Why agencies stall

We’ve all seen it – a promising agency starts out strong then reaches a plateau. Billings stall or decline, new business wins dry up, and strong talent leaves. Agencies stall for any number of reasons, but these two contributing factors could be resolved by more skillful leadership.

The Clubhouse Mentality

Change is hard, and many agencies refuse to prepare for their long-awaited move to the grown-up table. They focus on the fun parts of being in the ad business and ignore the boring stuff: implementing new systems for time management, project management, or CRM, hiring to offset competitive weaknesses, investing in more robust infrastructure, or building more sophisticated admin, IT, and HR capabilities.

Ambitious agencies evolve by forging ahead, trying new things, pushing through the discomfort of change. Other agencies—a kind term is “lifestyle agencies”—embrace the status quo. Their founders like things just the way they are. They enjoy the prestige of having the title of founder or CEO. They talk about driving growth and increasing profit, but they’re more interested in working at a place where they can watch every game of March Madness or work part time in the summer and generally ignore the duller parts of running a business.

There’s nothing wrong with being a lifestyle agency IF everyone understands that’s the plan. The challenge is when the leaders won’t admit (usually to themselves) that they’re not really serious about growth or profit and they blame their teams for not winning more new business, growing existing accounts, or doing better work.

Firing Blocks

Agencies often need new people to reach new levels. The people who create an agency or practice may not be the best ones to grow it, and the ones who grow it may not be the best ones to maintain it. Agencies often need leaders who are more proactive, new talent in key roles, or new staff to add skills and competencies that keep the shop competitive. But they don’t always see that need, or they address it in the wrong way. Morale plummets when the wrong people take up key positions and slackers keep their jobs while others have to work harder.

Even with good people, you may need to make changes to stay profitable. That can mean thinning out an overstaffed team so you can afford to build up an understaffed team. Nothing about this is comfortable. But some leaders can’t seem to pull the trigger on staff changes that are desperately needed, even when waiting is slowly destroying the agency.

Laying people off or firing poor performers is always uncomfortable. But some leaders have what I call a firing block – they can’t seem to pull the trigger on needed staff changes, even when waiting is detrimental to the agency.

How do you, as a leader, avoid these pitfalls?

First, honestly decide what you want to do. If you really want a lifestyle agency, if playing by the clubhouse rules is what brings you joy, embrace that. Articulate it clearly to the rest of the team as a positive choice about focusing on work life balance, doing great work, staying small and nimble. These are real, positive benefits of a lifestyle shop – having a better lifestyle. Own it.

But understand the potential consequences of that choice, and be realistic with yourself and your leadership team about what that might mean. You might not have the new business wins, national press, or opportunities to work on your dream accounts.

But being a lifestyle shop means you don’t have to be as aggressive about changing up the talent, staffing and capabilities, which means you might not have to fire people you don’t want to fire.

But if you really don’t want to be a lifestyle shop, if you are ambitious about growth and change, you might need some help, especially if your agency has been around for a few years. Here are a few suggestions:

  • Add senior staff who have worked at a larger successful agency. Listen to them and support them. 
  • Get outside help; from leadership coaching to systems implementation.    
  • Dust off your business plan or make a new one. Understanding financial goals and implications can help you stay on track, especially if you have a CFO or advisor who can hold you accountable.

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