Today, the advisor, Yu, is here to take a piece of advice…
An agency friend ran out of money by continuing to employ dead weight. The dead consequences are nice people but don’t do any work, so the clients are demanding refunds. The agency owner is so empathetic that they don’t want to let anyone go. The agency friend feels he can’t do much since many of the dead weights are friends of the guy who somehow got control of his agency.
Can you guess what I advised?
My advice was to cut the dead weight, even if it pisses off the guy who controls the agency.
But he believes in waiting it out– even though he will not be able to generate more cash (can’t take on more clients since the team of VAs is too junior to deliver).
He has another unhappy client that would pay another $10,000 if he completes that project in 3 months– that he hopes will cover every refund. But that money is unlikely to come now since the same client has hired other people to complete the project.
The dead weight is so highly paid that the agency owner is forced to live at home and take zero salaries. The main piece of dead weight has the title of COO but is uninvolved in the company– and that man makes twice as much as I do.
A) Fire the dead weight.
B) Play games with the client by avoiding/negotiating.
C) Try to sell more clients, even though you can’t deliver right now– hoping you can use “Peter to pay Paul” or Ponzi the issue forward.
D) Declare bankruptcy since you’re already financially bankrupt.
E) Borrow from family and friends.
No great options, as all of them are embarrassing.
This all was to highlight an issue with young entrepreneurs who believe while starting an agency:
You have to appear successful if you want to attract more clients!
So, they spend money on trying to get fake PR pieces, Instagram verification, hanging out with “influencers,” and coaching programs instead of hiring solid people, saying that they can’t afford to hire.
To which I say, “You think we’re expensive? Try incompetence.”
If you have an agency that can’t pay bills but desperately needs clients, they have to pretend things are going great.
I have empathy for you— since I was there not so long ago.
My advice to all these young entrepreneurs is:
“Be brutally honest with clients about where you are from the start, and yes, you should also have the guts to swallow your pride and admit every arrogant and ignorant mistake you commit in your professional journey.”
Believe me; you will be surprised how nice clients will react to this when you own up rather than playing games.
Here is the testimony of what I said. Let me know what you guys think about it.
Yu signs off with a solid piece of advice:
Always make sure you have a solid COO and a solid accountant– who has your interest instead of theirs, as in the aforementioned case.
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