Finance

What leads to business success? If you’ve ever gone back to your high school reunion, you’ve probably seen some surprise success stories and scratched your head while asking the same question. For small marketing firms, success typically follows one of two paths.

The first step toward an improved business environment is stepping out of denial with a deep sigh of relief as you begin to use new found energy to fix the problems instead of mask them. We all have ways of talking about specific situations that make them a bit more palatable.

Many firms began facing a downturn early in 2001. Though it was immediately easier for them to find qualified employees with the tech implosion, their clients were making more conservative spending decisions. This affected design firms the worst, and public relations firms the least. (Advertising firms seemed to be between the two.) This position paper was written during that time, hoping that the lessons could be memorialized.

The reason marketing firms fail is not creativity, location, or the marketplace. It’s management ability. Your firm is a direct reflection of you, and you must take responsibility for it. Here are the most common dozen mistakes we see marketing firms make. If you are managing a firm now, you’ll identify immediately. If you are an employee, this might give you some context for the decisions you may not agree with. If you are considering starting a company, this will help you learn from the mistakes of others.

Embezzling is not a fun topic. Just the notion that somebody might be cheating—or will do so in the future—is not a comforting thing to consider. It falls in the same category as drafting a prenuptial agreement, filling out your living will before surgery, or making your parents sign a note before loaning them money.

Should you bonus employees at the end of the year? The short answer is “probably not.” We have seen little benefit from this procedure. Here’s why:

Some decisions are simple and insignificant, like deciding where your desk should be in the big corner office. Others are difficult, but less significant, like what title to give your “new business” person. Others are watershed decisions because they have far reaching implications.

While running your firm looks a lot like the reverse peeling of an onion, building layer after layer, at some point you need to quit building on the past and start constructing an entirely new firm. That process of cutting ties with the past is essential…and terrifying. It’s what happens when a child moves out, a bird gets kicked out of a nest, or a student pilot takes off on that first solo flight. It’s probably more likely that you’d associate moments of terror with starting your firm, but it actually requires far more courage to move beyond that initial founding.

Need new computers? Office equipment? A better car? The choices are bewildering. Deciding which model to purchase is tough enough. (Do I really need it? Will it pay for itself?) But deciding how to pay for it is even tougher.

Before making a decision, you need objective advice. But you won’t get it from a bank or a leasing company, and certainly not from a sales person. They are more interested in making the purchase easy than helping you make the right choice. The people making decisions about whether or not to grant you credit are not necessarily your friends.

The heady days of automatic success are long gone, and since late 2001, marketing firms we run across have achieved success the old fashioned way: they’ve earned it. I would even argue that the leanness many firms have experienced has been good for them.

Why, you say? Sometimes it’s only the inevitability of your situation that provides the courage to make those tough choices. When you later look back on the decisions you are making now, you might realize that this period was a watershed that set you on a path of great prosperity. The vast majority of our clients have found that to be the case.