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Don’t repeat my biggest mistakes as an agency owner

This SAGA Member Webinar is available only to individuals with active memberships. Login or join to gain access.
Webinar presented live on June 12, 2024

As an agency advisor, Chip Griffin spends a lot of time trying to help clients avoid the same mistakes that he made as an owner.

In this webinar, he digs into some of the biggest mistakes he made over the years so that you can benefit from the insights into his own failures.

Chip explains what he did wrong and how he would have handled the situations differently if he encountered them today.

If you share Chip’s belief that there is more to learn from failure than success, this will be an excellent educational opportunity for you.

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

Hello and welcome to today’s webinar, where I will be sharing with you my biggest mistakes as an agency owner. I’m your host, Chip Griffin, the founder of SAGA, the Small Agency Growth Alliance. And I’m delighted to have you with me today, and I know that my wife is particularly delighted to for today’s topic because she loves it when I have to admit that I’m wrong and I’m going to spend the next half hour or an hour doing just that.

So we will jump into that in just a moment, but before we do, let’s go ahead and talk about the housekeeping items that I always cover at the top of these webinars. First of all, the full replay will be available on the SAGA website in the next day or two. So if you’re, watching on replay you already know that. If you’re watching live, then feel free to access the replay for anything that you might have missed.

You can use the Q and A function to ask questions. If you are attending live, that should be at the bottom of your screen in zoom, hopefully. And if you have questions that you’d like to ask because you’re watching on replay, or maybe you’re watching live and just don’t want to share the question publicly, feel free to email me directly at chip@smallagencygrowth.com. And I’ll do my best to answer you. I’d also encourage you to participate in the SAGA community on Slack, where you can ask your questions, not just of me, but of your peers, and get feedback from them as well. If you are, going to engage on social media, I’d encourage you to use the hashtag agencyleadership to make it easily discoverable.

And finally, any of the resources that I might mention, as well as all sorts of additional materials will be available at smallagencygrowth.com. You can use the search function there to find the answer to many of your agency questions, or at least. My perspective on those answers. So with that, let’s talk about why I’m doing this in the first place.

Why am I having a webinar dedicated to talking about my own mistakes? It’s not necessarily because I enjoy admitting that I make mistakes, but we all do. But the reality is that we learn more from failure than from success. Success sometimes can be dumb luck, but failure, there’s usually a lesson to be taken away from it.

So I like to try to look at every mistake that I’ve made, whether it’s big or small, and try to learn from, from it for the future. And I think by sharing some of the mistakes that I’ve made over the course of 20 plus years of owning my businesses and working, and 30 years of working in the agency world, that may be beneficial to some of you as well.

So hopefully you don’t repeat the same mistakes that I’ve made, at least not in the exact same way. So, I’m going to go through 10 of my top mistakes. They’re not necessarily in ranked order, although I think the last one is probably the one I would say is my biggest. Some of them are, many of them are actually mistakes that I repeated because I failed to learn my lesson the first time around.

And so I guess maybe that shows that I’m stubborn or maybe I don’t listen to my own advice or who knows what. But it is the kind of thing. that you want to try to avoid because if you make the same mistake over and over again, that’s the kind of thing that holds you back. Making one mistake, as long as you learn from it, can actually be a productive experience.

So my first mistake was very early on, it was with my very first agency, and I resisted hiring an employee. And, as a result, I ended up selling off the clients of that business rather than hiring an employee. And the reason I did that was because I was running multiple businesses at the time, and I didn’t have the bandwidth to do it all.

And so I had a conversation with a mentor who said, look, you just need to hire someone to run the business for you while you’re doing these other things. And you’ll be in great shape. And in retrospect, I absolutely should have done that because that business could have continued to grow and could have continued to flourish if it had someone else who was working in it while I was distracted by my other business enterprises, which at the time were generating more revenue.

So therefore were more interesting to me. And the reason why I resisted hiring that first employee is really where you get the lesson. The, what I was concerned about was two things. One was losing control over the quality of the product. And I know that this is something that all of you struggle with. It’s one of those things where anytime you have an employee involved or a contractor involved, you worry that it’s not going to be up to your standards, no matter how good that hire may have been.

And I shared that same concern early on. And honestly, there’s some legitimacy to it. The reality is that most of us as owners will do a better job for a lot of the things that we do for our clients. But the question we need to ask ourselves is, is it good enough? Is it up to the standards of the client?

Because if so, then it probably makes sense to hire. The second thing that held me back is again, something I know that holds back many of you. And that is that I was now going to be responsible for someone else’s livelihood. And it’s the re, it’s probably the biggest reason why agencies are slow to hire that first employee.

But I will tell you that once you cross that threshold, once you have accepted the fact that yes, there is a risk, that you are now not responsible just for putting food on your plate, but for your employees and their families. Once you’ve crossed that threshold, it becomes so much easier with each additional hire.

So that first hire is a big mental block. It is the kind of thing that I think more of you probably need. to push through because there are so many benefits to having employees in your business instead of doing it all yourself or relying even on high quality contractors. You can improve your profit margins, you can improve your scalability, and you can really transform what you’re building into a true business versus being perhaps a super solo or a freelancer on steroids or whatever you want to call it at that point where you don’t have an employee.

So that’s my first lesson, my first big mistake was giving up on that business without hiring an employee instead. The next one is something again, I know many of you have done and I’ve done it more than once, but there’s, there’s one particular instance where I kept an underperforming employee on for six to eight months beyond when I knew that individual was not performing in a way that was beneficial to the business or frankly to their own career. They were misplaced in what they were doing, but I allowed it to continue. And the reason why, again, is where the lesson comes in. It’s not that we can’t all be in this situation where we keep someone around too long. And in my case, it wasn’t because I was afraid of letting someone go.

Many of you know that I’m perfectly comfortable with letting employees go at this point. And this was well into my career that I did this. The reason why I kept this employee around was because I didn’t want to have to do the work myself and I didn’t have anyone else who could do that work. And so for me, I rationalized it as saying I need to keep this person simply because they are a warm body and able to absorb the work that needs to be done. The reality is that all that did was prolonged the inevitable. It put me in a situation where I wasn’t actively seeking a new hire for that position because I was able to be comfortable and just allow it to continue. And so the lesson I took from that was once I am certain that an employee is not a good fit, I need to act on it and it’s better for them and it’s better for me because when you let an employee remain who doesn’t belong there who is not meeting their potential. You are simply holding back their advancement and their ability to find a better fit where they can thrive. So be very careful about repeating my mistake of keeping an underperforming employee around for too long. Next one up. I agreed to do work outside of my agency’s expertise.

Does this sound familiar to you? You have a client, they come to you, they ask you if you can do this or that, and they’ll pay you more money. And so you say, sure, why not? I’ll do that. Maybe it’s something that I’m thinking about getting into. But this is different. This particular situation was me agreeing to take on work that was outside of my agency’s expertise.

And it was an area that I never planned on getting into. In fact, it wasn’t even really appropriate work for my agency. It was the kind of thing where I wasn’t going to be able to recoup my cost in a meaningful way. The worst part was the reason why I couldn’t recoup it was because the client wasn’t going to pay more for it.

But this was a big client. I wanted to keep them around and so I said, you know what? I’ll just, I’ve got that for you. I can take care of that. And that’s never a good decision because when you do that, you’re doing two things. First of all, you are confusing the client as far as what it is that you do. And if you’re taking on this kind of work that is outside of your scope, they now think you are something that you are not.

But the second problem that it creates is that it becomes a drag on you and your team because you’re now doing work that you’re either not good at, don’t enjoy doing, can’t do efficiently, that sort of thing. It becomes even worse when, in a second instance, I agreed to do work outside of my agency’s expertise and I didn’t do a good job at it.

And the reason why I didn’t do a good job of it, because it was truly outside of our area of expertise, but we didn’t have enough of a budget to go hire someone and subcontract the work and do it in a way that would meet the standards of the client. So in the end, the client ended up being uncomfortable with or dissatisfied with the product that we created.

In this case, it was some design work, and our agency was not a design firm. And the client was unhappy. We were frustrated. We thought that it would have helped us move the product project forward. We thought that it would help to endear ourselves to the client by willing by being willing to step up. But in the end, it backfired and it caused a rift in the relationship.

It didn’t end it. We were able to recover from it. And as I always say, most of these mistakes can be recovered, but it’s the kind of thing it was, you know, what you would call an unforced error. We had a turnover that we didn’t need to have because we could have simply said, look, that’s not what we do. We can help you find somebody.

We can make a referral. We can find someone that we can partner with. But we shouldn’t have said, yes, we will do that work. So in those two cases, doing work outside of my agency’s expertise, it was damaging to my business and it was damaging to the relationship with the client in the latter case. So those are things you need to be really careful of.

Next on my list is I let a client stay quiet for too long. What do you mean stay quiet? Here’s what happened. So I had a client who was paying me really well. They were paying primarily for strategic advice. But they didn’t give me a call for a month. And they didn’t give me a call for a second month. But they kept paying their bills in a timely fashion.

And so I sat there and I said, Well, I’ve got these other clients, I’m over servicing them. So, why not keep doing this work? They seem happy. I give them a, I do a touch base email, say, do you want to schedule a call this month? No, no, we’re good. We’re good. And so in my mind, I started to think of it more as sort of an insurance policy for them.

I was available to them if needed. The problem is that after a few more months of it going on like this, they realized they really weren’t taking advantage of what I had to offer, and so therefore they ended the contract. And this was a lucrative contract, and it was the kind of thing where had we been doing the work that we were supposed to be doing, or that we had originally discussed doing for the client, they would have been getting value, we would have been paid, would have been being paid handsomely for it.

And so, my mistake was allowing it to go forward. And I should have been more proactive in coming up with specific reasons for a call or suggestions. They might still have said, No, I don’t know. I can’t turn back the clock and find out. But by allowing the relationship to go on and allowing them to be quiet and allowing them to skip over multiple calls that were planned, it put me in a position where they would inevitably determine that they were not getting the value that they needed.

Because truly nobody hires an agency solely for insurance purposes. It’s just, that is not why we’re getting hired. We’re getting hired for the work that we can do, for the strategy that we can provide, for the insights that we can offer. And if we’re not doing that, and if we’re not staying top of mind and we’re not the person that they’re calling when they have a crisis or when they have a new idea, then we are falling down on the job.

And so I should have done a much better job. of being proactive with that client and I could have continued the relationship forward or we could have had an earlier conversation where we said look this just doesn’t make sense. We need to reshape it. We need to come up with something different. Maybe we shift it from being purely strategic to strategic plus tactical. There’s a lot of things that we could have done but by the allowing the relationship to atrophy there was really one outcome that was preordained.

There was no way to salvage it at that point in time. And so that was on me. That was my mistake for allowing it to go that way. Next on my list, I took on a project I was uncomfortable with doing. And I’ve, having been in the world of public affairs, I can tell you I did this more than once. But I can think of one particular instance where I took on a project that was something that I, I didn’t think was going to be successful, that I didn’t think was a good idea that candidly, I had some degree of ethical concerns around and I had resisted it for a long period of time. This was a conversation with another agency where we’re going to partner with it. We talked it through repeatedly and I said, you know, I just, this doesn’t, I don’t feel like this is going to work.

And then one time we were sitting down having a conversation about this particular project and the person on the other end was drawing out what it would all mean and sketching out the revenue that it would provide and how profitable the work would be. And I’ll be honest, I got blinded by the numbers.

I got blinded by money. And I sat there and I said, you know what? I can, I can shelve my concerns. I can push aside my discomfort for that kind of money. At the end of the day, I did end up making a fair amount of money off of that particular project, but it did end pretty much the way that I thought it would, in that it was not successful in the actual outcome of, the results that we were producing, for the, the clients involved.

And so it’s, it was the kind of thing that was a mistake. I should have said no. I should not have agreed to out of greed setting aside my own principles and comfort. And so I know many of us are often in positions where we’re pushed, we’re pressed to take on a particular piece of business.

Maybe we’re uncomfortable, not because it’s something that we have an ethical concern with. Maybe it’s simply that we’re not confident that we can produce the results. Maybe it’s that we are not comfortable with it because the client is someone who we don’t feel like they will respect us and they will not treat us and our team well.

Whatever your discomfort with a project is, you should be listening to that. Because you may take these projects on, they may be okay for the short, short term, but they almost always end poorly. And so I would encourage you, if you’re uncomfortable, listen to yourself. I should have done that. I didn’t.

Alright, I got too comfortable with a couple of whale clients. So there was a period of time where one of my agencies had a couple of really big clients. They were paying large sums of money. The amount of work that it took to service them was perfectly reasonable for what we were being paid. In fact, we had very good profit margins.

But those two clients were responsible for a significant portion of the agency’s revenue. And it was the kind of thing where we were making decisions based on the total revenue that we had. But we didn’t fully appreciate just how dangerous it was to have these clients that in a combined fashion were worth probably 80 percent of our revenue.

And so if you lost one of them, you were going to lose nearly half of your agency’s revenue. If you lost both of them in a short period of time, you were basically going to be out of existence. And in this particular case, relying on those two clients and saying, look, I don’t need to push that hard for other new business.

I don’t need to push to diversify my client base. It got us into trouble. And ultimately we made bad decisions around how to service those clients. We made bad decisions about how to staff the business and grow the business. And inevitably, those clients, one cut back and the other left, and we were in a world of hurt.

And so we had to dig out of that, and we were not able to do it from a position of strength because we had gotten comfortable. We had gotten, frankly, a little bit lazy because we were addicted to the cash flow that we were producing, and we never envisioned the possibility that those particular clients might go away because we had long relationships, they liked us, and all that.

The reality is that you never want to be in a position where you are relying on whale clients and you don’t make an effort at least to diversify and make a real serious effort to build a business that can stand on its own, even if that whale client or one of those whale clients, in my particular case, goes away or cuts back substantially.

And it’s really challenging because when we have these great clients, we enjoy the work we do for them. The money is good. And so we can often get caught up in just servicing them, keeping them happy and thinking that everything will roll on fine. We need to address those whale clients sooner rather than later.

If we’re going to put ourselves in a position where we can continue to grow and scale the business over time, and we’re not going to put ourselves in that position where we really hit a panic mode when something bad happens with one of those relationships.

Next up, I put off the inevitable. So, this is something that many agencies do or have done.

It’s something that a lot of agencies did during the financial crisis in 2008 2009. Some agencies did it during COVID as well. That was, that was alleviated a little bit by some of the government assistance that was provided to businesses because of the unusual nature of those events. But you’re in a position where if you see the handwriting on the wall and if I had seen the handwriting on the wall on a couple of occasions where I knew, I knew my revenue was decreasing.

I knew my cost base was not decreasing in line with it. And I said, you know what, it’s going to be okay. But something is going to come up that’s going to help get us on track because usually it did. And so I had a couple of these instances in my business where I said, you know what, it’s going to get better in the next six to 12 months.

So I’m going to hold on to all of the team members that I have. I’m going to hold on to all of the vendor relationships that I have because I don’t want to disrupt them. And if I do that, then it’s going to be harder to continue to grow when I inevitably get that piece of business back. That is a very dangerous way to think.

You need to really understand what the realities are and accept them sooner rather than later. It doesn’t mean you need to be rash. It doesn’t mean that if you have a client cancel that you need to immediately run and start laying people off. But you do need to sit down and take a cold hard look at things and say, okay, what does the forecast look like?

What is the reasonable likely outcome? Is it going to require some unusual good thing to happen in order to put me back where I was? And if, if so, if it’s something unusual would need to happen, then you need to find ways to start cutting your costs sooner than later. Because the longer you wait to cut costs, it sort of compounds itself.

If you wait to cut costs, you’re in a position where by the time you actually stop putting off the inevitable, you have much more pain that you’re going to have to mete out. And in particular, one of the things that I would say is when you have a situation where you think you may have to reduce headcount, maybe you’ve had a whale client that’s gone away.

The sooner you’re able to pare back your headcount, the more generous you can be in your severance. And I’ve advised a couple of agencies that waited too long to let people go. And they were then in a position where they could offer virtually no severance because they had to let them go simply to avoid going bust.

That’s not helpful. When you are able to, to identify the inevitable sooner, you’re able to, to deal with it. You can then offer some kind of severance to those individuals without putting yourself in a particularly, volatile situation financially yourself. And you’re able to help smooth the transition, which is good for you psychologically, but more importantly, it’s good for the individual because it gives them some runway to make their own career decisions that are frankly being forced upon them because of other things beyond their control in most cases. So I needed to learn not to put off the inevitable when it came to evaluating the reality of my business and figuring out if the overall economic conditions or in the particular sectors that I was serving at the time were changing in such a way that I needed to address them.

And it’s really something that many agencies struggle with but the sooner you can learn that lesson the less pain that you will have at the end of the day.

And finally, this is, this is probably the biggest thing that I’ve learned over the years. And my biggest mistake that’s happened at least two major occasions that I can think of.

And that is I lost focus. What do I mean? I’m not talking about focus in the terms that I usually do, where I’m talking about how your agency needs to have a focus, which is basically clear positioning, clear messaging about who you serve, and what you do, and that sort of thing. That’s important. And I’ve certainly lost that from time to time.

But what I mean is I’ve lost focus personally. And I’ve lost focus personally for a couple of reasons. One, I am someone who likes a lot of different balls in the air. And so most of the time over the last 25 years or so, I’ve owned and operated more than one business at a time. And when you do that, you have to be really careful not to allow it to overcome you and not to allow you to spread yourself so thin that you cannot make any of them as successful as they could be.

And so I lost focus because I was running an agency and a media monitoring company at the same time, which sounds great. They’re very complimentary. But at the same time, I’m only one person, and even though I had teams in both, you need to figure out how you can mesh them in such a way and how you can spend your time most effectively in order to get the maximum results.

But you don’t have to have multiple businesses in order to have this as a problem. You might lose focus because you have strong philanthropic interests and volunteer interests that you have. Or maybe you are, you have a lot of things going on in your personal life. Maybe you’ve got family issues. Maybe you just like to travel and you want to do other things.

There are a lot of different ways that you can lose focus. And so what you need to do is not necessarily take all those things away. I don’t know that I could ever do it where I was solely focused on one thing for 80 hours a week without having other interests and activities and things like that. And most of you are probably the same way, but what you need to do is figure out how to maximize your focus during the time that you are devoting. And you need to plan for the work that needs to be done by you to be done in whatever time amount that you’re able to contribute.

And in my case, I made the mistake of thinking that I could be basically full time in multiple roles at the same time. And that’s simply not possible. Even though you might be able to technically spend the right number of hours, it’s very difficult for you to be as effective, and for you to be able to generate the same level of mental energy when you’re doing that.

So I lost focus because of that. And I think that we all need to learn from that, and we all need to figure out how to allocate our time more effectively. But the second instance where I lost focus, it wasn’t because I didn’t have the time available. It wasn’t because I was stretched too thin. It was because I was basically burned out and not interested in the business that I had. And so in order to be able to focus correctly, you need to be able to have some level of enthusiasm. You don’t necessarily need to love it every day, day in, day out. We all have days where we’re frustrated with our jobs, with our businesses, with whatever. And that’s acceptable.

But what you can’t do is allow yourself to get to the point where you lose focus because you show up every day and it feels like a drudgery. It feels like you’re just being, you know, you’re, it’s a slog. And so when you have those moments, you need to step back and say, what can I change? What do I want to change?

It’s one of the reasons why I’ve created as part of my AIM-GET framework, the A, which is ambition. I know that for me to get the most out of my business, I need to understand what I want from that business. And that allows me to focus more. And I would encourage all of you when you’re at that point in time where you’re, you’re frustrated, you just don’t understand why you’re doing what you’re doing.

You can’t really think about how to grow the business because you’re not happy with it. Maybe you’re working too much just to meet client needs. You don’t feel like you can even come up for air. Whatever is causing that loss of focus, you need to hit the pause button. Take a day or two off, recharge your batteries and then take a clear and careful look at what your ambition is.

What is it that you want from the business and then start taking steps to address that because you need to get your focus back. I know that I never got the right results from my agency and for its clients when I didn’t have the appropriate level of focus. You can’t either and so you need to make sure that you don’t lose focus the same way that I did.

So with that, I obviously have shared a number of my mistakes. I’ve shared the lessons that I’ve taken from them, but now I give you a little piece of homework and I would suggest that you take a look at what were the biggest mistakes that you’ve made so far in your own ownership journey and what things can you learn from them?

Because I don’t care that you’ve made mistakes. I always tell employees, I don’t care if you make a mistake, you’re going to make mistakes. All I ask is that you recognize that you made a mistake. And you take some lesson away from it, so that you don’t repeat it in exactly the same way again. And I do stress in exactly the same way.

Because, inevitably, I will lose focus again in some other way than I’ve done it before. Hopefully it’s not the same way. Because that would mean that I took no lesson, and I didn’t take an actionable lesson away from what I’ve done. So take a look at what you think are your biggest mistakes. And then look at what the lessons are that you can draw from it and ask yourself, have you taken the steps to try to avoid that mistake in the future?

Have you taken the steps so that you can hopefully identify that mistake coming on before it occurs? If that’s possible, some mistakes you don’t have advance notice of. But a lot of them, and most of the ones that I’ve shared, I had early warning signs of just about all of them. And if I had followed my own advice, if I had thought about those early warning signs, I would have been in a better position in each case.

So, hopefully you’ve gotten some good lessons from this that you can take away, but hopefully you will also examine your own activities to try to figure out what you might be able to improve. So with that, that will conclude the formal presentation portion of today’s webinar. These are my 10. You may have 2.

You may have 20. I don’t know. Whatever number you have, hopefully you can learn from them as well. And if you’d like to share some of your own lessons, in the SAGA community on Slack, that would be great as well. If you have questions, if you’re attending live, please use the Q& A function. on your screen.

If you are watching on replay, this will conclude the replay, but you can email questions to me at chip@smallagencygrowth.com and I would be happy to do my best to answer them for you.

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