The Agency Advisory

A packed issue this week with a leaning toward financial reporting and pipeline. Perhaps that's an indication of the focus agencies have on planning / preparing for 2025. In this issue, there are some great posts including a discussion around pipeline health; a couple of posts on revenue reporting; an interesting piece on how to ratchet up your multiple; and 12 reasons why you should offer a discovery services. Combine that with a couple of promotional items - one from a current client of mine and one promoting a growth event I'm presenting at - and you have issue #34 of The Agency Advisory.

As always, a mssive thank you to all the original contributors for sharing their knowledge and expertise. It's been a week rich in reading and discovery for me.

How Is Your Pipeline Stacking Up in Q4?

Check out the conversation that came about as a result of Ryan McNamara ’s post on pipeline value. Ryan made the very valid point that pipeline value isn’t for next month but for 3-4 months down the road. His post elicited some good replies from experts including Simon Collard , Ben Potter and Stefan Hull plus yours truly and the discussion threw up some great advice on how to measure pipeline, on sales cover calculations, and on sales cycle length. It’s worth checking out if you are at all concerned about the state of your pipeline as we head toward Christmas and the end of the year.?

Get involved with the conversation here:

Revenue Reporting - Metrics to Use

Another useful post from Simon Collard who lists out 6 revenue reporting metrics that you might like to consider as part of your monthly reporting pack. Sure they might be lagging indicators, but if they provide insights that highlight a trend or worse, a developing issue then they are worth the effort of producing. My fave among them is the revenue gap which relies on leaders having a set budget for the year and a monthly rolling forecast.

Knowing the gap between actual and target several months out focuses the mind and ensure that as my good friend Darryl Sparey (Chart.PR, FPRCA, FCIPR) says, “sales never sleeps.” Simon’s post fits neatly into Ryan McNamara ’s advice on pipeline value as this is a measure of named deals. The gap is made up of a challenging 3rd element - blue sky numbers. In other words, the revenue you need to find that is not currently covered by contracted work or named pipeline deals. And it is that which you should be equally as focused on.

Check out the metrics here:

The Importance of Ratcheting up Your Multiple

Agency advisor Simon Quarendon posts that patience is a virtue when it comes to planning an agency exit. In his excellent reprise of a webinar by Jonathan Baker of M&A advisors Punctuation , Simon shares a graphic which shows the ‘ratchet effect’ that applies to agency sale multiples. He goes on to explain why it’s advisable not to rush into a sale because for the sake of a few more months or years, multiples can increase as the owners identify and rectify the factors that result in lower valuations. As has often been cited in this newsletter, those factors include a ‘woolly’ agency positioning; overly high client concentration levels; an over- reliance on the founder; poor business development processes or worst of all, a weak second tier management team.

Read Q's summary here:

And listen to the podcast here:

Here’s Why You Should Always Start With Discovery

One of my pet peeves is when a new client expects the agency to immediately jump back on the hamster wheel of activity and head blindly in the direction the previous agency was heading. What’s the point of that? The only way to credibly avoid this is to build into every proposal and costing, a period of discovery. This allows the team to explore the symptoms, scan the horizons, and to fine tune the recommended programme. That’s not to say the lights go off during this period. Quite the opposite. It means the spotlight is turned to shine on the real problem. I’m flagging this thanks to another great post from Luk Smeyers who last week explained why every consultancy firm should have a discovery service. In his post and carousel, he outline 12 reasons why you should go down this path. Wise words as always from Mr Smeyers.?

Check out 12 great reasons why you should include a discovery step

How Long Would it Take You to Answer These Queries?

An interesting post from Jonathan Smith who lists out the data that any broker or interested party would ask an agency during the early stages of an exit process. His list highlights the importance of running your business well, even if currently it’s a lifestyle. My own experience at Hotwire confirms Jonathan’s opinion. From the get go, the founders ran the business with the highest levels of accountability and professionalism - helped in no small part by one of those Founders being the CFO. And although I came in just after the sale, the discipline by which the firm was managed, held us in good stead through the growth years of the earn-out and beyond.?

Here are the queries you need to have at your finger tips:

Tips on Building Your Personal Brand

I’ve been talking about personal brand a lot recently, to the extent I delivered a workshop on the subject recently. I’m always interested therefore to collate best practice from experts on the subject and so I was drawn to a post shared by my good friend Valérie Gooding from sales leadership coach Jason Cooper . He offers up a number of suggestions, inspired by best selling author on the topic, Dr. Robert Cialdini , author of #influence. Jason highlights 7 ‘strategies’ that should be used to build your personal brand in the workplace, all of which have a place in the personal brand toolkit.

The list is oriented toward how to build trust within a larger organisation, but the concepts work just as well for the individual in any size of firm. Jason points out that building a strong barn in an organisation isn’t just about visibility, it about consistently demonstrating your value and influence.?

Those 7 strategies are here - take a look:

The Existential Threat to Your Agency’s Profitability

Thought provoking post here from Spencer Gallagher , Founding Partner at M&A advisory firm, Cactus , who states that the biggest threat to agencies is the wage cost to net revenue ratio which he predicts will significantly reduce over the seven years. Using the Cactus generative AI tool, Tabitha, the headline number suggests the ratio will drop from an average of 63% to as low as 25% during this period.

If this is proven true, then every agency leader must adapt quickly or die by embracing tech and by driving innovation across the business. This is something of a wake up call if it is to be believed. Whether or not the headline figure will become a reality is questionable in my opinion - but the fact remains that the revenue to staff cost ratio is under threat and every agency must find ways to innovate or get left behind by a new wave of agencies.?

Dive into Spencer's prediction here:

Client Plug: New Report into Gen Z & Millenial Expectations of Social Purpose

A big week for my client Purpose Union as they published a major new report into the expectations Gen Z and Millennial have around corporate social responsibility and DEI. The firm 1,800+ respondents (US & UK) to understand how these generations view businesses and their commitment to social and environmental issues.

The findings show that Gen Z and Millennials expect businesses to do more to tackle social issues, and this expectation is growing. This expectation has grown over the past 4 years.? The Purpose Pulse finds that the majority of Gen Z and Millennials believe that businesses are not doing enough to address climate change.? The business case for DEI is significantly less persuasive than the principled-based case ? Despite low trust in institutions, 16-43 year-olds are demanding more action from businesses and policymakers. Engaging more rigorously with this agenda is the path to building trust and improving reputation with these audiences.

Download the report here:

Full Programme of the Agency Growth Summit Revealed

I’m delighted to be among some incredible speakers scheduled to appear at the Agency Growth Summit’24. Just take a peek at the quality of speakers and if you at all interested in growing your agency, then this is an event that can't be missed.

Although I have the Friday afternoon GMT graveyard slot, I’m excited to be asked to present.?

Jonathan Leafe, Rachel Nulman-Schapiro, Robert Craven, Roland Gurney, Laura West, Chris Bantock, Robert Da Costa ??, Janusz Stabik, Robin Bonn, Henry Regan, Denise Beaupre, Felix Velarde, Vlad Calu?, Stephen Kenwright, Claire Hutchings, Rory Spence, Jhana Li, Nikki Gatenby, Simon Bollon, Jason Swenk, Marcel Petitpas, Chris Rudolph, Felix Velarde, Kobi Gamliel, Karl Sakas, Trenton Moss ??, Clair Heaviside, Louise Turner, Chartered PR, Tom Mcloughlin, Haley Despard, ???William C. Attaway

Register here:

Full details here:?

If you like what you have read in this newsletter, please do repost it to your network, comment on one or other of the topics that have been covered, and if you don't do so already, follow me for more shared posts on matters relating to agency management and comms in general.

https://www.dhirubhai.net/in/andyjhwest/

Many thanks.

Andy