What are the financial metrics & best operational model for a fast growth agency?, with Mark Probert
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**Transcript:**Jenny 00:02So I'm delighted today that I've managed to get some time in the diary with Mark Probert. Mark is managing partner of Cact.us, the leading UK agency growth consultancy, and also managing partner of Agencynomics, a social enterprise and the largest free of charge community in the UK for agency founders. Welcome, Mark.Mark 00:23Hi Jenny. Thanks for having me on. I feel honoured with the guests you've had on this.Jenny 00:28No, honestly I've wanted to have you on for ages. So I'm really excited about diving into this topic. Would you mind spending a couple of minutes first of all, Mark, just talking about you, your background, a bit of your experience and how you help agencies?Mark 00:42Okay, do you want the short story or the long story?Jenny 00:44However it comes.Mark 00:46Okay, well, maybe it's helpful to go back a few years. So whilst I was at school in Hampshire, I had a variety of different jobs. And as somebody that never really wanted to go to university I had this thing in me where I wanted to go and work and I had various things going on, a car wash business, run a cigarette kiosk of all things, stuff like that, and went into went into college, kind of enjoyed my business studies, thought actually Maths might be the thing for me, I was quite good with numbers at the time, maybe not so much now that this technology to do these things for you. So I went into accountancy practice. And I went in at the age of 18, had a couple of other jobs on the side of the weekends and so on. And I probably then spent about the next 18 years trying to get out of accountancy practice, so 18 to 18 even I can add that 36. So basically I went into different accountancy, doing audits, tax, a bit of M&A work, business advisory. And what I always loved doing was working with SMEs. Absolutely loved it. I love seeing somebody come up with an idea, run with that idea and either make it or not make and we can try and help them a little bit along the way with what we we could advise on. But when I said about trying to escape, I got to the point where I moved up to Scotland probably 19, 20 years ago, with my wife, now wife, Kirsty and joined a variety of firms up here, tried a different couple of different ones, went to Grant Thornton, which is my last one, obviously big, big multinational. And I'd got to the point then really where I was trying to get out of doing accounts and audit and tax and so I wanted to do something a bit different. But perhaps naively, what I ended up doing there was working on some big global brand, you know, audits, accounts, and so on. But I also learned quite a lot at that time in that environment in Scotland in Grant Thornton, about marketing and the value of marketing. So for once, the first time ever in my life, I kind of took a step back and thought hang on a minute. I dabbled into industry once upon a time before, didn't like it, went into a company that was too big came back out into practice. I thought it's probably time to be a bit selfish and go, well forget this party route that everybody kind of steps into in accountancy where you're a trainee, and you progress up the rungs and so on. And I thought it's probably time to try something a bit different. I took time to think about what that was. And that ended up being Cact.us. So I knew Pete, a really good friend of mine that I've known since I was four or five. So there's a whole backstory there which is a different podcast, there's a few stories in there! And he was up in Edinburgh one weekend, we were sat in my living room for a glass of wine catching up, and he said are you okay? And I was, uh, you know what, I just need to do something different. I'm fed up doing what I'm doing, doesn't mean anything, I don't feel like I'm helping anybody, I've kind of lost the sort of buzz. So anyway, he went away, give me a call the next night when he got home and said, you should come and join us. Totally out of the blue, you know, what does that mean? And what Cact.us was at that time, and that was probably seven or eight years ago, nearly now, Cact.us was eight people, Spencer Gallagher, my colleagues, ex agency owners who have grown and sold their agency, their designer build agency. And they'd set up Cact.us and Cact.us was consulting to independent agencies in the kind of 6/ 700,000 turnover up to about four or 5 million space. And they were helping them holistically around, you know, all the areas of the business finance ops - marketing, sales culture, and trying to help people get to what their vision, you know, wherever their vision was, they're trying to help them on that journey. Pete very much helping on the finance and ops, Spencer, very much the tech sales marketing. So, again, long story short, I joined six and a half years, sort of probably about that time now ago and over the time, I've partnered with other ex agency owners. I do very similar to what Pete does, helping very much on the financial and operational side of businesses. That can be getting my hands dirty on some of the stuff up to helping people hire in their finance teams or their operation teams up to M&A work, which last year Cact.us I think we did 12 deals with different varieties. So that's what I now do. And I don't ever call it a job now. I think I ended up when I looked for that role seven years ago, who I had various other opportunities but this one sort of stood out because it was helping SMEs, entrepreneurial people with an idea. And yeah, I love what I do now, it's is not really a job.Jenny 05:19It shows!Mark 05:21There's a long story, Jenny?Jenny 05:23I didn't really know half of that. So it is really valuable already for me. So I know how many agencies you work with and it's very difficult to actually get a time with you to work with you. But when an agency comes to you and says, right, an agency owner says I want to grow. What are the very first things that you do with that business? What do you look at first?Mark 05:44Well the very first thing I do is spend some time getting to know them. Because you know, everyone knows about The Four Fs, as they call them - Fun, Fame, Fortune, Future kind of thing. And what I always want to do is feel like I get to know the person. For me, I did a poll on LinkedIn a few weeks ago, I think I know which way you answered this one, actually similar to me, where is what is the one sort of area of the business you'd really want to, you want to monitor a KPI on? And for me, people thought I'd have said finance, and I said clients. Clients are key to me, like, absolutely, fundamentally, it's about client care to me, always has been. And that for me is, you've got to enjoy working with somebody. And I suppose my motto is, it's got to be bloody hard work for me, but it's got to be enjoyable. And that, for me is get to know the person first and foremost. And then there's all the usual stuff isn't there, funnels of how you get them to work with you, and so on. And suddenly, we implemented a while ago was we put in a health check for the business, where what's really useful for that is, I have a lot of kind of new business, if you want to call them that, calls with people that have completed their health check on our website at Cact.us. And it identifies areas of business where they don't see themselves scoring very highly. So it might be, I don't know, they might not have a cash flow projection, or it might be they have no marketing strategy, bizarrely, even though they're a marketing agency. And these things often root out quite quickly for us what their problems are. And so for me, it's get to know the person first and foremost on, at the moment obviously, a lot of calls, get to really feel like you know them and starting to get a bit friendlier with them. Over time building up a friendship more than a working relationship, I think is really important. And then there's the work side, identifying quickly what their problems are, so that you can help them quickly. Because a lot of people think they need help, like yesterday. But it's trying to identify what the real issues are. Because they might think it's one thing and it might not be that thing.Jenny 07:41Okay, perfect. So I'll include a link to the health check on this podcast as that sounds really, really valuable. And absolutely, you would imagine that it would be some kind of audit. So that sounds like it's super.Mark 07:52It is like an audit, yeah.Jenny 07:54So I know that your specialism is the financial and operation side. So can you talk us through some of the kind of standard financial benchmarks and parameters that you believe would help an agency grow?Mark 08:09Okay. For me, there's huge worries around staff costs, obviously, at the current time as well, that can be a bit difficult for some people to monitor, we've still got all the furlough stuff and that going on, but for me, this is one of the, what's the word for this, this is a confusion in the market. There are other advisors that look at staff costs in a different way that we do at Cact.us. So the biggest thing for us really is staff cost, the gross profits. So that for me is the biggest metric to watch, or one of the big five, as I call them I suppose. So what I mean by us different to others is, a lot of the big networks would treat their gross profit differently to how an independent would. So they will do sales, but lots of terminology now when people call them different things generally, but sales, less cost of sales, equals gross profit. A lot of people will put advisors will put staff costs into the cost of sale. So if somebody, if a web developers working specifically on a on a web project for a client, they might attribute some of their time to cost of sale, to the cost of making that sale. We wouldn't do that. So what we do is very much try and keep a lot of what we do at Cact.us, believe it or not, is try and keep it very simple. So we're quite aware that in the independent space, people don't often have resource, okay, so they don't want to buy in the non fee earners like the finance people, maybe the marketeers or whatever. Project managers, you'll know this, this is what you do in your account management, project management stuff. So for me, the staff cost, the gross profit ratio is we keep sales, the sales, we put pretty much nothing in cost of sales. So it might be a bit of a hosting of a website, might be a licence, you know if you're reselling it to a client, but all people costs are in overheads. So in our view, all people are overheads. As soon as you hire them there are fixed costs. Yep. But a lot of other people completely change that, do it differently, split the employee costs and so on. Some of the big networks do it that way. When I did a deal last year with an agency in Bristol and we sold them to McCann's, McCann's did it that way, you know, but that's because they've got a whole team of finance people doing their numbers and analysis. So what we say is, an agency of a million pound might not even have a full time finance person, more often than not, they don't. So what they should do is another question, but you know what, why make it complicated? You know, why make it complicated?Jenny 10:38Okay. So it simplifies it, from an accountancy perspective or more from an understanding?Mark 10:45I think, by the way, there's no right or wrong way in accountancy. I mean, I can say that I suppose with my accountancy degree hat on or whatever, that you can do it either way, it's up to you. But for us, it's about that day to day, month to month internal reporting. Why make it really complex and take my salary and put some up there, some down the bottom? And then go, Oh hang on, what are my staff costs to my revenue? I'm going to do this funny calculation to work it all out? Or why waste all that time? What we would say is, if you're operating in between 55, it used to be 55 to 65% of your, let's say, gross profit figure, which is nearly a sales figure in the capitalist world. Yeah. Then you are about right, you're running an agency that's about the right kind of staffing level. Although I would say at the moment, a lot of people are edging towards say 70% regularly because they're investing a little bit ahead of sales a little bit. A number of agencies, probably the ones that are faster growing.Jenny 11:43Oh right. Why are they doing that? Just so that they've got people ready to kind of hit the ground?Mark 11:48People ready to hit the ground, they've got the buffer of the government money. So a lot of agencies, believe it or not, are quite buoyant, in terms of cash reserves at the moment, still are, even though it's what, it's 5th May sort of time, they've still got a buffer of reserves. So they're thinking, well actually, we're quite confident at the moment, it's hard to get people, so let's go on hiring, let's try and hire some people in, it's hard to get them. There's still a lot of people, some people moving, some aren't and so on. Why not invest some of that money in people? Because that's ultimately what we're going to be trying to get our value in going forward.Jenny 12:25That makes total sense. Have you got any other benchmarks that you can share with us?Mark 12:30Yeah, yeah. So we tend to say, well I tend to say, that three times somebody's salary is what they should be earning an agency, you might have heard that before? So somebody on 40 grand, they should be doing 120 grand billable work. Lots of the bigger agencies have that number down to a fine, you know, 3.2, or whatever. We would say, the Cact.us fag packet here, it's three. Times 3, is the revenue kind of target for everybody. Liquidity is always one, some people ask me often how much money should we have in the bank, and then they pull out their mobile phone, and then it all goes wrong! You go, it's not about what you've got today. It's about what you've got covering your costs. And so some people work to six times their overheads. So if their overheads 100 grand a month, they can actually have 600 grand in the bank. I think I'm quite a cautious finance person in some respects. I think that's, that's an awful lot of headroom to give yourself if you're trying to scale something quite quickly. And all this I suppose, depends on vision and so on as to what you're doing. But, you know, a couple of months is enough. A couple of months in the bank is enough. So there's a ratio, I do Pete hates this one, I call it, he always calls me Horatio Probert as in Horatio Nelson! This is the current ratio where you do your assets on your balance sheet, bank and cash and your debtors, who owes you money, divided by your liabilities. You know, you owe the VAT man, you are HMRC your payroll, you owe your suppliers if you've got any. That VAT, if that's more than three to one- three pounds to one pound, you're in quite healthy position for a lot of even project based agencies. You know, if it's two to one, you're fine. If it's less than one, you've got problems.Jenny 14:12Some poor agency leader listening to this somewhere thinking, Oh, no!Mark 14:16Well, maybe, maybe!Jenny 14:18And this is fascinating, and what about billable percentages? Do you have any benchmarks around that?Mark 14:26Yeah, yeah. I suppose the minimum for us is 64%. So what I mean by that is, so if somebody has capacity, if they're 80% available to work, they've got holidays, and so on and then nobody is super efficient nobody's a machine or though sometimes I think you might be with all these podcasts Jenny, you're amazing! Nobody's a machine. So that's 80% against 80% of 80% is 64. So what I mean by that is the minimum number, somebody should be able to do that's a billable resource is 64% of their time, and you'll you'll find that you know, in a dev agency, maybe web developers 80 or 90% kind of thing in creative, maybe not as high, then different job roles, not as much obviously account management very different and so on. So we would tend to work on, somebody should be doing about 64% if they're mostly a billable resource, and you tend to find, I think, in some of the industry reports that have been done in the last couple of years that you know, some people ,you will know this well, it works out, I think the average is about 63/65, something like that. So our starting figure is about right usually.Jenny 15:31Perfect. What about your views on account management? Should account management be billable or non billable?Mark 15:43Should it be sorry, billable or non billable did you say? And should it be split up in terms of job roles?Jenny 15:48No. Well, just in terms of the account management role, should it be billable or not? What's your view? Or does it vary? Or is it just, from your perspective?Mark 15:58I think most people tend to say it's not billable. But I still think there is elements of it that could be billable. And it just depends how you're packaging up your offering to your client, isn't it? Really, at the end of the day. If your value based pricing, then you can wrap all that up, and there's no issue is there? This is your price and that's what we create and you know somebody that you and I work with that does kind of thing and so on. So maybe it's chargeable, maybe it has been billed, but that has not been identified to the client as such.Jenny 16:27I have to ask you, because you've mentioned it, how many agencies do you come across that do actually manage to do value based pricing?Mark 16:33Oh limited. I know, it's the utopia, isn't it, people want to try it and, and so on. One that you and I work with, another one that I work with, I work in a pair, I probably should have said this earlier on actually, I work in a partnership with a guy called Danny Turnbull who you'll know, most of the time now. But I also have a number of clients of my own that I've had for years in different guises of support to them and I would say there's probably two of those that do it. One very, very well. But that's mainly because they've got a couple of big clients, and they've had them for quite a few years and I think they've always sold on that basis. And, and one that's been trying it recently, and it's been working. I think that the other thing is, people worry too much about pricing about changing their prices, how do they find out what the competition is doing? And I know that's not that's a hot topic for you and other people. But why don't you just try things? I mean, it's I just don't get it sometimes. I think people overanalyse it all and they overanalyse finance too much, numbers, and it's just like, just try it. What have you got to lose kind of thing?Jenny 17:40That's really good advice, actually. Yeah, absolutely. Well, this has been so valuable already. Mark, thank you for sharing so many benchmarks. I'm sure that's been a few lightbulb moments going off. I'm interested to know about your thoughts on the most conducive agency business model that you've found has worked the best if someone wants fast growth?Mark 18:02Interesting. You'll probably imagine I'll say Pods here?. And I will say Pods, but what I won't say who but, I helped somebody last year, I've worked for them for quite a few years, and helped them sell their agency. And they've gone into a much bigger thing now, I think it's 160 people, a company bought them from overseas. And I asked the owner of that, while I was there working with them and still supporting them and so on, so I asked the owner, I think it was a couple of weeks ago on the on the board call, 'How did you scale your agency?' and I'm thinking, well he's got to have done this by the Pod style, I'll come onto the Pods in a minute, but got it done this via some kind of Pod. And he's just basically, and he's a development agency making the main, and he's just he was just like, so we just made sure we got the best people we could get. And I said yeah, but you must have had a structure. And he said not really. People that are doing the development also sell to the client. And I'm going, how does this happen that you know, struggling with this concept, like quite a bit. And he just said it's just all about getting the best people and training them. And eventually if they go off to say, I want to just be a developer and I don't want to do any kind of account management or sales, whatever it is, then that's fine. We're fine with that. But we give them a lot of training around different areas. And I know you said to me before you had sales training many years ago, you found that like game changing almost. And this guy had done that with people that you wouldn't anticipate would have had sales training. You'd necessarily be giving sales training to the development team and so on. But he said let them try it, let them see how they get on and they might not be able to do it and they probably can't do it all but let's just see. And his point was very much about getting the superstar people in the first place, spending a lot of time on the recruitment side of things. So that's the one I've heard that's a bit different. The Pod stuff, I mean, that for me usually works if you do it right.Jenny 20:02For those listening, who perhaps haven't come across the concept of a Pod structure, what what actually is a Pod structure?Mark 20:09Okay, so you kind of got three bits to the agency, I did it the other way around, you've got the kind of management almost, I mean, that may be the CEO, and maybe the finance director, whatever, as you scale up, obviously a million pounds, you probably, the owners kind of over here. In the middle you've got the core team servicing the client and what I mean by that is a project, we all call it different terminology obviously, but a project, different types of agency, a project manager, an account manager, and then the specialists, it might be a real data specialist specialist or strategists maybe in that role. And then it might be, a mobile and web agency I work with, they just hired a scrum master to go into that sort of PM role. So that they can do the all the efficiency and operational stuff and the management of the work scheduling and so on. The account manager hopefully then is more freed up to service the client properly, the stuff you advice on, obviously expertly, and sells a little bit in the right way to the client, have the right meetings, the quarterly meetings or whatever, talk about the strategy with the client, not be worried about, bogged down with how the team going to service it all. It's the PMs role, and then you've got the specialists to come into the meetings, obviously with the accounts person and hopefully get better ideas out of the client, which the agency can then deliver on. That's the kind of the core bit and that Pods in so many variables to that. That Pod, we tend to say might do 650 revenue up to about a million. But that could be a couple of big clients, can be multiple, multiple small ones, or a mixture of both. Obviously, there is no definitive numbers on these because, as you know, you could have had one client that had the Pods that had 1.8 million going through, it only had two clients, because one of them was a huge client for the agency, the account management team couldn't have coped with five or six other clients, it just wouldn't have been feasible. So that's that, and then you've almost got, and this is no derogatory term, the bench, the bench is the people doing the work. So it might be the development team, it might be, sometimes search agencies I think, don't maybe adopt this model and they see they don't see how it works for them, when they might have an SCO head, a PPC heads, whatever, a social media head and they think, how can this work? But actually it can work, and we've put it into some search agencies before and it does work, but it takes time, the Pod thing probably takes six to eight months to properly put in. Because you're trying to map out what you are now, where you want to go and show people their career opportunities. So you've got to get all that out clear first and understand it before you can go anywhere near doing it.Jenny 22:50And if you get above million pound revenue per pod, how does that pod grow? Or doesn't it? Do you just set up another pod?Mark 22:58Yeah. That's a good question. So I suppose the logical, I say the logical thing, in reality, what happens is you might have, you might have, people bring in a lot of account people don't they, you always want to be hiring the account manager and account exec or whatever and they're not really thinking about the role. So if you've got it clarified, you go well, okay, I've got one Pod, I might start another one and start putting some clients into there, I might have this PM role kind of floating between the two. Then as it gets bigger, you hire in another, or you bring on another account exec into a more CSD, however big the agency is they manage the other Pod, and eventually, I say CSD they're probably the person overseeing. It's a little bit like our friends that we work with, where they've got a CSD character haven't they, overseeing various Pod leads.Jenny 23:49Gotcha, that makes sense. And you found that actually, that's the most conducive, because obviously, different agencies that you start working with, have probably got all different structures. But do you tend to kind of try to formulate that structure? Or give them the benefits of doing that? And do you find that they say, Oh, yes, that's fine, or do you get any resistance?Mark 24:09There's always, there is a lot, obviously, it's pretty, I mean, this is the person's, people's company, you're sort of. And they've got a history of trying to grow the company to a certain stage, and then they're looking for somebody to help and, nobody has, we have no magic wands. We just have, I suppose between us a lot of experience. Yeah. And people do resist it. Absolutely they do. And sometimes it doesn't work. And I've worked with somebody before where they almost took it by the words of the book and tried to implement it really quickly. And they didn't really I think, from stepping back and looking at third party sort of in, they didn't really do what we just said- say What are we now? What do we want to be, in might be this posture and how are we going to evolve to? That can't just change overnight. This is people's lives, careers and so on. You're sort of messing with. They didn't take the time. So you do get a lot of resistance, but actually, they go back to their health check question, I think most agencies we end up working with, the biggest issue is the structure isn't right. So they think it's lots of other things, that actually, when you sit back and answer, go through it all and think of like, it's often the structure is not right. And I don't think there is, I don't think there is another model we've put in somewhere that's really worked better than this pod system. When it's worked well, it's worked really well.Jenny 25:29So Mark that's really fascinating. So what's a symptom that they come with? And then you unpick it and realise it's a structure?Mark 25:37Sometimes, the debate we've had once upon a time actually, often it's that AM/PM sort of split and I know that's obvious to say, but one of the exercises we often do is say, let's say financial budgeting? Yeah. So we're doing I don't know, let's just say we're doing 100 grand a month revenue this year at the moment, it's okay. Well, let's have a high level stab at next year's budget. Okay, where are we going to start? And some people go, well, the sales gonna go up in line like this, or the cost of this, we need to make this much at the top, and then you go, okay, well, let's take it another way. What clients have you got, what you're going to get from those clients? You know, it's just, it sounds obvious to some, but it's not obvious. I know, to lots of people. What are you going to get from those clients, what do you think you could get, all that usual stuff? And then you go, okay, and then they go, but we can't get that and you go, why can't you get it? And I guess our account management team aren't good enough. And you go, okay, well, what do the account managers do then? And then you start to, oh right, so that person's a project manager, then? No, they're an account, you know, and then you start getting into that debate. And that's why I say often, it's the structure. It really is. And always, I think most of the time you find agencies have too many people for the revenue they're doing. Because they're because the structure isn't right. So they're throwing people at it, not fixing processes and systems. And I could go on about this all day, and I probably am.Jenny 27:00You've treated me with this discussion. Because yeah, being an account manager, myself, most of my life, I was a marketing manager for a few years, but most of my life, I've been in account management, and most of that tenure has been in hybrid roles. So I am the project manager, and I am the account manager. And I've only, it's one of those things that I've realised later in my career now, I'm consulting with agencies, how nuts that really is.Mark 27:28It's interesting.Jenny 27:29It just really fights. I mean, I'm sure there are people out there that just can, convinced that it works, and it has worked. But I just see really, really talented, commercially minded account managers coming on my course, this is I suppose this is my day to day experience, and yet they're kind of really bogged down by admin resourcing, scopes of work, of financial reconciliations. And you think, my God, they should be out there selling, growing, adding value to the business, you know, talking to clients and helping.Mark 28:01Yeah, yeah, exactly.Jenny 28:03And just carry on really...Mark 28:08Some people, I hope a few have people listen to this eventually, and some people won't know me or whatever, and they'll think, how does this guy profess to know about this stuff, when he's never worked in an agency, he's only been here six years. And actually, people don't often, but if they asked me what my previous experiences were, then accountancy practices bizarrely, are not that different to an agency. They're not as creative. I'll give you I'll give you that. I'll give you that. But they have account management roles. They have project management roles, they have delivery roles, they have graduate trainees that take up a lot of time for the senior people and that comes resent, you know, all these things very similar. And an often and I think, what did I have in many roles? I had far too many things going on, I was trying to manage 35 clients, a team of 40 people, win new business, up-sell to a client and work with a marketing team, and be head of client satisfaction. So you're like, well, how can you do all those things? Many years ago, I saw somebody I know actually up here in Scotland and went into a role as a new business director in an accountancy. Everyone was like, oh, my goodness, how can you have that completely non fee earning, just just just like going out like schmoozing all the time? Absolutely you could because they got their structure right. They had the right people doing the jobs, the work, doing the technical bits, you know, project managing it for one of the better words. So, it's a very similar industry in a lot of ways that people often overlook.Jenny 29:41And how would you if someone's listening to this, and it's really resonating with them and thinking, actually, we could look at separating these two roles. Where would you advise an agency owner start with that process?Mark 29:52I think the thing for me would be to not necessarily write down what that person's doing, although sometimes that's a good place to start, because then you might identify, is to write down what you think account managers should be doing, and what you think project managers should be doing. And then sitting and looking at the team you've got and going well, okay, well, if the if these are the right people, right seat, if these are the right people, then do they fit into these roles? If they don't fit into these roles, you've got a slight issue, obviously, they need to deal with overtime. But, you know, there might be other roles that they go into. I think you've got to clearly identify what you think the roles are. And then if it's not quite right, you've got to be honest and transparent with your team about that. And so I've got a client at the moment where one of the team doesn't really know what they want to do in their career, but is pivotal at the moment to the agency given the size of it. And really, the agency needs both. It needs AM and it needs a PM. And it really does need these roles separated out, it scores in too many inefficiencies. So what we've done is we've basically job specked out those two roles, and said absolutely, you're the right person to grow with this agency. Absolutely you are. And it's up to you, you go whichever way you want. But we support you, it might be Jenny Plants training on account management, it might be getting somebody else for your project management, training, specialists support around you might be sales training, but you can have all the training you want. But in this agencies opinion, this person needs to choose which role they go. And I think that can sound a bit harsh, but actually, I've worked with many people over the years before I did this, and some people do need that bit of a steer on their career path, they need a bit of help, because they are a bit kind of lost often.Jenny 31:51I agree, Mark. And I also think there's a bit of what do you have a natural tendency for, like, what's your natural default, because having worked with so many different kind of hybrid account managers, and also, project managers, project managers are really good at process, getting things done, being transactional, and kind of their very good with clients. But account managers are, pure account managers tend to be different, they're very, they're kind of, they're looking at account growth, they're looking at business strategy, they're looking at adding value, and you can kind of put them in the middle of a room and by the end of the night, they'll know everyone. The more and more I see these different types of, I think people have a natural tendency towards one or the other. And I think if you ask anyone, I think they'd probably, if they're really honest, it's probably quite obvious from the outside. But asking someone as well, I think would be a good way of...Mark 32:49Do you personality test people then?Jenny 32:51I don't, but, I'm thinking about starting to do it.Mark 32:53Yeah, I know a few people that do that. And it's quite interesting. But then I sometimes think that it's about, it's like you just said actually, if you've got the right people on board, and that in itself is a huge thing, take your time to get the right people and so on. And you want them to grow with you. So why not offer them opportunity? You know, why not go this is us today, and it's almost that visionary piece, and this is a lot of what we would do, is work with, What are you today? Where do you want to go? And now you need to be articulating that clearly to the team. Because if you don't, people will leave, that's proven without a doubt. I mean, there's a lot of surveys out at the moment around this, its lack of communication, lack of clarity of company, which is understandable given the year we've just been on. But what we try and what I'm certainly trying to get our clients to do at the moment is spend time working on what the agency is, where it's going and speaking to the team about it regularly keeping everybody informed.Jenny 33:11Great idea because then everyone feels like they're coming with you rather than fighting against you.Mark 33:52Yeah, hopefully, yeah.Jenny 33:55I think that bit like, just from personal experience, looking back on my career, I was bogged down with spreadsheets. And you know, I was much better at being with people, my communication skills are much better than actually sitting there poring over financial reconciliations, etc. So I just think that this topic is huge, as you say, get the right people. And if they're in the right seats, then the business has a fighting chance of of growing really well. I'm just curious, what types of questions should agency owners be asking you that they don't?Mark 34:31What should they be asking? Oh, goodness. Okay, I've done a lot of pitches over my time before this, before Cact.us and I don't ever get asked about that. I think people think oh he was the accountant and like, you couldn't be creative and so on. And a lot of qualifying out opportunities and working out whether it was right for our firm and for all the rest of it, but people never ask us about if we came up with many innovative ways of pitching or, or even innovative, I suppose upsell sort of opportunities. And what I mean by that is, we came up with this thing, at Grant Thornton actually, I think it was, where we called it the CEO room, because we're not good at branding obviously, you know as accountants, but the CEO room was basically a concept where if you think we were working with mostly some big organisations in Scotland, but also global organisations that happen to have a presence in Scotland, so one for example, had offices I think in Dubai, New York and so on. And so what we came up with, this concept where we get the senior leaders in that company into a room with us, and we would get the top people from audit, tax, whatever it is, M&A, you know, advisory work, and we would just sit and listen and brainstorm, not always sit, but brainstorm around where that company was going. So the company they would tell us like, well, we're in, I don't know, Africa at the moment, and we're thinking of going to Brazil, and so on and blah, blah, blah. And the idea was that, was that we could then sit and listen about all the opportunities that would be for tax planning, or overseas branches. And you know, duty was in most countries in the world. So that in itself bought quite a lot of fee income back to the company, I think that concept.Jenny 36:20Absolutely great idea. And anything else?Mark 36:24Anything else? That they should be asking me that they don't? I can't think of anything else. I can't Jenny.Jenny 36:33No, that's okay. This is so good. And you're delivering some knowledge bombs. And how much visibility of the agency numbers do you think the whole team should have versus just the agency owner?Mark 36:48Okay, so I work with a couple of people. One particular, and I've done some sort of strategy work with the other one is, and they let their team see everything. So like, salaries for everybody, self regulate a little bit. Like, have you read Maverick, the book by Ricardo?Jenny 37:11No.Mark 37:11Oh, you must, that book is a, I'll get it right now. I think it was a family business in Brazil. And the business wasn't doing too well, I think it was a manufacturing business. Anyway, so the son took it on. And he came in with a complete unique way of looking at things. So for example, everybody knew what everybody was getting paid. And this was a big, big company, by the way, they would do a little thing on the door where they would, this is going back quite a few years where they would, you would go in and you would colour tag against your name. So it told everybody going in when they went to clock in, what mood you're in. which I thought was genius. We did a similar thing, once at GT where we did personality profiling, and we had everybody's colours up on their name tag around the office. So when you go round, you could see, all right well, I know Mark's a headcase so I'm not going to speak to him, then. So that was one of the first times I've ever read about this self regulating the pay and so on. And I know two agencies that do that and it seems to work for them. One of them's got, constantly wins, like best culture in the sort of small business section of different things. Very, very open agency. The other one and they're in the UK, the other one is a dispersed agency, a development house where they, they've got people in, I can't remember how many countries around the world, it's not that big, it's probably 15 to 20 people. But again, imagine that one where somebody in the UK could be paid 50 grand versus somebody somewhere else in a different society that's maybe pay 20 for the same job. But it works for them, because they understand that UK living, the cost of living is so much more different, so vice versa, whatever. So it works. Would I do it? I don't know, if I would!Jenny 39:00You've got some good case studies though where it's worked so would you say that you would recommend it?Mark 39:06I don't think I would possibly go to the extremes with the cash flow. Because the cash flow sometimes, although as I said early on, a lot are pretty okay at the moment, that can be a complete stress. And I think that unless you were 100% transparent about everything and everybody understood the commercials and the impact of those and actually, in one of those agencies, they train people on financial the financials as well. So that's probably why it helps, you know, then I don't think I would go personally to that extreme, because I think there are a couple of things you perhaps don't need to share and that pressure almost maybe doesn't, although some people would say that pressure is a good thing, but you can't drive the sales if that's not, you know, is it a good thing? But what I would say is other than maybe the cash flow and probably wouldn't do the salaries, although I've worked, and I've got this sort of gone with a couple of clients at the moment, we're looking at salary bandings, and so and I've worked in places where that's where that's worked and hasn't really caused too many issues at all really. Would I go salaries? Probably not. Would I share everything else? Probably. Because I think the more you hide, the less the team feel they're part of something don't they?Jenny 40:17I agree, yeah, absolutely. Okay, that's good advice. Look, I'm conscious of time. But I do have another couple of questions. In terms of the changes we've seen happening, Mark, I know you were really active on LinkedIn, sharing some fantastic information that you're interpreting really quickly from what the government was talking about in terms of furlough schemes, etc, and grants and aid for agencies. So I know that you've done a lot of work in this area, but what do you see sort of happening now and in the agency landscape in the near future?Mark 40:49Okay. I think there's a few things actually. M&As, obviously, on a lot of people's lips, you're probably hearing that in some of them, if you follow other podcasts, or talks or whatever. But it goes back to what I said earlier on in quite a few agencies and I've got some of these at the moment, I'm doing two deals at the moment where we're probably selling the agencies actually, and another one might be doing a kind of management buyout, which I'm helping on, but people have got money. Some agencies have got a pile of money they've had a CBIL (Coronavirus Business Interruption Loan). They might have just topped that up as well, with a recovery loan that they've been able to get, to get whether it's right on or not, I'm not going to say on this, because it's up to the people individually. But people have got money to spend. And although what I would say on the flip side is, a lot of agencies are doing quite well. So their prices are not going down and a couple we sold towards the end of last year were good good prices, so it's not like you're gonna get necessarily a cheap deal. And if you were I'd probably be thinking, well, why are we buying that? You know, is it the right thing? That's one thing. I think a lot of pipelines at the moment that I see, because we have our own pipeline tool that we've tried to put into agencies and so on, that usually really helps and quite quickly, a lot of opportunities at the specialist agencies, that seems to be coming to the fore a lot more. So if you're a PPC only agency, you know, there's a lot of opportunities to become a dedicated to that. I think the more full service, it's probably a bit trickier sometimes at the moment than the specialists. So that's definitely something I think is changing. And then team, I think this goes back to the vision bit again, there's a lot of turnover of people at the moment. And that's not just people hiring, because there are lots hiring, but actually quite a lot of people leaving. And I think that's, I was doing some reading for a research report meeting last week and it was a Deloitte survey, I think it was last year, saying two out of three people in the marketing space, two out of three people feel that they don't get clear communication on where the agency's going. So for me, it goes back to that, What are we now? Where are we going in the roadmap? Articulate it, you know, quarterly stand ups, monthly emails, or or a quick check in everybody, this is how we're going. And this is your career path. Because there has been quite a lot of churn this year to SaaS businesses that are well funded. Other agencies, people going, well I've had enough of the last year, it's made me think about my career, I'm coming out of the agency game. So as much as this recruitment it's also quite a lot of people leaving, I think that's a challenge at the moment.Jenny 43:19Wow. So that's really useful, what you've just shared actually, the reason for the churn or one of the contributing factors, is the fact that they don't feel communicated with. And it absolutely goes back to what you were saying before about being transparent.Mark 43:32I think it's been, you know, obviously, last year was hard, because I think most owners were like, you know, I got asked on this M&A stuff I'm doing at the moment, can we give them the budgets we did for last year? And the actual results we did. Well to be honest, we were budgeting every three weeks, you know, it was a pain, what's the point, we're changing it every week, because the new scheme is coming in, whatever other clients search, some of the search clients have one of their users working with were coming off a cliff causing all their projects, you know, retainers, so all of that is, it's just created uncertainty. So it was hard, it is hard, isn't it for people to articulate but I think just quickly, the other thing that we've been doing, we've run this mastermind thing recently, we've had 16 agencies as a cohort, we've got five groups go in, we're just about sold out the next one. And what we tried to do for the pre work for that is get everybody to do a Pecha Kucha, if you know what a Pecha Kucha is Jenny?Jenny 44:27Well explain for everybody listening.Mark 44:29So 20 slides, 20 seconds a slide, what is that, I'm the maths person! That's six and a half minutes or whatever. And they're supposed to articulate who they are, what they're trying to do themselves personally, but also their business, where they want the business to go. And we always think that's a critical thing for anybody on this mastermind and we've actually started to do with the clients now because they're weaving it into their creds decks and so on, as quite a quick visual, snappy thing. So a Pecha Kucha for me is if you haven't done one, look it up it's a whole, Japanese for chit chat I think isn't it? Look it up, probably do one because it makes you think about where you'll go in your business. And it's great for the creds. It's great for the creds deck.Jenny 45:08Amazing. Any other final words of advice for an agency leader that we haven't talked about that you think, you know, it's critical to understand if you want to grow your agencies?Mark 45:17Yeah, yeah, actually. So there's two things, I would say. It's one, most people don't have clarity on their pipeline. And I don't mean they don't know what leads a company. They don't have a tool or a process. They have some in the owners email inbox, they have some with the account managers inbox, they have some on the spreadsheet, then they have a SAAS tool that doesn't really tell them it just asks for them to tell you about the stages of how each opportunity is. Doesn't really tell you what's coming in the next couple of months with clarity. So I think a pipe line tool is fundamental. And we've built one over many years, we've evolved over agencies, anybody we work with, we show them now on like day one, or on the strategy day with them straight away or on the mastermind, because it's, to me, it's like the most fundamental tool that they should have in place first. And I think the other bit is, is the vision bit is, is again, we work quite a bit on that with, you asked me earlier on about what we do at the beginning, that to me is a lot of people don't really ever, they don't need to have a three or five year plan, but they need at least a year plan otherwise, what are you trying to go towards? So having that kind of step back and get away from the screens or the office when we're in offices and thinking about where they actually want to go, to a bit around the vision and putting a couple of numbers around that? What's the revenue going to be, what are the number of people? You can guarantee most people will have too many people on it, but then it's a starting point isn't it, is something to aim for.Jenny 46:53You've been talking to me actually, Mark, I'm thinking I need to do that. So that was a real moment of Wow. So I'm really glad you shared that because I'm sure people listening will be thinking the same thing. So Mark, thank you, first of all, for sharing so much value. This has been really sort of eye opening for me. How can people reach you? And who would you like to be contacted by? And what's the best way because I know you've got, it's difficult because you've got so many clients on the go. So I know that your time is limited.Mark 47:27That is fine. So I love speaking to people and hearing their stories like this. So you can email me at [email protected]. Funny ending, and, or you can hit me up on LinkedIn. I tend not to accept connections on LinkedIn, I just if people message me, that's just my way of doing LinkedIn, I'm a bit weird. So whether that works or not, Jenny, I have no idea. But I just try to keep it to people I kind of know or have met, but you can send me a message and that's fine, a cover call or whatever. But I'm happy to have a call with anybody and and really, yep, agency owners are often, I've supported quite a lot of finance people in agencies over the years. I probably don't say that enough, actually. So if there's any finance people that think actually I'd be quite interested ito chew the fat over x, y and z if they're whatever, FM or FD or finance controller, whatever, then I'm happy to have a call as well to see if we can help in any way.Jenny 48:22Amazing. Thank you so much, Mark. We'll include those links in the show notes so people can find you straightaway. So thank you so much, Mark. Really appreciate your time.Mark 48:31All right, cheers, Jenny. Take care.