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Agency collectives and collaborations

Small agencies can increase their capabilities and bandwidth by partnering with other small agencies and freelancers. But what are the tricks to doing this successfully?

Owners often struggle with how to make these partnerships profitable without distorting their pricing models.

In this episode, Chip and Gini discuss the benefits of collectives and collaborations, as well as some lessons they have learned over the years about how to make them work well.

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Chip Griffin: Hello and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin.

And I’m Gini Dietrich.

And we’re here to do some collaboration today. Gini, you and I are going to come together and figure out how to create a podcast episode.

Gini Dietrich: It wasn’t too bad until you got to the podcast episode part.

We are going to collaborate and talk about collectives and teamwork.

Chip Griffin: Right after this, I can’t find my mouse cursor. There we go.

I think I might just, I might just leave that in. So if you saw a little hiccup before the jingle or heard it, if you’re listening to this in, in podcast, I can’t find my mouse. I could find my mouse. I mean, I’m not, I’m not that old and blind yet, yet. I just, I couldn’t, my, it turned out my mouse cursor had gone off onto the monitor that’s on the other side of my office.

That’s the crazy setup here where I have monitors that are all over the place. And so, yeah.

Gini Dietrich: Yeah. You have a very cool office. There’s like all sorts of stuff that’s going

Chip Griffin: on. It’s actually very hot right now. It’s 73. 8 degrees. Way warmer though. Yeah.

Gini Dietrich: I don’t like it that warm. It’s because you have all that stuff.

You have lights, and yes, and servers, and computers, and servers, and yeah.

Chip Griffin: Anyway, nobody has tuned in to listen to that, and someone criticized one of my YouTube videos recently saying that I had too much, you know, blather in there, and that, you know, it took a while for me to get to the point. So I guess, why don’t we try to get to the point?

Okay. So anyway, this is, this is based on a question that I got by email from an agency owner, who asked, said, basically she’s been teaming up with two other women who were at the same level of experience. they’ve been operating as a collective with different companies. They’ve talked about joining up together, but that would be too complicated.

So they want to just find ways that they can work together, partner on projects, but find a way that everybody is still able to make some good money out of it. And so this is a common challenge that, small agencies, solo agencies have as they’re trying to find ways to. Expand their capabilities, which we’ve talked about recently to expand their bandwidth to reach, you know, different clients.

and, and how do you do that in such a way that it’s good for everybody? Because if you use a typical subcontractor relationship, then you’ve got to figure out, okay, well, how do we make some profit in here without having to overcharge the clients? And so it does, there is some complexity here, but the good news is.

Okay. There are lots of folks out there that have been doing this for a long time and doing it quite well.

Gini Dietrich: Yeah, it’s, it’s an interesting approach and I’ve certainly tried it as well. one of the things that I have found it for, for me personally, is that things tend to Go in into certain buckets. So I’ve always found that regardless, I’m the one who ends up doing this stuff.

And I have found that my partners don’t do the business development, or maybe they do, but they don’t bring me into their clients. And I’m always the one bringing people into into my clients. So from my perspective, it’s not always been super successful because I can do that. But that’s not my only job, right?

And so I, it’s, I think it’s an interesting approach and one that if you’re thinking about three or four or however many, for lack of a better term, partners, that wouldn’t be true partners. But how do you, how do you structure it so that it’s not it’s fair and it’s balanced and everybody’s doing the same.

Types of work and same revenue rain making types of work to be able to

Chip Griffin: make it work, right? Well, I think I think that’s part of it. I think you have to decide is everybody going to be doing the same thing or are there distinct roles for each individual within it? Because you certainly can have. Very effective partnerships, whether they’re loose or whether they’re formal, where you’ve got folks who are one who is focused more on doing the business side and someone else is focused on the execution.

I mean, when I started my first business with a partner. Twenty some years ago, we had very different roles and he was much more on the biz dev side and I was on the operational side and we, we tried to carve it out that way so that we had the different responsibilities. Obviously, that was a formal partnership, but even in some sort of a loose collective type arrangement, it can work as long as you go in with the right expectations.

Yeah, I think that’s the problem is that too often people go in and everybody’s like, Oh, I’ll bring you into your projects. You’ll bring me into mine, you know, we’ll all help each other. And, and because you’re going in with the wrong expectations, it sets it up for failure.

Gini Dietrich: Yeah, I think that’s, that’s probably key is, is setting the expectations.

And if it, if it is, So and so is going to focus on business development. So and so is going to focus on operations. So and so is going to focus on client service, like, you know, and, and you set it up that way as if you were together in a business, then it’s probably pretty effective, but you also have to make sure that everybody, everybody’s okay with it.

And everybody thinks it’s fair. And, and then I think there’s also the expectation setting in terms of, well, if the operations person has. A new business opportunity. How does that roll? Does does the operations person get to do it on their own or does it come into the collective? Or I think you have to have all those kinds of conversations to figure out those expectations, right?

Chip Griffin: And anytime you’re doing it where everybody’s got their own entity. Or doing their own thing. And there’s also a collective that’s where it gets really complicated. You have to be clear about what stays in and what goes out, you know, because if you, if you don’t, then there’s going to be, hard feelings.

Yeah. And yes. And, and people will, there’ll be, you know, resentments that will build up and, and they probably won’t emerge right away. It’ll take some time. It’ll fester like any good problem does. And, you know, by the time it actually comes up for discussion, it’ll be too late. And so. you know, you do want to think those things through and figure out what are the ground rules.

and, you know, some of that comes down to, you know, figuring out how you comp different things, figuring out what the roles are for folks. So for example, you know, if you’ve got a situation where everybody’s kind of doing the same thing and, and everybody’s kind of responsible for rainmaking, then you might want to set up where everybody’s compensated for the operational work that they do.

But whoever is the rainmaker gets some either percentage of the business or some fixed amount or some way to compensate whoever brings the business to the table, because that’s obviously an important role to have. And so that person should be getting compensation for that separate and apart from the actual execution that they’re doing, and that will help alleviate some of those problems, because then your rainmakers don’t feel.

Bitter about the fact that they are bringing things into the collective, as opposed to hoarding it for

Gini Dietrich: themselves. I wonder if it’s, as you’re talking about that, it’s, I mean, law firms are sort of structured this way too, right? I mean, certainly they’re in the same quote unquote organization, but I think you could use that same structure where you have, if you’re a partner, you’re a rainmaker.

And certainly there are going to be some that are more successful than others, but that’s how you make your money is based on a percentage of what you’re bringing in. And then you have the teams to be able to execute. And so, you know, you, the rainmaker, the partner attorney has the cache to be able to bring in the clients.

And then the, the, the teams are the ones that execute it. So, maybe there’s an, there’s an opportunity for you to study how, how law firms are set up and how they do it. because I think it would, I think that structure would work for a collective.

Chip Griffin: Yeah, and, and, and part of it comes down to, I mean, one place you have to start is figuring out, you know, how you’re going to structure the project work that you’re doing or retainer work that you’re doing for clients.

So, in other words, how are you billing them, right? So the, the, the method that you’re going to come up with for internal comp is going to be different. If you’ve got a project fee based approach, fixed fee approach, versus if you’re charging hourly, and we’re not, we’re not going to get into the debate.

We’ve had that conversation. And if you don’t know our views on it, go search the archive and you can see our discussions on that. But the, you know, how you are. Billing out impacts how you’re compensating each other and how you divide things up. And so you want to think about that when you’re structuring everything.

And look, the bottom line is there’s no reason why you can’t operate as a collective and have everybody making money. Sure. Absolutely. You have to accept that you’re going to, that you may be making Less as an effective hourly rate. If you’re not the one who brought in the business, and that should be okay, because that means you didn’t have to spend the time building the business, right?

You have to think of that as your business development cost. So, you know, in its simplest form, you could say, okay, you know, 10 percent of all of the operational fees goes to the rainmaker. And, you know, so everybody else is now getting 10 percent less than their normal hourly rate. Everybody should still be happy with that, right?

I’m not saying 10 percent is the right number. Yeah, yeah, yeah, for sure. So, if you do it that way, then you’ve got a system set up where I’m saying, I accept that 10 percent of the money that I’m making should be going to business development, and so I’m okay if that goes to the member of the collective that brought it in the door.

And so everybody is then winning. You just can’t view it as, you know, if the Business just showed up on my doorstep. I should be making the exact same amount as if I went out and I fought for it. That’s a really good point. I had all of the failed proposals and the time spent and all that. Right. Cause we all know it takes a lot of time to do good, good business development.

And if someone is doing that for you, they should get comped for it. And you should be okay with getting paid less for the actual operational work that you’re doing as a result.

Gini Dietrich: That’s a really good mindset shift too. I think because you, it, when you think about it from that perspective, yeah, you’re not.

You’re not having to do all that. Like there are certain things that I don’t enjoy doing. And one of them is project management and managing Asana or Trello or Monday or whatever it is that, you know, I don’t want to do that. And if it means that it costs. 30 or 40 less an hour on my hourly rate. Great.

Take it, please.

Chip Griffin: Somebody else do it. Right. Right. And, and so for you, I mean, you enjoy the business development piece more, more so than most. And so, you know, for you, if you took, you know, 10 percent of the total fees as your comp, you might end up feeling better about the fact that the collective was leaning on you to do that.

Absolutely. Conversely, if I hate doing business development, I might say, How about it? I get I get 90 percent of what I would have gotten anyway, but I don’t have to do the biz dev side. I mean, that’s gold.

Gini Dietrich: Yeah, yeah, it is literally gold. And I think you’re right, because there is not the failed proposals and writing proposals and, you know, meetings and blah, blah, Like, I personally love This is terrible.

I have a terrible way to put it, but I love the chase and the kill. I love it. Yeah. And then once they become a client, I’m like, Oh, I don’t have, I don’t want like the organization and the project management. So yeah, if you can find people that compliment your weaknesses. And, and build the collective that way and, and shift your mindset.

I think that’s a really important point in terms of you might make less quote, unquote, less and in your hourly rate, but you’re gaining in more time, time back, not having to do the things you hate, those kinds of things.

Chip Griffin: Right. And I think part of the trick here is that you have to be clear about all these things going in.

You have to have an agreed. And it doesn’t mean you won’t modify the structure at some point down the road. You always have to be open to making changes and adjustments as you learn more. And as, as they develop, because what you think the collective is going to be on day one is probably not what it’s going to be, you know, 18 months later, but you should go in with an expectation.

This is how we’re going to divide things up. This is how we’re The money works for everybody so that everybody can, can make that judgment at the outset and not after you’re already doing work for a client. Right. And, and cause you don’t want to be in a position and I’ve seen some of these where people are like, well, look, you know, once we get the business, then we’ll sort it out.

That’s the wrong time. It is the wrong time. Yeah, absolutely. Once you have the signed contract and you’re committed to doing the work. You got to do the work. Now is not the time to sit there and figure out, okay, well, this is, this is how much we can budget for you and you and, oh, oh, you don’t think that’s enough?

Well, too bad. We’ve already had a lock. Right. We’ve already agreed to do it. And, and. Part of the challenge in a collective is typically you have one of the parties is the one who’s actually signing a contract. Typically, not every member is doing it. there are some cases where you might have a more formal collective where there’s an actual separate entity, but the reality is someone is more on the hook than others.

Reminds me when I was in college and I lived in a, in a. A house with some roommates and I was the one who was always writing the checks. And so at the end of the day, I was the one who had that monthly check and I had to go collect from everybody else. But if that check didn’t come through, the landlord was coming to me for Yeah.

and so it’s gonna be the same thing in this kind of arrangement. So whoever that person is is taking some additional level of risk. Right. They get a little bit more control because if it goes south, they own the relationship now. But they also have the risk of actually executing on it. So, don’t leave it until the last minute, or after that contract is signed.

Sort it out in advance. Have your, your structure known. you know, and it’s, these things can work. You know, I think one of the other things that’s important to touch on, we’ve talked about where everybody’s sort of similar in the work they do, but except for the biz dev piece, it can also work. where people have entirely different roles.

You’ve got a digital person in the group. You’ve got, I was going to say that you’ve got to be a relations person. In some respects, those can work even better. The only downside to those arrangements is that you’re not really expanding your bandwidth. You’re expanding only your capability. Your capability.

It’s okay, but you need to, you need to understand that because those kinds of collectives can become quickly overloaded if you’re not careful. and so you have to think about those things.

Gini Dietrich: Yeah. I was actually going to say that, my friend, John Goldberg is part of a collective and I can’t remember the name of it.

It’s, it’s escaping me, but that’s what they’ve done is they’ve brought in expertise. So his expertise is crisis management, reputation, or crisis, communications and reputation management. And so when they have a client that has that need, they have the capability. They have the capability to be able to do it.

So that’s the way, and he certainly has his own business as well. but that’s the way they’ve created that collective is to bring in the different expertise, to be able to, to focus on increasing their capabilities, which is one of the things we’ve talked about in the last few weeks is, you know, how do you increase your capabilities in house and that could be one way to do it.

Chip Griffin: Yeah, absolutely. And you’re being transparent about it. That’s, you know, that then alleviates the, the bandwidth problem, right? Because if you’re being transparent about who someone is getting, when they’re getting that, the digital advice or the crisis advice or whatever, you know, that then it’s much easier to say, well, the, you know, the bandwidth of that individual is limited.

you know, generally if you’re looking at it as a group, the clients are going to just sort of expect, they can just go for as much as they need. They need to, and, and these can work even if you’re not setting up a formal collective, there are a lot of referral arrangements that take place between, you know, small agencies or solo consultants.

I, I know some that, that set up basically where it’s, you know, there’s, there’s one who charges a fixed rate to clients and then when they farm it out, you know, that person then gets 80 percent of it or whatever. They have some sort of set percentage split, that they use. There’s, there’s a lot of those that are set up in all sorts of industries.

And so those can be beneficial as well. That, that works more with overflow work, or where someone needs, you know, help maybe in a particular media market or with a particular social platform where someone’s got some additional expertise. But there are those kinds of arrangements that you can put in place, even if you don’t want to go to, you know, sort of a, either a loose or a formal collective.

Gini Dietrich: Yeah, I think it’s, It’s, it’s interesting to think about it’s an, it’s a way to both increase your capability and add expertise to your team without a formal agreement. but I think you’re right that the mindset shift is super important and setting expectations are, are the most important things you need to do before.

You start pitching business and doing work together

Chip Griffin: and then after that, just check in with each other, have open communications. It’s it’s the key to any successful partnership of any kind. You have to be communicating. If you’ve got a concern, don’t wait to raise it until it becomes that festering. Make sure that you address it.

You know, when it starts to nag at you and gnaw at you, and it’s, it’s something you can still solve, and so, you know, you should be having, if you’re, if you’ve got, you know, some sort of a collective arrangement, have regular meetings where you’re just talking to each other about these things. Just as I advocate weekly one on ones for employees, I wouldn’t advocate a weekly for a collective, but, you know, maybe a monthly.

Every other, yeah. Yeah. You know, something like that, where you’re sitting down and you’re just talking about sort of big picture things. And it gives you that opportunity to, to raise things, you know, either good or bad in advance so that you can prepare for them.

Gini Dietrich: Yeah, I, I like this idea a lot. and over the years I’ve tried different avenues, but I think your point about.

Shifting your mindset and figuring out expectations. I mean, those are the two keys and there’s your blog post too. There you go.

Chip Griffin: Well, this has been great. Cause I’ve been writing an article about it and I hadn’t gotten around to the article. So we’ve recorded a podcast episode and that will now be my cliff’s notes.

Love it. An article. So love it. Love it. Article for me coming soon on this very topic where I flesh out the ideas that we’ve talked about here over the last 18 minutes or so.

Gini Dietrich: And if you hear all the noise in the background, I am also a camp counselor for the summer.

Chip Griffin: So, you know, I don’t think it’s quite right to refer to your husband that way.

Gini Dietrich: He’s not here. It’s all me.

Chip Griffin: He’s not playing in the sandbox and you have to. No. Oh, well. It sounded like there was more than one person. There are.

Gini Dietrich: Yeah, we’re. Oh, okay. I’m, I’m attempting to keep her busy with other friends.

Chip Griffin: Gotcha. Okay. Well, I, I feel better then because. You know, she was making a lot of noise for a single.

Yeah, I know. There, there are several children here. Well, on that note, we’re going to, to draw this episode of the Agency Leadership Podcast to a close, but we look forward to having you back here next week. I’m Chip Griffin

and I’m Gini Dietrich.

And it depends.

Thank you for listening to the Agency Leadership Podcast. You can watch or listen to every episode by visiting Agency Leadership Podcast. com or subscribing on your favorite podcast player. We would also love it. If you would leave a rating review at iTunes or wherever you go to find podcasts, be sure to check out Gini Dietrich at spinsucks.com and join the spin sucks community at spinsucks.com slash spin dash sucks. Stash community. You can learn more about me, chipGriffin@smallagencygrowth.com, where you can also sign up for a free community membership to engage with other agency leaders. The Agency Leadership Podcast is distributed on the I Podcast Network where you can find lots of other communications oriented podcasts.

Just visit www.fipodcastnetwork.com. We welcome your feedback and suggestions, and look forward to being back with you again next week.

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The Hosts

Chip Griffin is the founder of the Small Agency Growth Alliance (SAGA) where he helps PR & marketing agency owners build the businesses that they want to own. He brings more than two decades of experience as an agency executive and entrepreneur to share the wisdom of his success and lessons of his failures. Follow him on Twitter at @ChipGriffin.


Gini Dietrich is the founder and CEO of Arment Dietrich, an integrated marketing communications firm. She is the author of Spin Sucks, the lead blogger at Spin Sucks, and the host of Spin Sucks the podcast. She also is co-author of Marketing in the Round and co-host of Inside PR. Follow her on Twitter at @GiniDietrich.

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