Frank Cowell | [Top Agency Series] Pivoting an Agency Business from Project-Based to Recurring Services

Frank Cowell 11:01

Yeah, so you know, over the years, that web development company morphed more into a full service marketing firm, where we were doing brand development and web development is our two core service lines. And then we had a lot of other ancillary supporting things that a marketing department might ask for miscellaneous, graphic design, collateral support, that we were even doing commercial quality videos, at one point, I got to the point where we, we could turn out great creative work both on the web and the branding side. And we knew what we were doing, I could sell pretty darn well. And the problem with that business model, though, it was just so reliant upon landing, the big, the big projects, and I just saw that scaling, those kinds of companies seem to be very difficult as I looked around other companies that had done it and other companies that were struggling to do it and, and so what sounded reasonable to me, based on my research at the time, is if we just had a recurring revenue model, then we wouldn’t be you know, trying to find our, our new launch every month, and then revenue would stack. Yeah. And so we had a few fits and started to try to find a recurring revenue model, but then roughly 2015, we landed upon what that would be. And we commenced going full bore into that, and so made a number of mistakes. And doing that, that’ll be the big theme of your interview with me as all the things that I know I did wrong, then, well,

John Corcoran 12:27

What were some of the big mistakes? And did you have any, you know, you know, big moments of, oh my gosh, I don’t know, if we’re gonna be able to make payroll this month, that sort of thing.

Frank Cowell 12:36

You know, fortunately, I always made payroll, even when we were small, and figuring the things, figuring things out. And, you know, they’re probably moments early on where it was, like, cutting it close, but never, never had a moment where it’s like, I don’t know, if we’re gonna make it, I gotta go borrow money, thank God, you know, he never, he never did that. And I was always able to sell and, and manage the cash fairly well. But, you know, some of the mistakes were that I just made too many things, right? Turns into something my mentor has now told me within the past couple of years, he’s like, Frank, no hard, right turns soft. Big curves are how you bring about change in a business. And, you know, I was just naive enough and arrogant enough to think, you know, we were good at doing what we did. I’m good at selling, we’ll just do this other thing, because I understand it really well, from a philosophical and strategic point of view, we’ll just launch into these other services, and it’ll be fine. We’ll have them up and running in 30 days, was my thinking at the time. And we pretty much in short order just ditched the things that we were amazing at, which was brand development and web development. We just couldn’t we ditched them said, Okay, we’re not doing any more brand projects ever again,

John Corcoran 13:49

That’s a tough thing to say, we’re amazing at this. And we’re gonna leave it behind to do this new thing, which we maybe not are not as amazing at yet.

Frank Cowell 13:59

Yeah. And so that, you know, my learning lesson was that, you know, anytime that I want to make a change in the business and create a new direction, or maybe evolve the company, it has to be based on our strengths and what we’re good at. So for example, when we launched into that recurring services model we were providing and still are To this day, inbound marketing services, right? Well, what I should have done back then and said, Okay, what aspects of inbound align with the skill sets we already have? And what are the unique ways in which we could actually execute. on that particular thing. The rest of the industry does a certain way. So for example, let’s say within inbound, a big activity component, a tactical component is let’s say landing pages was used as an example. Well, because we were already familiar with creative design and web development. My first foray into recurring services probably should have been something around just landing pages. That’s it. Yeah,

John Corcoran 15:01

just dipping your toe in the water with that said,

Frank Cowell 15:04

You know, if you want the best landing pages in the world to support your lead generation, your inbound lead generation efforts come to us, that’s what we do. Instead of trying to say we do everything inbound, that’s the learning lesson is I would have taken our amazing skills at copy, brand positioning brand, you know, awareness, design and Dev, I should have taken those exact same skills and said, We will do you know, your landing page and ongoing conversion rate optimization. And that would have been the recurring service and would have been small, but it would have been a very successful recurring service, because we were very good at the skill sets that would have been required to do that. That’s what I know now that back then, younger Frank was, you know, very stupid, and thought and very arrogant and thought we can just make this wholesale shift. And this is what we’re going to do, because I could strategically talk about it really well. And that’s the massive difference. It doesn’t matter if I can talk about it real well, or I could sell it. What can the team actually produce? Yeah, what, what unique collection of people and talents have we spent years developing? And how do we use that? It was the right question that I was not asking myself at the time.

John Corcoran 16:19

So rather than looking at the massive service that you want the business to be all about is looking at the team, the talent you have first and seeing what can grow out of that and then expand from one service to many more.

Frank Cowell 16:35

Yeah, that was it’s definitely something I’ve learned over the years is that in any big solution, there are many components within the solution that unto themselves, they’re their own big business. If you dominate it, if you do it right, if you obsess about the quality and the outcome of that component, that in itself could be an entire big business.

John Corcoran 16:57

Right? Right. This is about niching. Really, right, just niching down into something

Frank Cowell 17:02

niching into a service area, yes, specializing in a service area, and getting really good at it such that you’re so good. You don’t do the other things, but it drives tremendous value for your client.

John Corcoran 17:14

Yeah, you know, our company has done this a couple of times pivots, where, you know, we left something behind. And, you know, I can think of some years where our revenue is like this up and down, you know, and that’s why we did the pivot, because we wanted to be more stable, which has become, how long did it take for you what from the point of deciding you’re going to make this shift to the point where you felt like, okay, we’ve, we’ve, you know, obviously we have more that we wanted to do, but we feel like we’ve executed this shift, we’re more predictable, stable, consistent, it’s not as project based, it’s more of a recurring platform. Now,

Frank Cowell 17:47

I would say it took a few years to really, like fully make the shift, our revenue was all replaced by recurring revenue. And it probably took a good six months before we had an offering in place, and I thought it was going to be 30 days, then out at the outset. And so I think that just if any of your listeners are considering making, you know, wholesale business model shifts, I would say, step back, don’t throw the baby out with the bathwater. What is the unique collection of talent, and IP that you’ve developed to date? And how can you use that exact same IP and talent? And do it just a little differently?

John Corcoran 18:30

The Great questions for people to ask, I want to ask you, you know, one of the hard shifts, when you go from a project based, you know, business model, maybe you have a project that lasts six months, or or, sorry, 60 days, or 90 days or something, let’s say something along those lines to shifting where you have something where you want, maybe the client is worth less and on a month to month basis, but over the long term, they’re worth more is you have to start focusing on making sure the clients are really happy and keeping your churn down. What are some learnings that you’ve had around that?

Frank Cowell 19:06

Well, I think one of the big things that the mistakes that we’ve made and I find a lot of other professional service providers make is the solutions are often developed based on what the technical people think is a good solution, instead of talking to clients, and really figuring out what the product market fit needs to be. So product market fit, as you mentioned, is job number one. And to me, I think that means getting narrower doing less. How can we on each sub component, just crush it and be world class again to my earlier point such that you’re so good at it, that alone could be its own big, big business. And so those are probably the biggest takeaway is getting small, getting narrow and obsessing over the value of the output and the outcome of what you do. Not the hours of what you do, not the hands of what you do, not the scope of what you do, but the outcome. And then what our clients are willing to pay for that, I think the narrower you can get that. That means you stand a better chance that you can hire an army of people that can execute on that. Because it’s, it’s narrow. To me, that’s how I would build a business all over again, that’s professional services, which I would really question myself if I did that. But if I want to do professional services all over again, that starts very narrow. Yeah, and ensure that that outcome is wildly valuable.

John Corcoran 20:39

Yeah, you do see that a lot with repeat entrepreneurs, when they start a new business, it’s like really, really narrow. It’s like, you can tell how they, you know, how they learn their lesson. You know, you’re involved in Entrepreneurs’ Organization, San Diego, I’m involved up here in San Francisco. And before I was an accelerator, I remember a couple years ago, for a meeting that I had, where I was making this presentation to our accountability group, and I was talking about what we were focused on with the business and I just thought I was rocking it like, Oh, it’s just so great. And immediately afterwards, the coaches sitting there were like, I don’t understand one thing, what you’re doing, and I look back on it now, and I realized it was like it was trying to build four different businesses. And once Yeah, you know, four different focuses, like completely different markets and everything. And it was just a mess, you know, and once we got rid of all that focus on one thing, that’s really what would help. I want to ask you about March 2020. Okay, March 2020, that that date is seared in all of our brains, because that’s when COVID hit. Yep, take me back to that moment in time. You’ve got a team that’s all working together under one roof offices, and then one day, they’re all gone, and it’s just you showing up to the office. How did it hit you? And what was that experience like for you? Right?

Frank Cowell 21:52

Yeah, so I remember when that hit, it was a Monday when we heard over the weekend. Oh, these lockdowns and these restrictions and all that, you know, the stay at home orders and all these things. And it was just like, it was like, out of like, 1984, you know, George Orwell, it was kind of Orwellian, right? We’re like, what, what is this? Like, I never even experienced anything like this in my life. And so it was all very surreal. And so I remember during that first week, when we’re like, Okay, everyone, like, don’t come into the office. Why was I still going into the office during that first week? And I remember about the third day, fourth day. And we were just a large number of our clients who had been adversely affected by the stay at home orders, which meant their businesses were kind of essentially shut down. What do you do if you have a lot of restaurant clients or what? No, not a lot of restaurants, we just had a number of clients who, for one reason or another, their service volume, their patronage, just shut down overnight. So they in turn, started putting in cancellation notices with us. Like it was raining from the sky cancellation notices. Yeah. And I remember being in the office one day, by myself, that went down, I was parked up in the conference room, which was closer to the front door, because I wanted to see if you know, whoever would come in. And I remember just having my head down in my hands. And one person did come in to get a computer or something like, Hey, what are you doing? And I should look up, right? I looked up kind of just, for the first time in my life, like, no answer for this person. And that was really scary for the scariest time in my entrepreneurial career. But it was shortly after that, that I decided to, you know, slap myself, wake myself up and say, Hey, you know, what, doesn’t matter if we go out of business, I am not going to go out like that. I’m not going to be a coward. I’m not going to show my team that there’s no leader at the helm. I’m not going to help Stoke fear among my team, there’s no way I’m going to go out like that. So I had to smack myself silly. and say, Okay, let’s go. And so from that point on, I kind of took a wartime effort where I gathered my executive team, and every morning we huddled up, did you get any more cancellations? Who’s doing what, who’s on top of what clients? Are they? We do, we still have like, every day, we give a status update, what’s going on? What are you doing? What are the actions, and we just met, like, like, it was a military, a military thing, you know, sometimes multiple times per day. And so I just took a very wartime approach to it and said, Nope, I don’t care what happens. You know, we have to be proud if you do go down, like you have to be proud of how you go down. Right. And so from that point on, you know, we were able to survive, we had to make some cuts and we were fortunate to get first round a PPP, and a number of other moves we made and you know, we survived through

John Corcoran 24:52

and you know, are some of those moves you have to do layoffs?

Frank Cowell 24:56

Yeah, we had to do some layoffs, which was really tough. Now, one of those was my oldest son who worked for the company at the time, you know, so I mean, we had to do some things that were, what was that? Like? I mean, an emotional and very eldest son.

John Corcoran 25:12

He is 28 or 27?. So what was that like?

Frank Cowell 25:18

Yeah, it was, it was tough, I gotta tell you it, you know, I, obviously being my son that made it even more emotional. But yeah, a few other people that we laid off to, and that wasn’t, you know, necessarily a walk in the park, you know, that’s, that’s tough to do. And then we were, we had to tighten the belt, a few, you know, the shareholders, the owners who work in the business, you know, all took pay cuts for a period of time. Without paying for a period of time. And that didn’t last that long, you know, we buckled down, we stabilized, we took account of the clients that we did have remaining. And, you know, we still were selling and landing new business. And so once we got a good lay of the land, and we’re able to say, Okay, let’s start behaving like business as usual. We’ve made the adjustments, let’s get back to our rhythms. And that was really critical for me to get the company back into the rhythms. Because otherwise, your experience for everybody would have been filled with fear and filled with uncertainty and filled with doubt. And, and that doesn’t help anybody.

John Corcoran 26:25

Right. Right. I want to ask you about you mentioned a mentor earlier, who did you, you know, turn to at these different times, it could be you could also reference when you shifted over to, from the project base to more recurring service, you know, where their mentors their em, yo, forum mates? You know, I think that oftentimes there are certain trusted people that we turn to that helped guide us through these tough periods. So did you have people like that?

Frank Cowell 26:55

Yeah, absolutely. There were, you know, my mentor, who I met, was connected to through EO, there was another gentleman in EO, that was, was part of a coaching group of his at the time, because he was actually testing a new coaching offering, I was like, yeah, I’ll jump in on that and help you out. And maybe it’ll help me out as well. And, and so that gentleman, he would, he got on the phone with me just to do some literal, completely outside of what he was testing because everyone kind of dropped out of his program all at once, because of what happened and, you know, he talked me through some things, my forum mates, my ego for mates, they all you know, we’re there to listen and talk and give ideas. So going through that time, specifically, those people were very valuable. And then just at large, outside of COVID crisis times. You know, my mentor has been great. I’ve got great business partners. There are a couple of people outside of that group, other agency owners that have always been very generous with their time and their wisdom. And one gentleman in particular, who’s also an EO San Diego, nee ohana has been, you know, just amazing and giving with his knowledge. And this is a gentleman who has been very, very successful in our space. been very gracious with his time. Another gentleman out of San Diego recently, you know, chatted with me Grayson, the friends you know, very generous with his time and his knowledge sharing and he’s also been very, very successful in our space. Gentlemen, on the East Coast, Bob Ruff, hello, runs an inbound shop and is very generous and becomes a great friend, you know, business friend, and always willing to share what they’re doing and what’s working, what’s not working. So, you know, this, this, this business, while it may look like these people on the outside our competitors, just so many people that have just been willing to like, give and do the experience share things, so yeah, lots of really cool people along the way. Yeah,

John Corcoran 28:55

yeah. I wanted to ask you also, you know, blanking on my original question that I had, but uh, let’s shift to this. So as you as you started to get through the pandemic, there was a moment where you realize that you’re kind of coming through this and you’re gonna get through it just fine. And was there any big would you attribute getting through it to any big shifts? like did you have to switch to a different niche or just have to switch to a different industry any wholesale changes like that? Or is it just kind of like, you know, a lot of businesses saved that there was like a month or two period that they just kind of got through and then once they got through that, things started to rebuild on their own, which was for you.

Frank Cowell 29:40

I would say it took a few months, there were a few months of uncertainty and just kind of like not being in regular rhythms and two to three months, and that’s when we really kind of got back to normal and how we run the business. And that was a good feeling because it felt like okay, we’ll be fine. This may suck for the next year, but we’ll be fine. And so That feeling was very important. And it’s very important to communicate that to the team. And then the other thing that came through that process was just a reflection on my own leadership and management capabilities. And requiring that I step up and bring about more accountability in the organization, and especially amongst my team, the team that reports to me. And so that’s an area where I think there’s been a lot of growth over the past year. And I’m excited about what that’s done, and how that galvanized me personally, what I expect of myself. And so that’s been fun to go through in hindsight.

John Corcoran 30:40

Yeah, yeah, that’s great. All right, well, I want to we’re short on time zones and wrap things up. And I kind of already asked this question, you might have already answered it, but I’ll, I’ll ask it anyways. So I’m a big fan of gratitude. If you look around your peers, your contemporaries, others in your industry, who do you respect, who do you admire, people that are doing good work, and it might be some of those that you’ve mentioned already, but it could also be others that you, you know, maybe don’t have as close a personal relationship with but you still respect and admire the work that they do?

Frank Cowell 31:10

Yeah, I would say, you know, the three gentlemen that I just mentioned, you know, tons of respect for what they’ve done in this space, because growing a professional services firm is not easy. You know, it’s not like a widget on the shelf where, you know, you could always recoup your investment in it, and sell it at a discount and, and dump into other materials and leverage, you know, in professional services, and once the time has gone, it’s gone, you know, you don’t dust it off and sell at a discount to recoup your investment there. So, it’s not easy to grow a professional services firm. You know, you’re gathering a lot of talent and trying to assemble that in a way that is unique and different. But you know, more importantly, it’s effective. So, tons of respect to those guys that I just mentioned. And, you know, just so many other people out there that are, you know, tons of people in like the EO community, for example, like, it’s not a specific person, but the EO community at large, tons of respect for that community and how willing they are to show up and give value, you know, in the Slack channel that we’re in, all you have to say is, hey, gang, I’m struggling with x. Anyone have any experience with this, and you’re gonna see people come out of the woodwork, people willing to literally jump on zoom calls. In fact, I was just doing that today for another gentleman he posted on the Slack channel. Hey, I have questions about KPIs when it comes to marketing, and how should I hold my head of marketing accountable? But what numbers, what metrics and KPIs would you define? Sounds like, hey, let’s jump on a zoom, I’ll show you this thing I called the seven box method. And this is what we do to create that kind of clarity for everyone on the team, including marketing. And people do that kind of stuff all the time in iOS. So just huge respect to the EO crowd. They’ve been pretty amazing. Yeah,

John Corcoran 32:54

I’d second that. For sure. Frank, this has been great. Where can people go to learn more about you, learn more about your book and check that out? Check out your podcast? Where can people go?

Frank Cowell 33:03 That’s the name of the book Building Your Digital Utopia, to learn more about the book. We have some free resources for you to download. You can check out the episodes of the podcast and along with some other things there as well.

John Corcoran 33:18

And is your agency.

Frank Cowell 33:22

Is the agency, is the service firm. So if you go to, there’s no real big pitch there. It’s just really about what we teach with the methodology, the Building Your Digital Utopia and the resources, the framework, get educated, listen to the podcast, read some articles, download some tools.

John Corcoran 33:39

Excellent. Great, Frank. Thanks so much.

Frank Cowell 33:42

Joh, thanks for having me.

Outro 33:44

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