1576 Closing Chapter
“There is nobody at 1576 now,” he told The Drum, “But I, together with a skeleton crew, was in helping the liquidator for a few days. Their job is to protect the creditors. And part of that is working with the debtors – effectively the clients – to make sure everything is paid.
“So I worked with them helping in file retrieval and so on. But I feel I had done my best for that business so had no sense of guilt – or the feeling I was walking on the agency’s grave – going back in there.”
However, when that process was complete the reality of his business being no more really hit home when he returned to the office to collect some personal belongings. “My entrance was blocked by two guys in t-shirts. They did not know me from Adam and basically said I could not get in – which was when the fact that this was no longer my office really sank in.”
Reid, 44, looked relaxed as he spoke. And far from being embittered, if anything, is philosophical about the experience. “These things happen in business. Agencies like 1576 coming to an end – or failing – is part of the natural cycle of things.
“I do not feel angry or bitter. 1576 gave me a great living. I had a chance to work with some great people and do some great work for some fantastic clients. I do not regret a thing.”
But what went wrong at the agency, once seen as part of the advertising elite? “In the end cashflow got us,” he said, “We had several good wins recently, but clients spending over Christmas was slow. What it boiled down to is that we just did not have enough cash to continue.
“We over-stretched ourselves when we moved to new offices in Leith. We went down there with all guns blazing. And it is fair to say our staff overheads were just too high at that point. We were out of kilter with market conditions.”
However, in its final days the agency also suffered a shareholder fall out – which ultimately led to the resignations of every other board member including joint MD Gary Smith and creative director Adrian Jeffery.
Reid, will not be drawn on the details on the dispute, but leaves one with the impression that this animosity was a symptom rather than a cause of the problems which overtook the business. “I have promised I will not talk about that,” he said, “but we have not fallen out. I had lunch with Gary recently and we remain friends.”
However, his last few months fighting valiantly to save the business won him broad-based respect. But the struggle was a lonely one. “I was running the business by myself – without the support of other directors which was an education in itself.
“But, given the situation, it also meant I consulted my accountants and bank on a daily basis – because, as the sole director, it was important I acted in the right way. If I had acted improperly, and knowingly traded while insolvent for example, it could mean that I might lose my limited liability status which would have been very serious from a personal perspective.”
The decision to appoint a liquidator came through this consultation process. However, this did not make things any easier. “We decided to appoint a liquidator on a Monday. But then we had to go through a legal process which meant we could not tell staff until the Thursday. That was a strange few days having to work with people while knowing what I knew.”
When the end came Reid gathered his 20 strong team into the boardroom and made a speech – after which some said they simply wanted to buy him a beer.
“I did not plan to make a Churchillian speech or anything,” he said. “Everything I said was from the heart.
“After that the staff were told to come back to the agency at 10am the next morning, when the liquidator would explain the process.
“That was particularly strange for me. For there I was sitting with the rest of the staff being addressed in my own boardroom. It would normally be me standing at the fireplace doing the talking. But really I was now in the same boat as everybody else. Redundant.”
It is a status few of the 1576 staff have had to endure very long. Reid has been busy writing references and helping his former team find new roles.
“I am pleased to say most have now found jobs,” he says, “which speaks volumes for the quality of the staff and the fact that Scottish marketing cannot be in terminal decline after all.”
Despite this assessment of the market though Reid does believes others can learn lessons from his experience.
“It is a really tough industry,” he said, “and anybody who tells you otherwise is not being entirely honest. I think that in order to survive, agencies have to be either very large with a good spread of clients or very small with a hope of keeping overheads under control.
“It is the businesses in the middle, like 1576, which will struggle. They require a certain level of overhead, but just do not have the client base to fund it.”
This all seems a far cry from when Reid – as a fresh-faced 31 year old – first launched the new agency with partners Mark Gorman and Adrian Jeffery. What advice would he give any brave-hearted soul about to embark on a similar journey now?
“Go for it,” he said, “without doubt go for it. Just watch you cost base and work on your relationships.”
However, Reid – who will not be drawn on how much money he has personally lost and how much his former agency owes – is not tempted to launch a new business anytime soon.
“I do not feel I would want to start something again at the moment,” he said, “although never say never. But I am looking forward to working us a consultant in areas such as business development, creativity and brand strategy. That is what I really want to do.”