It’s a homely image. After all baking is a lovely thing. Everyone loves baking. It also makes some sort of sense. A touch obvious maybe.
Less obvious is the connection to my favourite subject, Agency finances.
I always thought there was a kernel of an idea there, if you’ll excuse the pun, that could illustrate the important point of maximising your profits whatever the size and shape of your Agency.
This became a lot clearer during a meeting I had recently with an Agency owner. It was a new business meeting so I was on my best behavior and trying to impress. I needed something more than my ongoing obsession to make sure everyone knows the importance of the compensation to revenue ratio.
They described their problems with their clients who were price driven and paid a flat project fee. There were substantial 3rd party elements – both freelancers and suppliers.
Thrown into this difficult mix were competitors who would undercut their prices (and suffer a loss if necessary) for the promise of future, more profitable, work.
My proposed, improvised, solution was to use their numbers (I always want to use numbers) to figure out their strengths. How much of their work went out to freelancers. Was there enough to hire in more cheaply? For skills they could not or did not want to bring in-house could they get a better deal by offering volume? Could they approach their clients with a sliding scale volume discount scheme that would help them secure the savings they needed whilst getting the better service from their preferred agency partner?
The meeting ended with smiles so the ideas weren’t too far off the mark. Food for thought at worst; a solid plan to improve margins up at best. Not revolutionary but a better combination of proposition, buying and selling approaches.
Walking back to the tube after the meeting it struck me this was just a better way of baking with the flour you had. Every agency has assets. They could be cash, they could be intellectual property or they could be a range of strong client relationships.
Too often we do what we did before. Before some Maverick dropped some yeast (I suspect whilst making beer) into their flour and noticed some interesting results all bread was flat. Suddenly we had loaves.
Whatever our assets I convinced we can do something better than we did before. Make our cash work harder for us. Leverage our client relationships to guarantee work volumes and lock competitors out. Use our IP to work smarter. Drop some yeast into the mix if things aren’t working.
Too often we overlook the assets we have and look longingly at those we think we need. Sure it would be nice to have a Head of Artificial Intelligence and that might help you become more profitable. Might. What definitely will is maximising your existing assets. Start by baking with the flour you have.