5 mistakes that will bankrupt your agency

These days, agencies tend to get carried away in almost constant discussions about creativity, innovation and disruption. But all that noise can drown out the real reason you're in this business: making money.

The truth is you are trying to make a living - for yourself, your family, and your employees. And no matter how hard you work at serving customers, when you're not making the money, it's pretty hard to keep the enthusiasm going.

Even when you are earning money, it is a tough business. This is why it is essential to avoid some catastrophic mistakes that agencies make every day.

Drain the water from your own swimming pool

Even agency owners inteIlligentes make some of these painful mistakes. They don't willfully sabotage their own efforts, but they fail to realize the long-term impact of these seemingly harmless decisions.

You might even recognize yourself in these five financially draining mistakes - and not realize how damaging your bottom line is.

5 mistakes that will bankrupt your agency

1) Your price is too low.

Nine times out of ten, agencies present clients with a single price and package. However, when you do this nine out of ten times they will grow back.

Instead, always give them three options. Create the middle option first, as this is the one they are likely to choose. This option should be your ideal sale and what is really best for the customer. Center Effect Study Finds Consumers Most Importantly The Options Placed At The Center Of A Range Of Optionspprecified.

Once you have built your "intermediate" option, delete some of these deliverables to create a first option. This simple option is about 20-25% lower in price than the middle option.

As for the third option, add some bells and whistles - not those that don't make sense to the customer, but factors that go beyond the minimum standard. The price is about 30-35% higher than the second option.

When you present these three options, more often than not, customers will talk about the second option themselves. The beautiful thing is that they feel like they are in control of their budget and their work.

2) You give it away for free.

Almost all agencies have a gaping hole called scope creep: allowing the scope of a project to expand without the price increasing accordingly. If we could control it, we would all drive better cars.tures and take a better vacation.

I'm not suggesting that you suggest your customers to your death, but you have to plug this hole. Of course, we can look at our customers and be frustrated that they keep asking for more and more. But the truth is, the blame is squarely on us.

Often your scope documents are too vague and fail to define deliverables in a way that leaves no room for interpretation. Or maybe they're too wide, with no limits.

If you have account managers who manage client project budgets, they might not understand agency math. You expect them to be good stewards of your bottom line, but they don't understand the game they're playing - no one has taught them the rules.

In most agencies, managers never take the time to teach employees howan agency makes money . Thus, they fail to understand that everyone, every day, is making money at the agency or costing them money by over-serving clients or not negotiating better with suppliers .

When employees don't understand this, they believe their job is not to make money, but to keep customers happy. Of course, the easiest and fastest way to do this is to over-serve customers. Here it is: Scope Creep.

3) You let customers slowly choose you to death.

When your scope documents are too vague, you'll have clients surpassing them in no time, asking for the 12th or 13th revision. Still, there's a good chance no one will issue a change order. This is especially true if your scope documents are loose because you know you are on unstable ground.

However, the mainThe reason is that by the time you are far enough along to consider a change order, your account manager thinks, "The client wants to make a minor change." By the time I calculate the costs of the change request, write a document, send it to the client and get them to sign it, we could have just made the change. So why waste more time and irritate the customer by issuing this change order? Screw it on. I'll just make the change.

Here's the simple solution: In all your scoping documents, include language that describes a flat rate for changes beyond the number of changes allowed. Clearly define deliverables and timelines.

If, for example, you are working on a brochure for a client and you are going to give the client four revisions, include this: "With this estimate, you are going to benefit from four revisions. Any revisions after the fourthrevision will cost me 250 €.

4) You put out small fires to the detriment of the raging hell.

You're so busy running around with a fire extinguisher, chasing the drama of the day, that you don't really have a vision for how you want to move your agency forward. How do you want it to be different a year from now?

If you really want to grow your business - not necessarily in body numbers, but in realizing your vision for your agency - it won't happen without planning.

5) O our new business plan sucks.

Have you ever found yourself saying any of the above? "Well, we're growing on referrals. " "We're going to hire a guy." "We're too busy dealing with customers to chase after customers." "We're really lucky the phone is still ringing. "

If so, you don't have a plan. Of course, all of this is pThat might be true today, but if you've been in business for awhile you know it comes and goes. This is why you need a new cohesive business program to keep your sales funnel full. Finding great potential clients is getting harder and harder, and the time between meeting and signing them is growing.

If you're not starting a new business now, chances are you won't start until you feel like your most valuable customer - your gorilla - is unhappy. Or, worse yet, fear will strike the minute you get the phone call he or she has finished. By then, it is too late. The new business is a muscle that you exercise every day, no matter what your activity.

If you are the agency owner, the new business should be your primary responsibility, taking 40-60% of your time.ps. You are not always initiating or calling prospects; maybe you are writing content. But not spending time on new business is a big mistake that agencies make every day.

If a shark stops swimming, it dies

Above all, make sure that you are constantly evolving, growing and refining. Even in the best and most profitable agencies, there is room for growth and improvement. Whatever solutions you are currently using, there will be different options in a year. Our world is changing too fast for us not to be able to follow it. And that doesn't happen without a plan.