Rob Pierre | Co-founder | Jellyfish

A bonus tip from Rob

I have some additional advice, something that might be useful for the readers to know about acquirers, like us.

One of the challenges is the portfolio of clients that agencies have - clients that won't fit the profile of Jellyfish. So we wouldn't buy a business that's full of very small to medium businesses or products that aren't consistent. It's actually better to either have a very niche, consistent product.

Don't try to spread your capabilities too wide. So it's either better to have a niche, specialist product or - contrary to lots of advice - it's not that bad to have a really good key client. Because in the long run, that means that a lot of your revenue is related to the type of client that your suitor or your potential buyer would want.

And it's better to have that key client that you're constantly trying to offset. Because of how much of your revenue share that client takes. Because that's normally the biggest worry, isn't it? You build a business around one client. If you lose that client, then your whole business disappears. But then if you mitigate your risk and spread it amongst a bunch of smaller clients, you end up with a portfolio that I wouldn't want, it ends up having to be an acqui-hire. Then we will acquire the business and all we want to do is swap out all the clients to the profile that we are looking for.

So they have to be mindful:
What type of revenue you are driving?
What is the portfolio of your clients?
And most importantly, what is the product portfolio or the service portfolio that you are taking to market?

It's often better to get more of the same thing and not just chase it. Because you might have a client who starts asking you for things that are not your specialism. Often we then get distracted and instead of getting more of the thing that you're great at, you start doing more for a single client.

Yeah. So as you can tell it’s a little conflicting advice. I'm saying grow a big client. That's the right profile for what your acquirer might need. But also don't just grow that client with a whole bunch of services that aren't your expertise and distract you from doing more of what you're good at.

So it's a graphic equaliser. There's a lot of things that you need to consider, but I would say strategically, you have to think about this because the instinct is to hustle. The instinct is if you are acquiring talent or recruiting ahead of the curve, you're just desperately trying to get revenue so that your balance sheet is in the right condition and that you can actually pay the wages the next month and that's the issue.

So considering how it's going to be funded, how you could demonstrate what hiring ahead of the curve looks like in your business. Isolate the costs that are related to hiring ahead of the curve, so that you have a sustainable profitable business without that speculation.

It's good to have it all tagged and marked. It shouldn't be that you accidentally have more expenses than revenue. It has to be strategic and it has to be related to growth. Otherwise you can't react quickly, optimise your business and take those costs out without impacting the existing sustainable business.

I would say that to all you founders out there. It's only out of experience. It's not wisdom, it's purely retrospective observations that these are some of the challenges agency founders face and to share what we’re looking for now to grow our business: A specialist and the right profile of clients.