We are designing our own agency. Excerpt from the report of the IT conference “Strike”
99% of agencies were created not by managers, but by highly trained artisans who have no experience in running their own business. And in this situation, business design is not a systematic and structured activity, but only a response to market changes.
The three main questions that business newcomers face are: how not to close an agency immediately after its opening, how to establish internal processes from scratch, and how to painlessly build an effective infrastructure. Here we will answer these questions and highlight the main stages of operational management.
My name is Kamil Kalimullin, I am an IT entrepreneur, the founder of AdvantShop and the largest regional IT conference “Strike”. “Strachka” is a marketplace in the world of conferences. Here they talk about development, marketing, management, design and content, startups and technology. The conference brings together more than 2,500 participants – the next one will be held on September 27-28 in St. Petersburg.
In April, Sergei Prokofiev, CEO of the web integrator Piratecode, and a permanent sympathetic partner of Kira & Rock, spoke at the “Strike”. I share the video of Sergei’s report and the main points of the speech.
For money or for love
The first and quite logical thought is money, otherwise why else would you open your own agency? At the same time, more than half of the room is engaged in business just for the soul. So which approach has the best chance of success? How to find the perfect balance?
Answer: don’t look for a middle ground. To prevent a business from closing immediately after opening, you need to give enough soul and invest enough money. Only after this will the long-awaited balance come.
And still about money
Although money and soul go hand in hand in business, we will talk about how to make money.
The Deming cycle is a universal algorithm for many areas, according to which you build a sequential chain of actions to achieve a goal. The cycle consists of four stages: planning, taking action, checking and evaluating, and adjusting. It helps agencies continually improve performance and identify and resolve problems.
Organization planning/design
According to the “rough” structure, there are several stages:
→ setting business goals
→ positioning, product formation
→ financial planning
→ development of organizational structure
→ setting up production processes and operational management
→ control of results
The system can hardly be called linear; these stages can be supplemented, detailed and decomposed depending on the specific case. Moreover, they are very closely interconnected, but let’s start in order.
Stage one: positioning the organization
And the question is still the same: how to find the middle ground between a rational and an emotional statement? You need to start external communication with a rational answer to the question: who are we and what do we do? What is our identity?
It seems that The answer to this question is very simple. How can you not know what our agency does? However, the variety of services is sometimes confusing. I would like to cover all areas, occupy my niche, but at the same time maintain high quality of services. But is it worth it at the initial stage to strive to complete all tasks at the same time?
It is important to define a specific specialization and formulate an answer to the question “Who are we and what do we do?” in two or three sentences.
What about competition?
Indeed, this approach will simplify communication both within the agency and with the outside world. But it won’t separate the agency from thousands of similar companies. This is where the turn comes add soul to your business!
You need to add zest to external communication, your own character, something that will set you apart from the crowd of equally cool companies.
Stage two: how to make money?
To develop a financial model and business plan, it is important to answer several questions honestly.
Disclaimer: and again, everything is not as simple as it seems.
→ How much do we want to earn?
And most importantly, how much do you want to keep for yourself? As practice shows, not everyone can answer this question.
→ What is the acceptable rate of return?
→ How much money do you have now?
→ How much do you need to invest to achieve what you want?
→ Where can I get the missing resources?
The answers to these questions help form two points:
→ Point A is the position we are in now.
→ Point B is what we are striving for.
Such simple visualization helps to understand what actions need to be taken, what efforts to make in order to move from what is actual to what is desired.
Stage three: organizational structure
Firstly, We draw the existing structure of the agency.
→ All processes in the structure are reflected through the specific roles of employees.
→ All roles are represented in the organizational chart.
→ A role is not a position.
Looking at the structure above, the question arises, where does Nikolai get so much strength? After all, Nikolay’s position is general director, but at the same time he plays the role of lawyer, accountant, and back office manager. Here we come to the next point:
→ in the early stages of agency development the combination of roles is off the charts.
And that's okay. Combining roles does not disappear from large structures either.
What will such a scheme achieve?
→ you will see not only the position, but also the real functionality of each employee;
→ you will find gaps in personnel: the absence of actual managers over specific specialists;
→ understand which roles are duplicated and which are not performed at all.
From time to time, such a diagram can also be drawn up in agencies with an already formed organizational structure, since it allows one to clearly assess the need to find new or eliminate existing personnel.
Insight: Every day it will become more and more difficult to lead your team from point A to point B. After all, an increase in the team leads to an increase in the entropy of the system as a whole and requires additional costs to keep it under control.
With a team of 10-15 people, it is unlikely that you will be able to earn a lot of money or carry out large projects, while the owner will combine and perform many tasks independently. At the same time, doubling the team will require additional expenses, including on the management staff.
→ Therefore, if scaling a team is necessary – we are increasing the staff to 80-100 people at once.
More details: lecture on organizational design
Stage four: setting up processes
If you write down all the processes of an organization and divide them into groups, you get the structure of a classic financial report:
Having thought through and prescribed all areas of the agency’s work, the answer to one of the most difficult questions of the financial plan becomes clear: how much do you need to spend to achieve your desired goal?
We repeat the algorithm:
→ determined an exact financial goal;
→ understood and adjusted their organizational structure;
→ prescribed and categorized the agency’s processes, understood what processes would be at point A and point B;
Next, we think about what actions and with what result we need to take. For example, to grow from a company with a team of 10 people and a turnover of 15 million into a large agency with a staff of 100 people and a turnover of 100 million, we need:
→ upgrade your marketing in a certain way;
→ hire a full-time accountant or lawyer;
→ assign certain tasks to the financial department;
That is, we rationally approach the goal and decompose the action plan in accordance with the structure of our processes, We divide a complex process into simpler and more manageable parts.
The timeline for getting from point A to point B is your agency’s development blueprint.
Final stage: control and KPI
What reports are we looking at?
→ About cash flow;
→ About profits and losses;
→ Balance sheet;
→ Plan/actual;
→ Payment calendar.
Then, every month we check the current state of the agency, compare it with previous periods, monitor the dynamics and analyze our actions.
Every month we update the monthly plan and plan the next two months. Then we compare the actual results with the plan for the quarter, update the plan for the next and 2nd quarter
More information about management accounting for the little ones: lecture by Kirill Milenky about money
