Three is the magic number

Last year was our 3rd year in business. And whilst years 1 and 2 were clearly pivotal for us (thankfully we managed to avoid being part of the 30% of new businesses that fail in that timeframe), I think 3 has been our most important year yet. But on the face of it we didn’t really do anything remarkable.

If you let me start by telling you a story... In August last year I sat down with Ishbel our Marketing Manager as we prepared a few award entries. We had some outstanding results for clients that I thought were award worthy and the conversation arose around whether we should enter Agency of the Year again. Given we’d won in 2018 for UK Small Agency of the Year, surely this should have been a pre-requisite? The thing is, we’d outgrown the small agency category and in my opinion, we didn’t tick enough of the boxes to enter ‘Large Agency of the Year’. So, we opted out.

But if you were to ask me whether I felt this was a negative for us, I’d say no. In the last year when we've established ourselves as Scotland's largest social media agency, we’ve doubled turnover, won 15 new clients, grew out of our premises and into new ones, and pretty much doubled our staff base. All this in our 3rd year of business. How is that not entry worthy?

So, here’s my thoughts on that…

While year 1 and 2 are about survival, establishing yourself and getting a foothold in the market, year 3 for me was about consolidation. No fanfares, nothing ground-breaking. In effect, it was more about internal operations than external show. We had to underpin the business with processes that we hadn’t needed before, we had to put a management structure in place to manage future expansion and we needed to invest in software and processes to allow us to have the correct foundations.

Yes, we delivered some great results, but for me, the most important thing was getting the foundations in place for what’s coming up. To put it into house-builder terminology, where year 1 and 2 were about securing the land, planning permission and setting out the designs for the building, year 3 was about laying the foundations for a solid base, and in year 4, we start to build.

So for us, ‘Three is the magic number’. Without investing time and effort in our foundations this year, future expansion would be all but impossible. In our case it was year 3, for others it might be a different year, but I’ve come to realise it’s been entirely essential in building a sustainable business. 

Sound like something that is on the horizon for your business? Here’s some advice based on my experience of the past year:

There’s a need for hierarchy: I’ve heard that 12 is the perfect size for an agency, no cliques, no need for hierarchy, everybody has a clue what’s happening. As we raced past this number the need for structure in the business became increasingly clear. It’s not about you as MD stepping back from the coalface and letting go of the day-to-day, it’s actually about delivering the support your team deserves, the time your clients deserve and the sanity you deserve.

There’s a need to invest: Whether it’s new software to make the business function better or it’s new hardware you need to underpin the business. We realised this very quickly as our basic IT setup started to creak under the pressure of the number of staff. Infrastructure aside, we’ve also invested in the team with a number of strategic hires coming into the team that will allow us to deliver what’s planned in 2020.

There’s a need to step back and plan: While years 1 & 2 tend to be about racing forward as fast as possible, year 3 was about taking time to step back, to look at things objectively and plan. With that focus on month-on-month survival behind us it really allowed me to look at our next 2-3 year plans.

Finally, there’s a need to de-risk: Every agency owner knows the script. You can’t have a client that represents too large a percentage of your business. While the going might be good for a while, it’s ultimately doomed to fail as you are symbiotically linked with that client. They leave, you’re done for. With the first years behind you, year 3 is about ensuring you build a sustainable portfolio ensuring safety for the business and the team.

So, as I said before, you won’t win awards for investing in IT, de-risking your portfolio or building in a management structure. But, I would say without it, without that year 3, the future years would become increasingly difficult. 

I hope this helps out anybody in a similar situation. If you read this and think, that’s me, give me a nudge, I’ll happily grab a coffee.