All posts tagged: agency-biz

Levers to Achieve Project Profitability

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A couple of notes: The following tips apply mostly to fixed fee design or web/app development projects. However, aspects of these levers can apply to any kind of services business. Achieving profitability on your projects doesn’t necessarily mean your business will be profitable. Other factors like overall team utilization, sales & general admin expenses, and non-billable staff can determine whether or not your agency is profitable. Profitability on projects is a good measure for how […]

How Well Do You Know Your Agency Business? Try These 25 Questions

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The Barrel leadership team has been working with a CEO/business coach this year. One of the most valuable takeaways from our sessions with him are the questions he asks about our business. It’s humbling how often we don’t have a clear answer, but with each session, we’ve been able to improve our knowledge of the business and install systems to better retrieve answers in the future. The following are 25 questions (not exhaustive by any […]

The Agency Cold Start Problem

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For our design agency Bolster, we’ve been looking to find our way around the agency version of a “cold start problem”. In tech, a cold start problem (as popularized by Andrew Chen’s book on the topic) is the conundrum that startups face when trying to achieve network effects with their product. For example, for Airbnb, their cold start problem was trying to get both enough host inventory and guest interest at the same time in order for each […]

How Much Cash Reserves Makes Sense for An Agency Business?

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How much cash in the bank makes sense for an agency business? Some agency owners I’ve talked to say enough cash to cover at least 3 months’ of expenses. I’ve also talked to ones that have enough to cover a year’s worth of expenses. Some serious amounts. I like having cash in the bank. Especially in a higher interest rate environment, having cash is a good place to be and provides a sense of security. […]

Agency Business Lessons: Distilled and Oversimplified

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I’ve written about the various aspects of running an agency business. Like any other topic, the deeper you get into it, the more nuances and complexities you encounter. However, it’s worth taking a step back every now and then to revisit some core ideas even if they may come off as oversimplifications. I present to you five agency business lessons: 1. Win New Business Winning new work from clients is what breathes life into the […]

Unproductive Thoughts of an Agency Owner

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This is a cautionary list intended to highlight the pointlessness and wastefulness of pursuing certain types of thoughts. They come from deep personal experience. As an agency owner for over 16 years, I’ve let these thoughts occupy my mind one too many times. Luckily, through introspection, coaching, and practice, I’ve been able to develop enough self-awareness to spot these thoughts and quickly dismiss them whenever they pop up. Life is a lot more pleasant and […]

8 Ways Client Projects Get Delayed and How to Avoid Them

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I’ve lamented in numerous Agency Journey episodes about how client project delays at Barrel have been absolutely killers in terms of profitability. This happens primarily with fixed-fee, fixed-scope projects. These projects typically come with a detailed outline of requirements, specs, activities, and other deliverables along with tentative timelines for delivery. Anything not captured in the contract could be considered “out of scope” although this will depend on the specificity of the original statement of work […]

Agency Survival: Handling Challenging Times for the Business

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We’ve been through our fair share of ups and downs at Barrel including some close calls on remaining solvent as a business. Through these rough times, we’ve learned some approaches to help us be more resilient as a business. More importantly, we’ve learned that the ability to survive (and eventually bounce back) requires a mindset that can hold two opposing views: the worst-case scenario where everything burns down in flames and the optimistic view that […]

A Matrix for Qualifying New Business Opportunities

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At the start of this year, as we became more diligent at Barrel about tracking certain business development metrics, our Partner and Creative Director Lucas Ballasy wondered if it could be helpful to come up with a scoring rubric for new leads. The thinking was that, over time, a data set would emerge and offer some potential insights while making the exercise of qualifying leads less intuitive and more rigorous. Lucas and I quickly mocked […]

The No Exit Approach to Agency Business

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In the play No Exit by Jean-Paul Sartre, three deceased characters find themselves in an unexpected Hell, a plain room where they are seated together, no instruments of torture in sight. As they learn more about each other and are exposed to their respective manipulations and fits of anger and sarcasm, it’s clear that eternal damnation is coexistence with other people, hence the famous line: “Hell is other people.” I found myself thinking about this […]

Winning Factors: What Leads to Client Wins

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At our quarterly town hall meeting at Barrel, one of the questions asked was: “What are the top reasons why we don’t win projects?” The answer we gave at our town hall was something like this: There are numerous factors ranging from our pricing, our body of work, the impression we made on the prospect, who referred the prospect to us, etc. that contribute to why someone ultimately decided not to work with us. The […]

Exploring Client Concentration in an Agency Business

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Client concentration isn’t a topic that comes up much when I chat with other agency operators. The most common references to client concentration I’ve heard are usually concerns from folks who rely heavily on a single client for most of their revenue. Agency business experts and 2Bobs podcast hosts Blair Enns and David C. Baker recommend that creative firms should have a roster of around 8-15 clients. This doesn’t matter if you’re doing $1 million […]

Calculating Project Profits at a Creative Services Agency

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A digital marketing agency, design/branding studio, UX consultancy, web development firm and any other creative services business are all similar in that they are asset-light, people-intensive businesses that rely on successful delivery of work for clients. What constitutes a successful delivery? Client satisfaction, team satisfaction, and profits. I want to focus on the profits part in this piece and explore some examples of what a profitable engagement looks like and why the two biggest levers in […]

The Downstream Impact of New Business Decisions on an Agency Business

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Last week, our leadership team at Barrel spent 3 full days aligning on goals and priorities for 2020. We came away with some concrete assignments that will improve processes, enhance our service offering, and deepen relationships with our clients. A recurring theme that’s become clearer to us in the past year is that all the problems and all the successes of an agency business, when you get down to the root of things, really boils […]

Small Agency Owner Compensation

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Can an owner of a small creative/marketing/digital agency make decent money? The answer is yes, but like anything worthwhile, it takes discipline, hard work, and some luck. The business model itself is really simple: be great at sales, control costs (especially labor), do excellent work, and have a good CPA. I built a really simple model on Google Sheets to show the inner workings of a small agency’s business from the owner’s perspective.  You can copy […]

Lessons from The E-Myth Chief Financial Officer

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The E-Myth Chief Financial Officer: Why Most Small Businesses Run Out of Money and What to Do about It by Michael E. Gerber and Fred G. Parrish focuses on the importance of the chief financial officer role in a small business and how, in the absence of a full-time CFO, the entrepreneur must be willing to play the role. It’s taken me well over a decade to truly appreciate the importance of how financial thinking […]

Reflecting on The 11 Laws of The Fifth Discipline (from Peter Senge’s The Fifth Discipline)

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It’s been a year since I read Peter Senge’s The Fifth Discipline and yet, I’ve been reminded almost every single day of the lessons from the book. My company Barrel recently celebrated 13 years of being in business. My co-founder Sei-Wook and I have been there for all 13 years, and I feel like it’s only been in the past year that the two of us started to take a less reactive approach to running […]

Continually Evolving Thoughts on Talent and Hiring

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In writing this post, I wanted to make a reminder for myself about the continually evolving nature of how I’ve viewed talent and hiring, and how it’s possible that my views will continue to change in the future. When we first started Barrel, Sei-Wook and I were essentially a couple of freelancers who said yes to enough work that we needed to hire people to help us. We used Craigslist and that was the start […]

Common Opportunities in Growing E-commerce Businesses Vol. 1

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At Barrel, a segment of our clients (and prospective clients who contact us) are growing e-commerce businesses doing anywhere between $500k to $5 million in sales. They are typically run by small teams (usually less than 10 people, often just 2-5 people) and have either been bootstrapped (funded with the founder’s savings plus the profits of the business) or with a small seed investment from friends and family. Drawing from my observations and experience reviewing dozens of […]

The Importance of Marketing to Existing Clients from Managing the Professional Service Firm

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Managing the Professional Service Firm by David H. Maister is a must-read book for anyone running a professional services business. For too long, I thought that a digital creative firm like Barrel was somehow special and played by different rules than consulting, legal, accounting, or architecture/design businesses. Wrong. It became quickly apparent in the first few pages of the book that Barrel operates in the same way as any other professional service firm and that […]