The Future of Agencies: New Models, Leadership, and Client Retention

Summary

In this insightful conversation, Ashton Shanks, founder of Badm Marketing, shares his journey of growing a successful agency and the challenges of scaling a business. He offers key advice to agency owners, emphasizing the importance of protecting cash in the early stages and avoiding premature promotions. Shanks highlights the need for clear expectations and honest conversations when managing employees, ensuring the business’s needs are met. As his role shifted from marketer to CEO, he discusses the identity transformation required for effective leadership. His practical insights are valuable for anyone navigating business growth and leadership challenges.

Takeaways

• 😀 Agency growth often comes with new challenges: scaling requires more than just increasing clients, it involves managing a growing team and operational complexities.
• 😀 Marketing is only a small part of running a business once it scales: As an agency owner, you evolve from marketer to founder and CEO, handling broader responsibilities.
• 😀 Identifying what you truly want from your business is crucial: Without clarity, you might struggle with misaligned growth and dissatisfaction.
• 😀 Protecting your cash flow is essential in the early stages: Keeping expenses low and building a financial buffer (war chest) can prevent business hardships during tough times.
• 😀 Avoid promoting employees too early: Over-hiring or assigning high-level roles too soon can cause operational inefficiencies and stress within the team.
• 😀 The transition from 50K to 100K monthly revenue is relatively simple, but crossing into higher revenue thresholds presents new challenges that require different operational strategies.
• 😀 Not all employees are suited for every role: It’s important to understand when someone is ready for a leadership role and when they may need a different position.
• 😀 Difficult conversations are part of leadership: Be prepared to discuss performance issues with employees and prioritize the business’s needs over personal feelings.
• 😀 Employees often know when they’re not right for a role: Honest, transparent conversations about their performance and growth can prevent negative outcomes.
• 😀 A strong company culture encourages people to land on their feet: Great people will thrive, whether they stay with your business or move on to new opportunities.
• 😀 The success of your business is tied to your ability to adapt: Scaling a company means constantly learning, evolving, and making hard decisions for long-term sustainability.

Q & A

What led to the merger between *Bad Marketing* and *For Media*?

The merger between *Bad Marketing* and *For Media* was driven by the realization that a strong agency needed both media buying and creative content. Ashton recognized the value of combining their strengths and worked for three years to vet *For Media* before merging, ensuring compatibility in their missions and operations.

How does *Bad Marketing* differ from traditional agencies in terms of pricing models?

Instead of using the traditional hourly rate pricing model, *Bad Marketing* operates with a monthly retainer and performance-based incentives. This shift allows them to focus on long-term client relationships and ensures that the agency’s performance is tied to the client’s success.

What key factors have contributed to the growth of *Bad Marketing*?

The key factors behind *Bad Marketing*'s growth include combining media buying expertise with creative content, focusing on performance-based pricing, and building strong client relationships. Additionally, Ashton emphasized the importance of aligning the business with the client's long-term goals.

What challenges did Ashton face when scaling the business?

Ashton faced several challenges while scaling, particularly with managing a rapidly growing team. One major challenge was ensuring that the right people were in the right roles. As the business grew, maintaining a clear focus on the company’s goals became difficult with a larger team.

What advice does Ashton give about managing cash flow during the early stages of an agency?

Ashton advises new agency owners to protect their cash as much as possible and keep expenses low in the beginning. He suggests building up a 'war chest' for backup, which can help during tough times, and ensuring that savings are not just for emergency funds but also to support future growth.

How does Ashton suggest agency owners should approach employee promotions?

Ashton warns against promoting employees too early. He believes that at smaller revenue levels, businesses often make the mistake of hiring for senior roles prematurely. It's important to ensure that employees are fully prepared for their new roles and that business operations are ready for those changes.

How should an agency owner handle difficult conversations with employees about their performance?

Ashton advises being honest and vulnerable with employees when they are not performing well or are in the wrong role. He stresses that most employees are aware when they are not a good fit and that transparency, with a focus on business needs, can help resolve the situation amicably.

What does Ashton say about transitioning from a marketer to a CEO?

Ashton explains that transitioning from being a marketer to a CEO is a significant challenge. As the business grows, owners must shift their focus from doing marketing work to managing the business. This evolution requires an identity shift and a focus on leadership rather than individual marketing tasks.

Why does Ashton emphasize the importance of a 'war chest' for an agency?

Ashton emphasizes the importance of a 'war chest' as a safety net for unexpected challenges. Having a financial cushion allows the agency to weather downturns, manage cash flow effectively, and make strategic decisions without the pressure of immediate financial constraints.

What are the most common mistakes Ashton sees agency owners make as they grow their businesses?

The most common mistakes Ashton sees are promoting employees too quickly without considering whether the business is ready for those roles and not preparing for the operational challenges that come with scaling. He also stresses the importance of understanding what the business needs at each stage of growth and not simply focusing on immediate success.