left over for travel. The worst-case scenario if the agency did not flourish was that we would struggle financially for a while, but at least I would have given myself the chance to fail.
So, at the tender age of 27, I left the comfort and security of my career to turn my own vision into reality. I set out to make marketing services accessible and affordable to the ma.s.s market of small businesses.
In retrospect, although the business model was sound, and we still function on the basic principles of the plan, my financial forecasts were overly ambitious, if not absurd. Forecasts called for $19 million in revenue and 140 employees by year five. I showed my business plan to a number of advisors before launch, and even submitted it to a local start-up challenge. Response was always positive, but I never got the feeling that anyone saw the potential I did in building a technology-driven hybrid agency, and no one really seemed to fully understand what I was trying to do.
With limited guidance, I set out to build an entirely new marketing agency model focused on the small business market. The first few months were easy when my infrastructure consisted of a home office, a single phone line, a MacBook, and a Palm Treo, but it was not long before things began to change.
Let"s take a look at five of the critical agency infrastructure lessons we have learned through the years.
Lesson 1. Prepare for Perpetual Change I launched PR 20/20 with $25,000 in loans from the friends-and-family network. I did not have any personal savings to fall back on, so this gave me a six-month runway to cover basic start-up expenses, health-care benefits, and a paycheck. I worked out of local cafes, and developed a particular liking for Panera, which offered free Wi-Fi and coffee refills, both of which were vital in the early days.
Although I had lofty aspirations for growth, the agency began with just three nonpaying clients-a barter deal, my wife"s art business, and my parents" cookie franchises. The first few months were spent finalizing the service and pricing guide, which had more than 100 standardized services when we published it online in January 2006.
The 20/20 Standard
The 20/20 Standard service and pricing guide was the original core concept behind PR 20/20. In essence, it was built as an online marketplace for a la carte, project-based services. There were 19 categories with 102 services when it was first introduced in 2006. In most cases, the standard services, such as press releases, brochures, logo designs, print ads, and websites, featured set prices.
Soon thereafter, we started getting calls from larger enterprises. Though the model was designed for small businesses, friends and business a.s.sociates at these corporations immediately viewed us as an alternative to the traditional agencies they were used to engaging. They loved the transparency in pricing, the simplicity of the services, and our focus on producing measurable results. So, as they would say in the technology world, I pivoted the agency. I set the small business plan aside and immediately began adapting the model to meet larger enterprise needs.
In March 2006, we hired our first employee, signed our first lease, and began the baptism by fire of building a scalable infrastructure. We made a lot of mistakes, burned through funding reserves on numerous occasions, got screwed by countless vendors, and battled some deadbeat clients as we fine-tuned our financial systems. However, we never got discouraged or stopped believing in what we set out to achieve.
I knew from day one it would be an iterative process, and it still is today. The velocity of change, especially in technology, is relentless. You must construct an agile infrastructure that positions you to continually evolve.
Lesson 2. Build through Trusted Solution Providers Whereas large traditional agencies are often bogged down by legacy systems, emerging firms have the flexibility to experiment with product innovations and hot new start-ups when building their technology infrastructure.
Change velocity in essence dictates that something better and more efficient is bound to come along sooner than later. Often, the breadth of options can be overwhelming and confusing for agencies. There are endless providers to evaluate, with seemingly redundant feature sets. Some claim to do everything in one platform, and others are narrowly focused on single pain points. Researching, evaluating, and selecting the right solutions for your agency can be a mind-numbing and frustrating experience. This also makes it difficult to pull the trigger on major technology infrastructure decisions.
A service that is here one minute can be gone the next. For example, in 2010 we discovered an amazing file-sharing platform. It was feature rich, yet intuitive, and exactly what we needed to transfer large files over the Internet and collaborate with clients on projects. We began integrating it into account-management systems, and clients seemed to really like and value the service. Then Facebook bought the company to acquire its talent, and within a month the company and its service were gone.
The lesson here is always test innovative solutions from emerging technology companies, but turn to proven organizations when it comes time to make major infrastructure decisions. Look for organizations with track records of performance, transparency, stability, continuous innovation, and exceptional customer/community support. There will always be risks when you rely on third parties for key pieces of your infrastructure, so do your due diligence and find partners that give you confidence and peace of mind.
Although there certainly are viable compet.i.tors you should consider in each area, here are some of the providers that we have come to rely on for our technology infrastructure. (Pricing shown is accurate as of July 2011.) Time Tracking Company: FunctionFox (www.FunctionFox.com).
Product: Timefox.
Pricing: $20/month and up.
Notes: A number of other solutions we use offer time tracking features as part of their products, but we have always preferred Timefox. It is intuitive and reliable, and easily scales as new employees and contractors are added to the system. Even though it is designed to accommodate billable hours, we were able to customize it to fit our model of service packages and set pricing.
As discussed in Chapter 1, it is important to note that the value-based pricing model does not eliminate the need for timesheets. Accurate time tracking actually becomes more essential in order to monitor efficiency and productivity, evaluate employee performance, produce activity reports, and evolve pricing.
Project and Campaign Management Company: 37Signals (www.37signals.com).
Product: Basecamp.
Pricing: $24/month and up.
Notes: Basecamp is one of the most essential components of our agency management system. Every project, task, and milestone is maintained in the system, and all campaign-based clients are given dedicated client centers.
These online group hubs are designed to foster communication and collaboration between the agency and its clients. They let businesses track campaign milestones, monitor agency tasks and progress, share files, view communications, and submit and read messages. There is also a great iPhone mobile app called Insight available for $9.99.
Customer Relations Management (CRM) Company: 37Signals (www.37Signals.com).
Product: Highrise.
Pricing: $24/month and up.
Notes: Another product in the 37Signals suite, Highrise is our CRM solution used to manage all agency contacts, including clients, prospects, media, and employees. It is billed as "simple CRM," and though it definitely lacks some of the features in more robust CRM platforms, we have always found it be effective.
We use Highrise to track all important notes, calls, meetings, and e-mails, which gives managers and account teams 24/7 access to everything happening throughout the agency. Plus, mobile apps make it easy to stay connected and informed while traveling and working from remote locations.
Internet Marketing Company: HubSpot (www.Hubspot.com).
Product: HubSpot.
Pricing: $3,000/year and up.
Notes: HubSpot is an all-in-one marketing platform. It includes tools to help companies get found online, convert visitors into leads, and continually a.n.a.lyze marketing investments. HubSpot also offers a wealth of education and training resources, an active online customer community, and a team dedicated to working closely with VAR partner agencies.
Accounting Company: Intuit (www.quickbooksonline.intuit.com).
Product: Quickbooks Online.
Pricing: $12.95/month and up.
Notes: In 2010, we made the switch from Quickbooks for Mac to Quickbooks Online. It was one of the best decisions we have made. Moving from the desktop version to the cloud simplified our accounting systems, improved our accounts receivable and accounts payable processes, gave us real-time insight into our financial health, and made it possible to integrate financial data into our account management systems.
Internal Social Network Company: Yammer (www.Yammer.com).
Product: Yammer.
Pricing: $5/user and up.
Notes: After a one-month beta test with a small group of PR 20/20 employees, we rolled out Yammer as our internal social network in December 2010. As our staff grew, we needed a better solution to encourage collaboration, continuously transfer knowledge, and perpetuate our culture. Yammer provided all of that and more. There are higher-end solutions in this s.p.a.ce, such as Jive Software, but based on our experience, Yammer is an ideal solution for small-to-midsize agencies. Here are some of the ways we use it on a daily basis: Post timely links and resources.
Share good news and positive campaign results throughout the day.
Ask questions of our peers.
Offer tips and share observations.
Add topics and daily notes for discussion during the next morning"s group meeting.
Get real-time feedback on campaign strategies.
Publish account and group updates.
Take polls and announce agency events.
Online Meetings and Webinars Company: GoToMeeting (www.GoToMeeting.com).
Product: GoToMeeting and GoToWebinar.
Pricing: $49/month and up.
Notes: GoToMeeting gives agencies an affordable solution to conduct online meetings and webinars. We use it for new business presentations and monthly client campaign reviews, as well as education and training. An online meeting platform, such as GoToMeeting, is essential for every agency.
In addition to the solutions just outlined, here is a collection of additional elements that agencies need to consider when building a scalable technology infrastructure: Agency management.
Calendar/scheduling.
Communications.
Computer network.
Data storage.
E-mail.
Hardware: computers, printers, cameras, mobile devices, servers, phones.
Marketing automation.
Online surveys.
Website a.n.a.lytics.
Lesson 3. Understand Your Limits Marketing agencies are bound by the limitations of human resources. One new employee is needed for every 120 to 140 hours of additional client service work per month. This not only affects payroll, but it impacts every piece of the agency"s infrastructure. Therefore, as your agency is forecasting its growth plans, it is important to take a macro-level view of how increases in revenue and staffing will impact your organization.
At the end of the day, great people define great agency brands. If you push growth too hard, you run the risk of burning out your most valued a.s.sets. If you hold back too much, you may not create enough opportunities to retain them. You can only grow to the rate permissible by your infrastructure. This not only applies to information technology, such as phones, servers, computers, and software, but to your talent.
If you are considering an aggressive growth model, ask yourself questions such as: Do we have the right leadership team in place?
Are we expecting pract.i.tioners to naturally evolve into managers or are we providing the resources needed to prepare them for the challenges ahead?
How will our agency management systems perform if we increase monthly client hours by 25 percent? 50 percent? 100 percent?
Is our current staff overworked?
How will the increases in staff affect payroll and productivity?
Is our training and education program maximized to quickly onboard new professionals?
Is our career path defined?
Do we have a solid recruiting program in place to fuel our need for entry-level A players?
Lesson 4. Find Reliable Advisors and Mentors Make it a priority to connect with and engage an advisory board for your agency. When I was building PR 20/20"s original business plan, I identified my weaknesses and tried to find advisors who could bring complementary knowledge and skills to the table. Specifically, consider core business areas such as finance, technology, human resources, legal, and accounting. If you are going to scale an agency, you need insight and guidance from professionals you can trust.
Also, look for mentors who have built and/or transformed businesses of their own. Entrepreneurs tend to welcome opportunities to help other entrepreneurs, and share what they have learned along the way. Their experiences can be invaluable to your development as an agency.