Starting out
Sometimes it seems there's barely a month goes by without news of yet another agency breakaway team or individual starting out on their own. Sometimes these start-ups, or even upstarts, grow to become the next big agency names, raising their profiles, winning big accounts and leaving their former bosses in their wake. Quite often they don't. But regardless of what fate awaits them the allure is plain for all to see: the perceived glamour of running your own company, being your own boss, doing things the way YOU want to do them for a change, and so on.
So there you are: a young, ambitious, trendy go-getter who knows, through years of working for someone else, what clients want and how to deliver it to them. You're fed up with the old boss breathing down your neck and telling you what to do and how to do it. He's old, lost his nerve. And anyway, he won't sign your expenses.
You've got a couple of mates who think the same way you do. They're also young, also trendy, and they're fed up with the way their boss seems to be picking up all their awards, with little reward.
So, perhaps in the pub on a Friday night, the three of you decide to set up an agency of your own. You've got some great ideas that you know clients will love and the enthusiasm to get out there and make a name for yourselves. There's just one problem... you don't really have the first clue how to do it and how to make it work.
Therefore, as we stand at the cusp of another new year, to help all the budding breakaways and future agency heads The Drum went out into the industry and spoke to those who have already started a breakaway, both recently and some years ago, to find out how it's done. Start-ups and more established players were asked about the problems they had faced, how they tackled them, and what advice they would give to any ambitious young folk planning to do the same.
The first port of call was Erick Davidson, chief executive of Tayburn. At 22 years old and working internationally across graphic and interior design, advertising, branding and new media, Tayburn is a true Scottish success story. The company was founded by Davidson, Vince Taylor and Richard Coburn. Davidson says: "When we first started out there were only six design consultancies in Scotland. At the last count there were 500. If someone's going to start now I would look at the marketplace and see how they're going to be different from the other 500 out there.
"The experience I have of it is that it's like moving to a new planet," says Ian McAteer, managing director of The Union. McAteer and his team have chalked up quite a bit of experience in starting up over the past six years, first founding The Union then direct marketing agency Only U and, most recently, the agency's English office - Union Leeds. In six years The Union has built up a strong team and a client base which includes Intelligent Finance, ScotRail and SMG's S1 internet brand.
McAteer continues: "Most people who work in stable jobs are basically maintaining what's going on in an agency, and they have support from a number of different departments. When you start your own business you're in a barren landscape and everything you have you have had to create. The skills are totally different. It's a battle for survival, you have to actually go out and hunt."
The theme of having to look after every single aspect of the company is one often referred to by people who have experience in starting their own agency or consultancy. The fact that previously a receptionist, office junior, accounts or administration department would take care of a hundred unseen tasks in larger companies is sometimes overlooked by those looking to start out on their own. When a new company starts, often everyone finds themselves doing several jobs at once.
Ilya Scott, managing director of Real PR, founded her consultancy just under two years ago. She says: "My father is an entrepreneur and his advice to me on setting up business was simple: 'don't do it'. Obviously I paid no heed and, whilst I haven't regretted that for a second, I now understand why he tried to put me off. You can't overestimate the hard work and complete commitment required. It really is all-consuming. You think about it every minute of every day."
Once you've heard all the horror stories, accepted that you're probably not going to get any sleep whatsoever for the first six months and worked up the guts to hand in your resignation, a decision has to be made on how you will finance your company. There are a number of choices about how to do this, each one with its' own merits, depending on who you talk to. You can self finance, receive funding from a venture capitalist company or other external investor, apply for a grant or take a loan. There is a wealth of advice available on what the best route is for you.
Scottish Enterprise's Small Business Gateway was responsible for helping 7000 new businesses get started in 2001, offering a range of advice from simply starting up, through to credit checks, supplier information, seminars and networking opportunities. In addition to all this the Small Business Gateway can also introduce potential start-ups to 'business mentors' who have experience in starting up in their particular sector.
If the person founding the business is under 25 the PSYBT may also be able to help with a low interest loan. Alternatively, high-street banks can also provide useful information on how best to fund your company. The Royal Bank of Scotland has produced a CD-Rom full of tasty tit-bits of information - which is available free of charge from the bank's website, www.rbos.co.uk.
As far as advice from the industry goes, though, the favoured source of funding seems to be self-financing.
Seven-and-a-half years ago Mark Gorman, with partners David Reid and Adrian Jeffery, founded 1576 out of their own pockets. Over that time the agency has grown to become one of Scotland's Big Four and does work for clients the likes of Direct Holidays, Mother's Pride and Glenmorangie. He says: "The hardest part of starting the agency was finding a source of finance without selling off our equity cheap early doors. When that happens you make all the effort while the investors put in a relatively small amount of money. Then if the company folds they don't get hurt too much, but if it succeeds they make a lot of money. It can hurt you in the long run. You want to find a situation where you retain complete control of your company."
Hoss Gifford of Glasgow-based new media agency Flammable Jam advises: "Start with low overheads. We started in a back room and it allowed us to not have to spend large amounts of money on starting up." At the outset Gifford was backed up by Donnie Kerrigan, a director of the newly formed new media consultancy Chunk Ideas, who says: "Be cautious about investment from other companies. Be careful of it at the early stages - build up your company first."
Whichever direction you choose to go, there's more to starting an agency than just paying for it. The legal side, whether it's regarding the contract from your old company, contracts for your new staff, or the lease on your swanky new premises, is a crucial element of starting your company.
Michael Livingstone, a partner at Glasgow's Maclay Murray & Spens, says: "One of the first things they have to decide is whether they're going to trade as individuals, with others or for a limited liability company. A limited liability company means the company is held responsible for debts rather than the individuals, but that can be a false comfort because most banks will look for a personal guarantee.
"A good business plan is probably the most important thing," comments Gillian Meehan, head of press and PR at the Law Society Scotland. "Thinking it through and having the right advisers around you. Make sure you get the right advice from the right people so that your company can flourish. The best knowledge, intentions and skills don't always make a good business. If you don't have a firm business plan your company will flop within three years."
If one thing becomes apparent when researching how best to start up a business, it's the wealth of information and advice that's available to help you decide how to do it. The general feeling seems to be summed up by Tayburn's Erick Davidson: "Get advice where you can, but try to get the best advice you can. Don't just rely on family and mates - pay for the best advice you can get because there are things that can come back to haunt you afterwards."
So before you fill out your expenses form talk to as many people as you can. Go to people who have done it before, the professional advisers and solicitors and see what they have to say.
Who knows, after you've done all that the grumpy old boss and unsigned expenses may not look so bad after all.
Thinking of starting up your own agency? Check the links for some help.