Today's episode will be particularly beneficial for you if you're an agency owner looking to grow. I chat to ‘Agencynomics’ co-author, Peter Hoole, about some common challenges faced by agency owners today, when it comes to business growth.We also talk about:- the importance of looking at your team's skill set to make sure everyone's sitting in the right seats- what point in the agency's revenue growth does an agency typically employ their first account manager?- and the implications of having a hybrid account manager (someone who plays the combined account manager and project manager role, versus keeping the roles separate)Peter shares so many tips and lots of value during this interview. Don't forget to grab a copy of the book ‘Agencynomics’. I really don't know any agency owner who hasn't said it was a brilliant read.If you're an agency owner, and you want more certainty on your forecast when it comes to existing client growth, or you're an ambitious account manager who wants to know how to grow a client account, without being pushy and salesy, then my nine week Account Accelerator programme might be for you.You'll come away with a client centric system and repeatable approach to client growth. Drop me an email at jenny@accountmanagementskills.com or book a discovery call with me, and we can see if it's a good fit for you or your agency. Transcript:Jenny 00:03So I'm absolutely delighted to welcome you to the show today. We've got Peter Hoole, who is the co founder of Cactus, the UKs leading agency growth consultancy. He's also acting CFO for a number of high growth agencies. And obviously, the author of the hugely popular book Agencynomics which has just been updated for the second time, and you couldn't miss a newsfeed report of someone reading it and finding it hugely valuable. Peter 00:29And we actually had complaints from people saying, 'How do I stop seeing this on my LinkedIn feed?' It was actually Mark that said, I think it was one of his clients 'Well, perhaps you just need to log out of LinkedIn for a week then!' Jenny 00:44You were bombarded, weren't you? Peter 00:46Yes, I'm gonna make a joke of it, but I'm super pleased with how it's gone. And we're really humble about it. Honestly, when we wrote the book, we honestly thought we'd sell like 500 copies, because it's quite niche, obviously. But yes, it's just seems to have taken off really well. So it's nice to be able to say, yes, I've written a couple of books, quite good for the profile, and it actually helps a lot with client stuff. But I've been interviewing finance managers as well recently for some of my clients and in in two or three recent cases, they say, 'We've bought your book'. And they're a bit star struck, which does crack me up. Jenny 01:22Does it always surprise you in some way? Peter 01:25Yes, it really does. Jenny 01:27Well, listen, not only have you written the book, but you have the biggest UK based community of agency owners, also of the same name Agencynomics, which is something that you run with the Cactus consultancy. So, Pete, before we kind of dive into the questions, I've got questions about the book and everything, would you mind just spending a few minutes just talking about you and how you help agencies? That'd be great. Peter 01:53Yes, sure. I mean, you mentioned the community, I think that's probably the starting point, really. We've been running cactus now for around 10 years as an agency growth consultancy. In the very early days when Spencer and I left our full time jobs after we've sort of grown and exited our first business, we were pottering about, I would say, doing a bit of consultancy for friends and ex colleagues who had agencies. And we had to find a way over the years to help smaller agencies who come to us and said, 'Look, you've done this before, how to how do we do this?' We had the idea for a community a while ago. And we were looking at different platforms of how to do it. And we came across a platform that looked really strong. And about the time we planning on launching was the beginning of the pandemic. So we were sitting there thinking, it's not quite ready to go, but people kind of need this at the moment. So we initially had planned, this is already super honest, me telling you this stuff, but we initially planned to charge a membership fee for it. But the sort of April time last year when things were looking a bit bleak for for everybody really, we thought we've just got to put this out there and make it a free for life community for agency owners, founders, directors. We had to put in some kind of rules in place around it, so it's going be for people with three staff or more, because freelancers and agency owners have very different needs in terms of the support they need. And it's just really taken off. I always lose count how many members that we actually have - I think it was 1250 as of last week. Jenny 03:32Wow. Peter 03:33Yes. And there's a backlog of 30 or 40 people a week trying to try to join. So yes, that's been really, really good. I think it's very kind of self sufficient. All the people within the community kind of help each other. And there's always something great going on in there. You know, you have someone say 'I have this problem, does anyone know how to solve it?' Or 'I have a lead that I can't do would anybody like it?' - those kind of things. So yes, it's been it's been super helpful. Obviously, we have the book as well, it's come out, but my day job really, as you mentioned, was the agency CFO kind of work that I do for lots of agencies. I've been a CFO for many different agencies over the years for last 17 years probably- probably 100 different agencies on and off during that period. And also branching out doing a lot more M&A work now in terms of mergers and acquisitions for clients who are either looking to grow and sale or they're looking to buy agencies as part of their growth strategy. And for a business, Spencer and I always laugh, for a business that doesn't advertise itself really as an M&A business, we did 12 transactions last year and four of those were between September and December. So I've been pretty busy with that as well. Jenny 04:49I was going say that sounds pretty busy. And how many clients do you work on at one time in your role as CFO? Peter 04:56Yes, we tried to keep the number sort of kind of fairly low because we're there to support people. And as much as we can kind of plan out how the agencies will relate to this, and you have retainers for clients a set amount of time, but the support that is needed is kind of ebbs and flows, we kind of keep it down to about 10 on a kind of full time basis. And we started a new service last year called our Mastermind group. So I don't know if you've heard of those? Jenny 05:23Lots of people have spoken very highly about it. Peter 05:26That's really good to hear. The idea came about that, could we come up with a kind of training programme, which kind of takes someone on a two year journey where we meet once a quarter face to face and we have a day session with them where we'll be covering different subjects, one in the morning, one in the afternoon, there's a chance for a kind of Q&A session as well. And we've got seven of those groups now across the business. And four of which Spencer and I run as a pair, and three of which is Mark and Danny run as well. So yes, they have to have a good feedback, and I really enjoy doing them. Jenny 06:04Well, it's a great way to leverage all your knowledge and expertise, but reach a wider audience, isn't it and help more people? Peter 06:10Yes, yes totally. And then the other thing for me is, I've not been that great with kind of public speaking or that kind of thing over the last few years. I'm, as an accountant, probably historically, a back office type person. So I've had to learn new skills in terms of standing up and presenting and that kind of stuff. And presenting to 20 people in a group like that is quite as quite a good size. I look around the room and I think there's a lot of friendly faces here. No one wants me to mess up, everyone's on my side, they see me as kind of the expert. And that's been really confidence boosting for me doing that. And I've really started to enjoy them from going from two years ago, as someone who would not sleep for two weeks, if I had to do a public speaking appearance, to now waking up and literally jumping out of bed thinking, I've got a new deck to present today, I'm really excited about sharing what's in it. I try and make them as humorous as possible as well, because sometimes finance can be a little bit dry. Yes, sometimes that goes down well, sometimes it doesn't! Jenny 07:10The thing is, I love your humour, it's very dry is your humour. And people just want to know what's in your brain, you forget that. I think as the speaker sometimes you get consumed with your own nerves. So Pete, when agencies start working with you, what are the patterns? Like, what are the what are the things they tell you? I want to achieve this by working with you, what do they want to get out of it? Peter 07:35That's a really, really good question. I think if you'd have asked me that question, maybe four or five years ago, I would have said they perhaps they will want to exit. They want to get to a stage where they grow their business from where it is now to a point where it's worth some value and there's a transaction. But I think that what I've learned over perhaps the last three, four years of working with more agencies is that actually, they want to have a choice and grow their business to where they can either they can sell it, or they can stay in it and get to a point and take it on to another level. Or perhaps they want to buy more agencies as part of their journey into a kind of buy and build. But they may want to recruit an MD and sit back in a chairman role and take some dividends. But it is about having that choice and getting to an agency of, if you're 4 to 5 million in revenues and you've got good profits, you'll have a decent leadership team around you. And as the agency founder or founders, at that point it gives you the opportunity to say, well I could do something different here or I could could sell but if you're kind of 3 million and 30/35 staff, the agency is probably not at that size and scale, where you're able to have that many choices about what you want to do ongoing, it just needs to be that slightly bigger size. Jenny 08:48Brilliant. Okay, well, that sounds totally understandable that people would want the option at least. And I suppose what you're doing is helping them systemize their growth, so it's more steady and predictable. So when you first start working with an agency, I would imagine that there's lots of things that you can apply straight away for some really big wins, to make them feel that they've got that momentum going. Can you share with us what kinds of things you would do that stage? Peter 09:15Yes, I think, in terms of the kind of practical first steps that we say the first thing we would do is probably take undertake a little audit of the agency in terms of where they're at in terms of the systems and processes they've got, where the financials are, where the T's and C's are, how their pitch decks look, what their marketing approach is. And there are normally a load of things in there that you say actually, because we're in quite a luxurious position when we go into these agencies, we can just come in like this and just see looking down or we think there's something that needs to be fixed over there or something tweaked there. So that's the first thing. The second thing is I help them kind of build a plan around what the next one, three and five years looks like and they've never, really a lot of people to be fair, the size agency we go into, will have a budget or a plan but they don't really think about the longer term. And that's the bit that I'm quite good at is kind of saying, well you're here now, if we apply certain growth metrics, and I work with the clients to do it at a rate that they're comfortable at, this is the key thing, because some people think 20% is fast and some people think 50% growth year on year is fast, so it's just gauging where where the clients are and saying, look, if you grew at this rate over the next few years, this is where your business would be in terms of revenues, profits, team size and structure and then they can start to kind of visualise it. And that's kind of the first step where you're saying, okay, well hopefully, when Spencer and I or Mark and Danny go into businesses, they think well these guys know what they're doing. We've had some validation about some of the things that we are doing well, there's a few things here that are going to help us kind of shortcut the journey a little bit and actually as a vision being set in terms of what are the stepping stones to get from from A to B, if you like. Jenny 11:03And then do you encourage them to write that plan down? Has it got to be in a visual format, they've got to be really kind of... Peter 11:09I would say it's horses for courses. There are some people are more visual learners, some people will like a written plan. And there's two sides to kind of growth plan really, there's the numbers side, which obviously comes from me, and then there's kind of the more documented plan or kind of, these are the steps we're going to take to get from here to here, or sometimes for some people, it's just a series of organograms really, which basically says, this year looks like that, here's my current vacancies and these are the gaps that I need to get to the next level. And the following year will look slightly different in terms of have more maybe account management roles, more project management roles, etc. and a certain number of fee earners to fit that kind of revenue. That depends really on on the client, in terms of what they want. I found that over the years certain types of agency owners are more detailed than other types of agency owners. So people who run paid media, performance marketing agencies tend to be very heavily focused on detail. And they will have lots of spreadsheets and controls in their businesses. And the more creative ones are less led by the numbers and more of a gut feel about about where things are. And that's a bit of a generalisation but I think I've spoken to enough types of those businesses now to get a feel for where the different personality types are. Jenny 12:28You said that it's really important for them to feel comfortable with the projectory of growth, do you ever find yourself thinking they're missing out on an opportunity here, if they don't plan to grow faster and do some encouragement? Peter 12:41I do. And I think I've got a very good example of working with someone where making sure they were comfortable at the start was important. So we did, obviously they remain nameless, but we did a workshop day with a client, it was about 12 months ago now, and they suddenly became a Mastermind client. But this person was kind of very apprehensive about the growth rates, I think they had an impression that we would come in and start demanding 50% growth and spending all their reserves on getting people on board. And we just said look, whatever's comfortable for you, that's the most important, it's about building confidence. So this person set a modest growth chart, we agreed 20%. I actually had a call with him yesterday to say, well how have you got on? He's achieved 30% in the first year, which means that he's almost probably two thirds of the way through his second year plan. So he's almost accelerated his business 8/9 months ahead of where he needed to be. And now he's saying, look you were right, the confidence is there, it's been built, I can see how to do this now. But I think if we'd have pushed that person to have gone for 30/35% growth in year one, I think they would probably push back and just say I can't do this, it's too overwhelming. So that's one of the tricks I think that we have to kind of learn is, understanding the person on the other side of the table and what's comfortable for them and going at the right pace to start with. You're right in some of those situations and potentially it could be a lost opportunity, but I'd like to think that we get to know people quite well. And we've got enough experience between us now to kind of coach better growth numbers out of them because sometimes they just don't know what they don't know. Some of them might think 5% is good. We've worked with people who come in and say I want 100% growth year on year for five years, and we kind of have to say, okay that's potentially possible, but do you know what that means? It probably means hiring two people a week, it probably means doing three acquisitions, which are going to be tough. And of course, the smaller they are, the quicker they grow because if you're 100,000 turnover this year, you could get to 100,000 next year, so you could double in a year but when you get to 750 million it's quite hard to go from 1.5 to 2 the following year. Growth rates do tend to slow down as the agencies get bigger. Jenny 15:09Interesting, and just selfish question really, at what revenue point does the agency typically get to, before they start hiring account managers? Peter 15:19That's a really, really good question, I think from the organisational structures that Spencer and I kind of use during our processes, and knowing the metrics that we know now about agency growth, it's probably around the 5 to 600,000 revenue mark. Typically, before that kind of structure kind of works, before that, it's probably the founders doing that role. Or they kind of have a hybrid AMPM roles that we kind of call them, where someone in the business is kind of project managing, or they're account managing, and/or they're running the schedule and the resource requirements as well. But at that kind of 50/60,000 a month in revenue mark, you can start to then separate out some of these roles. And if you've got someone in a role, who is an AMPM, and we have again had this conversation this week, where the first question I ask is, 'What do they like doing?' 'Oh they love chatting to clients are really gregarious, are outgoing, they have lots of ideas, their attention to detail could be better'. And I'm a bit like. they're an AM, they are not a project manager. When equally on the other side of the coin, we've got someone in an AMPM role, they kind of hide from the phone, but they're really good at getting the Gantt charts out and stuff, well that they're a PM. So it's then splitting out those two things and playing really to everybody's strengths then in the business. At that point in time, the growth journey is pretty hard because really, you need you do need those two roles but actually, it's quite difficult to afford them both at the same time You kind of have to decide, look at the people you've got, who have I got, play to their strengths. And then try and grow to a point where you can take the vacancy on that you need. Jenny 16:58Great advice. And I'm glad you brought this up, actually, because it's one of these ongoing things that even though I deal with account managers with the title of big agencies of 5 million plus, they still have that hybrid role. So just in terms of I mean you've all kind of already said it, but can you give me your views on the upsides and downsides of continuing to have a hybrid account manager/PM role? Peter 17:25Yes, I think I mean, for me, as I kind of sort of alluded to, I think they are,
they're probably two different personality types. So if you've got someone in a hybrid role, and let's assume it's 50/50 AMPM, that probably means that at least half the time they're doing something they're not that comfortable with on the whole. There are some people who can do these roles. I mean, I could probably account manager and project manage. But if you said to me I had a gun to my head, I'd probably be the person who would rather stay in the office of project manager and not speak to clients and stuff. So deep down everybody's kind of one or the other. And I think that, again, it's about playing to the strengths.
So the other thing is that, in my view, you've got account managers who are typically the sort of people who say 'Yes' to a client. 'Yes, yes, yes, we can do this'. And the project manager is kind of typically the one that doesn't, not in a negative way they say no, but they'll say, it's going to cost more money or take more time and they're not as quick to say yes. So if you've got a hybrid role, someone who's more of a PM, then you might find that your accounts aren't growing as quickly as they could do. But everything that you do get is delivered nicely. So you end up with longevity of the client, but perhaps a slow growing account. On the other side of the coin, you might have AM/PM role that somebody is really good at growing the accounts but because the PM side is not as formalised as it would be with a full time PM, the delivery is not as good. So they end up perhaps having a lower retention rate and a shorter lifetime of client. So that's probably, does that sounds too obvious? Jenny 19:03No, it doesn't. Honestly, honestly, it's not obvious to a lot of people. And I still have the same conversation. So I'm really glad that you've clarified it like that, and talked about the upsides and the downsides, I think that's well put. Peter 19:20Larger agencies, they've obviously been established a long time, they're huge beasts in terms of the staff numbers that they've got and they've probably got long standing clients that are embedded in a certain way of working with large agencies and it would be difficult for them to turn the ship around. I mean, we're lucky in that the agencies that we work with, they're probably 15 to 50 staff. So when you go in with fresh ideas for process changes, or improvements or structural changes, they're actually relatively easy to do. I mean, they don't happen overnight. But within three to six months, you could change an organisational structure, put in new processes, etc. and they work. Whereas I look at some of the bigger agencies and think that'll take years, if it happens at all. Jenny 20:12I agree. Just out of interest, just while you were talking I was thinking, do you cover every type of agency? Because obviously, there's multiple types of agencies with different specialisations? Have you probably covered most of them? Peter 20:26Yes, I would say so. That's a question that we often get from prospective clients as well, when they say, you probably haven't worked with an agency like us before. And on the face of it I'm saying, well enlightened me, maybe not. And then we find that we have, typically. So yes, I mean it used to be, our agency was a design and build business. And we did a little bit of performance marketing as well, in a separate business that we had. And in the early days I would say we had similar businesses gravitate towards us, oh you have this type of business delivering the services, can you help us? But the books I think have really helped people understand that actually, we've got breadth and depth in all sorts of agencies. And I look at my client portfolio now there's a real mixed bag in there - there's pay search, natural search, the design and build, there's creative branding, there's copywriting, there's pure software development. So from everything really. Jenny 21:27Principles, same principles apply. So then you start working with an agency founder, what are some of the biggest challenges that they always tell you they have when it comes to wanting to grow? Peter 21:39Oh, that's a really, really good one. I suppose it comes to three or four areas. It's normally not enough leads, or we're not winning enough pitches, it's delivery, the structure of the team, that kind of thing, finding and retaining people and then, my finances aren't where I thought they would be. Jenny 22:03Is there a fifth? Peter 22:05Hi. Jenny 22:08We can edit it! Peter 22:14Mindset is the other one, as well, I would say. And I say this as sympathetically as possible, it's not easy running any business. And I think agencies are particularly hard. And if you're a, and I say this more about agencies where there's only one founder, and they're the sole shareholder and director, they don't have business partners to share the stresses and strains with and they end up having every problem come to them. I work with some clients for their three or four founders. And one person is sort of managing people and culture, another one is new business and one's Client Services, and one's really strong in delivery, and/or finance. And it kind of sort of works across the four or five of them that the load is shared, whereas, I can think of one person in particular, I've had a call with this week, where they see it on all sides of everything - people challenges, cash challenges, lead generation, clients not happy, etc, etc. I do kind of sympathise with that. And so consequently, sometimes that leads to a bit of a slightly beaten up kind of mentality in a kind of negative mindset, where it's all a bit hard, isn't it and stressful? So I do empathise with that. And so what we have to find is, if we were to help you take some of that crap away, is there is there a positive mindset person beneath that who can break through with some support and really grow the agency. So that's probably the biggest challenge because I think that if you aren't able to, to kind of sit back and say, well I am a positive person, like we can change things and can improve things, then it's probably not worth working with somebody like us, because we'll be making suggestions and observations and you've got to be open minded enough to receive and digests and process them, and then potentially put them in place to get to get the value from us. Jenny 24:06And it's probably a bit of a self fulfilling prophecy, isn't it because the more depressed you get, or the more kind of negative you get, it's going to emanate across your team, and they're probably going to pick up on, then it's going to be all team culture problems. Peter 24:18One of the biggest lessons Spencer gave me when we were at Blue Halo was, because I was very young in my role I was 25 or 26 when I joined Blue Halo, I was the FD by 27, we sold the business when I was 29. And it was my first FD role in a business and I used to wear the stresses and strains, I'm the sort of person you can read me like a book when you look at me, you know when I'm happy, sad, upset, stressed whatever. He said to me, you just got to remember you're in a goldfish bowl. Everyone's looking at you. And it's the same with agency founders, if you're wearing all that stress and again, so to make the point I do empathise, life is stressful, but you've got to find a way to have an outlet for dealing with that, whether either a friend or mentor or some way of getting all this stuff off your chest because you end up carrying it and as you say, it then rubs off on the team. And one of the things that I had said to me when I was FD at Blue Halo, I was a bit sort of stress going into the sales process and spent a bit of time, a lot of time in the office. I slept in the office some evenings because the process was was crazy. And someone either said, well we're either selling or going bust - look at Pete. Jenny 25:37Well, you're the money man. So people do look at you and think... Peter 25:41It all applies when you look at agency founders. You can't be positive at all costs, if there's problems to deal with, deal with them, we can't gloss over them. But at the same time, you've got to drive the vision through and be positive and set that for the rest of the team to follow. Jenny 26:02When we were talking about problems and challenges that they come come to you with, you mentioned, the first thing you mentioned was leads, like lack of leads. Once you've started working with them, you scratch the surface, do you start to uncover why is it that? Is it their lack of prospecting? Is it they've got the positioning wrong? What's the reason typically that they don't have the lead? Peter 26:26I'll tell you why I laughed when I said it first, it'll make more sense. But when you said what are the things they come to us, the growth in leads generally it's more more clients paying more money, etc. The reason I laugh is right now as we're recording this, most people are fairly busy, like they wouldn't be able to take on more leads! But over the last 10 years, it's typically been leads. I think the most common thing that I find when we go into businesses, and remember they're kind of above a certain size-sort of 15/20 staff, is they have no internal marketing going on. So they have a founder, who perhaps is more focused on business development as a new business, and they might have some internal creative, but that person, or we might have a new business person in the agency, they're kind of expected to bring in leads and take them all the way through this. And what they don't really realise is that sales and marketing are kind of two separate functions. So for me, the marketing function is someone who creates event content activity to drive leads, which a new business or sales team can follow up and drive through and close into an opportunity. Again, they're two separate skill sets. So if people say I haven't got enough leads. We'll then say, well where's the marketing plan? Agencies are the worst people for doing their own marketing as they're working on all their clients stuff all the time. So that's probably the biggest thing. Sometimes the proposition isn't 100% clear -it's often we look at businesses, and we look under the bonnet and we say, well you're doing this, but from the outside it looks like you're doing something else, or you're doing something really well that you're not telling people about. Or they tend to be, and this goes back to kind of the personality types in the business, but either really good at winning new business, but a bit crap at keeping it because their delivery processes are a bit shoddy, or they're so good at looking after and retaining clients, that they don't often find the time to go out and think to find new business, because they probably think we don't really need that much new business because we keep our clients so happy. But it's about finding a happy medium, which is having enough new business coming in to keep the team excited and motivated. And also, to some of those ideas to rub off on the existing clients but not so much that the business is on fire, or enough where actually, you don't do any new business stuff and you rely on your existing clients and over 3/4/5 year period, they will all go because the average life cycle of the client, you probably know the exact numbers, but I reckons it's two to three years, probably on average, at best. I was going to say something similar so I'm glad we're aligned. And you brought up a really interesting point that I hadn't really considered, the boredom factor for the team if you've just got the same clients and you're not refreshing the portfolio. So that's a super relevant point. And we've mentioned a little bit about mindset. Where do you see that the most agency owners or leaders get in their own way? Wow, that's a really good question, getting in their own way. I think it's the not thinking big enough. I think sometimes it's the, when we said before about what we do, we first go in is creating the plan and showing them that actually they can achieve something, bigger, better, not necessarily bigger or better, some people don't want that. But they can achieve what they set out to do. Sometimes they get too internally focused and too wrapped up in what's going on in the business. Perhaps they're too wrapped up with a particular client, or they're still working in the business, or some of them, a lot of them still do the finances. The amount of times I've gone into relatively big agencies and I go into a board meeting and I say, right, well, let's look at the finances for last month. Can I meet the finance manager is he going to come in present? And it's, no, no we do them, here's all our spreadsheets? So it's a bit like okay, so how's new business? Oh I haven't really got time for new business at the moment. Yes, exactly. Too inwardly focused, I think sometimes. And again, this is relevant for a call I had this morning actually, we're working with one person at the moment, who's grown quite quickly and for whatever reason, hasn't necessarily grown the infrastructure around him, I was going to say at the right pace, but at all. So this person does the finances, do the marketing, they do client services, they do project manager, they literally do everything, in about a million in revenues, and it's killing them. So the first thing we have to come in and say is right, you need a finance person, a marketing person, you need a project manager and account manager. So all that stuff's going on at the time, but he's in a space running his agency at the moment where it's quite an exciting space and there's lots of leads coming in but he's been too internally focused on the clients and delivery, to think about what his business should look like. Jenny 30:48Too busy doing the spreadsheets! Peter 30:49Do you find that many people don't want to let go of the reins? I mean, is that a problem to actually employ someone else to take over? Yes and let's be honest, I've been in a situation myself it's scary, okay, so you get to a place where you think, well I'm pretty comfortable with what I do, I've got some clients over here, we're happy, everything's ticking along and then you get to a place where a few more things happen and it just gets out of control. And it's scary to hand over. Now imagine, you're an agency owner at £3/400,000 at the moment, you're probably running all of your clients, and they all know you really, really well. You probably win most of the pitches you go to because you're a lovely person, but you don't pitch that often because you're busy with the clients. And then someone like us comes in and says, look, you need to start delegating some of this stuff away, you need a finance person to come in. And the first thing they say is, well, how do I know if I'm gonna trust them? And it's like, well you've heard difficult stories about this stuff, but there' systems and processes we can put in. Or aren't all finance people just a bit boring, and won't be a culture fit they say? Well, no, but we can find someone who's a culture fit. And it's the same if they need to hand over the reins of their clients to an account manager, I get it. It's not easy to do that. But sometimes you have to kind of trust the process, take a leap of faith, you don't have to abdicate all responsibility in one go with everything. If you're in a situation where you are hiring your first account manager or project manager and you're handing over, then do it at the right pace. Build the confidence between you because the person coming in doesn't want to screw up either because they're going to lose their job. Well, they're going to feel like they're going to lose their job. So if you got 10 clients that land them all on them on day one and say see you later or go well here's two or three you can help with now, to get up to speed with those and make it a gradual process, like any change isn't it's better to be done over a slightly longer period of time? And get it right, rather than trying to rush it through and mess it up. Jenny 33:45Yes, everything you were saying actually resonates because I've been looking at hiring people to help me with the training delivery. And I feel exactly the same. It's a trust thing. Lots of people probably go through the same thing don't they? Let's turn our attention to the book because as we said at the beginning, it's been so valuable, everyone's talking about it. Have you got a picture of it? That's the one. Honestly it was like my newsfeed was just with all of these pictures of the book. I mean huge congratulations, because you've just launched the second edition. So a couple of questions really, first of all, why did you write it? And why did you update it basically? Sorry, I just struggled to get that one out. Peter 34:42So the reason, I can't actually remember the reason why we wrote it in the first place. And if you read the first edition of the book, we actually started writing in about 2012. I think Spencer and I were thinking initially that, we used to go on lots of long car journeys and on the way back, we'd have a writer ring us and say, Okay, you've asked me to call you tonight to talk about cash flow, tax planning, blah, blah, blah, I'll just talk. And this person would write as I was driving, it was a way to kill the time. We were going to use it to the content for LinkedIn and that kind of stuff and this went on for about a year, I suppose. And it was about five or six years ago, no, maybe five years ago, we said we must have enough material written somewhere, this could be a book. They found the copy in an old Google Drive and an old email address, it's still there. There's like 170 pages of content. And we're like, yes, there's a book here, this would be really good to get out and finish. So you know, the idea of the book, I suppose for anybody that writes a book really is to kind of share your knowledge that you have an experience that you have with as many people as possible. I think for us it's, I often joke, perhaps I shouldn't joke about these things sometimes because I've got a dry sense of humour, but the book is £20, there's definitely more than £20 worth of value in there. And after paying Jeff Bezos to print it and market it for Spencer us, Spencer and I get £1 each. Jenny 36:14Is that all? Peter 36:15Oh, yes. So we're helping Jeff with his rocket business at the moment. And that's the way we fund that. It hasn't been a way for us to make money. It's not about that. But it is a great way for people to have a first touch point of who are Spencer and Pete, what do they do? What do they know? And the the first book, I think, we're proud of it, pretty pleased with it, but there are a few things that happened over the last 12/18 months, we thought we probably should update the book now, because some of the things aren't as relevant. In the first edition of the book, we had a chapter in there about how it was perhaps important to have a London presence for international clients, everyone knows where London is. And if you're slightly more regional, as we were as an agency, that would be useful, but the pandemic put a torpedo into that. So we thought we'll update the book. So there we are booked out, I think 10/12 days early part of this year, won't take too long to update the book. Once you get into it it ends up being a total rewrite, because you suddenly start reading what you've written and thinking, I wish I'd said this as well or added this. And we've learned this since we last wrote the book. So it's now nearly 50 or 60%, longer than it was before. And now I'm really, really, really pleased with it. I think I found the first or was it both, well, perhaps Spencer more than me, Spencer found it difficult doing the first edition of the book I did as well to a certain extent, but the second time I really enjoyed it. I can't really put a finger on why that was. I think one of the reasons is perhaps that there wasn't so much pressure for us to kind of do it in order. I remember writing the last one feeling a bit like we've finished chapter one, let's move to chapter two and chapter three. And this one was a bit like - look, we've got a week this week, we probably need to do these four chapters. Where do we want to start today? What do we feel like talking about? So when you go into it in the right mindset of something had happened the day before that triggers a thought process that you just think, well, I'm going to get that down on paper. And so yes, so just it just felt much better this time. We had more support around us as well this time because having been through it before, you learn that even with two proof-readers last time, there were still loads of typos. And anyone with a copywriting business was messaging us saying is really bad, it's littered, it was, but this time we were like okay, we're going get you know, proper typesetting done properly, copy editing done, proof-readers etc, etc. So that was learning the lessons from the first time because normally you just think how hard it can it be? Just going to upload it to Amazon and they'll put a cover on it and it will sell! Jenny 39:07Absolutely, I mean, you've shared some really good tips actually. And I laugh, which I think is genius that you got someone to phone you and you just spoke to them and they transcribed. I mean, what a brilliant idea. anyone listening to this that's thinking about writing a book, that's a fantastic leverage of time, isn't it? Peter 39:25Absolutely. Yes. I mean for us, it was dead time. I mean, in the early days, we had clients in Liverpool, Manchester, Birmingham, and yes sometimes we're on the train but sometimes it was just easier to drive and then you end up with that time after the meeting where you think I've got a four hour journey home, there's only so much Ken Bruce you can listen to on the radio or whatever, what am I going to do? And this was a great way to utilise the time and we've worked with a couple of clients recently who said look, I think there's a book in me, I've got some really good content on that and they found it hard, but over the last eighteen months because we don't necessarily have that time anymore, if that makes sense, is we kind of got the impression that we've got more time but actually, I think we've got less. Because the time we have before, the driving somewhere and the driving back used to be for me, bit of wind downtime, I do some phone calls on the way there listen to a bit of music on the way back. And now that time is taken up with no we're busy, there's more client work, we're doing writing content, podcasts, etc. So finding your way to do that is challenging, but it can be done. Jenny 40:31What do people tell you is the most kind of useful part of the book? Do they tell you that? Peter 40:39I don't know. I think to me, they might say, well, the cash flow bit is really good. Jenny 40:42Because it's you? Peter 40:44They're saying, hopefully, your marketing stuffs really good. I think typically we get the sort of the average response we get is there's some really good stuff littered through it. A lot of it I already knew. But it was a good refresher, or validation of what I'm already doing. Plus I've picked up three or four tips. Occasionally we'll get someone who'll say I'm on my second copy, because I thumbed through the last one so much, there were so many notes and post it notes that I've had to buy another one. So that's nice. Nice to hear. Yes. And then occasionally we get the two star review. Which really wounds though, it's really upsetting, I really think it personally, but I've learned not. Jenny 41:31You've got haven't you because there's always going to be one, there's always going to be a handful of people that you can't appeal to everyone can you? Peter 41:37Exactly, we've sold 7500 copies in three years now so it'd be amazing if they all found it incredible wouldn't it? Jenny 41:45It would be a bit suspect if there wasn't any negativity, let's put it like that. Pete, could you spend a few minutes talking about how you help agencies sell, because there might be agency leaders listening to this that think, that's actually something that I want to do. Can you just give us a few highlights on how you typically help agencies because you mentioned how many you'd helped just over the last year alone? Peter 42:10To start the conversation, my process is probably a little bit unusual, because
most of the people I work with, I form strong relationships with them, because we're going through what is a stressful time and end up giving a crap about them, their families and their businesses. So the feedback I often get from my M&A work that I do is, Pete was really there for me, like it's such a stressful process, I'd never done it before, I hadn't realised that there was going be so much pressure or information needed. And I've done it a few times before. So for me, it's water off a duck's back. I can go in, say to the client, because most of them look, even if you're an experienced agency owner, if you've sold a business before, then you're definitely in the minority. Nobody normally has done this process before. And you get to hear anecdotal stories from other people. And normally they're, oh, yeah, it's really easy and I made loads of money, and I walked off into distance, that's normally bollocks. Because the reality is, it's normally stressful, difficult. And you end up feeling a bit deflated at the end of the process, even though you've got a big cheque, there's no, I've never celebrated a deal. Because everyone's too knackered at the end. Just go oh great. So I've set the expectation of people, it's going to be hard. But there's a process we're going to go through, and I'm going to be here to support you.
So it depends on where I am in the process. Sometimes I've been wheeled in at the negotiation phase. Sometimes it's a due diligence phase. But a lot of the time it's right at the beginning, where people say, we're sort of getting to the size now where we're thinking about about selling the agency. First of all, what's it worth? So that's the first kind of question. Second of all is, what do I need to do now to maximise the value? Protect the team is something that often comes up because I think if you're a founder listening to this, you're probably thinking, well yes, I want to maximise the value, but you're also probably thinking you do give a shit about your team and you want to look after them. And if you're an employee listening to this, you're probably thinking, well, surely the agency owners don't really care. They've sold, they've got their yacht, the Ferrari, whatever, that's the impression they get but most of the transactions that I go into, the first thing people say is, I want to make sure my team is looked after, there has to be a cultural fit. These people must be protected in the business because they're on short notice periods, I need to make sure there are longer notice periods, that kind of stuff. So it's coming up with all those things and then taking them through that kind of end to end process. So that was a bit long and rambly wasn't it but that's kind of... Jenny 44:45No not at all, you had me hooked. Peter 44:46Yes, I mean, the two transactions before Christmas are two bigger ones. And one of them, I met him randomly I mean he only lives about 50 miles from me, but I met him at South by Southwest one year and we got chatting, became good friends, play golf with him occasionally and he rang me September, October last year and said I'm thinking about selling, I've had three or four people, sniffing around isn't the right kind of phrase, but interested in in the agency, can you help me? When I said yes, okay, so I helped with the negotiation, helped him with the deal structure, helped him with all the legals, helped him get the due diligence across and I suppose the biggest win him there, and this is quite a complicated process to kind of explain on a podcast, but the profit in your accounts isn't normally the profit you sell for, there are adjustments that have to be made to that profit to make it presentable to the acquirer. And if he's listening, he will know exactly who he is. But he had his partner on the payroll, he put a few foreign holiday trips, snuck a few flights through, this kind of stuff and I said, you need to tell the other side this because you've deliberately suppressed your profits this year, because you've put some personal expenses through, which aren't to be recurring next year. And he said, Oh, isn't this goinglook really bad? I'm like, Well, no, you've paid tax on it all, it's fine. This is customary practice for a business owner in the UK, this is what people do. So readjusted the profits, we found about £120,000 worth of costs that were non recurring, which added 1.1 million to the value of his agency. So he loves me now. Jenny 44:49Yes I can imagine! Peter 45:49Yes, so we're still really good friends, surprise, surprise! And the other business I sold was people I've worked with for 10 years, and the real realisation of their dreams, the business that when I left Blue Halo, I set up my own accounting business. And this is the bit between when I left there and joined Cactus, and they were one of my first clients. And one of the guys that ran that business worked with me at Blue Halo. And their turnover when I joined was about 100,000 a year. And we sold it for 7 million. I've been on that journey with them for 10 years as their firstly their accountant, I used to go in once a month and do their payroll and their VAT returns and then as a CFO. So that one is, they're all important, but that one was super important to me, because three people that I worked with for a long time, I've got to take this seriously, I've got to deliver for these guys. Jenny 47:27That's phenomenal growth trajectory from 100,000. Lovely that you were part of the whole journey. What was their secret to successfully kind of consistently growing? Peter 47:40Really good question, I think. We had the 1/3/5 and 7 year plan with them. And there were years where they're slightly ahead in years where they were slightly behind, but they stayed the course, the plan. There were a couple of times we had to make course corrections in terms of what we were doing with regards to a new business approach, or that the overhead crept up in comparison to where the business growth was. But predominantly, it's sticking to the plan. And we actually looked at this about six months before the business sold, we said well, let's get that old document out that we used to refer to jokingly as the 1/3/5/7 year plan, I think we must have been about one or £200,000 out at the end of seven years versus where we thought we'd be in terms of revenue. Jenny 48:29Wow. Peter 48:31That's probably luck. Jenny 48:35But having a plan and having people externally looking at you and and supporting you and holding you accountable, I think the proof is in the pudding there. And I bet you there's agency owners listening to this thinking, wow, I've been struggling to make any traction with my growth and maybe it's now time to invest in some external help to kind of help me keep going. Peter 49:01It's the accountability? That's often, we often ask people when we first work with them, how do you want us to be because some people want drill sergeants, we've had feedback before where you haven't bollocked us enough and we're like well, we've only known you four months and you can't just go straight in. And some people find our approach a bit too sharp sometimes so it's just, we had feedback once from a client, I think we just signed them off. We'd met them for lunch. They done the dd on us, they'd appointed us and then one of them rang and said we just need to give you this feedback. He said due to the way I was brought up I need to take the feedback in a certain way. And that was super but he'd obviously had some challenges around parenting, that kind of stuff when he was younger. I was like I really appreciated that phone call because we, not knowing that the relationship with probably have ended fairly early on because the other three were just saying, Give me the feedback, we just want to know what, we want to crack on and just tell us how it is. And the other one needed to hear it in a different way. So it's, finding out those things sometimes is super useful as well. Jenny 50:18Fair enough, isn't it, it's that open communication? So, Pete, I'm conscious of your time so I just wanted to squeeze in a couple more questions. I want to kind of ask you your opinion on kind of the future of agency growth. Where do you see the opportunities for independent agencies in the future? And but do you see anything changing? Peter 50:41That's a really, really good question.
I mean, terms of the opportunities for independent agencies, I think the biggest opportunity they have is that they're all, and I say this with the greatest respect, in comparison to the network agencies, are all relatively small and nimble. And they can pivot into new service lines, new geographies, new sectors quite easily. So that's their big advantage. The thing that everybody needs to watch out for is, finding talent. Right now, it's super, I mean, it's never been that easy but I think it's harder than ever at the moment. Everybody's busy, nobody's got enough staff, it's difficult to find people out there on the market. So talent attraction and retention is probably going to be the number one challenge that independent agencies face over the next, I'm going to say five years
because I think the situation we're in now, in terms of how much work there is out there, and how few people are asked to do it in the UK, to solve the problem we're in today, you probably would have needed to plan for it five years ago. To start pushing younger people into the sector, getting trained up on to apprenticeship programmes or into the right courses on university to come out the other side of that with two or three years experience, that should have happened five years ago, and it didn't. So I think it's going to take a little bit of time to unravel this. And I don't know, that's quite a big statement, isn't it? Jenny 52:09Well, I'm shocked that you conceive, you think it's going to carry on for five years. I mean, that's really valuable for anyone to know. Peter 52:17I would be happy to be proved wrong, because it's going to make my life easier as a non exec for five years if it doesn't happen. But I think the people that are really and I say really focusing on retention and attraction, really doing it, like I work with a client this week, who's really doing it. He's got someone in to look at his people and culture and do a bit of an audit. And they've said, you need to sharpen up here, here and here and actually go beyond what I'm saying. He's doing that in his agency, it just seems like, what's the, and he looked, and it's always horses for course isn't it in terms of benefits, he's got a slightly more mature team, and that they've maybe got families, or children at university and he's going what's important to these people? More enhanced employer pension contributions, the health care side, death in service policies, some of these things don't sound very exciting. What this owner is saying to his team is, I care about you and your family. And if anything happens to you, we're going to look after you. And that's important to those people. So it's just, using that as an example of his younger people, what's important to them? Well it's providing them a place where they can learn, and get more experience and feel supported in that way. And you know, showing them a career progression path that means that at some point, they may be able to have their own homes, and there's opportunity for them if they want to, to run teams of people if they want that kind of experiences, providing those opportunities. So those are the big challenges for me. It's like you jokingly said earlier, what are the four or five things, sorry I was joking about it wasn't I? Like the four or five things, I laugh when I said lead generation, because when I look at the 10 years period that I've been doing this as a non exec, that's been the number one thing, but in the last 10 weeks, it's been people. So I don't think that's going to change. I really don't. I think it's going to be tough out there. Jenny 54:16Well, so the agencies that win, really are going to look after their own people, and in terms of attracting new people to their team, any tips or anything that you've seen that's working really well? Peter 54:28Well, I think that's a whole podcast in itself, I have to say, but it comes down to one word, which is culture. The ones with the best culture are the ones that retain and attract the best talent. And to steal a phrase or heard from someone I saw somewhere, I'd love to be able to credit them, but culture is not the Friday free lunch or the table tennis table in the office. It's how people act with each other and treat each other. You know that kind of... I've got one client where they've grown about 3 or 400% in four or five years. But the culture hasn't only diminished it's improved over that four or five years. They're mostly remote now, as a business, they've got an office that seats 60 people, they probably have 12 to 15 people in a day on average, they accept that, that's fine. But they have events that bring the team together. And they've adapted in a way to support everybody in the business. So those things have become so important over the last year. The businesses that sort of seem to be struggling are the ones that haven't managed to, they've adapted from the technology perspective, but not from the cultural perspective of keeping people together. I suppose I think that's what agencies are normally about. They're normally very collaborative, people based businesses. And I mean, there are some teams that can be siloed with headphones on perhaps if you're a developer, that's very easy to be that way. But you know, the other end of that business, someone's doing some kind of what are called discovery sessions at the beginning, and I've seen those things happening, and it's 5,6,7 people in a room just chucking ideas about and it's very difficult to do that remotely. And or, if you have a great culture, the people that do successfully, obviously get on very well together and work well with each other because they feel supported, trusted, etc. Jenny 56:34it's great, great advice. And I know, having worked in several agencies myself throughout my life, you get these toxic environments of agencies where it's a sweatshop or there's bitchiness or you don't feel supported. So actually now, the power is in the team, isn't it, where they choose to be. So you've got to make it attractive enough and comfortable enough to want to thrive. Peter 56:59Both situations arise from, well they come from the top, if I'm being really blunt, or panic recruiting is another one where people don't build up the pipeline of talent and culture and they don't end up recruiting against their values. And they end up with one or two, well, I hate to use the phrase, but can't think of a better one, bad apples turning up. It's like, the way that I imagine it is, if you do a good job, your client will tell one person but when you do a bad job, they'll tell 10. And it's a bit like that with team members. It's one bad team member with not the right attitude, can affect 10 other people to the point where they're unhappy. Jenny 57:41So true. Pete, this has been fantastic. You've shared so much value, so many tips, I'm sure people have been taking notes. Is there anything that we haven't covered or I haven't asked you? Or anything that you think would be valuable to anyone listening? Peter 57:58God, you really put me on the spot. No. Sorry, mind's gone blank. Jenny 58:08Don't worry. That was totally putting you on the spot badly there. We've covered most of the things I wanted to cover. So thank you, I just want to say a huge thank you. I'm just trying to squeeze you dry as I've got a couple of minutes. Peter 58:20I love being interviewed. Jenny 58:22Do you? Peter 58:22When I do my own podcast, I find it really, really difficult because I'm trying to listen to what they're saying and absorb it. And you're probably finding the same thing here because it doesn't always go to plan. You've got your questions. And then if they say something brilliant and you have to kind of give them a space to do it, kind of listen to Spencer, what he's doing as well. I sort of feel a little bit like, well I have felt like a rabbit in the headlights with it a little bit. I'm getting more comfortable with doing them. But when I've been interviewed, I've just found it, I just come and talk. Someone's interested! Brilliant! Jenny 59:01I feel a bit the same, honestly. And like you said, it takes practice, doesn't it? And I haven't even got started really? I've done 46 episodes now. And do you know what, I've had some good feedback, which I'm sure you have as well but I also want the bad feedback as well, the critical, the constructive feedback. And someone said to me, and I'll give him a shout out, maybe I shouldn't, no I won't say his name. I said, Tell me what you really think and he said, sometimes you come across as a bit insincere. Like because after people give you an answer, I say, Oh, that's fantastic. That's great. And I'm a little bit over the top. But you know what, I thanked them Pete because no one is likely to tell me that. And if I don't know I can't get better. And you know, when I'm listening to a podcast, I just want the value, the tips, the golden nuggets. I don't like the fluff and I like to hear the guests. So I try to do what I like. How have you found sort of interviewing people? Peter 1:00:05Well for my for my side of the coin we've done probably done 50 podcasts as Agencynomics but because of the M&A stuff that was happening late last year I was missing a few of them so I've probably been on about 20 of them so I sort of don't feel match fit sometimes when I get to them. But the last one we did, I remember Spencer saying before he just said it'd be good if you lead this one today. And I was like okay, this is about an hour before, so I'm kind of thrown into it, pull some questions together and luckily I knew the guests really really well so that works okay. And I think we had a great conversation and the feedback, and this is the whole thing about what I said about public speaking earlier is that little wins, the confidence building stuff and there was some good feedback online because it was a LinkedIn live thing you can see the comments and then I interviewed a finance manager for this, he was a client this person, about a week later. And the finance manager said I just want to say first of all, I've bought the book. Well okay, 10 brownie points, but the second of all, I was super excited about speaking to you, I've gone through the process, I'm really excited about joining this business but now I've heard the podcast the other day with you Spencer and this person, the fact you three are the board of this business and your approach to looking after people, I'm desperate to work here. Jenny 1:01:34Wow. Peter 1:01:35Okay, I really love that. And then the same client then emailed about another week later and said Oh, one of my clients has just watched it and loved it and so that's the bit that I love. I mean, sometimes they go wrong. I mean at the beginning of that one, for example, have you ever done the LinkedIn live? Jenny 1:01:54I haven't no. I've signed up for it ages ago, didn't do it. Peter 1:01:58The screen at the beginning, the music playing and it counts down 30 down to you're live. And then I was there with the guest and it went live and then Spencer wasn't there anymore! So I was like, Oh, hi, Episode 53 I think. And then Spencer appeared and just went, Oh, sorry, I went to close down some windows and just turn zoom off. Well, just these things happen, Caitlin can cut it out afterwards, it was all fine. But it sort of teaches you to be just, you've got to care about these things and how you come across, but not be too uptight about it. Jenny 1:02:45I think audio is quite intimate, isn't it? I listen to people when I'm on my walk and you actually feel like you know them because you're hearing their voice. You're hearing their intonation what they say. So it doesn't surprise me that they said that to you. Because they could see that the chemistry that you have as the whole Cactus team. And it's kind of the place you want to be, I feel the same way I want to be part of it. So it's lovely. It's a great, great channel for you. Peter 1:03:10Yes, yes. Jenny 1:03:11So listen, Pete I just want to say a huge thank you, that has been fantastic. So relaxed, and so many knowledge bombs. I thank you so much. If someone's listening to this, and they think I love what Pete's talked about, the Mastermind, working with him, as the team, I want to sell or I want to buy, anything like that. Where is the best place for people to get hold of you? Peter 1:03:35I would say LinkedIn is probably the best place. I'm on every day. We get lots of messages and stuff all the time. Peter Hoole Agency, CFO, focusing on M&A and growth - I think is my tagline on there. To be fair, there aren't many P Hoole's on LinkedIn. So if it was John Smith, then I'd be struggling. Jenny 1:03:58I'll make sure that I put the link in the show notes anyway. So Pete, thank you so much. This has been brilliant. Peter 1:04:04Thank you.
