Most agencies go through the “Feast or Famine Cycle” at some stage in their development. But it’s only through learning to break free of this cycle that you can take your business to the next level, scale it to greater heights, and reduce the stress you face every day as an agency owner.That’s why this month, we’re going to dive deep into how you can put a strategy in place to break free of the Feast or Famine Cycle for good (and if you want to read this blog in a handy downloadable PDF, click here).
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Let's start with a definition of “The Feast or Famine Cycle”:
When you don’t have a full order book, you’re compelled to try everything you can to win new business. If you do the right things (a topic for another blog) then the process of focusing on biz dev eventually brings you to a place where suddenly, all your time is taken up with delivering work to clients. For a little while, things are going great!
This is the Feast part of the cycle - where you have plenty to eat with no clear end in sight. And because you have enough work to keep you occupied, you stop pushing quite as hard in the area of biz dev. You have no time and right now it’s more important to service current clients than to look for new ones.
But there’s a cyclical rhythm to all things in life, and your business is no different. Big projects end. Unexpectedly, you lose a client through no fault of your own and your order book depletes. Before you realise what’s happening, you’ve been hit with a business famine.
Wondering how you’re going to pay your mounting bills, you take on any work you can get (even if it’s with the wrong kind of client, or heavily discounted). And through your rekindled dedication to the process of winning new business, you eventually put yourself back on the path to feasting once more…
And thus the cycle begins all over again.
You’ve probably experienced this before: it can happen at any stage of an agency’s growth. Many solopreneurs/new businesses are hit with this in their first year or two of business… but honestly, it could strike at any time if you’re not careful about avoiding it.
It’s something I’ve seen many agencies struggle with in my time as a coach. And to be super honest, it’s an issue I’ve faced too.
My first “famine” hit when government funding my clients had relied on disappeared overnight, taking over 50% of my monthly revenue with it.
After that happened, I had to have a tough conversation with myself. This feast and famine cycle with my coaching business was much too stressful to sustain - something had to give.
I dug deep and committed to a more strategic approach to business development… and using that, I was able to build much-needed stability into my business.
I know that consistency of business is a key issue of challenge for agency owners everywhere:
- Some of my coaching clients have lost their 40% of their revenue when 2-3 big clients all leave without being replaced
- I’ve worked with some solopreneurs who have lost 80% of their clients in a short timespan (easy when ‘all your eggs are in one basket’ and you have less than 5 total)
These kinds of setbacks can completely derail your business if you’re not careful. And although you can recover from them, there’s no good reason to subject yourself to this stress on a repeated basis, if you can avoid it!
Specifically, here’s what we’re going to talk about:
1. The #1 sign of an impending business famine
2. The three fundamental areas of business you need to pay attention to as an agency owner
3. A simple exercise you can use to figure out exactly where you’re spending your time each week
4. The most important tasks to focus your attention on to break free of the Feast/Famine Cycle for good
5. My favourite resources for simplifying this process & applying all the information in this article, starting today
How much easier would your life be to know that you wouldn’t have to suffer through this Feast or Famine Cycle anymore?
I can tell you it’s possible to stop this cycle repeating - and in this article, I’ll show you how in five easy steps.
P.S. Want to download this whole post as an eBook? Just click the picture below to get instant access (plus an exclusive One-Page Action Plan to help you put this information into practice right away).
Step 1: Get Clear On The #1 Sign Of An Impending Business Famine
As we covered in the introduction to this topic, the Feast or Famine Cycle is an issue that plagues agency owners everywhere...
But through working with hundreds of agencies over the past 13 years, I’ve learned that there are certain telltale signs that point to the Feast/Famine Cycle being in full effect. And in helping my coaching clients to identify these signs, they were able to solve their problems & build some much-needed stability into their businesses.
Remember, I’m not delivering any of this advice from up on my high horse. I suffered through a few business famines of my own before getting to grips with these concepts - but believe me, this is worth the effort.
The Feast or Famine Cycle is characterised by an agency that fluctuates between fully booked and completely under booked. When things are good, they’re great! But when times are bad, their agency is in serious danger of going out of business!
In my experience, I’ve learned that a business which fails to keep a consistent focus on biz dev (even when they’re fully booked) is one that’s in danger of experiencing a stressful famine if some bad luck should happen to come their way or just through the natural life cycle of a client.
This is Risk Management 101. We’ve all heard the old adage that we shouldn’t put all our eggs in one basket. If something happens to those eggs, or a few of them fall out while you’re carrying them, it just makes good sense to have some spares to replace the broken ones.
Similarly, an agency with its back against the wall is at risk of making very poor decisions. The cash flow issues that arise from a few big clients parting ways with your firm (for whatever reason: successfully completing a project, the client needing something different than what you can provide or just feeling it's time for a change) incentivise you to go out and chase after any business you can find. Even if the client is a poor fit, or you have to discount your rates, you might justify working with them as necessary to your survival - after all you have bills to pay and mouths to feed.
But because you’ve taken on work that’s not a great fit (or because it’s not very profitable), it’s difficult to please those clients. So you have to focus extra-hard on delivery…
And naturally, you’ll start to reduce your biz dev efforts, as all your time is needed to satisfy these existing (and potentially, wrong type of) clients. And before you know it, the cycle has begun anew.
When I begin working with a new client, I immediately look to see what kind of business development processes they have in place. Even if things are going great, they need to pay attention to this: I’ve seen too many agencies suffer needlessly because they neglect to keep their pipeline filled.
That’s the single most telling sign of an impending business famine - a lack of focus on good diz dev practices. But of course, there are many things that demand your attention as an agency owner. With everything you have to do in the day, it can be hard to find the time to keep inquiries coming in.
That’s why you should familiarise yourself with…
Step 2: Learn About The Three Fundamental Areas of Business Every Agency Owner Needs To Spend Time On
If you take a step back and look at what you do in the business on a day-to-day basis, you’ll probably find that all your tasks relate to one of these three areas:
1. Delivering your service
- Delivering client work
2. Growing the business
- Customer growth
3. Running the business
- Managing your team
And when we dig in to where you’re spending most of your time (using the time-tracking exercise I’ll outline in just a minute), you’ll probably find that you’re spending far too much time on activities you don’t really need to be doing (e.g. client work that could be delegated, time-consuming admin, etc.)...
And not enough time on the vital tasks that will help you to break free of the Feast/Famine Cycle once and for all.
We have to spend a certain amount of time tending to each of these areas of business each week to keep things running smoothly, of course - but it’s the question of how much time that makes all the difference.
Now, you might have read the above and realised that you’re not quite sure where your time is going each week. If so, that’s fine! Because I have a very simple solution, while we’ll cover in the next section.
Step 3: Use The Three Time Pots Exercise To Retake Control Of Your Day And Break Free Of The Feast/Famine Cycle
As I outlined above, there are three main areas of your business that you have to pay attention to as an agency owner. Simply put, these are:
- Revenue (Delivery)
- Strategy (Growth)
- Admin (Maintenance)
No matter what kind of complicated labels we try to apply to our work, pretty much everything we do falls into one of these three categories. But while each of these areas matters, they don’t all matter equally. Particularly not for you: as the agency owner, your time needs to be spent in a deliberate manner for maximum impact.
When I ask my coaching clients what their weekly schedule looks like, they’ll often point to their calendar and show me a list of appointments they’ve kept. But there are lots of gaps in that kind of system, and it’s easy to think you’re spending time in one way, when in reality, it’s completely different.
To overcome this problem, I like to have my clients complete a simple (but highly effective) exercise to track their time.
I don’t need you to track every minute detail of your day. Instead, I ask my clients to reflect on how they spent their time at the end of the workday on a daily basis for 2 weeks.
As for what I ask them to track - I get them to think of their work as being made up of three main types of activities:
- Strategy (everything you do to make money in the future - sales, marketing, pitching, etc.)
- Revenue (everything you’re doing to make money today - all the client projects you are currently working on/are already booked)
- Admin (the cost of running the business - finance, invoicing, HR, etc.)
Once per day, they deliberately cast an eye back over their work and see how much time they spent in each area of their business. I’m looking for either a rough ratio (e.g. half a day spent doing x), or a rough number of hours per day (e.g. four hours spent on admin)...
And once we have a decent picture of how they’ve spent their time, we can figure out the proportion of time they dedicate to each area of their business.
This is an enlightening exercise for many business owners. If you think you have no time to spend reaching out to new clients, but then learn that you’re spending 30% of your time on admin tasks, it’s easy to see what you should focus on fixing.
Odds are that your current ratio isn’t as good as you’d like it to be. So how can you go about improving it?
Step 4: Improve Your Time Split Ratio
If your agency isn’t where you want it to be, it’s probably because you’re spending too much time on Revenue or Admin activities, and not enough time on Strategy.
No matter how busy you get in these other areas, it’s important to remember that, as the agency owner, you have a responsibility to spend your time wisely. The growth of your business depends on it.
The ratio of time you spend in each area will vary depending on your particular situation. However, as a rough rule of thumb, I’ve found that a 50%/40%/10% split between Revenue, Strategy and Admin is a good goal for most agency owners to aim for. Whatever your ratio is, the exercise above will probably show that you’re not quite there yet. Luckily, there are a few different things you can do to improve it.
One of the biggest things overworked agency owners struggle with is delegating work. Learning to give up total control over the day-to-day stuff (like client deliverables, managing finances and more) can be painful, but it’s a necessary step if you want to free up more time.
You have some different options at your disposal for delegating work:
- Pass tasks off to your staff
- Work with a freelancer
- Hire a VA
- Reduce your workload through the use of various automation tools (which we’ll discuss a little later on in this article)
Fundamentally, it comes down to figuring out (and being honest with yourself) as to what only you can do. For anything else… you need to consider whether you let someone else do it, or if you’re just holding on because you’re afraid to let go of it.
A mindset shift many of my clients find valuable is to consider their target hourly rate. For instance, if they value their time at £100 per hour, there’s no good reason for them to do work that they could outsource for £25/hour.
Look at your schedule, and identify how you can start moving towards your ideal Time Pot Ratio. Automate, delegate, or stop entirely - do whatever it takes to get closer to your target. Getting disciplined at sticking to this time split will help to ensure your limited time is being put to its best possible use.
To make tracking your time in this manner as easy as possible, I’ve created a simple template for you to use (see the Resources section below for more info).
Of course, figuring out your ideal time split is just the first part of the equation. The second part is to then figure out the best things to focus on in those given time periods.
Step 5: Identify The Most Important Tasks To Focus On In Each Area Of Your Business
Once you’ve determined your ideal time split, it’s time to focus on the most important activities you can complete in order to maximise your impact in each area of your business.
When it comes to Revenue activities - this is all about client delivery. This is probably an area you excel in as an agency owner. After all, you set up your own business because you were so good at delivering great work to your clients.
As you already have a good grasp of these activities, I’ll just give you one takeaway tip...
Don’t be the bottleneck in your agency. Make sure the brand is not YOU! Otherwise every client will want YOU to work on their account and you will never be able to delegate work to your team. I have seen this issue time and time again. What helps you get your agency going and growing (YOU) because the very thing that stops you growing.
How do you overcome this? Introduce team members early on, let them build credibility with the clients. And in the end, push the client to that member of your team (don’t think ‘it's quicker to do it myself’), even if they are asking for you.
Admin is an area that many agency owners dislike, but most understand its importance. However, there’s more to Admin than just signing paperwork and conducting weekly staff meetings.
In my experience, the three most important Admin activities you need to attend to are:
Ensuring invoices are sent on time
Monitoring your cash flow to spot any potential issues arising
Managing staff effectively, so you retain top talent in your agency
We’ll cover each of these areas in more detail in future articles and videos. For now, let me make a few quick & easy recommendations relating to the above.
First - there is a huge number of software products on the market that will help you to get invoices out on time. Accounting packages such as Xero and Quickbooks are fantastic apps that are easy to use and integrate directly with your bank account. And when you combine them with a powerful CRM like those offered by Pipedrive or Zoho, you can easily streamline this process for good.
Aside from this, make sure you set aside a block of each month to send out your invoices, and have auto-reminders set up so you can chase late payers. If you are so busy delivering client work that you have no time for invoicing (yep, i have heard this before!) then you are setting up future cash flow issues for yourself.
Managing your staff effectively is a huge topic, but one principle I’ve seen many successful agency owners abide by is to touch base with their staff every week. Ensure everyone is on the same page as to objectives (and ensure they are SMART objectives) and they all know the agency’s (and client’s) priorities.
Of course, this is more doable in a smaller agency. If you have a lot of staff, then make sure to delegate it to a manager. Either way, making sure someone has their finger on the pulse will go a long way towards keeping top talent and clients happy at your agency.
The area of Strategy covers everything to do with how you plan to make money in the future. It includes sales and marketing, but it also includes planning, business strategising and time spent getting clear on your vision. On a day-to-day basis, the Strategy activities you focus on are geared around winning & retaining new clients, as well as selling additional services to existing clients.
Sadly, there is no magic bullet when it comes to winning new business (despite what you might read on the Internet!). Ultimately, it all comes down to focus and hard graft - building processes, then consistently working to implement them.
Finding the perfect business development strategies for your agency is not an easy process, but it is a critical one. You might find it helpful to think of your activities in terms of whether they’re short-term, medium-term or long-term.
Short-term activities include networking, reconnecting with old clients, and identifying opportunities to upsell current clients to higher levels of service.
Medium-term strategies could include building and maintaining strategic partnerships with other businesses. For instance, a good partnership might result in three or four extra clients per year - much easier than having to go out there and win those customers yourself!
Long-term strategies include activities you complete to boost your standing in the marketplace. These activities include creating videos, producing blog articles, building up your social media profiles, and more. These methods take longer to have an effect, but when done right, they’ll help you generate many more inbound leads - a great asset to your business!
As for the specific strategies you should employ? That comes down to:
What has worked well for you in the past
What works well in your sector in general
For instance, a content marketing agency might find that their audience responds well to in-depth articles, whereas a graphic design firm could leverage “behind the scenes” style videos to great effect. Ditto for short and medium-term options, too. If you’ve previously had success pursuing strategic partnerships with a particular type of business, work on identifying opportunities for more of them. If you find that all your clients in a particular niche are easy to upsell after three months of regular service (as opposed to the six months it takes to upsell other clients), then double down on that.
Whatever you do, remember that it’s better to do a small handful of activities really well and consistently than to do lots of things poorly. Falling prey to Shiny Object Syndrome will do nothing but waste your time, so avoid this.
My final comment on business development is this:
build your list.
Having a list of subscribers you can build a strong relationship with is invaluable for any agency, so if you’re not currently doing this, start immediately.
This doesn’t pay off instantly. You first need to ATTRACT new subscribers to your list, then you need to build authority with them by TEACHING them something useful and then and only then can you start to SELL to them. Maybe only one person in 100 is ready to buy when you email out an offer. But you can still engage the other 99 by adding value to their businesses with useful content. And when the time comes for them to buy? If you have communicated with them regularly with value added content then you’ll be the first agency they think of.
Spend the time now to figure out what business development processes will work best for your agency. Doing so is a critical part of escaping from the Feast/Famine Cycle once and for all, so any time you spend doing this won’t be wasted.
My Most Powerful Resources for Breaking Free of the Feast/Famine Cycle
To give yourself the best possible chance of overcoming the Feast/Famine Cycle, there are several different things you can focus on. And in this section of the article, I’d like to share with you some of my favourite resources for simplifying each part of the process.
Improving your client retention is a fundamental part of breaking free from the Feast/Famine Cycle. When you increase retention rates and decrease churn, you reduce the likelihood of another business famine coming your way.
In last month’s article, I broke down the topic of client retention in great detail. If you’d like to read that, just click here.
Additionally, I’ve also written some other powerful materials on this subject before. If you’d like to get access to a powerful five-part framework you can put to use in your agency right away, you can get a free copy of my Client & Account Management eBook here.
Winning Highly Profitable New Business
As well as learning how to retain your current clients for longer, you should also focus on winning new (highly profitable) business. But that’s easier said than done. Many agencies struggle to consistently sell their services at rates that support their growth moving forward.
Hands-down, one of the single most important skills you should master is communicating and selling based on value. In my experience, I’ve seen that agencies who sell based on value consistently enjoy better profitability, stronger client relationships and a less stressful workload - all highly desirable!
Using Your Time Wisely
Getting focused is crucial. Knowing what is important and what you need to consistently do, no matter how busy you become (e.g. business development) will ensure you avoid drop offs in client revenue. One book that had a big impact on my focus and productivity is Free to Focus by Michael Hyatt, so I highly recommend reading it.
If you want to get a quick summary of ideas from the book plus my top time management and productivity tips then download my FREE eBook on “Winning back time”.
No matter what system you end up choosing, learning to batch tasks is an easy way to skyrocket your productivity. For example, if you need to record videos, draft some emails or write blog articles, batching them into groups will be a lot faster than doing them one at a time. If you’re interested in learning more about what this means, give this podcast by Amy Porterfield a listen (I love her positive but practical advice - she is a regular on my iPod at the gym!).
While there are many tasks you’ll be able to delegate (or just stop doing entirely), there are certain things you might want to keep doing.
- Posting on social media
- Creating great content
- Writing emails to your list
- Tweaking the design of your website (to create new landing pages for example)
These tasks can be time-consuming, but luckily, there are several tools you can use to automate them to a large degree.
Email marketing solutions such as ConvertKit, Kartra (the tool i use and my personal favourite) and Mailchimp all streamline the process of keeping in touch with your subscribers, segmenting your list, and automate your outreach.
Thrive Architect, Divi and Beaver Builder are all simple, flexible WordPress builders that let you tweak your website and set up new pages with relatively minimal effort and without the need for programming skills - perfect for getting new offers out there quickly!
No matter what time-consuming task you choose to keep performing, there’s sure to be a tool out there that will help you to automate it.
Getting Your Priorities Right (short video)
To run a successful agency, you have to wear many hats...
But switching between these hats too often can cause problems, making things drag out far longer than they need to due to the cognitive switching penalty - apparently when we get distracted from a task it takes 23 minutes to get our “heads back in the game”!
To avoid being hit with this penalty, you need to create and maintain a good schedule: one that gives you ample time to do everything required of you as an agency owner. If you are brave use a tool called Freedom that locks you out of apps and the internet (e.g. Facebook)for set periods of time to help you focus your mind!
Batching tasks is a great help, as you can avoid switching contexts more often than is necessary. Another thing to keep in mind is the Three Time Pots Model we discussed previously.
Of course, before you can allocate time effectively, you need to know how you’re spending it at the moment. That’s why I shared a specific time-tracking exercise earlier in this article: it’s very effective in helping you do this.
To make completing this exercise as easy as possible, I’ve created a simple downloadable template you can use to start getting a grip on your schedule. You can get a free copy of the template here.
Finally, here is a short video I made shot on this subject.
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We’ve covered a lot of ground in this article... but if you can put this information into practice, it’s practically guaranteed that you’ll be in a better position than ever to escape the Feast or Famine Cycle once and for all.
If you’d like to have a permanent copy of this article for your easy reference (plus access to an exclusive One-Page Action Plan to help you put this information into practice right away), just fillin the form below and I will send it right over.