Dec 23, 2020
Summary:
In this episode we discuss how we are approaching normal end of year activities in a new remote-ish landscape in a time where profits may not be as plentiful and parties may not be as comfortable. We talk bonus structures, socially-distance parties (#thumbsdown), the absolute importance of diversification going into 2021, and the systems and processes that are part of creating predictable revenue.
Top 3 Curtain Pulls in this episode:
For more tips, discussion, and behind the scenes:
About The Guys:
Bob Hutchins: Founder of BuzzPlant, a digital agency that he ran from from 2000 -2017. He is also the author of 3 books. More on Bob:
Brad Ayres: Founder of Anthem Republic, an award-winning ad agency. Brad’s knowledge has led some of the biggest brands in the world. Originally from Detroit, Brad is an OG in the ad agency world and has the wisdom and scars to prove it. Currently that knowledge is being applied to his boutique agency. More on Brad:
Ken Ott: Co-Founder and Chief Growth Rebel of Metacake, an Ecommerce Growth Team for some of the world’s most influential brands with a mission to Grow Brands That Matter. Ken is also an author, speaker, and was nominated for an Emmy for his acting on the Metacake Youtube Channel (not really). More on Ken:
Show Notes:
[1:39] Bob introduces today’s topic, asking the Guys what Christmas gatherings are going to look like in 2020 and what to expect for 2021.
[2:07] Ken shares that Metacake typically has a Christmas party that some partners and clients are invited to attend. They always have an end of the year tshirt design and announcement at the holiday party as well, so that’s something that will happen again this year- at Arrington Vineyards, a gorgeous vineyard and winery in Middle TN. They have safe and socially-distanced options that Metacake will take advantage of!
[4:42] Brad and his company will have a small gathering at his home to celebrate the holidays.
[6:04] Ken stresses the importance of Holiday parties for morale’s sake. It’s been a rough year so finding a way to create a small gathering safely to celebrate is the way to go.
[6:59] Bob asks about giving bonuses this year in the context of agency life.
[7:26] Brad shares that he gives 2 types of bonuses, one that is across the board to a degree and one that has to do with the people on his team that are directly responsible for profit.
[8:54] Ken asks Brad about the bonus structure he uses and how he decides to let his employees take part- they also discuss SEP’s and how soon they allow employees to benefit from that.
[9:13] Brad dives into Simplified Employment Pensions and how his company uses them to provide retirement benefits to his employees.
[10:45] Brad continues, saying that as a small business they are trying their best to stay lean during this season until they have a better idea of what the next 6 months look like. So bonuses are very much dependent on and tied directly to profits and where they came from.
[12:12] Ken talks about how Metacake structures bonuses, saying that there’s a profit percentage that is split across a pool of people. “The discipline of doing a great job is part of the job description- you don’t get bonuses for doing a great job.” He talks about the value added by an employee and how that is massively important when considering bonuses.
[14:37] Brad talks bonuses as a small company, and how important it is that those people who directly contributed to your bottom line need to be compensated and shown appreciation for what they’ve done and worked hard for.
[15:36] Bob asks about special gifts or surprises for clients.
[16:19] Ken says that Metacake often sends gifts out after New Years instead of with every other holiday gift.
[17:47] Brad says that back in November he and his team began talking about what 2021 might look like for them, talking about how they’ll wrap up the year and what cashflow looks like, etc. Most clients want to relax during the holidays and for a lot of them, their fiscal year doesn’t end in December so there is less pressure.
[19:24] Ken shares that usually during December there are a lot of projects they are trying to finish off and wrap up with clients, mostly execution for his team. Currently they are looking at the type of strategic changes they can make entering into 2021, with so much that has changed and this “new normal” that may or may not have longevity.
[22:05] Ken “I’m looking at how we diversify even more aggressively across different types of sales channels… just being service based is risky to me… we’re trying to figure out how we diversify so that we can be less on the peaks and valleys of seasonality and be more consistent across the board.”
[23:00] Brad predicts that something very positive is going to happen in 2021! Ken agrees.
[23:51] Bob “For me, it’s kind of like, can’t get any worse, right? There’s five vaccines, Covid is going to get tackled somehow.”
[24:12] Bob continues, saying that getting to come back into the world after Covid is tackled means that growth is bound to happen. “I also feel like there’s a lot of innovation that has taken place… even small startups during the past year have innovated and done some really cool things.”
[24:53] Brad reflects on the way that Covid has affected businesses, saying that such a strong change in such a short window of time has taught him to get over things in a way that he couldn’t before.
[27:02] Ken talks disruption, and says that this mindset shift has been great for a lot of people, to realize that keeping your mindset in the offensive is the way to go- which is easy when things are going great but not so easy when times are hard.
[29:39] Bob says that when business does well, your clients will remember who was with them through the winter. So as clients begin to pick back up and do well in 2021, they’ll remember that you stuck around and did what you could to help them survive and thrive.
[30:18] Ken talks hiring during “winter” and how this should be a time that you hire people who are high-quality people now if you find them, because finding great people when you really need it is always challenging.
[31:58] Bob asks about closing out books for 2020, asking if collections are difficult right now and how The Guys are maneuvering through that.
[32:19] Brad says that he has noticed clients who are having trouble paying their bills on time, so he is trying to work with them as much as possible. Some projects are being moved into 2021’s books so that they can close up 2020 efficiently.
[34:00] Ken shares that Metacake only uses automated billing, so that end of year rush to collect isn’t an issue. It an be difficult to take a more aggressive approach with this, but totally worth it in the end.
[35:06] Ken continues, saying that collecting paper checks is one of the biggest risks as an agency business. A mentor told him once that the biggest risk to your business is accounts receivable- “If you can’t get your accounts receivable in order, you’ll go out of business thinking you’re making money.”
[37:55] Brad adds that sometimes he does feel like a giant credit card for some clients who are 60 to 90 days out- stressing even further the importance of taking a different approach to collecting as an agency.
[39:36] Ken: “I think one of the challenges with being a small business is actually enforcing agreements and then also keeping the relationship.. There has to be a balance, you have to make sure you’re not getting steamrolled and you’re also being kind and empathetic.”
[40:29] Ken continues, saying that when you purchase something online, there is a process that you follow, with little room for flexibility in the purchase. And because that process left very little to no room for flexibility, you didn’t question it.
[42:31] Brad says that the age of the clients will have something to do with this as well- if they’re younger and closer to Millennials, they will be more comfortable with processes and fitting into existing systems. But older generations may be more likely to ask to sit down and talk, to work on “the art of the deal” to customize the agreement for their company or their needs.
[43:02] Ken agrees, saying that there can be a hybrid of both. One way of presenting things to a client who is older- make sure they understand that online marketing versus traditional in-store retail marketing is NOT the same. If you can position yourself as the authority on that topic and subject matter, they will lean into your expertise more and are more likely to trust that the process you’ve established is the best for their business as well as yours.
[44:14] Brad isolates 2 things Ken has talked about today that he can carry into the New Year. #1- Go Electronic and #2 Create strong systems so that your clients know what to expect.
[44:41] Brad asks Ken and Bob about processes and systems- Is this the time where you guys identify those issues and create plans for changing?
[45:02] Bob talks about the medium-sized agency he’s working with currently. He is the head of the digital side of the agency and his focus right now is figuring out how to be more integrative and less siloed inside the agency.
[47:09] Ken talks about how agencies can sometimes be slow with changes due to the levels of communication that projects have to pass through.
[48:17] Bob talks about how typically in agencies, making changes takes several steps for approval and is a slow process. How can you shore up those processes and use technology to integrate?
[49:36] Ken asks Bob what 2021 looks like for agencies- what should agencies look at adapting?
[50:06] Bob says that 2021 will be a great year for agencies- with more people buying online and using ecommerce and that will only increase. He predicts new startups in 2021 and says that it is MORE important now than ever to move towards becoming a media company instead of just an agency.
[53:10] Brad is focusing on 2 things in the New Year. What is making us money and what is making my client money?
[55:37] Ken adds that agencies have to get more efficient with the way they produce products. Expand beyond believing that your product is just your service. Also, get into the 21st century! Tech is here to stay, so move forward into that instead of sticking with traditional models and systems- this will make it that much easier to adapt and pivot.
[57:50] Ken predicts big changes in the ecommerce world- Facebook ads alone will be disrupted and leave many clients to figure out something different- get ahead of that curve and focus on working with clients to show them other ways of selling their products.