Why your proposals go nowhere.

You spend hours writing a proposal for a prospect and it goes nowhere. All you hear is that the proposal is still being “reviewed.” Why does this happen time after time? Here are five reasons. I am sure there are more.

1. Proposals written in answer to RFPs that you are very unlikely to win.

2. Proposals which are too focused on YOU, not on THEM.

3. An information dump with no persuasive structure.

4. Failing to offer a compelling value proposition and persuasive business case.

5. Poorly written, full of jargon,too technical, irrelevant content with no focus on key issues.

What a prospect really wants to hear from you.

I have probably participated in over several hundred new business pitches. Most go pretty much the same way. You are asked to submit some information about your firm, you get an invitation to present, you make the presentation after ignoring your normal workload for a week, then you are told that you didn’t get the business.

After sulking for a few hours, you call the team together and together ponder over why you didn’t get the business. You were brilliant at telling the prospect about your process and your outstanding creative work. You even threw up a few slides about
your knowledge of their industry. It was the best presentation you had ever made to a prospect. So why, you ask, didn’t you get the business? The team just sits there, wishing they were somewhere else.

Here’s the deal. What you failed to do was engage the prospect in a dialogue, based on where you thought you could take their business. Generally, prospects don’t want a show. They want a conversation about them. Now, some of you probably think that expressing a point of view at this stage is risky because you haven’t had a chance to apply your patented “brand exploration process.” However, you shouldn’t even be at the table talking to them at this point if you haven’t learned enough to take a stand. Sure it is risky. But a heck of a lot less risky than witholding your thinking.

So next time you are asked to present, think of yourself as a facilitator, not a talking head. The idea is to get them engaged with you. Make them think that you are already working for them. Do that and your chances of winning will probably go up dramatically.

Is the full-service ad agency becoming irrelevant?

I will admit that “irrelevant” is a pretty strong word. But I think it is true. Positioning a professional services firm based on “what you do” as opposed to “what you know” is nuts.

This is particularly true today. Your ability to do things better than someone else based on a functional skill are over. A world-wide market has made access to “best in class” functional skills available to anyone.

The only meaningful way to be different is to know something different. Anything else is a crapshoot.

What is an ad agency worth?

There are a few different approaches to valuing an agency and a number of different factors contributing to the sum under each approach. To keep it simple, I will focus on the most common of each. Keep in mind that the only accurate valuation is what a willing buyer, under no compulsion to buy, will pay to a willing seller, under no compulsion to sell.

The two most common valuation methods that I see are:

(1) A percentage of the average of the past three year’s revenues (AGI, equaling the total of commissions, fees, hourly billings, markups, etc.). In some cases, this approach is expressed as simply a percentage of revenues. The median percentage of revenue is 70 percent for general advertising agencies, and somewhat more for digital or other “new technology” businesses.

(2) A multiple of operating profit (EBITDA). AdMedia Partners, Inc., an investment banking and advisory firm specializing in media, advertising, digital, social and marketing services companies, conducts an annual survey among prospective buyers and sellers regarding prospects for mergers and acquisitions. The median multiple of operating profit in the most recent AdMedia survey was 5.0x for general ad agencies.

It should be noted that whatever the multiple, it is applied to “adjusted profit.” “Adjusted profit” usually reflects reported profit with additions or deductions for the difference between compensation paid to an owner, and what would be paid to, or on behalf of, a non-owner executive performing the same duties. As you know, that adjustment could go in either direction. In addition, items such as depreciation and interest are added back into the equation. Usually, the market value is an average of both of these methods of agency valuation.

Stated simply, your agency is worth about 70 percent of last three years’ average AGI; or, 3 to 4 times adjusted net profits. Or, some average of both of these methods.

Cutting a member of the team.

One of the most difficult decisions for any owner is making the decision to cut a member of the team.
Just like a sports team, sometimes people no longer perform and have to be let go.

Perhaps it was your mistake to hire them in the first place. Maybe not. The point is that it is no longer happening and you have given them every chance to step it back up.

As the owner, only you can make these cold, hard decisions. Your staff will be pissed at you. You will feel bad. But you have to do it.

I know an owner who needs to cut a team member right now. But they just can’t do it. The person has been loyal for over ten years and hung in there in good times and bad.

It doesn’t matter. You have to cut them today.

Nobody ever said owning a business was easy.

The Lazy Man’s Business Plan

If you are like me, you have too many things to do than spend time on a plan. So here is a simple format to follow. Even a lazy man can get this done!

VISION
A vision is something that is ongoing without a specific end-point in time. Also, a vision is considered a soft skill because it may not be measurable. If your business is a structure to fulfill your greater purpose; what is the purpose? What is the long range picture of your business?
MISSION
A mission answers the following questions. What specific outcome does your business need to be focused on? What approach out of all possible approaches to your vision does your business need to take? What is your market ‘niche’? in what product or service does your business specialize? How will you put your mission into words that will be meaningful and inspiring to your employees? How will you keep your company mission up in front of employees, clients and associates, so they will stay on course?
OBJECTIVES
Objectives are the ultimate goals of your business. What are the long-term and short-term goals of your business? Identify those goals that will achieve your objectives. Create clear and concrete measurements. How many? By when? Design measurement systems for each distinct area of your business, which will be posted daily, weekly, monthly, etc.
STRATEGIES
Strategies are plans and skills that allow the business to achieve goals on the way to fulfilling your business mission and objectives. What is your action for your business? How will you get to where you are going from where you are now?
STANDARD OPERATING PROCEDURES
Standard operating procedures are the foundation and the rules of conduct for your business. This is the vehicle that will allow people to know if and when they are not operating true to company’s principles. What does your business stand for and what are the business commitments? What is the motivating force behind your business? By what principles will you operate? Write out an employee handbook or a company manual.
ORGANIZATION AND ACCOUNTABILITY
Organization is the system by which your business achieves specific purposes. Define what the business, departments, and individual employees are responsible for.
EXECUTION
Execution explains the measurement of actual results vs. the budget. Where can these resources be obtained and what will they cost? What are the appropriate actions?
BUDGET
A budget is an estimate of income and operating expenses for your business. Prepare an operating statement for your business for all 12 months.

How will you measure your life?

The following is part of an article from the July 2010 Harvard Business Review entitled
“How Will You Measure Your Life?” by Clayton M. Christensen. It seemed to hit home.

When people who have a high need for achievement—and that includes all Harvard Business School graduates—have an extra half hour of time or an extra ounce of energy, they’ll unconsciously allocate it to activities that yield the most tangible accomplishments. And our careers provide the most concrete evidence that we’re moving forward. You ship a product, finish a design, complete a presentation, close a sale, teach a class, publish a paper, get paid, get promoted. In contrast, investing time and energy in your relationship with your spouse and children typically doesn’t offer that same immediate sense of achievement. Kids misbehave every day. It’s really not until 20 years down the road that you can put your hands on your hips and say, “I raised a good son or a good daughter.” You can neglect your relationship with your spouse, and on a day-to-day basis, it doesn’t seem as if things are deteriorating. People who are driven to excel have this unconscious propensity to underinvest in their families and overinvest in their careers—even though intimate and loving relationships with their families are the most powerful and enduring source of happiness.

If you study the root causes of business disasters, over and over you’ll find this predisposition toward endeavors that offer immediate gratification. If you look at personal lives through that lens, you’ll see the same stunning and sobering pattern: people allocating fewer and fewer resources to the things they would have once said mattered most.

Ten tips for business owners

Ten Tips From Ten Top Entrepreneurs
Porter Gale, The Huffington Post, 9/27/2011

Below are ten “success” tips from ten top entrepreneurs.

1) “Hire slowly, fire fast.” –Bill Clerico, CEO of WePay

2) “The Brand is The Amusement Park, the Product is the Souvenir.” –Nick Graham, CEO of Fresh Happy People and Founder/Chief Underpants Officer of Joe Boxer

3) “Trust your gut, keep your sense of humor, surround yourself with adult supervision, and know that starting and running a growing business is filled with adversity and challenges. I doubt any successful business was easy.” –Lily Kanter, CEO of Serena & Lily

4) “Never ask anyone to do something that you wouldn’t do.” –Guy Kawasaki, author of Enchantment and former Chief Evangelist of Apple

5) “When you become an entrepreneur you need to understand ‘people’ are at the heart of your success. The most successful entrepreneurs master the art of dealing with and attracting the right people.” –Daren Klum, CEO of CRAM Worldwide

6) “Do business in person, use email for follow-up.” –Ido Leffler, Co-founder of Yes To Inc.

7) “I believe a business can thrive with the right attitude towards people. Treat everyone with courtesy (you never know who might be a customer or a conduit to one), think about what your employees need to thrive and work hard (set a standard and an example as the founder), and take time to get to know your banker.” –Wendi Norris, Co-Owner of Frey Norris Contemporary & Modern

“When tackling a problem, I would rather work with a team of people who don’t know they can’t solve it rather than with an experienced group that would tell me how difficult it is to get the job done.” –Jeff Pulver, Founder of #140conf and Co-founder of Vonage

9) “Problem solving is a joy.” –Jodee Rich, CEO of PeopleBrowsr

10) “There is no way to fake hustle.” –Gary Vaynerchuk, Co-founder of Vaynermedia

Managing a business downturn.

It happens to all businesses. Things are going great. Then something happens.

A key customer fires you. The slow economy decides to hit you like a sledgehammer. And you just sit at your desk asking what the hell happened.

First things first. Check your cashflow. If you have six months of operating capital then you have some breathing room. If not, better start looking at expenses. I advise business owners to make the tough cuts earlier than later. It is no longer just about growth. It’s now about preserving capital.

Tell your staff exactly what has happened. Then tell them about your plan for getting back on track. Be honest, direct and optimistic. Thank them for hanging in with you.

Now get focused. How is your business truly unique? Do you have an industry expertise? Find customers that need that expertise. This is no time to be all things to everyone.

Have weekly staff updates. Let everyone know what’s working and what isn’t working. Ask for their input. Then take action.

Successfully managing a downturn is a skill that is just as important as managing growth. As I think back over my career as a business owner, there is no question in my mind that a great deal of my success was due to how I handled the big challenges. You can do it too.

The well-run business: vision

My wife and I are a great team. I state the destination and she holds the map. Both are necessary to get where you are going.

The same is true for you as an owner of a marketing firm. First of all, you need to state where you want your firm to be in five to ten years. You need to articulate exactly what the firm (and your life) will look like when you get there. Who will be your clients? Who will be on your staff? What services will you be offering? And, of course, what will YOU be doing.

But you also need to state how you acheived this vision. I advise my clients to actually look backwards from the day you got there. What did you do six months prior to propel you forward? How about two years prior to V-Day?

Vision is so important to your success. Without it, you are just wandering in the dark.