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Is your business development program working?

How does your business development program compare to these five factors? You’ll be reviewing your Q1 revenue performance soon.  Hope you’ll be happy and confident about the next nine months.  Or, will you be pleased, but concerned about the rest of the year? Or disappointed…and really concerned about the rest of the year? The senior counselors of Prosper Group want to help.  Since we have decades of experience with oversight of the function,  we submitted our opinions of the “five most important factors” in an agency’s winning business development operation.   Here is a summary of the top five in order of priority: One: Identify prospects strategically This factor was referenced most often by the counselors. Start by defining your “ideal” client.  Then, find the prospects that meet the definition. Seek input from your staff.  Do some research.   Ask if you are picking clients, or are clients picking you? Some suggestions:  Identify prospects that need your capabilities; develop information on their current agency relationships, challenges/opportunities, decision-makers (and who in the firm knows them or will); review opportunities with clients to provide them new services; seek referrals from people who know you (like clients).  As several counselors indicated, this methodology allows permission to say “no” to certain prospects and leads.  You can avoid wasting resources on those that just aren’t a “good fit” for some (now) obvious reasons. However, you may have an interest in a new category, discipline or geography that isn’t part of your current skill set, but you’d like it to be.  Adding a client that gives you a chance to develop, prove and then promote your new capabilities is strategic.  Just be realistic about what you’ll have to do to win and how hard it may be to meet the client’s expectations when you do. Two: Create a new business culture All your employees should understand the importance of additional revenue from existing and new clients.  Be sure they realize the viability of the firm  depends on it. That includes their jobs--their potential for new opportunities and growth in the firm; compensation; and, of course, the quality and frequency of their favorite perks.  So, get everyone involved. Some examples of engagement that create a robust business development culture include:

  • Account teams regularly identify new opportunities with current clients;
  • Everyone networks in person and on social media to expand awareness of your firm’s distinct capabilities;
  • Anyone can support the development of marketing materials;
  • Anyone may be tapped to participate in the preparation and pitch to prospects.
Oh, and everyone celebrates the wins. Make “winning” part of your culture and make “winners” your champions. (Reward them accordingly.) Three: Know your “why” You must be able to answer “Why should this prospect hire us?”  Why are you different and better?  Have a clear understanding of your strengths and weaknesses. One of our counselors says: “What you know is unique to you. What you do is usually generic. Focus on your deep knowledge of business categories, target audiences, key trends and issues.” It all results in “why” your priority prospects will be convinced to hire you. Position the positive impact you’ll have on them--their work days, achieving results, benefiting their companies. And, importantly, their personal career successes. Of course, your “why” must be at the center of your messaging, marketing initiatives and new business materials.  Build your reputation around it. Be sure to integrate the “why” in to your pitches. It makes you distinctive and memorable. Focusing on “how” and “what” will not. Four: Manage a process Your business development has to be a machine that’s always on.  Someone has to be in charge.  Ideally, it’s not the agency principal.  It’s beneficial to have a flexible team that can be the center of the process to ensure continuity.  (If your best talent is 100% dedicated to client service, you are missing an opportunity.)  Also, you can’t grow with any speed if the principal or the “new business leader” must always be at the center of every pitch. Institutionalize the best practices that work for your firm so time is spent productively on insights, strategies, creative, rehearsing the pitch. It also ensures others can quickly access and understand the “rules” that help you win business. (One of our counselors has a “business development checklist” with 167 different items that can be important in winning clients.  Some are obvious.  The ones that aren’t can be important.)  Our counselors also suggest:  Adhere to an annual budget—including what you’ll spend on individual pitches;  review with discipline the status of outreach to prospects; create a toolkit of ways to turn “strangers” in to hot prospects;  analyze wins and losses…especially  losses; and determine who needs what kind of training. Five: Market your agency as you would a client Treat the development and implementation of your marketing and sales efforts with a top priority.  Be able to be proud of your website, social media, publicity, thought leadership, proprietary tools, case studies, capabilities materials.  After all, these are the kind of capabilities you’re selling to your clients!  Let’s go back to your “website.”  Is it really doing justice to the uniqueness of your firm?  Does it demonstrate the firm’s capabilities as an effective communicator?  Is the information that is important to prospects easy to find and compelling to read? And, what about LinkedIn?  It’s becoming more and more critical to the identification of potential agencies than ever.  How are you leveraging it? All your communications activities should explain why you are the right partner. Tell stories about solving problems and over-delivering on expected results.  One consultant advises:  “Find ways to attract attention of your key prospects through relentless, insight-rich messaging that delivers important ‘new news’ and fresh thinking.”   That’s the top five from a group of experienced consultants.  Hope they’re helpful.  Your top five priorities for the year are more important.  What are they?  Have you shared them with others?  Who in your agency can help you develop and deliver on them? How can you get everyone involved in the appropriate ways? Ensure your business development program is working for you as you develop priorities for the remainder of 2019.  Though new revenue is dependent on the other drivers of growth, you’ll see how it enhances reputation, retains and attracts talent, reinforces culture, improves financial performance. Simply put, it adds value to your company.  Don’t miss out. By Rich Jernstedt, Prosper Group        

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Blog

Do you know your agency’s Digital Fitness Score? Survival of the fittest now applies to digital too.

Developed by Mark Johnson, Prosper Group Digital fitness is no longer an option. Is your agency as digitally strong as it needs to be in order to succeed long-term in the face of ferocious competition? Prosper Group has the experience and process to answer that question. Your agency's Digital Fitness Score will help drive more growth. We will use our deep digital experience to calculate your Digital Fitness Score based upon our in-depth assessment of virtually everything related to your agency's digital awareness, capabilities and performance. Our analysis includes in-depth interviews with your management team and other staffers, shorter interviews with selected clients, a review of internal documents and systems, samples of digital work and their media planning/placement as well as other sources of information. You'll see more than 40 separate scores which are then combined to determine your overall Digital Fitness. We won't just tell you your scores. We'll also show you specifically how you can improve in each area which needs to be stronger. Achieving digital fitness is the result of many factors. We will evaluate: 1. Do you have a digital vision that your agency can easily, consistently and uniformly communicate to the market and your clients? 2. Is this vision clearly understood throughout the agency? Can your people articulate it? Do they act accordingly? 3. Are the agency’s leaders evangelists for digital? Are they leading the agency forward in the adoption of new digital technologies and methodologies? 4. Overall level of digital literacy and competence: Up-to-date awareness and understanding of basic digital disciplines and trends and also the ability to discuss and practice these at a high level: - Throughout the agency overall - Within each group or department (E.g. – Account management, creative/concept development, production, media planning & buying, research) - Effectiveness of intra-group/departmental integration of digital knowledge, activity and productivity - In working with clients - How does digital integration happen within the agency? Is it effective? 5. Digital message development: - Staffing and experience - Strategic thinking - Creativity - Production 6. Digital media planning: - Staffing and experience - Strategic thinking - Media research used - Ongoing innovation 7. Digital media placement: - Staffing and experience - Stewardship of client’s media investment (including safeguards vs. ad fraud) - Ongoing innovation - Measurement and results 8. Social media expertise: - Staffing and experience - Your agency’s strengths and weaknesses for each major social media platform - Stewardship of client’s media investment (including safeguards vs. ad fraud) - Measurement and results 9. Data and analytics: - Staffing and experience - Systems and tools - Consistency of application - Results 10. Resources and innovation: - Are there gaps in digital resources and knowledge that might prevent the growth of digital service offerings? - What is the role of innovation at the agency? Is it valued highly? - Do you regularly adopt new technologies and deliver new services to your clients? - Are you capable of developing technologies, methodologies and I.P. as an iterative process (starting with a minimum viable product)? 11. Ongoing training, learning and improvement -- Are there training and personal development programs in place that will allow the agency to be a digital leader? 12. Any truly proprietary systems, software or other digital tools which are being used 13. Developing websites for clients 14. SEO for clients 15. SEM/CPC/CPO for clients 16. The agency’s own website: - Should be your most powerful new business tool – Is it? - Overall look and feel (Contemporary, visually engaging, instills credibility and trust, etc.) - Clarity and ease of navigation - Impact of site on convincing clients and prospects that you should build their sites and/or manage their digital messaging too - Being new business-friendly - SEO (Title tags/page titles, h1 tags, meta descriptions, headlines, subheads and more) - SEM 17. Within the context of the above: - Overall assessment of the agency’s internal digital resources and capabilities - Overall assessment of any external digital resources, capabilities or alliances which the agency employs on a regular basis As you can see, achieving Digital Fitness… and then sustaining it... isn’t easy. We can help. We were created to help you succeed. Prosper Group exists to help the owners of independent marketing communications agencies to achieve their ambitions and maximize the value of their life's work. We’re here for the builders, innovators, visionaries and risk takers. We provide expert guidance and proprietary processes for driving strategic growth, profitability, services, technology, recruiting talent, succession planning and M&A. We have also recently expanded into Europe. Three of our Partners and Senior Counselors are deeply experienced in growing and managing advertising and digital agencies. If your agency isn't already digitally fit, we can help you to make it that way. Thank you for reading. By Mark Johnson, Senior Counselor, Prosper Group

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Blog

Three ways to make sure your agency is maximizing its tax efficiency

By David Bosses and Doug Baxter, Prosper Group The deadline for filing business tax returns is fast approaching. It is important for agency owners to do a quick check to make sure you are being both tax efficient and tax compliant in your submissions. Most agency owners don’t have backgrounds in finance. So, it means you must be extra diligent in managing the administrative tasks that come with running a company, especially in today’s tax climate. Remember that many of the tax laws have changed in the last few years. Make sure you are not missing a potential savings or leaving yourself open to issues with the tax authorities. Our mission at Prosper Group is to help agency owners achieve the most value from your companies. Smart tax planning can help improve your cashflow and assist you in developing future growth in your agency. Here are three things to consider this tax season: 1. Make sure you have familiarized yourself with Section 199A. This can determine your hiring strategy in relation to the number of full-time and contracted staff you should employ at your agency. Section 199A in the new tax law offers a big perk for small businesses. Whether it helps a lot or a little depends on how your agency operates. Section 199A gives taxpayers deductions for qualified business income. This applies to qualified businesses that operate solely through a “pass-through” entity -- essentially, a business structure used to reduce double taxation effects. The main benefit of Section 199A is the 20% deduction that agency owners can take on income. For some, like consultants, the law caps the benefit. Today, most agencies, regardless of size, operate as a blend of full-time employees and contractors. Some of the Section 199A benefits are a function of the wages paid to W-2 employees. Wages are not the only factor that affects Section 199A eligibility, though, so talk to your accountant. 2. Look for ways to take advantage of the R&D tax credit. The R&D tax credit — officially known as the Credit for Increasing Research Activities — allows a qualified business with qualifying research expenses to apply up to $250,000 of research credit against your payroll tax liability and potentially offsetting your AMT liability! This is an added incentive for you to build a more future-facing agency. While the R&D tax credit is federal, some states have adopted similar programs. To qualify for the R&D credit, your agency has to be “experimenting” with technology with a qualified purpose. Basically, this includes any time your agency is investing resources and devoting time to:

  • R&D that is technological in nature that provides results you intend to use to develop a new or improved business component
  • R&D that must be elements of a process of experimentation relating to a new or improved function, performance, reliability, or quality
Initiatives that may qualify include building your own technologies (such as CRM, databases, marketing automation) or developing tools to capture unique analytics. So, investing in these innovations will not only lead you to the front of the pack, but can be a good tax strategy, too. Prosper Group advises all of our clients that this is a good investment. The “Agency of the Future” will be built on data. The credit is also beneficial for those of you in tech-heavy niches — like VR or AI. But, let’s be honest. Almost every agency is going to devote some staff time to, at the very least, customizing out-of-the-box software, analytics or social media solutions. 3. Partner with a tax strategist, not just an accountant. Accountants and bookkeepers are essential for seamless day-to-day operations, but they are not strategic advisors. A tax strategist can help organize your financial operations in the most tax-efficient manner. It will help you take advantage of all available benefits and extract the maximum value from deductions throughout the year. For these purposes, a tax strategist is a CPA who specializes in helping businesses design and initiate strategies ahead of time, as opposed to a tax preparer who handles records of financial decisions made by a business owner throughout the year. A tax strategist can help you with both tax planning and preparation. Think of this as two sides of the same coin. By planning ahead and developing a tax strategy upfront, you’ll be in the best position possible to minimize your tax obligations allowing your business to thrive. It’s not as easy as “1, 2, 3” since each requires research, planning and appropriate actions, typically with the advice of an expert. Manage the tax obligations of your firm as well as you manage everything else. And, start now (if you haven’t already) planning for next year. Developed by David Bosses and Doug Baxter, partners at Prosper Group. The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial advisor. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial advisor. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Tax Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need. This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm. We appreciate your interest. Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, we are now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of: (i) avoiding tax-related penalties under the Internal Revenue Code or; (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein

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Agency Development, Blog

Five services your agency should be offering in 2019

Agency owners should consider developing new solutions that demonstrate the relevance of the agency to existing and new clients.

In the last year we have all witnessed tremendous disruption in our businesses. The client/agency relationship is at risk; companies are developing in-house agencies; company growth agendas bring in CIOs and other business stakeholders; marketing budgets face constant pressure; and consultancies are swooping in to take away the high-margin business transformation and “Experience Technology" assignments.

This is no time to be complacent. Agency leaders should be developing a future-facing mindset in order to remain relevant to your clients. Prosper Group is dedicated to helping our clients become the “Agencies of the Future” to stay indispensable to clients.

Here are five service offerings you should be prioritizing in 2019 - if you haven’t already.

1.    Real Business Transformation

This is something that agencies need to get better at in the years ahead. In the past, our partnerships with clients were based on their marketing and communications needs. But, the disruption brought about by the digital age has changed all that. Clients need more transformative services and solutions from their agency partners. At the recent Worldwide Partners Summit in London, Prosper Group led a session on how agencies must offer clients deeper thinking that will allow them to transform their businesses for tomorrow’s markets.

Click on the link below to watch Doug Baxter’s presentation to agency CEOs at the Worldwide Partners Summit in London:

http://prospergroup.net/wpilondon18/.

Many have already experienced the large management consulting firms making huge inroads into our business by offering these services. We need to develop new models more focused on the metrics that really matter to clients: return on marketing investment, new customer acquisition, profit per sale and client retention, to name a few.

2.    Deep Understanding of Analytics

There are also great opportunities for agencies that have developed a mastery of analytics. Clients resist making transformative decisions described in the first point without appropriate data. There is a new generation of clients whose first question will always be “What does the data say?”. Today, deep learning allows us to take massive and sometimes unstructured datasets and reap relevant, actionable insights and direction.

What’s more, predictive analytics activate those insights by facilitating real-time optimization, ongoing measurement, and even further optimization.

Here are five different data skills your agency may need to master in 2019:

  • Fluency with emerging analytics. Existing analytics platforms will evolve, and new solutions will emerge. To stay current with what’s possible, you’ll want your digital marketers to be fluent with the latest digital marketing analytics.
  • Business acumen. A strong digital marketer will know how to stay focused on business goals and not get lost in the data. That means having the business acumen to know which analytics are meaningful and actionable. Most importantly, they should know how to use analytics to advance business objectives.
  • Data wrangling. Also known as “data munging,” this is the process of transforming and mapping data from a raw form into another format so it can be used for other downstream purposes, such as analytics. These skills come out of data science and traditionally belonged to the data scientists. But as digital marketing becomes increasingly data- and analytics-driven, you’ll want people on your teams with these skills.
  • Storytelling with data. Storytelling usually evokes word mastery, but the rise of data visualization means data can now play a bigger, more visual role in any story you want to tell. The key for analytics-savvy digital marketers is figuring out how to present data visually so people who are not particularly proficient at immediately grasping the meaning of graphs and data can also see the story in the numbers.
  • Proficiency with unstructured data. Unstructured data — data that isn’t stored in a database row or column — has played a big part in the current data boom. That’s because so much of today’s data is created on social media platforms and in other unstructured formats. Think tweets, Facebook posts and comments, or even chat messages with a call center representative. As digital marketing campaigns move to social media, more of your customer intelligence will take the form of unstructured data. Moving forward, proficiency with unstructured data will be key. You’ll want digital marketers who can organize and understand unstructured data and know how to combine and correlate it with structured data for even greater insights.

3.   Strength in Integration and Digital Project Management

Disruptive technologies continue to penetrate and reshape every industry and job role, forcing companies to adapt and operate more nimbly.

To succeed in this competitive environment, companies are embracing digital transformation throughout their organizations — especially in marketing. And, as more digital transformation investment is allocated to marketing, more digital projects will need to be scoped, planned and implemented.

Digital project management is a big bucket that encompasses a broad range of skills and capabilities, some of which we capture in other categories. But here are a few must-have digital project management skills:

  • Proficiency with project management tools like Wrike, Trello, Slack, Basecamp, Liquid Planner, Pivotal Tracker
  • Understanding the software development methodologies — Waterfall, Scrum, Agile and others
  • Familiarity with content management systems (CMS)

4.   Artificial Intelligence: Set to Boom

We have really only begun to scratch the surface of AI’s potential. For example, investments in AR and VR, a small segment of AI, are expected to grow from $11.4 billion in 2017 to $215 billion in 2021.

The challenge now facing agencies is developing an artificial intelligence mindset, in order to make best use of AI-powered tools and tech. There’s a push to explore the myriad ways AI can improve data collection and analysis, create organizational efficiencies, enhance the customer experience and ultimately drive greater ROI.

As exciting as it is, it’s important that agencies keep AI in perspective. It is not a cure-all for every problem. Avoid the temptation to start with the tech; rather, define the problems you want your technology to solve and from there, you can begin to explore AI-powered solutions.

In the coming year, we’ll see a lot of first-adopted AI applications fade away as organizations track and analyze performance data and rethink their strategies. The volume of data created worldwide is growing at a staggering 40 percent per year, feeding a near-unimaginable level of intelligence into organizations attempting to make sense of and activate it. As consumers increasingly move away from the touch interface and choose to converse with search engines and personal assistants, we’ll gain even better informed, more compelling experience.  We are just beginning to understand the possibility of the opportunity of platforms such as Alexa.

 5. Embrace Marketing Automation

Many leaders in our industry fear marketing automation. They consider it a threat to the strategic and creative outputs they historically offer clients. What if clients embrace it and consider the agency redundant?  In reality, automation in marketing frees up valuable time to focus on areas of greater impact - on creativity, communication and decision-making.

Today, you can automate search campaigns, email campaigns, lead flow processes, analytics, content promotion, interactions triggered by actions within your CRM, and more. There’s a tool out there to automate delivery of every message and the collection of every bit of data it generates.

It’s the next step in automation that is exciting. It is the combination of automation and AI. Intelligent automation takes the efficiency and productivity of automation and layers on data analysis, decision-making and even prioritizing next steps. Automation allows for the collection and analysis of super datasets; natural language processing; and machine learning that drives predictive analytics and evidence-based learning.

Applications that interact with your customers and even make decisions about how to interact with them must be extensively tested and monitored closely by team members skilled in AI. ROI cannot be measured in dollars alone. Customer satisfaction must be tracked at various points in the journey in order to fully realize the impact of the technology on your customer-facing operations.

These are five services our clients are integrating into their agencies’ offerings. However, every agency is different. The strongest voice to listen to as you develop and rollout new services is that of your clients themselves. They may not always be able to describe exactly what solutions they need, but will be able to tell you what problems they want to solve and what objectives must be achieved. Your agency’s ability to provide new solutions to these challenges is a golden opportunity for 2019.

Doug Baxter is a partner at Prosper Group, and leader of our digital practice.

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Blog

Is your agency ready for the next recession?

For the past 5-6 years, marketing communications agencies (especially independents) have been enjoying a long run of strong growth and profitability. You’ve earned it. But you can’t take it for granted. The next recession is coming… and it may be soon. Many pundits are predicting that a recession may arrive sometime in the next 12 to 18 months. Recessions are sneaky. They creep up on us. Sometimes it takes several quarters before we start to feel it… and then it’s too late to prepare because the recession is already here. Are you ready? At Prosper Group, we believe that agency owners would be wise to start thinking about steps to take now should a recession hit us in the coming quarters. We also believe that smart, proactive agencies can in fact capitalize upon recession to become even stronger, more competitive and add top talent instead of passively trying to just “ride it out”. We’re here to help. Here are our recommendations to help get you started. How to get your agency into fighting shape for the next recession? Start running your agency for maximum profitability.  During a recession, revenue generally decreases which directly impacts the bottom line profitability of your agency. You should strive to maximize profitability now so that, in an economic downturn, it takes as long as possible before your profits turn into losses. For example: A $10 million net revenue agency operating at a 10% profit margin can sustain a loss of $1 million before red ink occurs. That same agency operating at 30% profit could sustain $3 million in losses before any red ink. Dig into a deep review of all operating aspects of your agency which can increase competitiveness. During a recession, there will be fewer business opportunities so you need to become more competitive and more capable than ever. Carefully review key areas (which we include in our Growth Driver Audit) such as your agency’s vision, brand value proposition, leadership’s ability to sell and service the value proposition, digital fitness, meeting clients’ expectations with contemporary and relevant new service offerings, financial management practices and more. What’s working? What needs to be better (and soon)? Take a fresh look at how you communicate about your agency to prospects and the market. Is it as relevant and powerful as possible? Are your areas of “super competitiveness” (such as  category/industry specialization and knowledge) being effectively communicated and clearly understood? Does everyone on your staff understand why a prospective client should choose YOU? Leverage what you know (which is unique to you) and not just what you do (which is generic) to make your website, SEO, presentations and outbound messaging just a compelling as they can be. Be consistent in your outreach efforts. Use your built-in advantages vs. global agencies. You have at least three:

  1. Pricing: Independents are usually more efficient than global agencies with fewer layers, fewer non-billable departments and lower overhead. Independents can earn a higher profit per dollar of billings due to the mix of staff and, at the same time, devote more experienced talent to the client’s business.
  2. What you know: Independents generally have deeper knowledge of the smaller number of industries and specialty categories which they focus upon compared to the larger agencies which try to be all things to all people.
  3. Better execution: Independents are also much more effective and efficient than the largest agencies at executing client programs. Ensure that your agency team executes at a high level in order to retain your most important clients during slow economic times.
Your people are the core of your business. Work even harder to get to know every person in your agency. Develop stronger bonds and establish common cause. Make it personal. Create a deep, motivating sense of united purpose, collective mission and WE. Your staff will rally around you and the agency during tough times, if they feel valued and if they have a personal bond with you as owner. Building up your financial muscles. No one can control the timing of a recession. But you can control how prepared your agency is to meet it. By being financially strong and flexible, you’ll be able to deal from a position of strength…  not weakness… going into and then during any downturn. Your agency’s financial strength will not only be key to keeping your own people, it will also help you to add talent and knowledge instead of losing it. It will enable you to hire exceptional people who have been let go by weaker agencies. Seven ways to increase your financial strength and flexibility. Start managing your staff costs more tightly. Total “people costs” are generally 75% of an agency’s cost structure. If you feel a recession is likely, get tougher on staff utilization by running closer to full capacity than you have been for the past several years. Managing staff more efficiently before a recession hits means that you have fewer jobs to protect and your overall cost structure will be lower. For example: As staff attrition occurs through resignation or termination, take a very close look at whether or not 1099 freelancers might be a better choice. Carefully examine where your non-people costs have crept up. Even though this is always a best practice, most owners let this slip during good economic times. Spending on phone, IT, subscription services, user licenses, T&E and other major items is too often taken for granted but can easily add up to a substantial number all too quickly. Challenge your team to see how the agency can remain competitive and effective while spending less. Analyze each expense area and ask tough questions about whether or not you’re getting the best value. Are all of your subscriptions truly being used? Do you need all of those licenses for research, media, accounting services and other software? Can you negotiate better prices and volume discount pricing for supplies? Are all of the trade shows your agency attends driving leads? Protect yourself with stronger client contracts. Negotiate termination clauses which guarantee that a specific (or minimum) amount of money will be paid to you during the notice period. Contractually require more money upfront (especially from start-ups and venture-backed clients) to avoid serious A/R write-off situations during a recession. Be sure to build a close relationship with your banker. Pay off at least some debt soon to reduce your lender’s exposure. By doing so, you’ll also avoid or at least reduce the stress of making payments during difficult times. Negotiate a more favorable line of credit now because banks become much tougher on loan/credit approvals in a recession. At the very least, ensure that you have an untapped line of credit equal to four times your payroll. Build a strong relationship with your landlord too. Landlords are much more likely to help a tenant whom they know well vs. one they don’t. Make sure that your lease gives you the right to sublet a portion of your space. Have a contingency compensation plan for you and your team. It may become necessary for the senior team to take a lower salary during the recession to help avoid layoffs of other valuable staff. Letting good people go due to short-term economic hardship can hurt your agency’s long-term value. Think about making a commitment to paying back the sacrificed salaries once the economy turns around. Finally, consider offering your key senior people additional compensation based on new business performance during the period of salary sacrifice in order to provide more focus and motivation for selling and growing revenue. This will align their goals during the recession with your need to ensure that the agency survives. This approach might not only help you get through the next recession but actually emerge even stronger on the other side. We’re here to help. Prosper Group’s mission it to help independent agency owners achieve their life ambitions. We help them to maximize and monetize the value of their life’s work. Please contact us at any time. Thank you for reading. Written by Alex Halbur and by Mark D. Johnson of Prosper Group (January 25, 2019)      

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Agency Development, Leadership, Leadership Coaching

Agency Leaders MasterClass: How To Build Mental Toughness That Can Make Your Agency More Successful

Being the leader of a communications agency is hard work. We are in a time of unprecedented change. Adapting to this change and developing the vision and leadership strategy that will inspire your staff takes a lot of hard work and courage. Sometimes it is a lonely job, especially if you are the owner/leader of a small to medium sized agency that doesn’t have a deep management team to lean on. It takes mental toughness to take on the challenges that agency owners face growing their business and servicing client all while maintaining a decisive and calm approach to solving issues. Here are 6 rules for developing your mental toughness so that you can do it all. Rule No. 1: Examine your beliefs. Think about the core beliefs you hold about your life, the world around you, and yourself. Have you developed ways of thinking that put limits on what you can do? Your past emotions, experiences, interactions, and behaviors always influence your present state of mind. You may find things from the past that negatively affect your present. Examine each belief and find the ones that limit you. Get rid of any negative beliefs—things that make you say "I can't" about yourself or your business. These negative beliefs may be a self-fulfilling prophecy, but getting rid of them will free you up to do, see, and try more. Rule No. 2: Change negative to positive. We're bombarded with negative self-talk all day long, and the inner voices never leave us alone. When we listen and give in to those voices, we end up quitting long before we truly run out of stamina. Catch yourself thinking negative thoughts and make a conscious effort to change them to positive ones. Change the way you talk to and think about yourself. Productive, positive thoughts will keep you going when negative thoughts would have caused you to shut down and quit. Rule No. 3: Use your mental energy wisely. You only have so much mental energy available every day. If you use it all on useless, anxious thoughts, you'll have nothing left for creativity and productivity. Stop thinking about "What if's" and "Maybe's". Bad things will always happen; no sense worrying about them or you live through them twice if not more. Anxiety will sap your mental energy and leave you drained. To develop mental fortitude, shore up your mind against worried thoughts. Rule No. 4: Analyze your progress. Whenever overwhelmed, take a moment to reflect on what you accomplished and then try and tackle the mountain in front of you. Big and little, you'll be amazed by how much of what you do goes unnoticed in the day-to-day scheme of things. By analyzing your progress, you can celebrate the small and large achievements. Just like you don't develop huge physical muscles overnight, the same is true of mental muscles. You have to use your mind every day in order to strengthen it. This simple activity can go a long way toward developing mental strength. Rule No. 5: Stop wishing, start doing. Do you ever find yourself thinking, "I wish I could build revenue" or "I wish I could win more clients like my competitor"? Stop wishing, and start doing! If you want to be like something, start thinking and acting like it. If you want to do something, do it. Stepping out of your comfort zone builds mental fortitude. You'll have to wrestle with anxiety, but that just adds to your strength. The more you stretch and grow, the easier it becomes to accept new challenges and push yourself beyond your limits day in and out. Have you developed a long term strategic plan for your agency that can help guide decisions and investments? Challenges that are tough are especially positive in developing our mental strength and versatility. Rule No. 6: Nothing works like tenacity. You are in one of the most competitive industry sectors there is. You are constantly competing for the best clients, talent, technology and ideas. Nothing succeeds like tenacity. We believe in the old Latin motto ‘Nulla Tenaci Invia Est Via’. To the tenacious no road is impossible. Go conquer!

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Agency Development, M&A Transactions, Mergers & Acquisition

Prosper Group Transaction Advisors Case Study – Cassidy & Associates

This week Prosper Group announced that it served as transaction advisors to the management team of Cassidy & Associates in their purchase of the lobbying firm from Interpublic. Kai Anderson (CEO) leads the management team under new ownership along with Barry Rhoads (Chairman), and Jordan Bernstein (COO). Prosper Group’s work with the management team included advising throughout the negotiation process, financial analysis, and strategic counsel through the documentation and closing process. Prosper Group will continue to provide counsel and advice to Cassidy & Associates as they migrate to become a fully independent firm. David Bosses, who heads the firm’s New York office and M&A practice, led the assignment. Anderson said, “David’s guidance and experience were invaluable to us during the entire process. Even during an amicable deal, such as this, trusted counsel ensures that you are well positioned for post transaction success.” David Bosses commented, “This is a prime example of how Prosper Group supports agency owners and leaders in complex transactions and negotiations as well as post closing concerns. There will be strong long-term benefits for the Cassidy team in securing their independence from IPG. It is truly a win:win deal” Prosper Group, founded in 2014, brings the expertise of former agency owners and leaders of global agencies to independent agency owners looking for support in charting a course for their future. Prosper Group serves as performance improvement, organizational development and transaction advisors to owners of marketing communications agencies. Prosper Group has offices in New York, Washington DC, Los Angeles, and San Francisco. Learn more: www.prospergroup.net. If you are considering making an acquisition or selling your agency Prosper Group can support you with a range of services that will ensure that you minimize the risk associated with such transactions and maximize the value that the transaction will offer you and your company. For more details or for a free consultation please contact dbosses@prospergroup.net

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Agency management, Mergers & Acquisition

Agency Owner’s Masterclass: Why You and Your Partners Need a Buy-Sell Agreement

AGENCY OWNERS MASTERCLASS: Why You & Your Partners Need A Buy-Sell Agreement There is a compelling case for creating a Buy-Sell Agreement for co-owned agencies. If owners agree about how to appraise business value and set the terms of payment in advance of any transfer event, they can avoid the heated and often damaging negotiations that can occur when one owner leaves the company. In this issue, we continue making our case for Buy-Sell Agreements by outlining several other advantages of a well-drafted and recently reviewed Buy-Sell Agreement. Controls Transfers A Buy-Sell Agreement can control all transfers of business ownership to the benefit of both the owner wishing to transfer ownership and the owners who want to acquire ownership. This agreement can assure that a selling owner (or his or her estate) is selling for fair value and under terms and conditions that are acceptable to all parties. Further, the agreement assures remaining owners that any transfers of ownership must be at least offered to them. This eliminates the potential for an outside party or a co-owner’s spouse or children to assume ownership of the business, all of which could negatively affect the company’s management, control, and value. A Valuation for All Reasons A Buy-Sell Agreement sets forth an agreed-upon method of valuing the agency that applies to all transfers. Owners’ valuations of their own businesses may be much different than the IRS’s or a co-owner’s. If owners rely on a “stated value” or a formula-based value, they may run into difficulties with both the IRS and other owners, because value in privately owned businesses changes often and rapidly. If Buy-Sell Agreements are not revised every year, their valuation formulas will favor either the buyer or the seller, and provide ample opportunity for disputes. Owners can avoid this by requiring a value determination from a certified business appraiser, but even that provision needs to be drafted carefully. Similarly, if co-owners buy a living co-owner’s interest, the value of the selling owner’s interest will likely be lower in the buying co-owners’ opinion than the seller’s. However, if their Buy-Sell Agreement requires the involvement of a business appraiser, they can avoid this impasse. It is best to agree—today—on a method of valuing the business when no owner knows which side of the transfer table he or she will be sitting on. Not knowing whether you will be a buyer or a seller tends to ensure that all owners work to protect the interests of both the buyer and seller. If owners don’t have an existing, binding process for valuing the business, ideally using a credentialed business appraiser, they can expect disagreements when one of the owners leaves the business. We strongly recommend that owners take the reins and design a valuation appraisal process suitable for their companies, and we would be happy to help you do so. The Fine Print In a Buy-Sell Agreement, owners can fix the terms and conditions of any transfer of ownership, including interest rate, length of buyout period, and security. In addition, it often is possible to provide the funding for future ownership acquisition, either during an owner’s lifetime or after death. Finally, Saving on Income Taxes Buy-Sell Agreements should be drafted to anticipate the likeliest transfer event: the sale of an ownership interest from one owner to another. While they require additional planning and document drafting, intra-owner sales can be designed to save as much as 30% of the company’s cash flow from taxation. For example, if the purchase price is $1 million, the cash flow required to pay a departing owner could be reduced by $300,000 or more. To repeat, this does take additional tax planning—but the result is well worth it. We’ve made our case about the importance of establishing a proper Buy-Sell Agreement, and now we want to help you do it. Contact us today and we can begin creating a Buy-Sell Agreement that covers all of your business wants and needs. Contact dbosses@prospergroup.nert for more details.  

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Agency client relationships, Agency Development, Agency management

16 Keys to Healthy, Long-Term, High-Value Agency/Client Relations

Breaking the Cycle Of Glee to Flee By John J. Seng 2017 marks my 38th year as a public relations practitioner, with 35 years on the PR agency side of the fence and three years in the mid-1980s managing external and internal programs for a leading pharmaceutical company. I’ve been the boss in the latter half of my career, launching the health-care only PR firm Spectrum in 1996. Compared to Google, founded two years later, I’m a failure! Well, not really. I consider our leading health and life science public relations firm a success in many important regards, all owed to getting right one of the two words that describe our profession: Relations. At age 38 in 1996, married with two young children, I decided that my current salary growth wasn’t the sole important criteria for me to secure my family’s future. Instead, I reasoned that stable employment with fair pay at a quality employer was far more crucial. Through the years, I’d worked at other independent shops and a few what I call mega-agencies between New York and Washington, but never more than four years or so anywhere. I was still learning, making lots of mistakes and growing, while my employers were expanding or downsizing or selling to third parties. I recognized that my career track lacked design and planning. Instead, I was reacting to unpredictable change. Whether a student or creature of PR agencies, I thought a lot about my experiences and the roots of all-too-often tectonic plate shifts of firms and realized that the unsteadiness in the businesses derived mainly from unbroken patterns of poor relationships between the PR firms and their clients. You know the drill. When the PR firm wins the business of a big client, it’s all hugs and kisses. Please enjoy the honeymoon of two or three months, and then settle into a continuum of steady performance that, after a time, perhaps two or three years, begins to degrade. Patience runs a little thin. Boredom and malcontent. Fingers start pointing. People have come and gone on both sides, so almost certainly some of the original parties may have changed jobs within or to positions at other organizations. Before too much longer, contracts aren’t renewed or the account is put out for bid. The incumbent PR firm management decides not to rebid or is not given the opportunity, and heads oftentimes roll. Did I leave anything out? At a crossroads in the midpoint of my career, I wondered why it had to be the way as above described. What does it take to break a cycle of “from glee to flee?” I’d like to think that the past 20 years of running things a different way at my own firm resulted in far more stable client-agency relationships. Despite some stumbling along the way, we’ve enjoyed mostly steady growth in revenues and employee headcount. What are the roots of healthy client-agency relationships? My non-scientific but firsthand anecdotal observations led me to conclude that the values that enhance the relationships between couples in our human population can also apply to the people who staff client-agency relationships. Also bear in mind that just as with people, it takes two to create a bond, but only one to break it. For clients and their agency partners both looking for stable relationships, consider my 16 rules for engineering a lasting, healthy bond. (I’m addressing both parties in the following list.)   Screen Shot 2017-06-05 at 8.11.13 PM In the beginning, when the client has just awarded the business to a new firm

  1. Form and communicate a mutual trust and strive to never break the compact. This rule is paramount. In my experience among all my employers, the biggest breakdowns result from one or both party’s taking the other for granted: Slacking on the pledge to give 100% and putting relationships on auto-pilot; not really caring as much as your trusting partner deserves; agency people forgetting to worry about your clients’ concerns and needs and thinking of solutions until too late when the client is yelling. To clients, introduce the principle of trust at the RFP stage and put appropriate language in your contracts: Your “marriage vows,” but in writing. Agencies, make the commitment, and honor and defend it, particularly if and when your management attempts to make you cut corners.
 
  1. Establish who’s in charge on the client side; and who’s in charge at the agency. Each party must set outstanding examples in leadership for its respective team. Each side’s leadership bears a responsibility to visibly set and adhere to high standards of behavior.
 
  1. Set the ground rules for process and engagement; and expectations for results. The more concrete the goals, the less ambiguity and potential for disappointment down the road. If possible, cut the red tape and simplify your approvals (without weakening them) mechanism to pave a cleaner pathway to success. A streamlined chain of command facilitates a speedy response time, especially important given 24/7 news cycles and the volatility of social media.
Every day thereafter…
  1. There’s no substitute for honesty. Be honest brokers on both sides. Give and expect respect at all levels and sectors of engagements. Be open and honest with credit and criticism. Is it really always the agency’s (or client’s) fault? Instead, when problems arise, run to them like a fire fighter smelling smoke. It’s incumbent upon each side to take a custodial approach to nurturing the relationship. Ask for critique and feedback. Too often, agency leaders avoid asking about what they’d rather not hear. But ignoring opportunities to learn whether a hurricane is forecast doesn’t guard you from that certain threat.
 
  1. Despite the best of each parties’ collective intentions, there will always be characters and personalities who, for whatever reasons, bring unhealthy levels of their own pet peeves, envy and passive-aggressive quirks into a business relationship. Leadership as well as rank-and-file should recognize and correct bad behavior, or the personal agendas of individuals will upset the balance in the relationship and hamper productivity for the entire relationship franchise, and likely increase costs with diminished results.
 
  1. Maintain fairness and dignity. Don’t air dirty laundry about other partners or executive colleagues in front of one another, and especially not within earshot of your partner organization. Succumbing to a temptation to badmouth others can foment a lack of trust (“Is he saying the same thing about me?”) and only makes the perpetrator look small. It amounts to unnecessary and distracting turmoil.
 
  1. The devil’s in the details. Leadership for clients and agencies should ensure that their respective billing and administration functions are aligned in every way. Agencies, send out clear, fair and timely billing. Clients, pay the bills on time. With questions, immediately ask them but don’t hold up an entire bill unless there are fundamental, outstanding disconnects. Remember the trust thing?
 
  1. Strike a better balance between use of email and the phone. Whenever emotions might be arising…Pick. Up. The. Phone! Even if you can only leave a voice mail. Know when to call instead of emailing or texting. Written communications are a must in the interest of clarity and sharing, but nothing substitutes live exchange, whether in person or by video chat or telephone call.
 
  1. Avoid aimless, regimented bean-counting. Judgment day needs to come, but it should be scheduled at meaningful intervals. Clients, do you really want your PR firm managers spending their hours looking at spreadsheets, or instead leading their teams to think about your needs and do their best work for you? For instance, spending a mere 30 seconds on a conference call acknowledging a major program success, and then grinding away on invoices or process minutiae for six minutes abuses everyone’s time and sucks inspiration and energy out of your communications partners. If you want your firm to think big, then give “big” far more of the limelight.
 
  1. A healthy agency-client relationship should be an even business exchange. Stop with the scope creep. Smart public relations agencies will bend over backwards to do a favor for a client, now and then. But incessant “never enough” is fatiguing and deflating to PR agency partners. By the same token, PR firms should remember rule #1 above and never take their clients for granted. If it feels like a shortcut, it is. If it feels half-hearted, guess what? It is.
 
  1. Show mutual respect for your people and the work challenges at hand. For starters, be on time, if not early, for appointments, or those teleconference calls. Prepare for meetings. Be organized and courteous. Unless it’s a true emergency, don’t leave meetings early or make sure to inform your teams in advance. Next, maintain your mindfulness and presence. Your goal is for the team to win, not prove you can speak louder and longer than others. Listen more and talk less. You will be heard, and more important, respected and persuasive.
 
  1. Figure out a way to not constantly check mobile devices during a presentation or discussion. For people who like to take notes on their laptops, unfortunately doing so looks like you’re multi-tasking instead of paying attention to what’s going on right in front of you. Doing so gives tacit permission for others on your team to give in to distraction. You lose too much eye contact in a personal meeting, which interferes with trust and engagement. Does this behavior encourage the cohesion your team needs as you prepare for that new product or service launch? Unless you’re the meeting transcriptionist, take notes on a legal pad. The message you send to colleagues on attentiveness is more important than your need to record every word. If you really, really need to capture detailed conversation, then do so by announcing to the group in advance that you would like to audio record the proceedings. That way, you can pay attention, and pay somebody else later to transcribe the proceedings.
 
  1. Show genuine appreciation for performance and results. Don’t over-celebrate mediocre results; yet don’t overlook or minimize outstanding outcomes. Don’t take all the credit for your agency partner’s successes (as surely you won’t take the blame for problems). Instead, position the achievement of goals as a team win, but credit the firm as appropriate. Ensure that your senior management weighs in now and then with calls or messages of appreciation. Many clients have no idea how far a kind word from the top can go with the agency.
 
  1. If you’re happy with the performance of your PR firm, don’t keep it a secret internally or externally. I’m completely biased here, but a really cool and cost-effective way to reward your PR firm for its outstanding work and relationship with you is to refer the firm to your colleagues elsewhere in your organization, and agree to serve as a reference for the firm as it seeks to earn the privilege of working for other clients. If lending your endorsement will help your partner agency win additional business, what’s so wrong with your PR agency becoming even stronger, and perhaps benefiting you and your employer?
 
  1. Avoid offering or encouraging excessive gratuities and gifts, starting with the client pitch. Freebies, unless they relate to the moment in a creative way, tend to cheapen our profession and detract from forming a healthy relationship. In government and in many companies, gifts of any amount are strict no-nos.
And, finally…
  1. Public relations firms should be, more than anything else, counselors to their clients. Recognizing the higher order of the profession as primary caretakers of an organization’s relationship with the public should be integral among internal client decision-makers all the way to the C-suite. Corporate or institutional procurement departments that insist upon rote, biannual or semi-annual outbidding relegate public relations counselors to commoditized, customer/vendor relationships that don’t incentivize agencies to do their best, even despite the best of intentions. The role of corporate procurement is here to stay. However, enlightened procurement operations seek to understand the deep value of the public relations profession understand the genuine cost-effectiveness that correlates to long-standing, mutually trusting and productive relationships between the client and public relations agency partners.
I’ve found nothing, I repeat, nothing more valuable in my experience than a decade or longer client-agency relationship that sails under its own steam of high quality results and performance for compensation. Sustained, healthy relationships maximize results for clients and minimize disruption and chaos on the business front. For their PR firm partners, relationships built on unflagging trust in one another carry with them unrivaled stability and the prosperity that goes in hand, for both parties.
  • John Seng is founder and chair of Spectrum Science Communications; as well as senior advisor to Prosper Group. John@ProsperGroup.net; @JohnJSeng
     

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Agency sales, Agency valuations, Mergers & Acquisition

Agency Owners Masterclass – How To Avoid the Pitfalls of a Sale to an Inside Team

Avoiding Disasters in Insider Transfers At Prosper Group we talk to agency owners every day about the difficult choices they face when planning their futures. Steve Smith was no different than millions of other baby-boomer business owners in that the thought of leaving his agency was never far from his mind, no matter how far away his exit might have been. He daydreamed about transferring the agency to his oldest daughter and perhaps to a member of his management team, yet he couldn’t gauge their passion for owning a business and hadn’t tested their management skills. And, of course, they had no money. Steve’s agency was his economic and financial lifeline. Without its income, his ability to use the business to accumulate wealth, the ability to sell his interest to a buyer who had cash, and a plan, Steve’s wishes would never come true. To Steve, it was obvious that if he ever wanted to exit his agency in style, he needed to wait for a white-knight buyer to appear on his doorstep bearing saddlebags of cash. So, Steve did what many other owners in his position do: nothing. If you think that transferring your business to your children or management team is inherently risky, you are right. Insider transfers are risky for three reasons:

  1. Insiders have no money
  2. Successors’ management/ownership skills and commitment to ownership may be untested
  3. Owners lose control of the business if they make the transfer before they are completely cashed out.
On the other hand, the possible benefits of an insider transfer include the following:
  1. Keeping the business in the owner’s family or extending the owner’s legacy through his or her hand-picked management group.
  2. Motivating, retaining, and rewarding key employees.
  3. Reaping more after-tax money than a third-party transfer.
  4. Retaining control until all, or most, of the purchase price is received.
  5. Remaining active in the business while gradually reducing day-to-day responsibilities.
  6. Providing time for owners to build up personal assets (via distributions of cash) before their exits.
The trick is to design a plan that minimizes risk so owners can reap all of the potential benefits. Let’s first look at how that might be done.
  1. Insiders have no money; therefore, it is too risky to sell to them. That’s true if owners don’t design a transfer strategy that puts money in the insiders’ pockets as they increase the value of the company. Owners have to work steadily and effectively to build cash flow (the source of all cash outs) through (a) the installation of Value Drivers and (b) careful planning to minimize taxation years in advance of the transfer.
Unless owners carefully plan to avoid it, cash flow can be taxed twice. This double tax, sometimes totaling more than 50% of the total payout, can spell disaster for many internal transfers. However, through effective tax planning, much of this tax burden can be legally avoided. Finally, agency owners and their advisors, including a certified business appraiser, should use a modest but defensible valuation for the company. By using a lower value as the purchase price, the size of the tax will be correspondingly reduced. The difference between what owners will receive from the sale of the business at a lower price and what owners want to be paid after they leave the business is “made good” through a number of different techniques to extract cash from the company after the owner leaves it.
  1. Successors’management/ownership skills are untested. If the successors’ ownership skills are untested, owners should create a written plan to systematically transition management and ownership responsibilities to their successor(s), beginning today. The transition period, during which owners test both their assumptions and their successors’ skills, usually takes several years to complete.
  2. Losing control before being cashed out. This only happens if owners and their advisors fail to implement a transfer strategy designed to keep the owner in control until he or she receives the full sale price for the business. In a properly crafted plan, owners keep control through a well-designed and incremental sale of the company based on improving company cash flow over time.
There are four keys to reducing the risks of an insider transfer:
  1. Plan the transfer well in advance of your desired exit date. Executing an insider transfer takes longer than executing a sale to a third party.
  2. Implement value-building activities, which are just as—if not more—important to an insider transfer as they are to a sale to a third party.
  3. Design the plan to be tax-sensitive.
  4. Write the plan down and hold advisors accountable.
We have the experience and know-how to help you implement those keys and unlock the doors to your successful exit. Please contact us today to get started on your insider transfer today. For a  full list of our services please visit www.prospergroup.net.  

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Agency Development, Agency management, Leadership Coaching

6 Ways That Agency Leaders Can Handle Difficult Employees

Communications agencies are stressful places to work. Deadlines, unhappy clients, interpersonal issues and endless admin. Most sources of stress at work are easy to identify. If your agency is working to land a big new client that your organization needs to function, you’re bound to feel stress and likely know how to manage it. It's the unexpected sources of stress that take you by surprise and harm you the most. Recent research from the Department of Biological and Clinical Psychology at Friedrich Schiller University in Germany found that exposure to stimuli that cause strong negative emotions -- the same kind of exposure you get when dealing with difficult people -- caused subjects’ brains to have a massive stress response. Whether it's negativity, cruelty, the victim syndrome or just plain craziness, difficult people drive your brain into a stressed-out state that should be avoided at all costs. The ability to manage your emotions and remain calm under pressure has a direct link to your performance. TalentSmart has conducted research with more than a million people, and we’ve found that 90 percent of top performers are skilled at managing their emotions in times of stress in order to remain calm and in control. One of their greatest gifts is the ability to neutralize difficult people. Top performing leaders have well-honed coping strategies that they employ to keep difficult people at bay. While we’ve run across numerous effective strategies that smart people employ when dealing with difficult people, what follows are some of the best. To deal with difficult people effectively, you need an approach that enables you, across the board, to control what you can and eliminate what you can’t. The important thing to remember is that you are in control of far more than you realize.

  1. Set limits. 
Complainers and negative people are bad news because they wallow in their problems and fail to focus on solutions. They want people to join their pity party so that they can feel better about themselves. People often feel pressure to listen to complainers because they don’t want to be seen as callous or rude, but there’s a fine line between lending a sympathetic ear and getting sucked into their negative emotional spiral. You can avoid this only by setting limits and distancing yourself when necessary. Think of it this way: if the complainer were smoking, would you sit there all afternoon inhaling the second-hand smoke? You’d distance yourself, and you should do the same with complainers. A great way to set limits is to ask complainers how they intend to fix the problem. They will either quiet down or redirect the conversation in a productive direction.
  1. Rise above it. 
 Difficult people drive you crazy because their behavior is so irrational. Make no mistake about it; their behavior truly goes against reason. So why do you allow yourself to respond to them emotionally and get sucked into the mix? The more irrational and off-base someone is, the easier it should be for you to remove yourself from their traps. Quit trying to beat them at their own game. Distance yourself from them emotionally and approach your interactions like they’re a science project (or you’re their shrink, if you prefer the analogy). You don’t need to respond to the emotional chaos -- only the facts.
  1. Stay aware of your emotions. 
 Maintaining an emotional distance requires awareness. You can’t stop someone from pushing your buttons if you don’t recognize when it’s happening. Sometimes you’ll find yourself in situations where you’ll need to regroup and choose the best way forward. This is fine and you shouldn’t be afraid to buy yourself some time to do so. Think of it this way -- if a mentally unstable person approaches you on the street and tells you he’s John F. Kennedy, you’re unlikely to set him straight. When you find yourself with a coworker who is engaged in similarly derailed thinking, sometimes it’s best to just smile and nod. If you’re going to have to straighten them out, it’s better to give yourself some time to plan the best way to go about it.
  1. Establish boundaries. 
 This is the area where most people tend to sell themselves short. They feel like because they work or live with someone, they have no way to control the chaos. This couldn’t be further from the truth. Once you’ve found your way to Rise Above a person, you’ll begin to find their behavior more predictable and easier to understand. This will equip you to think rationally about when and where you have to put up with them and when you don’t. For example, even if you work with someone closely on a project team, that doesn’t mean that you need to have the same level of one-on-one interaction with them that you have with other team members. You can establish a boundary, but you’ll have to do so consciously and proactively. If you let things happen naturally, you are bound to find yourself constantly embroiled in difficult conversations. If you set boundaries and decide when and where you’ll engage a difficult person, you can control much of the chaos. The only trick is to stick to your guns and keep boundaries in place when the person tries to encroach upon them, which they will.
  1. Don’t die in the fight. 
 Smart people know how important it is to live to fight another day, especially when your foe is a toxic individual. In conflict, unchecked emotion makes you dig your heels in and fight the kind of battle that can leave you severely damaged. When you read and respond to your emotions, you’re able to choose your battles wisely and only stand your ground when the time is right.
  1. Leaders don't focus on problems -- only solutions. 
 Where you focus your attention determines your emotional state. When you fixate on the problems you’re facing, you create and prolong negative emotions and stress. When you focus on actions to better yourself and your circumstances, you create a sense of personal efficacy that produces positive emotions and reduces stress. When it comes to toxic people, fixating on how crazy and difficult they are gives them power over you. Quit thinking about how troubling your difficult person is, and focus instead on how you're going to go about handling them. This makes you more effective by putting you in control, and it will reduce the amount of stress you experience when interacting with them. Prosper Group works with agency owners and leaders to help them improve their business performance and secure the maximum long term value from their agencies. We have structured leadership development programs that equip leaders to handle the difficult issues that arise in busy agency environments. For more details please contact the Alex Halbur, Managing Partner, alex@prospergroup.net. 310 936 3774    

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