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EP 69: Planning During a Pandemic, with Drew McLellan

EP 69_ Planning During a Pandemic, with Drew McLellan

On this episode of THRIVE—sponsored by Workamajig—Kelly and Drew McLellan talk about the realities that many agency leaders are facing right now, from questioning the sectors we serve and the financial health of our businesses to planning for a viral resurgence later this year.



 EP 69: Planning During a Pandemic

Duration: 13:04


Kelly: Welcome to this week's episode of Thrive, your agency resource. I'm here with Drew McLellan, a marketing agency owner himself and owner of the consultancy Agency Management Institute, which is where all of you probably know him from. He's actually been described as helping clients create authentic love affairs with their customers, which for me, that's one of the best descriptions I've ever come across. So Drew, welcome to the show. I'm really glad that we're finally able to connect.


Drew: Thanks for having me. I'm excited to have the conversation.


Kelly: So let's just put it out on the table. Many agency leaders from your perspective, from my perspective of what we do, these agency leaders are coming from a place and operating from a place of a lot of fear right now—questioning the sectors that they work in, questioning their own business models and even maybe their leadership capacity. So what are you seeing from a granular perspective with your agency clients?


Drew: Yeah. People are freaking out. I mean, I think that's the way I can see it.


Kelly: The only way to put it.


Drew: Yeah. And, here's sort of the start of every conversation I've been having with agency owners and like you had been having them pretty much from 7 AM till midnight in the last couple of weeks. We have to remember that we've done this before. It looks different because there's the health element to it and there's the working from home element to it. So that makes it weirder and it feels more intense. And we're also trying to work around our children and our pets and all the other stuff, which also adds to the stress of all these, right?


Kelly: Absolutely.


Drew: But the reality is, if you've got an agency owner for any length of time, you and your agency survived 9/11, you survived 07-08 recession. And so, the truth of the matter is we have to expect as business owners that every 8 to 10 years, whether it's just a financial crisis like a recession or it is some sort of external crisis like 9/11 or the virus, that we have to be ready to weather this and we have been ready to weather this in the past. And our job as leaders, our number one job as leaders, we have to think of ourselves as sort of the captains of a ship.


Kelly: Yeah.


Drew: And right now our ship is in the middle of a huge storm. Our job is to get the ship back to calm waters. There is an end in sight to this. This is not going to last a year. It’s not going to last two years. And then I was staying here before we hit the record button, I've been chatting with agency owners in Asia, and they're already back to work. They’re already back in restaurants. They're already back meeting clients face-to-face and they’re about two and a half months ahead of us in this experience. And so, part of this is we have to as hard as it is, remain calm, we have to be confident, and we need to be compassionate. That's what's being asked of us right now by our employees and by our clients. And so, that's where we have to come from but I get that we’re all afraid and for some agency owners they're actually busier than they were before because of the sectors they serve or like my PR agencies are crazy busy right now with crisis communications.


Kelly: Yeah. Same.


Drew: But I've also had agencies that have had 50% of their AGI walk out the door. And so, you also understand that you are probably if you're listening in the middle, you're probably not on either extreme, but you need to plan like you may get to either extreme.


Kelly: And, the other thing that you bring up is that you're pretty confident that there's gonna be a resurgence of the pandemic just based on what you're seeing with some of the clients and agency owners in Asia. So if we know that we need to plan for this, from a financial perspective, from a positioning perspective, what are those best practices that we should have really all been following all along?


Drew: Yes, so I think one of the truths that this crisis has revealed is which agencies have already been running a pretty solid ship. And so what that means is, depending on your client mix, so if you have a gorilla clients that’s worth more than 25% of your total AGI, then you need to have 4 months of operating expenses in the bank. So operating expenses of all your all-year salaries and all your overhead costs. If you are an agency where your clients are more scattered evenly and you don't have anybody that's more than 20% of your business, then you can get by with two or three months.


So now, it's probably not the time for most agencies to be stockpiling money away but when we come out of this, one of the first things they should all be doing is starting to—your mark money to have as a safety net. Many agency owners rely on a line of credit as a safety net and are now feeling like that's inadequate and that's because you need to have both. So I think some of the other things that we need to be doing are: a) If you do have a gorilla, the reality is for many agencies right now what they're going through is no different than if their biggest client fired them today. Right? It's just we have the health stuff and the other things that make it scarier but financially from our agency management point of view, it's exactly the same as if you lost your biggest client for a lot of those.


So part of it is having a plan, a regular active biz dev plan that allows you to—if you have a gorilla, offset that gorilla as quickly as possible. Right now, it's about having lots of conversations with clients. I have a lot of agencies who have said to me, “You know what? We haven’t been able to get the attention of the CEO for the last two years. And now all of a sudden, they want to talk to us.” And so, we should be making the most of those conversations. I think it's really easy to be a great partner when money is flowing and everything’s awesome. I think it is really telling if we can be a good partner in this moment in time.


And so that may mean telling your client to stop doing something that they're paying you to do because it's really not in their best interest. It is about helping them figure out how are they messaging this to their internal audiences, at their clients. So helping them pivot what they're doing and the resurgence, just for clarity, not a scientist. But what I'm hearing from Asia is that they are all back. They were all back at it and then they started letting people come back into the country and outsiders were bringing the virus back in so they had a slight resurgence of active cases, which they were confident they’ll be able to tamp down in a week or two but all of a sudden they're back working from home for a week. And so, we have to be ready for that too. This may not be a one-and-done for us.


Kelly: Right, for sure. And there's also kind of this thing that you talk about a lot which is there is this reality of something like this, some anomaly that happens, pretty much every 10 years.


Drew: Yeah.


Kelly: You can almost bet on it.


Drew: Right.


Kelly: And we can't really plan our businesses around that or change them from that perspective. First of all, we don't know what those 10-year glitches are going to be. But it's not something where you like necessarily need to completely pivot or completely rethink everything every 10 years. So from your perspective, it's more about staying the course?


Drew: Yeah. That's the equivalent of saying, the grocery stores closed on Christmas Day so I need to find another place to get groceries all year long because they're closing.


Kelly: Right. That's a good analogy.


Drew: For agencies that have positioned themselves or niched themselves in a certain way that maybe now is being adversely affected by this, that doesn't mean it's not the right thing for your business to do. For 9 and a half years, it's been a very lucrative smart thing to do. And, if you had built the safety net, you would have been able to weather this. Let's call it six month decline, right? Or recession, whatever we're heading into. And then you come back out and you keep doing what you're really good at. So I am a firm believer in we should still be selling from a position of expertise and authority and for many of us, that's around a niche or an audience or some sort of solution that we provide for our clients and this shouldn't stray you away from it.


Kelly: Yeah. No, we're definitely aligned in that thinking as well. And again, a lot of this is coming up because there are so many agency owners who are again going back to how I started the conversation, they're just so fearful and starting to question like if nonprofit or education or all of these other sectors are the area of my specialization, for all the reasons that positioning should be in place. I'm questioning whether that's even the place that I should be in, because what's going to happen to those sectors as, yes kids come back to school, maybe they're not doing online learning as much in the future, nonprofits, they're looking at marketing as like an expense versus something that's really critical to their mission. So there's this mindset that really I think what you're saying is we do have to be really clear that if we positioned ourselves the right way, there was a reason for that and we do need to put those other best practices in place from a financial standpoint so that we can weather things.


Drew: And the reality is the generalists are having as much trouble as the specialists right now. There is no industry that is safe from a pandemic.


Kelly: Right.


Drew: Though there are some industries that are perhaps more recession proof than others, but there is no island where you can stand and know that no storm will ever get to that island. That's just not realistic.


Kelly: Right.


Drew: But the reality is the specialist agencies, the niche agencies, the agencies that are known as an expert in something, when we come out of this, they're going to be the ones who clients are seeking because clients are gonna be hungry to make up what they've lost. Everybody is going to be champing at the bit and again they're already seeing this in Asia, that people are saying yes I paused for 3 months but now we got to go, go, go.


Kelly: Right.


Drew: And so if somebody doesn't already have an agency relationship and they're looking to really boost and come out of the gate strong, they’re not gonna pick a generalist. They're gonna pick somebody who understands their industry or their audience or whatever it is your specialty is.


Kelly: Yeah.


Drew: So just be bold and proud about who you are and what you are and know that this is just the reality, this is the lousy side of owning a business. Right?


Kelly: Yeah.


Drew: But the good news is we enjoy 9 and a half or more years of the good side of it. So in my opinion, it's still a whole lot better than being an employee.


Kelly: Yeah, well absolutely.


Drew: Yeah, right.


Kelly: And I know that you actually pretty generously put together some resources for agencies particularly around COVID and just let us know a little bit about how we can access those and what we can expect from those resources.


Drew: Yeah, so I have been sending out like emails constantly to our own members and things like that and finally I thought this is: a) I'm killing them with email but b) I need to have a resource. So we’ve put together a page on our website, And it's organized by week so I'm putting all the stuff we're creating but I'm also curating what other people are sharing specifically stuff that’s agency specific. But right now, this week there's some information we're recording this in late March. There's some information on what will hopefully pass the Care Act. So also there is some generalist option. There's no firewall. There's no email asked for. I'm not going to know that you're there or not there. We're not going to try and sell you anything. I just want agency owners to have vetted resources and help them survive this storm like I said at the beginning, get the ship through the storm and to calm waters.


Kelly: Right. Well again, that's incredibly generous. I'm definitely gonna put a link to that in the show notes. And Drew I just want to thank you so much for taking the time to come and talk with me today and really convey a lot of this advice to other agency leaders. I know there are a lot of people really hungry for this content. So thank you.


Drew: Oh my pleasure. Thanks for having me.



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