Preview Mode Links will not work in preview mode

Marketing Agency Exposed Podcast


Feb 12, 2020

Summary:

There are only 2 ways to gain wisdom: 1) learn from your own experiences and failures or 2) learn from the experiences of others. In this episode we discuss the reality of building and selling an agency with Hannah Paramore Breen, founder of Paramore Digital and author of Business Ownership- The Joy, The Pain, The Truth: A Survival Guide. This is a topic on the mind of any business leader. It’s something that’s often idealized, but rarely understood. 

 

Resources Mentioned: 

 

 

 

Top 3 Curtain Pulls in this episode:

  1. Understand from the beginning that you’re building an asset that will help create a life that you want to live in the future. Run your business with the intention of building a healthy business that will provide the life you want!
  2. As a business owner, the process of selling can be exhausting and emotional. The importance of relationships and mentors is more important in this season than ever.
  3. If you’re a business owner, get a hobby! Something that will take up brain space and ensure that you have a life outside of the office- this work-life balance is absolutely necessary to mental health.

 

About Our Guest:

Hannah Paramore Breen: Former CEO of Paramore Digital, a digital agency she ran from 2002- 2016. Through the years she navigated the world of business ownership- including the highs and lows that inspire you to achieve and make you want to quit. Fast Company, Business Insider, The Wall Street Journal, Bloomberg business week, and the New York Times have all profiled Hannah’s candid, no-nonsense style and approach to leadership and the daily struggles that come with owning a high growth digital agency. She also has a 12.3 handicap on the golf course!

 

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:

[3:38] Bob asks Hannah: What was the motivation behind writing your new book?

  • “Adam Bryant wrote the foreword of the book, his first line… says there’s too much happy in business. And I agree with that…. It’s hard to get your peers to tell you the truth.”

[5:00] Hannah: “I feel like I have something to say, particularly to business owners who want to know what to do with what they’ve built, because that was my big question the last three years or so… have I become the limiting factor to the company?”

[7:33] Bob asks Hannah to speak on business being “a process of continual shedding”

  • The positive side of this shedding process is that eventually all owners begin to shed their responsibility and delegate to others, allowing growth to be broad instead of deep. This allows the company to be structured
  • The negative side of this shedding is that eventually you do transition away from direct 1-on-1 relationships with the staff and instead hand those roles over to managers and directors, etc. 
  • “It took me a long time to learn the difference between a CEO and a President of the company… If I had found that President for my company in time, maybe I would have had an additional choice.”

[10:05] Bob asks: “In your book you discuss trying to find your #2 within the first 5 years- is that what you’re talking about here?”

  • Hannah: When you’re a business owner in any type of business round table, they always want to know what your exit plan is and who your number two is. 
  • “When I got to the point that I knew I needed it (a President), it was hard to hire it because we had a legacy of promoting from within… to hire outside felt like that would be really disruptive to the culture of the company.”
  • Had she had a partner in this, the process would have been a lot less lonely. 

[13:00] Ken asks: “Where did you go outside of your company, or could you go anywhere to find those peers?”

  • Hannah: “I had been in business for four years or so by the time I got an EO… that was good for me in a lot of ways.The good thing about EO is that it’s non competitive… the bad thing is that it’s non competitive,” meaning that while you can learn from people there, the lack of competition means learning is slower paced and not exact.

[14:35] Bob asks: “Being early in the digital agency space and seeing this whole world transform and being a part of it- What was it like engaging and interacting with generational differences?”

  • As the age gap between herself and the people she was hiring got wider and wider, “...there was just a huge disconnect… I cared about them as people, but I couldn’t take the time to get to know them at that many years in business… it’s hard on relationships and especially on the owner when you feel alone… you begin not to trust.”

[15:42] Hannah: “You begin to not trust your staff because you know that at that age, you’re a pit stop on their way to somewhere else and turnover is very hard on project work.”

[15:50] Ken asks: “It seems more often than not in the agency world or even maybe other service businesses as well… you might end up in business without wanting to be in business, is that right? And so you don’t have that ‘thing’ that pulls you through.”

[16:41] Hannah: “Exactly… people get into marketing or creative jobs because it seems like fun… a good place to start… and I do think in the agency world you have a lot more turnover. And the thing is… clients expect it.”

  • “I think that there’s also a lot of misconceptions on their side or just… wrong expectations on the employee’s sides that it will always be fun...they expect to continue their college years inside the business...there will come a point where it’s just work, man, it’s time to run a business.”

[18:35] Ken asks Hannah why she chose to start an agency

[18:52] Hannah: “I was a classical piano major in college. My dad was a preacher, and my mother was a housewife… I didn’t have any kind of career aspirations… I was just on the borderline when women took off in the 70’s… some things happened that sent me off on a different path. I worked a lot of soul-sucking jobs in my career… so I’ve never had a business class or a marketing course in my life.”

  • Eventually she was laid off in a large corporate restructuring and a headhunter offered her a job at Citysearch, an online city guide. She understood the company’s mission quickly and flourished there. 

[20:36] “I loved that job and that job changed my life. And it was so early in the industry that you were just learning on warp speed every single day.”

  • She was with Citysearch for 3 years, and because her role there was high profile she had no problem getting other jobs- the difficulty was keeping them through the recession of the late 2000’s. 

[22:35] Ken: “So would you say, the reason you got into your agency was because of the excitement and the freedom?”

  • The industry was inherently exciting because it was so new. 
  • The process of finding a job that was sustainable that also offered her the freedom she wanted and allowed her to truly trust the people running the agencies- this lasted through 4 jobs. Meanwhile, she built contacts and knowledge in a niche market and was acutely aware of the holes in the market.

[23:30] “The core values of my company that I eventually wrote like three years in, they reflected so much of frustration from the industry.”

  • One of those things was 100% delivery on the promises made to clients. At the time, it was hard to get that result because “Traditional agencies had the clients, but they did not have the digital talent and they didn’t understand it… they couldn’t get good digital people to work for them because even if they grew digital to be 20% of their revenue, it was only 20% of their revenue. So it was always disrespected. It was given the short sheet… and you can’t get good talent to work for you like that… So that was the hole in the market that I saw. And so I really thought that I would consult for a while… but that frustrated me because I want to see the ideas finished.”

[25:00] “So I hired a project manager, and then I hired a developer, and I needed two, and then it’s over. Then you have a company.”

[28:30] Bob asks: “What was it like being a woman-owned digital agency starting back then?”

  • Hannah speaks on how natural it was. In the beginning she won “woman in the industry” awards but eventually stopped applying for them because “I don’t want anything in front of business owner… it offends me to be called a woman business owner. Anything else just lowers the bar… I wanted to just compete.” 
  • She speaks on understanding the reality of being a “woman in the industry” but just never paid attention to it. 

[31:00] Ken asks about the process of actually selling her business. “So from the outside, you start a business, you grow it to $5, $6 million, which is awesome. And you sell it. That looks awesome and exciting- and I guess a lot of people would idealize that. But talk about some of the ups and down in that?”

  • “In our industry that is so project-focused, it can be hard to find a place to celebrate… it felt the same selling the business. I sold it fast, I was not marketing it out. But in the back of my mind...I’d love to sell but I didn’t think it was possible.”

[32:30] Ken and Bob ask where that lack of belief came from.

  • “... because of the fact that it’s a project oriented industry and there aren’t any longterm contracts… so what’s the value? I couldn’t understand how to quantify that value… but there are strategic buyers out there.”
  • “I had a strategic buyer who… saw the value that I couldn’t see in the business… they wanted to be in Nashville, and wanted the diversity in their client base, and they needed digital talent.”
  • “Most of these deals fall apart… like in the last few weeks. It is extremely scary.”

[34:15] Bob: “Was that something that kept you up at night? Like… this is either a home run or it’s going to fall flat.”

  • Hannah: “Yes. Because you cannot do it in secret.”
  • Hannah speaks on the risks of letting other in on the process of selling. Bringing VP’s into the discussion leaves room for them to doubt your commitment to the business if the deal doesn’t go through. 

[36:00] “You spend months going down that road to sell, which means that you are choosing to not engage in business development like you normally would… so your business development pipeline starts to dry up… everything makes you angry, you’re emotionally wrung out… it’s not fun anymore… If you have a vision for something else, if you have the opportunity to sell your business and make good money and good multiple on your business… it takes serious consideration at least.... Because there are very few times in your life that you have the opportunity to do a deal of that size… and in the kind of industry which changes so rapidly, your skillset can be antiquated.”

  • She met her buyer in December and the papers were signed the following November 31st. She had a 2-year workout process. Tip: Negotiate a shorter workout!

[38:14] Brad asks about the relationship with her staff and what their response was to her. 

  • The process of deciding to sell, telling her staff, and then working out her tenure with the company was a challenging process. It took her 6 months to truly accept that the business was no longer hers after the papers were signed. 
  • “Whether someone wants to work for new owners is the question.”

[43:00] Ken asks Hannah: “Are there any things you would do differently? What are the top 3?”

  • #1: “I would work longer on understanding that I was building an asset that was supposed to enable my life… I didn’t have high enough expectations for that, so I gave everything to the business… If you are 35 years old and own business, when you are 45 years old, you’re going to feel differently about that business than you do now.”
  • You are GOING to want to spend your days differently, so make sure you’re building a business with that reality in mind and enable that life rather than keeping you sucked in.

[45:51] Ken reiterates 2 awesome points: “Number one, make sure you’re enjoying what you’re doing… we spend more than half our lives in business, so it has to be something you enjoy… And number two… you’ve got to build it so that it’s a smart business. It creates a profit. It’s built assets… so that ultimately, like you said, it can not only fulfill your destiny where you need to be but also everyone who works for you… this business has to be on the rails.”

[46:41] Hannah: “A lot of time the right reason for making decisions is a financial reason. The company needs to make profit.” 

  • The most fun part of owning a business is watching people grow, along with watching your bank account grow. It’s necessary!

[48:00] Bob asks: What one thing could 60 year old Hannah tell 42 year old Hannah? 

  • Hannah: “I was told that every agency owner should have a hobby that takes a lot of time, that’s expensive, and that’s preferably dangerous…. The danger meaning that it needs to be something that if you don’t concentrate on it absolutely to the exclusion of everything else, you can’t do it well.”
  • “I got a passion that made me impatient with overwork. You need to love this hobby so much that it makes you impatient to get out of the office because that creates the balance in your life because your business is going to take from you anyway. You’re going to spend a lot of time there, it’s going to get the best of your thought process. It’s going to get the best part of your time, and you have to have something that competes against that.”

[51:23] Bob asks: “What are the things you see… starting new digital agencies these days. What are some things that you’re seeing and want to advise them about?”

[52:02] Hannah: “The lack of business acumen… there’s no way in life that a 20 something year old is right around a business… young owners are too altruistic by nature and aren’t ready to navigate the waters you get into when you start doing real business… Lean into humility.”

[54:00] Ken mentions mentoring as a way to open yourself up to be the shortcut for new people in the industry.

  • “There’s two ways to gain wisdom, by other experiences or your own experiences. The normal way is to make your own mistakes, which is great… but the smarter way is to find other people who have done it and learn from them.”

[55:43] Hannah: “I’d love for my legacy to be to change the relationships between business owners so that we have a much more collaborative culture.”

[56:07] Bob adds: “That’s our dream. And I think… you’ve got to get beyond the business principles and you’ve got to be willing to and be vulnerable into the personal, the psychological, the emotional, because that is the emotional intelligence around business ownership.”

[1:06:55] Hannah: “... a strong spiritual foundation for me is a reason outside of what we see every day… we’re supposed to leave the world a better place. Accepting that you’re not going to have perfect balance in your life every day is a process… so you have to let go of your own expectations of what your life is supposed to be like and reframe that for yourself.”

  • It can be sad and even scary to think that your company will run just fine and even expand without you, but it’s also a really great thing. Because if you sell your company and it immediately fails, you haven’t built a very stable company.