Built to Sell:
Creating a Business That Can Thrive Without You
By John Warrillow
Published by Portfolio
Copyright © 2011 by John Warrillow
“Traffic was heavy on the way across town and Alex was late for his second meeting of the day. Sandy Garmalo sat at the table sipping San Pellegrino. She ran the marketing department for a law firm and had been Alex’s client for five years. The law firm never generated huge billings for the Stapleton Agency, but they were steady, which meant Alex had to spring for lunch once a quarter. For Sandy, Alex’s lunches were a nice escape from the overbearing lawyers she served.
The waiter arrived and asked if they would like a drink. Alex was about to ask for a Diet Coke when Sandy preempted him.
“I’ll have a glass of your house white.”
Alex had too much to do that afternoon but knew that letting Sandy drink alone would make lunch awkward.
“I’ll have the same,” he said, promising himself that he would nurse one glass.
Sandy was a divorced fifty-something woman, ten years older than Alex. She enjoyed flirting with him, and Alex obliged, knowing that a little harmless amusement would keep the projects flowing.
Appetizers were picked at. More wine arrived. As Sandy rambled on about the lawyers she worked for, Alex became increasingly less interested. Eventually, the waiter cleared the plates and dessert was offered and refused. Sandy requested a coffee. Resigning himself to another ten minutes of meaningless banter, he ordered an espresso.
The bill came and Alex produced his credit card. One of the perks of owning the Stapleton Agency was the ability to charge $8,000 worth of expenses per month on his card, which generated a nice stash of travel points that he promised himself he’d use this year to take his wife and two kids on a vacation. Alex sat nervously as the waiter went away, and he asked the credit gods for a little bit of understanding. He’d been late paying off his balance last month and was cut off until his account was back in good standing. His bill was due again sometime this week and he hoped the date had not passed.
The waiter returned. The card had snuck under the watchful eyes of the bank’s credit department. Alex smiled, retrieved the card, signed the receipt, and got on with the business of extracting himself from lunch. Sandy made some vague overtures about upcoming projects she would need the Stapleton Agency’s help with. Alex feigned interest and eventually made his escape.
After grabbing yet another coffee en route, Alex returned to the office to work on the proposal he’d promised to tackle that afternoon. The request for proposal had come in from Urban Sports Warehouse (USW), a local sporting goods retailer. They had grown tired of their agency and were looking for a new marketing firm to handle all of their work, which included newspaper ads, local radio spots, store banners, and an e-commerce-enabled Web site.
Alex knew that his team could handle the print ads and in-store signage. He had a friend at a production house who could help with the radio work. Most of the Web site work would be out-sourced, but USW didn’t need to know that.
After pasting the requisite drivel about the history of his agency, its creative credentials and awards, Alex began to estimate his fees. There would be hard costs for studio time, proofs, and freelance web designers. Then he tried to estimate the staff’s time. He billed his designers at $200 per hour and his own time at $300 per hour. These were largely arbitrary rates established over time by researching how much competitors charged.
Alex hated the process of estimating hours. He knew it was an inexact science and that his actual hours invested would have no resemblance to what he was estimating. Creating marketing material was such an iterative process that there was no way to estimate his time accurately.
After four hours of writing and doing some fuzzy math, the proposal was done. It was 6:30 p.m. and he had missed the FedEx guy for the day, so he dropped the proposal off at the depot on the way home. He handed it to the clerk and hoped that USW would be the client that would finally make him less reliant on MNY Bank and the likes of John Stevens.
Alex decided it was safe to call Mary Pradham’s office, given the late hour and knowing that she usually left early to get home to her kids. Mary was his account manager at MNY Bank, which had required him to move his business banking there after he made it onto the bank’s approved vendor list. Alex was bumping up against his $150,000 line of credit, and by steering clear of a live conversation with Mary, he could avoid another one of her cash flow lectures. Ironically, he’d been expecting a check from Mary’s employer today, but it hadn’t arrived.
Alex left Mary a voice mail explaining that he’d pay down his line of credit as soon as he received the anticipated check. He hoped that would buy him a few days. The Stapleton Agency provided him with a decent income and a great vehicle for tax write-offs. He ran the Range Rover through the business and was sure to keep the bill whenever he ate out with friends. He had been able to give himself a bonus of $150,000 last year on top of his $100,000 annual salary. Not bad, but the cash flow was lumpy, and this wasn’t his first after-hours call to Mary.
Alex spent a good deal of his Saturday in the office under the guise of catching up on paperwork—which did not need to be done. But his main reason for sending his wife and kids shopping without him while he returned to the office was so he could be on hand to supervise Sarah’s work. She was his best designer, but she hadn’t heard John Stevens’s criticisms firsthand. He had. By the time the two of them left that afternoon, he felt Sarah had everything under control and would be able to finish up rather quickly on Sunday.
On Monday morning, Alex met for breakfast with an old client who owned a local car dealership, so it was after 10:00 a.m. by the time he got to his office. As soon as he arrived, he knew it was going to be a bad day. Taped to his door was a note from Sarah:
“Sunday, 4:00 p.m.
We need to talk.”
This was not going to be good. He’d hired Sarah away from a rival agency last year. He needed her for all of the MNY Bank work. Resigned, he walked over to her desk.”
part four of “Built to Sell’ will appear here tomorrow