Commercial Resilience For Agencies

Great creative work doesn't always mean a healthy bottom line. In this episode of The Edge of Influence, host Iman Issa and Lisa Welsh - Co Founders and Managing Partners, North Seventy Five, sit down with Zaid Aboobaker - CEO, CompassPoint Consulting, to unpack what commercial resilience really looks like for agencies navigating a tough, procurement-driven market.

They dig into the race to the bottom on pricing, why over servicing quietly kills margin, and how financial transparency across a team and not just at the top, builds a stronger business. The conversation covers quality of revenue vs. growth for growth's sake, the soft skills needed to have honest scope conversations with clients, and practical habits for staying on top of cash flow.

Whether you're running an independent agency or leading within a larger network, this episode offers grounded, experience-backed advice for protecting margin and building a business that can weather turbulence.

Production Credits:

Presented by: Iman Issa
Editor: Ian Carless
Executive Producers: Iman Issa & Ian Carless
Produced by: North Seventy Five & Poddworx Dubai

Transcript

Welcome And Why Resilience Matters

Iman Issa 0:17

Hello and welcome back to the Edge of Influence, a podcast brought to you by the Alliance of Independent Agencies, Middle East and North Africa, and North 75. I'm your host, Iman Esa, co-founder and managing partner at North 75. Today we are talking about commercial resilience, or brilliance as I sometimes like to call it, and I am joined by Lisa Welsh, a former chief operating officer from WPP. Lisa brings over two decades worth of experience running and leading agencies. I'm also joined by Zayd Abubaka, CEO of Compass Point Consulting. Zaid joins us with 18 years of experience from both in-house agencies and now advisors, independent agencies as a fractional CEO. Welcome to the show. Thank you.

Lisa Welsh 1:04

Thank you. Great to be here.

Iman Issa 1:05

So as you know, today we are talking about all things commercial. I think a lot of agency leaders will know the feeling. Really strong work, phenomenal client base, a really fantastic team, but commercially, it can often feel like you're holding your breath. And I think given where we are over the last six months, it's been a particularly turbulent time for us in our region. And I think when we start to go through moments of difficulty, it can often show up in your PL, your margin, your bottom line, which can cause either knee-jerk reactions or it can cause us to really think about the type of habits we've developed during good times. What we want to spend some time today thinking about is what does good commercial resilience look like for independent agencies, but also for some of the larger agencies that operate because ultimately we all want to scale and grow. So I'd like to point my first question to Zayd and just to really understand at a broad point of view, what are some of the best practices that agency leaders should really be thinking about during this period of time? And what are some of the challenges that they're facing as well?

Procurement Pressure And Price-Driven RFPs

Lisa Welsh 2:19

So let's start with the challenges. I think that if you look across the entire sector, whether you're a big agency or a small agency, the biggest pressure and challenge is price. There is so much competition that every RFP that comes out has so many different agencies responding. And then the increased power of procurement across the region means that all these agencies are competing primarily on price. I think you'll often hear procurement come to every agency and say, hey, you know what? You guys, we loved it. Technical proposal, brilliant, great ideas, but you're too expensive. So sharpen your pencil. Let's get to that best and final offer. Let's see how much we can force you down on price. And I think that's the biggest challenge that big, small, medium, whatever size agency you are, that's that's the real crux of the challenge today. It's the increased power of procurement. And how do we overcome that? And what would what do I think is good commercial resilience? It's about knowing for certain your cost base and understanding how much room you have to negotiate. Because what tends to happen in my experience is an RFP will come out or an opportunity will exist and the agency's eyes will light up. Oh, you know what? We could charge X thousands of dollars a month for this particular retainer and it'll be great. And on the top line or your revenue line, it will be great because you will charge and invoice a big number. But in reality, what are you making? Do you actually know what your profit on that client is? Because sometimes you may be better off taking the brave decision of walking away from that piece of business if it's going to be a margin or a profit level that doesn't add enough to you and creates pressure and more requirement to hire people, more requirement to have overheads and other costs in your business. And you become very busy but not very profitable. And I think commercial resilience is really about understanding fully what is your ability to negotiate and at what price should you be walking away?

Obsess Over Numbers And Client Profit

Iman Issa 4:33

So I think that's a really good point. And Lisa, in your former life as head of a larger agency, and obviously now as we move into the independence space, do you think that agency leaders are looking at commercials with that lens or that hat on?

Zaid Aboobaker 4:52

I think yes and no. I think it's definitely harder to do it given everything that's happening in the region, um, because everybody has targets, revenue targets, margin targets. So I think there's a desire to make the RFPs work if they if they can. So maybe there's a lower level of qualification that's happening for each of these leads. But I think for me, from an internal perspective, so talking in Zage was talked, you know, about externally in terms of RFPs. But I think for me, the success happens when you're obsessed with the numbers. And I think this is something that you and I were taught at a very kind of young age when we were really starting our career in the region, was really around knowing all of your numbers and that real deep obsession with the numbers and knowing them each and every day and each and every week. And I think not only us ourselves as now as leaders, but also the level of transparency that you have with your team. I think we've always found that you can build very successful teams and to your point, say, around, you know, the big RFPs and those big, wonderful retainer numbers. And you think, you know, I could be in July and I could hit my annual numbers if I win this RFP. And, you know, that hunger and excitement is very, very natural. Um what we've always found certainly when we were building teams and working with clients where we've also had a lot of organic growth, because there are also RFPs coming from clients maybe that agencies are already working with as well. So I think staying close to the clients, there's definitely a lot of power with procurement. If or how that will ever change, I'm not really sure. I don't, you know, I don't see much change there. I see the Alliance really championing that, you know, the power of the partnerships. And I think there's just some real impacts that can be had there. But I do think until that does fundamentally change, I think it is about the obsession with the numbers internally and the transparency with teams. Because I think that financial transparency that you have with your team, and I'm not necessarily talking about cash flow and things that maybe may panic them, especially given during times of challenges, but talking around things like margin, like revenue, like stuff cost of fee, like client profitability, when we look at things like scope creep um and where we can maybe charge additional things for clients. Um, I always had a client that would say, don't come to me with a tan sheets, Lisa. I don't want to have conversations around um over, you know, over scope and scope creep. Um so we used to we used to phrase it as investment. That was what we called it. You know, we have overinvested this month or this quarter or six months in, and you know, we agreed that anything over 15%, and that's when we would have the conversation. So I think there's different ways that you can protect the business, protect the margin. And a lot of it to me is around that, as I say, the obsession of the numbers and the transparency of the numbers as well.

Iman Issa 7:37

I think the other thing I would ask here is, and maybe Zaid, this is an observation that you will have, obviously spending time with some of the independent agencies and those companies that you're currently advising is do you see leaders having models in place or tools in place that allow them to cost in a manner that stops them from doing a race to the bottom? Do you think there are enough tools available? And is that an area that we potentially need to look at and improve upon?

Lisa Welsh 8:07

Yeah, I think 100%. I think it's very important to try and think about how this race to the bottom principle or concept can be somehow avoided because at the end of the day, who's the winner in the race to the bottom? It's not the agency, it's it's the client. And sometimes I also feel uh particularly from my vantage point, that if an agency uh goes into a client relationship feeling that it's cheaply priced or that it's underpriced, there you you kind of start from the wrong position, you know. Mentally you you you feel like you're doing the work, but you're not quite getting rewarded for it in the right way. And and that whole concept and principle is gonna give the client a poorer outcome. They they have to ultimately feel like they're getting good quality service, proper deliverables, proper results. And the way to get that is to make sure the incentives and the interests are aligned on both sides. You you talked a little bit earlier about you know some of the lessons you learned from your dad. Well, one of the things my dad always tells me is you get what you pay for. And if you are going to constantly ask people to give you discounts and provide cheaper service for the same deliverable or same quality, it's not going to happen. Everyone's kidding themselves, in my view.

Zaid Aboobaker 9:31

I think that's an interesting point because what we've also seen is sometimes that's a procurement-like conversation as opposed to a client conversation. So procurements are like, here's the technical score, and here's the commercials, and here's your now your agency. We've managed to get, you know, ex agency down to the lowest, and here you go. So the clients then saying, Great, this is the agency I'm now partnering with, they're probably seeing the scope exactly the same as it was in the RFP. Fantastic, that's a win. But then we'll probably looking at the budget and say it that looks really low. But quite often the day-to-day client or even the senior client hasn't been a part of that conversation. So then you're you're you're make you maybe starting that relationship with a tiny bit of resentment because you know that you know you've been forced on an auction to, you know, at the lowest that you possibly could. But then it's how can you make sure that, and I do feel it's really important to spend time with clients right at the beginning to say, this is the process that we went through, this is where we are, this is the scope, this is the team, because you still then have to service that uh as a team for the scope, not a team for the budget, regardless, you know, and you know, fundamentally you agreed to the budget, you know, no one forced you to do it. That was what you decided to do as part of the your winning strategy. But I do feel like it's really important then because quite often the client isn't even part of that conversation. So I wonder if there is room for clients to be be closer to that procurement process to what to be able to say, hang on a minute, I don't, you know, it's just financially not going to work for anyone if that is beneath this certain kind of threshold, maybe.

Iman Issa 11:04

We have spoken over the course of this series a lot around the role of procurement, the need for greater transparency when it comes to budgets in RFPs. And I think those two things are recurring themes, but there's genuinely a bit of a consensus that it's not going to be corrected overnight, which then brings me to Zaid's point, which is it goes to the agency team to understand what they're putting forward from a commercial perspective and what the impact of that submission is, both on the team from a servicing capability perspective and then ultimately on your margin. So, how do you ultimately start to balance the books over the course of a one-year period?

Overservicing Boundaries And Team Training

Iman Issa 11:50

Would be my next question, Zaid.

Lisa Welsh 11:51

So I think here what we have to understand is there's two forces at play. When you're an agency founder or you are in a senior leadership position, you're typically making the decision about hiring, about staffing, how many people you have and at what level. But if you're over-servicing a particular client through strategic direction or whatever it might be that's leading to that over-servicing, the likelihood is you're not paying that staff member overtime. It's not part and parcel of our sector, right? We don't pay overtime to staff. So one of the things that I see about that balancing act is we have to have more respect as agency leaders for the junior members of our teams who are doing extra hours and having to do out-of-hours service to comply with overservicing. So that's one element of how I would square it away. And the second is when you go into a relationship at the outset and you've picked a price and you've picked a scope, it's very easy to get pushed around on the scope because your natural uh human nature is to want to please the client, right? You want to please the client at all times. So there has to be a bit of a cultural shift internally around, you know, it's not about upsetting the client, but it's about being respectful of time. It's about being respectful of the boundaries that were set within the contract. And this, what I say here, I know it's so hard to implement in reality. But if you can get to a place where you're not asking people to work excessive hours to cope with that overservicing, and you have the relationship with the client where you can go back and say, listen, we're 10-15% over time at this point. We need to have a discussion about it. That's where your books will get balanced. The the biggest challenge that I've seen is where overservicing goes unaddressed and people just continue to work and work and work, and everything the client says is delivered, and no one ever has that conversation. And you get to the end of the end of the month, and we're like, well, we just gave them $20,000 worth of service for a $5,000 retainer. That wasn't very clever, was it? Um, and it it it effectively becomes like second nature. And I think it's a cultural thing that has to happen within the agency itself around what is the line, what's the boundary, and how do we respectfully and diplomatically speak to our clients about oversurface?

Iman Issa 14:24

I think this is something from our previous uh history. We have a lot of training around. And one of the observations I had as people were coming into the agency fresh from other places, is we realized that that sort of mid-tier management, sort of an account manager going into an account director or a group account director potentially hadn't had the level of rigorous training that's required to support senior management decisions. So there's really an onus for me on leaders of an agency to make sure that commercial brilliance training starts from the bottom. Lisa, I think you agreeing with me here.

Zaid Aboobaker 15:01

I'm nodding a lot. And I think the soft skills, it's that, you know, there is the financial savviness, which, you know, can be um can be taught. You know, there's this technical training that we have done, that we've both done for team members. And it was really interesting to me, and it still is, is how keen team members are to understand well, what's the scope and the deliverables and how are we reporting? Is it hours or is it activity? And how are we making sure the clients are where and where's the money coming from and how much organic growth are we having? And I think that's really important. And I think that's something that we've always focused on. But I do think to your point around, you know, what can people be doing over the next 12 months? And these are questions that, you know, as a as an agency that's nine months old, you know, we're asking ourselves how can we make sure that we're building the best agency for the future. But that soft skill training, it's really hard. And if people don't like or consider it confrontation, if they don't feel like they've got the level of competence to be able to sit down, even at a senior level, with their day-to-day client and say, I've got the data. And it does go back to your point around what tools are available. As much as everybody hates timesheets, the it is it's business critical, the information that you take and the conversations and the business changes that you are able to put in place based on that raw data is game changing from a business perspective. Um, but I think really spending some time to understand with the team members that are having those conversations, because the reality is it's not always going to be able to be the founders or the most senior leaders, but how can they go in and have, like we used to call in the past, you know, uncomfortable conversations or difficult conversations. But even by phrasing it that way, it automatically assumes it's going to be a tough conversation. And it doesn't need to be, you know, there are clients that are so invested in the success of an agency and the excess of the partnership and the way that you are doing it together. And we've certainly seen that at NOR75 with the new clients that we've brought on boards. They want to know where we're at, how how are we tracking our payments on time? Do we have any challenges? Um, what can they do better? How can we do better? And I think just having a really open dialogue around the good things, the bad things, and the ugly things, I think, you know, the training that can go into people on those much softer skills, they are as business critical as it is just the commercial resilience at commercial excellence.

Lisa Welsh 17:24

Yeah, I fully agree with that. It's it's also, you know, in my in my world, if you think about hiring a finance person to deliver a finance-based service, with all my due respect, there are many, many thousands of people you could hire from, right? Because there are so many trained and skilled finance professionals. But what I look to hire for at Compass Point and what we try to invest in is yes, technical skills are important, but the emotional intelligence has to be there. Because otherwise, you're going to be fighting a losing battle from day one. Uh, we are in a people business, we do business with people every single day. And if you can't find a way to communicate and to build trust, because ultimately what we do is trust-based, it's it's quite a personal decision to trust someone with your numbers and your finances and your bank details and whatnot. That trust has to be there. And it all stems from the interpersonal. It doesn't, I don't think people pick working with Compass Point or with me because I'm the most skilled accountant that ever walked the earth, because I'm not, but they work with us because we can find a way to communicate with them and find common ground and just troubleshoot and find a way to solve a problem together. Like you say, both invested in one another's success. That's really important to sort of find those people because culturally, whether you're running comms of PR, advertising, paid media, whatever type of agency or the kind of business we run, the the human capital element of it is the most important part. Um I fundamentally believe that, and that's where we're going to see success.

CFO Trust And Cash Flow Honesty

Iman Issa 19:02

I love that we're talking about people at the same time as talking about finances. It makes me very happy to see this. Um when we talk about the relationship between whether it is your CFO, your fractional CFO, your finance team, the relationship that you have at a senior leadership table, what type of conversations do you think are missing that should be happening right now?

Lisa Welsh 19:30

So the first thing I'd say is you like me come from a UK background, and so we'll understand this saying, but the role of the CFO today, fractional or otherwise, is almost like an agony aunt for the founder. You you are there as the person that they give all their problems to. They want to use you as a thought partner, as a thinking partner, as a leadership to make leadership decisions. And what I try to find a way to do is bring those back to a numerical or financial context because everything can be housed in that kind of context. And the types of founder relationships or business owner relationships that I find are the strongest and work the best are where I don't have to second guess myself about having to say something difficult. Guys, listen, I've looked at your cash flow forecast. We are in deep problems come September because the health insurance is renewing and the health insurance is quite a chunky payment. Uh, we've got lots of slow receivables right now. You might need to put some money into this business to get it going again. Uh, we've got that kind of, you know, to have that sort of discussion and be able to do that with a founder is quite powerful, particularly when you have enough trust in the relationship to say it in a blunt way. You don't have to dance around the issue. And what I see a lot in financial relationships today, where you've got an in-house finance team supporting whatever kind of business, they're very sort of process-driven. Okay, we'll do this, we'll do that, and we'll tick the box. But they're not actually thinking about having that conversation with whoever they need to speak to about that tough point that's coming up in the organization. And lots of them are gonna face it. Lots of businesses are gonna get to the end of Q3 and find that cash is very short.

Iman Issa 21:28

I'm glad that you've raised cash flow because cash flow is one of those topics that's almost a bit of a bit of a poo-poo, right? We shouldn't be talking about it. It's it's sort of the dark word, no one wants to hear about it. But ultimately, we we do live in a market where I'm sorry to say it, payments are often delayed. Whether you are a big agency, a startup agency, a medium agency, we are all chasing someone at some given point in time for payment. Is there a better way for agencies? To stay on top of receivables, whether that is the leaders going in and talking to them, making best friends with procurement, having much more blunt conversations. What do we do to protect cash and to make sure cash is coming in?

Zaid Aboobaker 22:16

I would say all of the things that you mentioned, absolutely. And I think that you do that even in the good times. Even when you have a great amount of money in the bank and you're feeling like, you know, you can fund the next one, two, three plus years. I feel like those habits should happen anyway, not only at times where you think, you know, come as you say, at the end of Q3, we're going to run out of money. Because I think for for me, the job isn't done until the client's paid. And we've always worked like that. It's not when you go great and you know, coverage is fantastic and the client's happy. The job is finished when the the money is in the bank and everything's everything's closed off. So I think there's a lot that we can do. For me, it's about doing it during the good times as well as the bad times. Um, but I think also working with, as you say, Zaid, with a CFO, that is very honest with you. And playing those scenarios. What if this happened? What if that happened? And it's not to be kind of doomsday, but it's about to say, what do I need to do now for 2027? So yes, I understand where we're at now financially. What are the moments that matter? What are the moments that could really hurt us? What can I do to prevent that? So it does feel like your scenario playing a bit dramatically, maybe, but I feel like trying to understand those different moments and the different routes that things could go to me, as long as you're doing everything you can, as you say, with procurement, with accounts, with your clients, and making sure everybody with the portals and everything's happening that should happen, drawing the good and the bad. But I think just making sure that you're aware of those different scenarios, I think provides for me weirdly a little bit of reassurance because I don't feel surprised. For me, I don't want to feel surprised. I don't want to get to the the last month and think, hang on, we can't make that payment. I don't, I want to make sure that we are, if something happens, there's no surprises, there's no cables, and we have thought of all the different routes. So for me, that's what I would encourage people to

Rolling Forecasts And Cash Reserves

Zaid Aboobaker 24:20

do.

Iman Issa 24:20

Um I do have a question, which is at what point in time do you release some of the profits and how much cash should you keep in the bank? So obviously, during good times, there will be potentially more of a drive to take money out of the business. How much reserve should you start to think about, you know, over three, five, ten years for agency leaders?

Lisa Welsh 24:43

My first response to that is I think three, six, and nine months is a long horizon right now, um, with all of the uncertainty that we face. And one of the biggest problems that I'm trying to help, that my colleagues are trying to help all of our clients get through, is breaking this idea that you budget once in September or October for the subsequent year and then forget about it. Because setting a budget in November of 2025 for the financial year 2026, your budget's out the window in February, right? It's gone. Forget it. You made it on completely different assumptions. So we implement a something called a rolling forecast and we roll the forecast every month and then project 12 months forward. Okay, we don't have a crystal ball, we're sort of future gazing a little bit, but uh having a future forecast for 12 months, I think, in this current climate is good enough. And then what we do is we say, okay, if that forecast comes through to fruition and it equates to a cash flow in your bank that gives you enough cash to cover six months worth of expenses, you're good. That's good enough. So if you've got six months worth of cash cover in your bank, anything on top of that, if you want to declare a dividend, you want to pay out a bonus, you decide you want to go to a bigger office space, you want to open an office in Riyadh or in Doha or whatever you might choose to do, that's the point at which to do it when you've got six months worth of secured cash flow against your recurrent expense base. It's very hard to get there, in in my view, in the current climate, because there's a, as we've talked about, a lot of uncertainty with receivables. Um, but that's how I would model it. And I encourage everybody, no matter what size of business you are, to always have in place a 12-month rolling view. You update it once a month. The first time you do it is horrible and painful and it's tough to do. The second time and third and fourth, it gets progressively easier to the point at which it becomes like muscle memory. It's just routine. And when you do it routinely, you will find so much benefit from it because as Lisa was speaking about before, you avoid the surprise, right? If you're gonna have a really bad month because you're losing one of your key clients, it's rolling off, it's going to compulsory retender or whatever, you know, you're not gonna, you're not gonna get there and go, oh well, you know, it's happening now and I'm surprised about it. So I think that's what I would advise in terms of withdrawal of profit and cash cover.

Managing Growth And Revenue Quality

Iman Issa 27:20

The the next kind of point I wanted to ask us or spend some time on is whilst we've been through a fairly difficult period, which potentially is seen as all tighten our belts, be a bit more conscious in terms of how we're growing, there is usually, that's called per the data, an uptake at some point in time that should come into play. So the next question I really have for both of you is how as agency leaders do we manage either paced growth or rapid growth, making sure that we can still hire, we still have money in the bank for staff, for the expenses, but at the same time, we're able to capitalize on opportunities that are coming forward.

Zaid Aboobaker 28:04

I would say two things. Firstly, the ability to adapt and readapt and readapt and continue adapting. I think if you continue to do things the way that you have done, I think then it becomes irrelevant. And then I would say, and something you and I talk quite a lot about, Iman, is around how do you do things differently? So the speed of growth, I think everyone wants to grow, but then some agencies don't. Some agencies do the work that they're doing, they're really happy, you know, they're winning awards, they've got great clients, and some clients don't, some agencies sorry, don't necessarily have an accelerated growth vision. And I think as long as you're clear on the direction that you want to go in, I think for me, especially as an a we're an agency that's nine months old. So growth and speed for us is something that you and I both work towards. And, you know, we're we're very, you know, I'm very excited by new projects, by RRPs that come in. Um, I get very excited about the work. I am quite often a yes person, which I know I have to kind of rein myself in at times. But the idea of growth and nurturing people and creating opportunities and working on interesting work, that kind of really excites me. So, how do you know, to answer a question, like how do we how do we set our business up during times of change so that we can grow, regardless of what the what the speed is, it is to me around doing doing work with interesting clients, with interesting people and doing it really well because I feel like, you know, because resources are a little bit strained, because budgets are a little bit straight, you know, how can we make sure that the quality of work is really important? And I was having a conversation yesterday with Ziyad at Weber Shamwick, and we were talking around how sometimes something that doesn't make financial sense, makes business sense, but how do we then still show up in a way that you're still delivering? Because right now, the work that we're doing, that's that's what's really important to make sure that we're showing clients, that we can really stand by the work that we're doing. And that quite often is where the growth comes from. So, yes, we can still talk about the revenue and the margin, and that's really important to protect that. But for me, it's really around how can we do really good work, how can we show that to clients, show that to the industry, how can we get excited about it during good times and during difficult times, and the growth will ultimately come from that and the revenue will come from that.

Iman Issa 30:26

I do think on this point, this is where the agility of agencies that sit without a typical holding company over the top of them have a little bit more flexibility, right? The ability to adapt, to invest in a client without worrying about the margin, that is a real plus plus because we know ultimately we're here in the long term, those benefits will come through. And I think that level of flexibility in how you manage growth over a 12, 18 month period becomes incredibly important. Back to your point around those clients that potentially offer you reoccurring growth over a period of time you've spent time with them.

Lisa Welsh 31:06

The other thing to think about here is the fact that independents or founder-led businesses, as you say, don't have whole co-structures over the top, but they also have a lot less governance to try and comply with as they get through those growth phases. So you can look at a little bit more creative, um, uh bespoke ways of generating growth for your agency that maybe you wouldn't have had in a larger environment. And I think the other thing to think about here is not all growth is good growth. So one of the things I talk to clients about a lot is uh a term I use is quality of revenue. You you would probably hear this in financial press, quality of earnings. The the quality of your revenue is so important. Uh you you have to bring the right client in at the right price because the more the more clients you have that detract from your quality of revenue, the bigger mess your agency gets into or your business gets into. So that quality of revenue meaning not all growth is good growth, and don't be afraid of being a little bit more creative and and working with some businesses that maybe you wouldn't have had the chance to work with under a big agency environment.

Iman Issa 32:19

Would you have a bit of a ratio for what retainers, projects, organic growth, and new business should look like, just in sort of a best in class term?

Lisa Welsh 32:30

Yeah, so I I always like to try and say that if your retainer income on the first of your financial year, so let's assume it's the first of January, keeps the lights on, i.e., your retainer income is covering your fixed overhead, you're in good shape because then all the project work that you win through the year and everything else that comes through is all going to be margin, and you can bring those projects in at a higher margin because you'll get economies of scale as your business grows. And then you should be setting a new business target that is beating inflation as step one every year, making sure that you've got inflationary increases built into your retainers so that you're not getting eroded. That's probably another thing I would do. And then when you're setting that target of new business, you know, look at when Eid falls, look at when the second Eid falls, look at when the summer holidays for school start and map it accordingly. Don't kid yourself into thinking you're gonna close a load of new business through the summer months because it won't happen. So soften the targets in the months where you know it's not gonna happen, make them a bit more aggressive when you know people are gonna be around and activity is gonna be higher, and incentivize your new business earners, or I think in our second, you know, people use this expression hunters and farmers, right? So it you have to kind of incentivize your hunters, not on the amount of revenue they bring in, but on the amount of profit that they drive and on getting clients to pay on time and on bad debt write-off and so on and so forth. And then you've got a good structure to say my fixed costs are covered, project work's gonna be sort of my cream on top and my margin, I can plan around this because I know what's gonna happen in ebbs and flows through the year, and then I'm gonna incentivize people on the basis of profitability. And by the end of the year, if that grips, if that if that comes to fruition, you will see better margin by the end of the year, and then you can kind of compound that as you go through the years. The challenge I see quite often is people take, okay, we're gonna grow the business 10% next year. Our new business target is 10% divided by 12 months, uh not discriminating in the months by seasonality or anything like that. And uh anyone who wins new business gets a new business referral fee or commission fee, but it's based on the revenue. Doesn't drive the right behavior.

Iman Issa 34:49

I think a lot of people don't always get incentivized for new business. Um, so I think some agency leaders might be in trouble hearing you say that senior, senior directors should get incentivized for new business, because I think it doesn't always happen.

Lisa Welsh 35:02

Answer their job. Yeah, new business is part is is is part of part of the job, but if you want to grow properly, there's got to be something in it for everybody, right? If you're not a shareholder in the business, you're not you don't have equity, then I think you should be incentivized to drive new businesses, particularly if the quality of revenue is high and it's profitable.

Iman Issa 35:20

I think um there could be an entire conversation around how agencies build better incentives for their teams and how they are budgeted and factored into the PL from the get-go. I think a lot of times it can often become an afterthought. If we do well, we'll allocate some funds.

Zaid Aboobaker 35:39

I think the moments passed where people just want a salary. The salary is great, don't get me wrong, especially in the times that we're going through now. But there's definitely hunger for different um incentives and just different structures because the salary will just continue and it'll be a set amount and dependent on when the promotion cycles are. So I definitely think that's an interesting podcast theme for sure.

Practical Principles To End On

Iman Issa 36:02

Well, hopefully I'll get you both back on for season two to talk about incentives and rewards for team members. And I think we are nicely heading towards the end of today's episode, and there's been so much that we have covered. I think what would be really nice to end with today is Said and Lisa, if you could just leave agency leaders with one principle that would help protect the business and support growth over the next 12 months.

Lisa Welsh 36:33

What would it be? I'll I'll be boring and and and say to you that you know what needs to be done is it's having a short-term and a long-term cash flow forecast. Look at it every Monday morning, make it your discipline to log into your bank account every Monday morning, look at how much cash you've got, and make sure that you are covered. Because the worst thing that you can do in the current climate is bury your head in the sand with regards to cash flow and your runway that you've got uh in front of you and when you might have some challenges occurring. So that would be my one thing from the kind of sort of boring CFO.

Iman Issa 37:10

I appreciate it, and I can assure you that North 75 does that.

Lisa Welsh 37:13

Okay, very good.

Zaid Aboobaker 37:15

Lisa, I'm gonna be a little bit more short term in terms of this year, but I'm gonna say encourage your teams to take some leave. It's been a pretty strange year, and I think everyone needs a bit of a break and a bit of a rest, and it's gonna be a busy QF, regardless of what continues to happen. I think there's some exciting things that are happening in our parts of the world and some great projects that are kicking off, and I think it's great to see. So take some rest, take it now, come back, re-energized, ready to go, because I think, regardless, our industry is a very exciting industry to be in. Um and I think there's going to be some great things that are happening beautiful.

Iman Issa 37:57

Thank you very much for joining us. Thank you.

Lisa Welsh 38:00

Thank you very much.

Iman Issa 38:01

I really appreciate your time. It's been a really rich and fruitful discussion to all of our listeners. I hope you have some sound advice and some practical tips that you will take away, potentially think about, digest, and implement. The Edge of Influence was brought to you by the Alliance of Independent Agencies, Middle East and North Africa, and North 75. The executive producer was myself, Iman Easter, and the producer was Ian Carlos. And this podcast was produced by North 75 and Podwell Dubai.