Avoiding Chaos to Expedite Agency Growth

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Jason Blumer is CEO of Blumer and Associates, a CPA firm dedicated to providing strategic growth strategies to creative design, digital, and marketing agencies ready to go to “the next level.” Key areas of influence include transforming people to facilitate growth, leveraging teams to scale, and recrafting business models. Areas of greatest impact are pricing . . . and how a business is run.

Jason notes that an agency’s pricing reflects its value to its market or its niched expertise. It will take 2 to 3 years for an agency to transition from hourly pricing to value-based pricing – a process that starts with new clients. Legacy clients who refuse to abandon the old hourly-pricing model become “legacy baggage.” No matter the form, the co-existence of legacy systems (the old way of doing things)—whether pricing, organizational, or operational – and new, conflicting, growth-targeted policies and procedures causes confusion, and what Jason refers to as “chaos.” This kind of growth problem is often the result of an owner not letting go and letting the business become what it is meant to be – or the owner pulling rank and violating the new “rules,” destroying credibility.

Much of the focus of Blumer & Associate’s work is on moving toward simplicity, eliminating chaos (chaos inhibits growth), and transforming business owners into organizational leaders. These leaders are then charged with:

  1. Developing relevant mission statements and defining how to live out those missions
  2. Implementing core (foundational) values and effective patterns, processes, and rhythms
  3. Caring deeply for their teams and the rhythms around their teams
  4. Keeping people and teams accountable and leading them to all walk in the same direction.
  5. Encouraging collaboration. Collaboration leads to strength

Jason warns companies not to hire people who are unwilling to collaborate and outlines a process to safely release an employee who refuses to collaborate or fails to follow an organization’s core values:

  1. Recognize and acknowledge nonconforming behavior, with a friendly offer to help or explain
  2. Make a less-friendly suggestion that the employee work on the problem
    1. The employee’s failure to follow core values
    2. That the employee must follow core values for the company’s health
    3. That the issue has been discussed
    4. That the employee knows the rules and knew them when hired
  3. Meet facetime (in-person/virtual) with a manager pointing out:
  4. Meet facetime (in-person/virtual) with a manager telling the employee that s/he has to follow the core values and then stating, “You will do it and this is the last conversation we’ll have asking you to do it.”
  5. Let the employee go in a way that does not hurt the firm and or the released employee

Jason can be contacted by googling “Jason Blumer,” on Facebook, on Instagram, on his website at jasonblumer.com, @JasonMBlumer on Twitter, or on his company’s LinkedIn site at https://www.linkedin.com/company/blumer-&-associates-cpas-pc/ , or website at: https://www.blumercpas.com/.

ROB: Welcome to the Marketing Agency Leadership Podcast. I’m your host, Rob Kischuk, and I’m joined today by Jason Blumer, CEO of Blumer and Associates. They are based all over the U.S., and he’s personally headquartered in Greenville, South Carolina. Welcome to the podcast, Jason.

JASON: Hey Rob, thanks for having me, man. Always love to share stories of growing agencies, so I’m pumped to be here with you.

ROB: I think our audience is really going to enjoy this conversation. It’s a little bit different, because so often we are talking to the CEO, the founder, the owner, the partner of a marketing agency, and as one might start to guess from the name of Blumer and Associates, that is not what you are. So why don’t you tell us about Blumer and Associates and what you all are amazing at?

JASON: My dad started our firm in ’97, and I started running the firm in 2003. I’ve been in public accounting, a CPA, for about 20 years now. But about 7 or 8 years ago we decided to go virtual and really focus on a niche around creative agencies. Now we’re fully niched into that and we only serve creative design and digital agencies and marketing agencies all over the U.S.

The way we niche is we help them grow. We help agency owners grow their companies, and we actually know how to do that. We teach a lot of groups and a lot of agencies. Been doing consulting and business coaching for a long time. So, we know how to help people transform into a growing agency, basically.

ROB: That’s a pretty interesting niche to be in. Is there any particular trend or particular time, any life cycle of an agency, where you find people start to ask these questions about growth? Is it a particular size? Is it after they’ve been stalled for a particular amount of time or in some sort of cycle?

JASON: Yeah, there’s a lot to that. A lot of the times – again, a lot of the components of growth we talk about apply to any service-based company, where basically the deliverables are the knowledge coming out of your head or your team’s head.

I think people really start to learn between Years 4 and 6. They’ve been through some ups and downs at that time with their agency, so they really know growth means something. It really takes a lot of work. At that time, they start asking these questions of, “How do I scale?”

Scaling, getting bigger, is something you do around teams. You leverage a team to do it. People struggle about that time, especially when they get into three to five team members. They start to feel the ceiling, this growth ceiling typically that they’re pressed up against. It’s because typically what they did when they were on their own or when they had one or two people, they now can’t do. They can’t control, can’t see everything, and so they have to leverage a team and let a team do it.

What got them to that point won’t get them to the next point, so they have to re-craft a business model, typically, and they don’t know how to do it. Sometimes they don’t even know they need to; they just feel like they’re getting behind. Sometimes service to clients will start falling away a little bit, or they’ll start feeling the push of profit being lower than they expect and not understanding cash flow and profit and things like that.

So, they’re bumping into this ceiling and they don’t understand what it is. Could be 4-6 years, could be three to five team members when they really start struggling and needing help to grow.

ROB: When people start to ask those questions, how do they end up finding you? Because when someone starts to ask a growth question, they might not always think, “Why don’t I ask someone who works with a lot of agencies to a large extent from a financial perspective?” You do much more than that, but it would perhaps be easy to see you and say, “Oh, they’re financial people.”

JASON: That’s right. It is hard, actually. We have to educate our market a lot. We have to do a lot of market education because our prices are a lot different than a CPA firm. They’re higher, as you can imagine, because we do something different.

We almost require people to purchase some type of growth-related service from us, like coaching or consulting, because these are the things that actually transform people – which is part of our purpose – to practically lead people and equip them for growth. That being part of our purpose, they have to buy or purchase those growth services.

But you’re right; we have to, a lot of times, reeducate a market. They’ll find us through things. I do a lot of videos online. You can find me on my LinkedIn profile. We put a lot of those podcasts or those videos on blogs, on our website. We share that out on all four of our different social media platforms. People find us on podcasts like yours, Rob, things like that.

So, when that lead has identified themselves as potentially wanting to work with us, that’s when we have to start educating. We’re not a CPA firm. We’re a growth firm. And then we have to tell them what that means. So, you’re right, it’s tricky to explain that.

ROB: It sounds like a key inflection point is they have a few people, they’re no longer solo practitioners in the agency, they’re trying to scale, they’re having to delegate – what are a few of the things that you find are the typical obstacles to growth and the things they need to do to break through that?

JASON: It could be many, many. Pricing is always a pretty big deal. We’re a value pricing firm. We call ourselves a value pricing purist firm, so we value-price everything. Our team does not track time.

So, a lot of times we’ll do consulting around pricing. Pricing is a huge reflection of a statement of your value or your expertise to your market, so we’ll help them assess whether they are experts or niched in some certain way that allows them to price substantially higher. So, pricing is a key component.

But another one is really how the business owner runs their business. We’re influenced a lot by a book called Traction that a lot of agencies have read. It talks about a model of growth called EOS, Entrepreneurial Operating System. We help them introduce a lot of those components into their firm.

One thing owners really struggle with when they do start to face problems with growth is the owner is not letting go, typically, and letting the business become what it’s meant to be. That’s odd because there’s a point in time where you run the business – it is a reflection of you – but at some point the business gets large enough where now you work for the business. You have to meet its needs.

That business has needs. It has needs of a certain kind of flow of how information goes through the business, how information’s captured, how it’s delivered, and a lot of times they’re starting to become things that happen in your business sometimes that you don’t even see or know about. That’s especially when you get larger.

Sometimes an owner will hold on tightly, thinking they should hold on and be able to see everything, but there’s some point they have to let go. You can do that in safe ways, and EOS talks about some safe ways to do that. We can talk about some of those safe ways now, if that’s a good time to talk about it, Rob.

ROB: Yeah, go for it.

JASON: Cool. We talk about core values. That’s a big deal. Core rhythms, core processes – this word “core” meaning foundational. EOS talks a lot about that.

But what happens is so that you can avoid chaos – because chaos does not allow companies to grow. In growth, you’re always trying to move toward simplicity and away from chaos. That will always kill growth. Complexity and going crazy, that stuff will always kill growth. So, we’re always trying to establish some type of patterns or rhythms, and that’s what EOS is about.

When we find leaders starting to commit themselves to caring deeply for a team, caring deeply for the rhythms around a team, how to care for them in certain ways, how to develop some kind of mission and value statements, core values, how they live out their mission, what happens is the whole company starts to operate and go in the same direction, thereby avoiding complexity and chaos.

And that’s hard because now you’re starting to push the owner into a leadership role. Leadership is about leading people, keeping them accountable to walk all in the same direction. It’s just hard to do all that when an owner thinks they’re supposed to do everything.

But at some point the company has its own needs. It has its own needs for simplicity and an elimination of chaos, and so things like these core values and rhythms and purpose statements and core processes are what give this company its life. It breathes life into the company.

Now the team follows what the company requires, which is its core processes, its core rhythms, core values, and things like that – and the owner in a sense is a team member too. They serve the business too in their role. The role may be CEO, but they also try to meet the needs of the business. That’s when businesses start to become their own entity, which they can then begin scaling in a healthy way.

ROB: I think that’s a great point. When you talk about the core values, core rhythms, core processes, you’re really enabling your team not even to do what you, the owner, would do in that situation, but to focus on how to do what is right for the business and also swimming in their own strengths.

JASON: That’s exactly right. You can really mess that up, because as the owner, of course, we have the ability to fully trump any of those core values and core processes any time we don’t want to. [laughs] That’s the temptation, right? To go, “I don’t feel like following this stupid process. I’m the owner, I don’t have to.”

Well, that’s when you start to insert chaos into your organization. Your team starts to distrust things. They don’t believe what you’re doing. That’s when the failure of leadership starts to really hurt owners. I don’t know, I guess it’s hard for agency owners to commit to that, but at some point you have to obey these things just like the team does, and your company will become much, much healthier.

It’s cool, though – the core values are typically a reflection of the owner, so they should be things that you ultimately want everybody doing. But I don’t know, as owners, I know I get lazy. Sometimes I don’t want to obey our core values. But I have no choice, really, because I’ve given myself to the company and I’ve allowed the company to use me in the role of CEO. It has its own needs.

If we want to stay healthy and grow, I just have to obey those things – and I want to, and I like to. My partner and I built those core values, so we know what they mean. We’re behind them.

ROB: I think another point there – and you can probably elaborate on this more – something that has to be true for core values, I think, is that they have to ring true. They can be directionally maybe a little bit aspirational, but if everybody looks at them on the wall and feels like it’s a lie, that’s kind of the opposite of effective.

JASON: Oh yeah. It’s funny, in a lot of coaching, people really push back against purpose statements and core values a lot. It’s something we face all the time, and I understand why – I would too – because in the last company you worked in, it was some stupid poster on the conference wall or something. It really just didn’t mean anything.

But the core values are a huge tool. We use them every day. Every single day. It’s what eliminates chaos. Can I just give some stories of how we’ll use core values?

ROB: Go for it.

JASON: It took my partner and I a full day to really work through the process of coming up with core values, and we’ve had them for a number of years. Collaboration leads to strength. That’s one of our core values.

Basically, collaboration is a huge part of our company. Now we’re large enough, about 12 people – and we’re virtual too, which makes running a company even more difficult, honestly, running a virtual company – so when we see our team collaborating and looking to each other to help each other, we can bring it up and say “That’s what makes us strong. You guys are doing it, way to go.”

Or if they ask us questions, we can say, “Remember, we’re all committed to following core values. Don’t ask us; go ask the team and see what they think about this question that you’re posing.” So, it’s a tool we constantly use and push the team to use.

We also use it in hiring, too. Core values are a huge way to identify right fits for your company because you talk through what’s required of them. In our company they may take a technical role, some kind of accounting tax and leadership with a client on a team that we sell, but when they do that there’s another part of their job that’s not technical. Part of your job is to collaborate.

So, we tell them that when they’re hiring. You actually have to collaborate. That’s part of the core values. It’s one of your job descriptions: to collaborate. They’re required to do it. So, at any point, we can push the team to each other, and we just get stronger and stronger and stronger because of that belief in that core value – and because we use it as a daily tool to remind the team.

We’re always, always reminding the team to walk in the same direction, and the core values are the direction we’re basically walking in.

ROB: How would you coach a client if they were debating either firing or retaining a staff member who was unwilling to get in line with a core value?

JASON: My partner and I have a five step process we go through. First of all, the first thing we would do is, do you have established core values? Do you hire according to the core values? That’s the first filter. If you are, that means you’re potentially getting the right people into your agency, so that’s the first step.

But when they’re in, a lot of people want to just step away from their team and say “go do it,” and that’s not how teams work. Teams must be held accountable, and that’s sometimes a daily, weekly, monthly, quarterly work that you do. It’s one of our rhythms.

For example, we have quarterly conversations. My partner and I have one conversation every single quarter with every single one of our team, and we do it with everybody. That’s one of our rhythms that keeps us healthy and keeps us keeping them accountable.

So, when a team member starts drifting away from the core values, my partner and I have a very structured way that we walk through five levels of bringing them back to the core value. The first level is typically “Hey, we saw you weren’t doing this. You may need some help, or maybe there’s some confusing things we didn’t tell you.” That’s typically the case, so we pose that first.

If that doesn’t help, the second time we’ll be a little less friendly and we’ll say, “Hey, that’s something you probably need to work on. Is there anything we can do about that?” Those can be in our online office chat system, those two.

The next three and four are typically when we’re meeting with them in person. We’re virtual, so in person means on Zoom or something like that. We’ll say, “You’re not following the core values. You do have to follow the core values. That’s what keeps our firm healthy. We’ve talked about it, you know it. We hired you. You knew that when you were hired. Nobody’s confused about that, so that’s something you have to follow.”

Then the fourth one, after that direct reminder that they have to do it, is “You will do it and this is the last conversation we’ll have asking you to do it.” We always make that statement. At that point, that’s a pretty hard conversation. We don’t have to have it a lot, but they will seek to turn it around or seek our help.

The fifth one, we’ll relieve them from the firm. Of course, you don’t just fire them just because they’re not obeying the core values. You have to do it in a safe way so that it doesn’t hurt your firm, and of course we don’t want to hurt the person we’re letting go from the firm. But we follow those five steps.

And you do need steps. We help people fire people, and it becomes pretty murky. You want to get away from any murkiness or feelings around firing somebody, so you need some steps that walk you or the partners through a methodical thing so that you can walk towards that firing if you need to. So that’s how we do it.

ROB: Interesting. You see the undercurrents of, number one, process and how you think about that and how you share that with your clients. Number two, it’s interesting even to hear the lens of being virtual. When you say in person, you mean on Zoom or something like that. Makes sense entirely.

I want to jump back to something you were mentioning earlier about pricing based on value. When an agency starts off and it’s that solo practitioner or that starting team, and for a while they just figure out how to keep on increasing their billable rate, how do you help them start to think about making that transition – both with their existing clients and in a new client conversation, particularly with a client who may be very pushy on getting an hour count and an hourly rate?

JASON: I guess you could do that in a lot of ways. First we would want to work with the agency and know for sure, what do you want to do? Do you want to fully move away from an hourly billable system to a value pricing system?

They may or may not want to. We think it’s healthy to be one or the other. Having a mixture of the two creates what I’ve already said is not good for companies to scale, which is complexity. You’re always looking for simplicity in business building. Scaling happens around being as simple as you can. Now, larger companies are automatically more complex. That’s why you’re always seeking the greatest level of simplicity you can so that you can scale without chaos. So, we would say, use one system.

You make it a policy of the firm. If you want to become a value pricing firm and you’re an hourly billing firm, that’s going to take typically, depending on your size and your team size, 2 or 3 years to transition to, actually. A lot of times that transition begins with new clients.

My partner and I like to say the moment you introduce a new policy or new change in a firm – like for example, “we are now going to value price every new client” – you’ve just laid down what’s called a legacy line in your company. Everything before that line or that date, really, is legacy, meaning it was done in an older way, in a way that we don’t do it anymore. You can have legacy team, legacy processes, legacy pricing. You can have legacy anything. Everything new is done in a completely different way.

When you’re changing and transitioning an agency, legacy can always cause problems, so you always have to watch out for these legacy lines you’re laying down because it’s now baggage you have to deal with. You have to work through it in some way.

So, first thing we would do is go, what do you want to become and why do you want to become that? It’s really important. Do you want what it needs? Because it does require a commitment of time to transition to a different type of pricing model. Then we’ll walk them through the process of getting there.

Again, that happens with new clients first, and then after a year or two or even 6 months, you’ve got to start addressing those legacy clients too and start trying to bring them up to these new prices or new types of pricing models. Sometimes they don’t want to come, and that’s fine. You’ve got to figure out, are you going to get rid of them over time or are you going to just let them do what they want to do?

But, just realize, if you let a whole group of legacy clients do what they want as far as billing, you’re running two different business models, basically. You’re tracking time and billing to one group of clients and you’re not tracking time and billing to a whole new one. You can imagine how confusing that would be to a larger team. Do they track time, do they not? Do they do it on some projects and not on others?

That just creates a whole bunch of complexity, and you try to avoid that. So we would push an agency to choose one model or the other and figure out why they want to do it, and start heading down that direction.

ROB: Right. Does a value-based agency get completely out of tracking time, or is there still perhaps an underpinning of tracking time internally as a measure of project profitability without actually passing that through to client visibility?

JASON: There are different proponents of that. When I say we’re a value pricing firm, we don’t believe in the passage of time equaling value, so we don’t track any of it at all in any way. None of our team does, our clients don’t. We can’t do it. We actually don’t have any software to track any of that at all, and our clients can’t be priced in that way, actually billed in that way. If you’re hourly, that’s called billing, not pricing. It’s two different things.

But you can. If somebody wants to price based on value, that is this outward pitch of a price to a client – but internally, yeah, they can still track time if they want for more resource management type purposes, project management and capacity and knowing, do I have enough team and is all their time taken up with current projects? Can we add more clients to the current team?

So sometimes team tracking is helpful to do that internally, even if you don’t want to use that to build a client.

ROB: Right. I’ve seen some agencies take a very bottom-up approach to value pricing, and I have seen some take a more top-down approach.

In one case you’re trying to figure out and put your finger in the air – maybe you’ve got a better process for it – to understand what the value is to the client, and in other cases I’ve seen a buildup from the hours it takes and an implied hourly rate that they start to see how far they can push it up. How do you think about getting to value?

JASON: It is really hard to do. There is a process we go through, an onboarding process. Takes about a month and a half to bring an agency into our firm. That has a number of different steps.

The first thing we do is have a value conversation, and that’s where we ask very strategic questions to try to pull out what that client values and the things that we’re going to price, basically. We already know a lot of times what an agency needs because we’ve been doing it for so long, but that value conversation is meant to pull out of them what we need to price them for.

Value pricing, it’s hard to scale it. It really is, especially for a firm like ours that’s a value pricing purist firm. Even side projects with current clients, we value price all of that. Really, it comes with experience.

The owner typically does the value pricing – or somebody that’s so innately in tune with the purpose and the value of the firm and they know how they can transform and really help agencies, then that person is typically the one who does that pricing. It kind of hems in the owner a little bit, because that’s typically the owner in a small firm like ours, which is about 12 people.

What you find is agencies or firms that fully value price, their team doesn’t do a lot of the selling because the team doesn’t have the skills to coach people through understanding and pulling value out of their life, so to speak, so that they can then turn around and create a service that may meet that need. It can be difficult to do.

Of course, we love to do it. We’ve even had a business development person at some point, but I don’t know. They just didn’t work for us, but it may work for us in the future. I don’t know. But you have to teach them to really sell based upon how deeply you can transform people, and really it’s the owner who can do that best.

ROB: Very, very, very interesting. Looking forward, what is coming up for Blumer and Associates and maybe for some of your clients and trends you’re seeing with them that you think is exciting and interesting?

JASON: The agency space is pretty interesting. Right now, we’re in a world where design is really valuable, I think. So, I’d probably say it’s true that agencies for the most part are probably underpaid, underpriced.

That doesn’t mean you can raise prices; it means you have a lot of education to do to a market that doesn’t fully embrace what design can do and how it can solve problems. I think it’s an untapped market for growth and for profit. At least, that’s what we see in our own clients.

But some people do it right, and it is an unlimited market too. Some people are experts, so it is true, if you can double down on a niche and become an expert, if you have a lot of experience in one area and you can limit yourself – which is something you have to do safely; you can’t just niche overnight. It takes time to do that right so that you can not hurt your cash flow and things like that.

But if you can, you can double and triple your prices. A lot of times we do that in coaching. We start an agency with “Hey, let’s see if we can double your price.” It’s not the price we double; really we’re seeking to double the value that that agency is pitching.

So, I think agencies are going to become more and more valuable. I think smaller agencies, more niched, boutique agencies with 10 to 12 people are very substantial businesses, where the owners, the founders are still heavily involved. We love those kind of business models. That’s our model. We love the owner being deeply involved in leading a team, transforming the clients, being part of that transformative service, but letting the team start to lead and do some of those great technical things and delivery too.

I think the agency design, especially in the marketing space and a lot of different spaces, are apt to grow over time pretty significantly.

ROB: That’s really interesting. I think it’s interesting what you said there about even the idea of design. Someone who’s in an agency selling design services, there’s so many different layers of ways they can position that service and position the value to their clients.

Just to give us an example as we get towards the end here, what are maybe three different ways, from low value to high value to a client, you have seen this – let’s say design services – presented? Is that a crazy question?

JASON: No, no, no. No, that’s good. I think probably the lower value is when somebody does just sell design, which is “I’ll make you something.” That’s the lowest valued thing you can do, just making that thing.

But what we start to see is when people wrap knowledge around that design, that’s when you really start to make a lot more money, because knowledge – which is basically our past experience – is way more valuable, and thus has a higher price tag than just the things we do with our fingers. We want to transition agencies to sell things that come out of their mind instead of things that come from their fingers, so to speak.

We see people do things like – strategy is a huge deal. Adding a lot of strategy, forethought, and planning into what is the design or the assets related to what we’re going to build, like the social assets or the website or whatever. What is it going to do? What is it going to accomplish?

And then adding to that, after the build of the design, maybe a website or something like that. Then the maintenance and support. It’s harder to sell maintenance and support based upon value, but that is something that can be recurring over time. It can be more of a value than probably a lot of people sell it as.

I think there’s a lot of value in the planning and the strategy and looking ahead as to what the design will do. When an agency walks your clients through that process, that’s when they really step into the world of making a lot more money instead of just selling the design. That’s when you become a design leader, so to speak.

But leaders lead. That’s what they do. Not everybody’s going to want that, and some clients will push against that, and you have to lead them through the process. That’s where we would push an agency and say, “How do you do it? What is your way?” and stop letting the client decide how they want you to deliver service. You say, “Sorry, we don’t do it that way. This is how we deliver service. This is how we transform our clients.”

You start to take the leadership and sa,y “This is how you’re going to consume our services,” so to speak. When you start owning that and you start leading that, when you feel the confidence to do that, that’s when you start making the most money.

ROB: That’s great, Jason. When people want to find you and Blumer and Associates, where should they find you?

JASON: You can just google “Jason Blumer” and I’ll come up a whole bunch. You can go to jasonblumer.com if you want, or @JasonMBlumer on Twitter. We have a couple of businesses we promote. We’re on all the main four social platforms – LinkedIn, Facebook, Instagram, and Twitter.

A lot of my videos and things that I do – I do a little series called Word of the Day. I just pick a word and spend 5 minutes talking about what that means for an agency. You can find those on my LinkedIn profile. If people want to connect with me on LinkedIn, then they can see those pop in their feed and you can get some free educational content for growing your business.

ROB: Very good, Jason. Thank you for coming on. Thank you for sharing the wisdom of what you have seen across many different agencies and working with them on growth.

A special thanks today to one of our former guests, Kade Wilcox from Primitive Social, for this introduction. We can’t do it without great introductions like this. Thank you so much for coming on, Jason.

JASON: Thanks, Rob, for having me. It’s been fun.

ROB: Thank you. Take care.

Thank you for listening. The Marketing Agency Leadership Podcast is presented by Converge. Converge helps digital marketing agencies and brands automate their reporting so they can be more profitable, accurate, and responsive. To learn more about how Converge can automate your marketing reporting, email info@convergehq.com, or visit us on the web at convergehq.com.

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