The Dark Side Of Agency Life: Being Scammed, Legal Challenges and Letting People Go
- Clients Refusing to Pay for Services
- Dealing with Clients Who Won’t Pay & Better Cashflow Management
- Sophisticated Social Engineering Attacks on Agencies
- The Intersection of PR and SEO
- The Challenges of Being a Solo Agency Owner and How to Overcome Them
- Contract Issues: Legal Reviews, Payments, & Typical Contract Length
Deepak: Guys, we're going to just, so you know, be starting in one or two more minutes. I see that people are still coming in. We'll give you a couple of more minutes. We've got Mike from BKK. We've got Paul from Leeds who runs an agency. I'm assuming SEO's part of that.
Thank you for telling us where in the world you're from. We have officially reached the actual five-minute mark. Now it's time to, as they say, lock and load.
Everybody, welcome to the show that we've got with Pete of Kaizen. They are an SEO -first as well as PR agency, probably a couple of other things, which Pete will go on to explain, that are based out of London here in the UK.
Today we're going to be talking ultimately about the dark side of agency life. We got a bit Star Wars Jedi on you. Pete's going to be taking us through is a couple of things, guys. Just so you know what to expect.
The first thing, you're going to hear a little bit about who is Pete. Who are Kaizen? If you're wondering. Then we're going to move into some of the challenges and the interesting parts of Pete's journey. Challenges with clients who sometimes refuse to actually process payments that are due, dealing with issues of actual criminals targeting agency staff, and also the challenges to include the loneliness and sometimes depression of being an agency owner. For you people who are agency owners, you know how tough it is. It's exciting, and it's great. It's tough.
Throughout the webinar, please do ask any questions that you've got. And we'll be jumping into those questions in and out as we go through the webinar. But first, we begin with finding out a little bit more about Pete.
Pete: At the moment, the present version is that I run of 25 people; 90% of our revenue comes through doing link building for SEO purposes. We're sort of five years in that journey. Our revenue last year was 1.5 million. We're on track to smash that this year as well, but it's been a little bit ruined in the past couple of months with coronavirus stuff.
The past really is I got my start building websites as a kid. I learned HTML when I was like 12, 13. As a result of that, I learned to make a little bit of money off the internet, even though I was making websites about like The Simpsons, and just like video games that I liked. Most of my life has revolved around learning skills that focus around my passions, and then I stumbled along how to make money out of it along the way.
So 15, 16 I got a sense of what AdWords was, what SEO was. Landed a job in an agency up in Leicester, where I'm from. Potentially they were launching an SEO department, largely serving small/medium business customers, trying to get them to rank.
I'm the only owner of the business. I have a managing director now. That's been a massive help the past year in terms of our growth. I guess a lot of the journey has been the past six years where it's went from me sitting on this chair on a desk similar to this. Growing into a right fancy office, and then all the way crashing back down to here while obviously the world is a little bit on pause.
Deepak: Yeah. Listen, it sounds like it's been an amazing journey. Talk to us now about how you landed in SEO and how that decision came to start an agency, and to grow it, and to scale it.
Pete: In a similar sense, it was when I was a kid making my websites. I wanted to somehow get more traffic from Google. I just Googled like, how the hell do you do that? And landed upon Moz as a first point of a call.
But the whole actual business side is I was a web designer. I had a job paying 30 grand a year as a web designer. They were launching an SEO team, and I was seeing that small businesses could rank to the top of Google and make a lot of money off it.
While landing a couple of SEO jobs, both in-house and agency side, I started on the side doing freelance SEO training, basically. I maintained a blog. I used to post on tips and tricks in the SEO industry. I did a fair bit of networking.
I became a bit annoying to all the sort of big agency leader types. I'd get on their radar. I'd go to conferences like Brighton SEO. Basically, I offered freelancer SEO work for cheap. I did for £15, £20 an hour alongside a full-time job where I was running SEO accounts for large corporates.
Those big brand names on my shelf were really appealing to folks when they wanted to use me from a freelance SEO point of view. It got to a point where I was making about £800, £1000 a month.
Then I thought, "Okay. Maybe I should give this a little go, really." Saved up three months’ worth of rent. Saved up about five grand's worth of rent.
That was the deal that I struck with my good then-girlfriend, now wife, at the time. She says that you can go and start your own business provided that you can cover your rent for three months. And very kindly, the agency I used to be at, they offered me to come back as a contractor if needs be.
I had a very nice, relatively secure position. But most importantly, I'd been freelancing for two years. I'd already started to learn sort of the basics of business, really. I just sort of announced I was going to launch, really.
Very thankfully, some of my agency sort of people in my network started to introduce me to a couple of folks, and from that I was able to turn it from a couple of hundred pound a month to a five grand business a month, within that first sort of month, really. It was self-taught. I taught SEO myself.
Clients Refusing to Pay for Services
Deepak: The dark side of agency life. Let's go through some of these things one by one. Now I want to talk about the challenges that you've had, or the specific journey of what happened when you had the client that refused to pay a rather large bill and kind of what happened, and just to talk us through their journey.
Pete: Sure. It was a client we were working with for about six months, referred to us from another agency. It was largely actually SEO work. Link building is a core element of that. And essentially they weren't happy with our level of service was the view that they were giving.
The first sort of note came saying they wanted to terminate out their contract, and we had three months of that contract left. I said, "Well we need to adhere to that contract." They said, "No. And on top of that, we're not going to pay the two months of outstanding bills that we owe you." Which totaled up to about £25,000. "And if you chase us on it, then we'll essentially look to bring a professional indemnity case against you outlining the long list of ways in which essentially you've damaged our business and our brand."
The challenge with SEO, as you know, is that it's so goddamn subjective. What really quantifies as good work versus bad work? You can have two SEO experts, ask them the same question, polar opposite answers.
What we got in the mail was this dossier of how essentially our work was so damaging that it caused the business to potentially lose over one million pounds of revenue on their end. It listed how one month the traffic said that it was a split of non-brand versus one brand. They had a separate agency do that report, and they got a different outcome to us. They hired another SEO agency to essentially pull together a list of SEO recommendations of what's wrong with their website, which are the same recommendations that we had.
It's just there's a difference, as you know, when you work with big corporate clients. You can do this until the cows come home. You're getting paid tens of thousands of pounds a month to give them advice. But maybe they'll only implement or act upon 5% of it. And even then, you're working in a particular order.
The point was that it was £25,000 of debt that we couldn't afford to solve, really. This is like a big business that are coming down on us. My first part was to do due diligence. I actually called up the last two agencies that worked with them.
They both told me that they both did the exact same thing. They have a habit, basically, of going from agency to agency, signing on a contract, working with them for six months, and then essentially they will negotiate a better price with another agency that's cheaper.
Then they get out of paying months of bills by threatening a lawsuit. The company, in particular, I should say, it's in like the health/beauty space. They were largely ran by lawyers, used to customers of theirs potentially bringing lawsuits against them. Therefore, they had very rigorous legal mechanisms of essentially avoiding unpaid bills.
When you've got me, an agency of 20 people versus a multi-million pound business, how am I going to be able to raise the funds and proceed for a three-year professional indemnity case? It's built in a way that obviously means that the only choice for me is to walk away.
But for me, it was a matter of principle. How can I let these companies just trash us about? And there's no vetting process. How could I avoid that process in the future? That was the big part of it, really.
Dealing with Clients Who Won’t Pay & Better Cashflow Management
Deepak: What happened in this instance? Did you decide to kind of let it go? Or what did you do in the end?
Pete: My first approach was anger. Me and one of my colleagues, we prepared a response to every single bullet point, going in through the ins and outs of SEO, why we made the choices we made. I consulted that with lawyers that I arranged through insurance.
And I think that's what actually changed all this, really. I can't give a big enough shout to Hiscox, the professional insurer that we use. They arranged me a marketing specialist law firm straight away. They're called DWF Law, and I really recommend them if you ever need to use them.
Essentially they said, "You can proceed if you want, but it might cost you up to a million pound in legal fees." And I wasn't willing to put my whole business at risk. But I was scared that they would continue with the case anyway.
I wrote it off. Frankly, Hiscox's were willing to step in and to cover the cost element of that. They ended up paying me £10,000 out of that £25,000, which is not the full amount. But it was a massive relief for me.
It just literally ruined my life for like three months. Because here's a massive company threatening to sue me for £1.5 million of damages. We didn't have the cash. I've never had a legal battle in my entire life. I don't know what the hell I'm doing. You know?
Deepak: Dude, it sounds like an incredibly, incredibly stressful period. First of all, congratulations on coming out the other side. Knowing that that's happened historically, what is your advice for anyone who's working with a company that effectively refuses to pay their bills. What would you do, or what have you done now differently, in terms of upfront, to make sure that doesn't happen?
Pete: Whenever we take on a corporate client now, I do a bit of due diligence in that I actually get to know who the agency was. I speak to that agency owner and ask him what it was like. That's the only real thing. Other than that, you should have professional indemnity insurance in place. And then, yeah. That's the only two practical things you can do.
Deepak: Okay. Perfect. Perfect. And then talking of the question of that three month period where they didn't pay their bills, basically. I think that David, so David Schulhof asks a really good question which relates to this, ultimately. “How do deal with cashflow and building of debt in areas where you've got full-time employees, you've got a client who's not paying, you've got COVID-19 coming down on you. How are you managing, ultimately, your cashflow and some of the decisions within your business when you come across these challenges?”
Pete: There's some basics first. We used to have 30-day terms on invoices. I'd seen that no clients were paying it until about two weeks after those 30 days. I just halved the invoice terms to either immediate or 14 days.
There's a lot of guilt when you first do that. But you know what? Our cashflow rate doubled the second we did it. People pay invoices when they're due. They do not pay them early. Most procurement teams don't even look at it until it's due. The max we'll accept is 30 day invoice terms, but 90% of our clients are on a 14-day turnaround.
Forecasting bad debt. I learned this early on. My accountant said, "You should always have two months of running costs in your business ready to go." I have a little bank account which has two months of our running costs there to break in case of emergency, and it's been a massive lifeline in the past couple of months for us, the corona cycle.
Sophisticated Social Engineering Attacks on Agencies
Deepak: I want to go onto the second element, which I know that some of you probably tuned in for. I know that I wanted to hear about this. This is a super unusual one. I'd just like you to take us through it I guess really, Pete. It's talking about you guys being a victim of criminals targeting your agency. We'd love to hear the story. And just to talk us through what happened.
Pete: Another employee. This is where my employees get scared by the truth. But it's all fine. Social engineering runs rampant, which I was thought were just simple email phishing scams. "Login here, sir, and you win a million pounds." But actually, there's a level of sophistication to this now that exists that took me by surprise. And I'd like to think I'm a pretty nerdy guy.
Essentially, I regularly Tweet my bank. I did regularly Tweet my bank going, "Oh, hey. This doesn't work," or, "That doesn't work," which is a standard thing to do. Even last month, I've seen two agency owners Tweet out, "Oh, who do you recommend for banking?" Then loads of people reply who they bank with.
Then, you have got a list of business owners and who they're banking with. That's the starting prospect list. In my instance, and it actually happened to an agency friend of mine as well, essentially a person will pose to be a bank employee. But instead of trying to get a hold of me, they'll try to get a hold of a low-level employee.
They go, "Oh, hi Steve. It's Tom from," this isn't the bank. I'm just going to pick a bank. "Hi, it's Tom from HSBC here. I've seen that Pete did a Tweet saying that he's having a problem with his Apple Pay. And I just wanted to reach out and see if I could resolve that issue. If you can give me a call back, here's my name and number."
Then an employee I trust will hand me a Post-it Note and say, "Tom from the bank has called. Here's the number," which is what happened. I ignored it. And then I get another call back, and my employee goes, "Oh, it's so-and-so on the bank again for you." And I'm like, "Oh, okay." And they get me through.
He goes, "Yeah, I've seen your Tweet. You said you were worried about Apple Pay, because we've disabled it on the account. But we're actually opening up a new corporate banking facility," which is a true thing. They were actually opening up a new corporate banking facility where Apple Pay would be available as a function.It was a lie told with the truth.
Deepak: Wow. Yeah. Yeah. This is crazy sophisticated.
Pete: Yeah. And this is the thing. It happens. I'm hook, line, and sinker with this, really. They basically said that they could change the online bank account to effectively reinstate the Apple Pay function on the corporate banking.
Before I moved any further, I did my homework. I Googled it. And I'd seen, great, okay. Apple Pay is available on the corporate banking functionality. This is all legit. I looked at the bank employee's name. I'd seen their LinkedIn profile. I'd seen their name on there as well. They were using a real bank employee's name alongside information they'd gathered on me by scraping Twitter effectively.
What they then did is, "To move forward with this, we have to verify it through security." So they asked me a secret question, which I answered. They're the same set of secret questions that the bank was usually asking me.
Then when they call you back for a second time, they extract more of the characters of the password. They call you back for a third time, they extract more characters of the password, if that makes sense. So on and so forth, until they have a complete login, essentially, for both a username and a password, that they could use to reset the online bank account.
They attempted to take up to £50,000 of the bank account by funneling off payments of two, three grand off to a series of 20, 25 bank accounts. After about the 10th one, my banking provider noticed it. And they called me to go, "Well actually, £50,000 has left your bank account. And we want to know if the payment's suspicious or not."
It then became an instance of me versus the bank, of the bank trying to prove... because basically banks have a legal obligation to stand by customers if they're a victim of fraud. But like any refund policy, they will try their hardest to get out of it, if that makes sense.
The big thing for me was the shock of I'm at home on a Friday night. I've just had my dinner. And I get a call that says that £50,000 has left your bank account. And then I literally didn't sleep for three days. £50,000. It's the most amount of money that I have ever heard of being taken out of a bank in my entire life. I mean, I was paying myself maybe £30,000 a year at the time. That was a whole year and a bit's salary.
Deepak: Yeah. No, of course. When was that? What year was that in?
Pete: Three years ago now.
Deepak: Okay. Okay. That's a pretty incredible story. And you were able to, I believe, get some of the money back in the end from the bank?
Pete: Yeah. I actually ended up turning it into a bit of a PR strategy. I ended up looking at how that bank, in particular, had been cited several times in the press over their poor online banking security. And as a result of that, essentially I built a dossier of all the ways in which someone could legitimately log into the account that was a flaw of their security.
I produced that dossier and then presented it to them. They then essentially went away and said, "Okay. We'll think about it." Then they realized the liability was on them. And they chose on Christmas Eve to call me and say that they're going to give me the money back. I went from the worst week of my life to the best Christmas present I have ever had.
Deepak: Pete, what a crazy journey you've been on, my friend. Christ.
Pete: Yeah. Honestly, it ruined my life. I was in tears. I was so depressed. My wife said she had never seen me ever look like that. I didn't talk all week. I just didn't know how to move. I was numb, because I was just embarrassed.
It was just so embarrassing for someone that runs an internet marketing agency to say that essentially hackers have attacked them. There was a sort of bank fraud. How embarrassing is that? You'd like to think of yourself as a pretty legit guy, because you're used to people, like old ladies getting called and having two grand taken out of their bank account. But now when I still see agency owners Tweet out who they bank with, I literally jump on the DMs and I'm like, "Delete those Tweets now." Because you don't realize that it happens through six layers of sophistication.
Deepak: Guys, so if you've got a public persona, or you're in the process of building one, then do be mindful of the public information you put out about yourself. Especially when it comes to sensitive information, I guess.
The Intersection of PR and SEO
We're going to sort through a couple of quick questions, some questions that we've got right now that I think are really super interesting. Tyler Tafelsky asks, Pete, could you speak to ultimately the PR side of your business? I'd love to get your kind of two-minute insight into... You're an SEO agency. You offer PR. Ross Tavendale, who's been on. We comment every couple of weeks. What's your answer to that question about digital PR and how it fits in within the SEO space.
Pete: All our clients are SEO managers or are taking on for SEO services. It's just that the vast majority, 90%, of the work that we deliver for them is link building, effectively. And the reason why we have a stand out in the market is experience.
I think for me, because I had that background in developing websites about things that I like. I used to post content on video games, post content on The Simpsons. I did freelance journalism while I was a student. It gave me an understanding of the news. And it gave me an understanding of what qualifies as news, basically.
And from that, my starting place is I used to just write listicles: 10 things you didn't know about X. I was able to get them placed on one or two key sites in a particular sector as a form of link building, really. That was the work that our clients are most predominantly interested in.
As a result of that, it's where I make all of my investment. We took on an in-house designer. We took on in-house writers. We focused on hiring people who have freelance journalism and PR interest as a result.
The reason we get more PR clients is because I can stand there and go, "Oh yeah, Compare The Market, I used to do the PR for MoneySuperMarket." And so on and so forth. It's very portfolio-based, I guess. A bit like a designer.
Deepak: I think the outcome there is do the things that clients have an exception of not being able to do themselves, about the things that they want done for them. It sounds like Pete has built upon something that was a pre-existing skillset.
Pete: It's that. And if you don't have those skills, I guess you've got to build them in. I think you look for students with freelance journalism experience. That way you've got it at low cost. They have connections in a certain sector already. And you can piggyback upon that to get the first few digital PR links for your clients, effectively.
The Challenges of Being a Solo Agency Owner and How to Overcome Them
Deepak: We're coming into the last 15 minutes. And Pete, you spoke about the challenge you had with the bank. You've spoken about, of course, the challenges with hiring, as well as clients that refuse to pay.
It sounds like it's been a difficult and often lonely journey. You mentioned a couple of times that you had several within the business where you struggled. Could you talk a little bit about, first of all, the challenges of being a solo agency owner, as well as how you have overcome some of those challenges that you faced.
Pete: Yeah. Solo agency owner is incredibly lonely, because if you get to grow and you take on employees, there's just certain things which just aren't appropriate to share. Even in the past couple of weeks, where we had to make decisions about shoring up our short term cashflow by thinking about, do we ask a couple of employees to leave the business or do we furlough them?
They're incredibly sensitive and private conversations that need to be done in respect to those involved. You carry that weight with you wherever you go. I have a managing director now, Jeremy. We're very different characters, but by just having another person just to bounce that off, it makes it incredibly a lot easier to handle.
The ways in which I have tried to overcome it, on and off I've joined a couple of agency owner networking groups. There's one called The Agency Collective that's pretty good. I went to a few agency owner networking events.
Often, where I get the most therapy is things like this. Like me talking to you, by just being able to be transparent about it, and getting it out there, and put it away, so that other people can learn from my mistakes.
I've seen social change and the huge growth of social media agencies. I've seen one of the co-founders do a talk about essentially when he was thinking of committing suicide. And for me, that was incredibly powerful.
Fortunately, every time I take a beating, I learn from the beating. And most of it is caused by finances. That's my biggest worry.
Deepak: I wanted to just ask, what would you say are the couple of biggest pieces of advice you have for solo agency owners who experience loneliness, depression, burnout, overwhelm, fear, anxiety, self-doubt. What would you say to that in terms of answers?
Pete: You've got to express those problems, somehow. Whether that is through a close friend or family member, or you join a networking group. It's cathartic just actually getting the words out there. And just having someone, "I've been there too," and giving you their perspective.
It just makes you think that there is a sense of we're all in it together. And the SEO industry is brilliant for that. Unfortunately, in my case, all agencies are also still competitors against each other. When you're comfortable, talking about it in your team, as well.
The reality is, I think every agency is about six months from going out of business. We're an agency. We're relying on retainers and recurring revenue streams. The other things you can do to offset that is having cash in the bank.
The other thing that's been really cathartic for me, is that I envisioned, what's the worst thing that's going to happen out of this process? At this point, the worst thing that's going to happen, hopefully, is I end up as a managing director in another agency, and I'm finally making a decent wage. That's the worst thing. Finally, I'll have a work/life balance again. That's the worst thing that's going to happen is that I'm going to end up in a cushy job. I just try and remind myself of that.
Deepak: Thank you for your insights on coping with loneliness. Guys, if you've got other agency owners, do connect, communicate, and share with them as to the challenges that you've got.
Contract Issues: Legal Reviews, Payments, & Typical Contract Length
On that note, we've got six minutes. I'm going to storm through the questions. We're going to go through them one by one. And let's just give the shortest answers that you can. Okay. First thing is, let's start with, Tirupati from Pune is asking, "Currently we're freelancing. Should I get proposals or contracts that my clients ask me to sign or agreements reviewed by legal experts? What do you think? Should we do that or should we not do that?"
Pete: I don't do it. But at the same time, I'd like to become well educated on client contracts. That's the problem. What I would say is you that you should get a client contract drawn up by a marketing specialist legal firm, and then run the first couple by them, and then just use them for weird exclusion clauses. That way you do it. Limit your costs.
Deepak: Okay. Perfect. Perfect. Jeannie Hill now asks, "What is the contract length that you seek, or do you ever go month by month?" What is your typical contract, in a nutshell?
Pete: Sure. Yeah. We actually go by minimum project value. We won't take kind of project value less than £21,000. And then that contract length is ideally three months, but we'll take it over six. And then after that, we have either month by month contracts, or it renews on the same sort of terms. We think of it as what amount of money do we need to make in order to make a good profit?
Deepak: Okay. Perfect. Perfect. There you go, guys. It's driven by contract value, and then you figure out what your return is in terms of basically profit, and as a consequence, you can roll out what that means in terms of months. Figure it out based upon contract value first.
MPH Marketing Solutions have got a really good question. What do you do when a client pays 50%, and then you deliver the work, and then they don't pay the balance? How do you deal with that? Or they stall?
Pete: It sounds to me like they're just trying to just get out of the contract, regardless. That's the thing. My initial approach would be, I'd do one or two iterations to see does that actually... Well first, we have a feedback tracker. We get a defined list of the specific things that you want wrong. Do you want it in blue? Do you want it in red? If they don't proceed past that, then I assume that they're just trying to wiggle out of it.
And they're threatening to sue, but they won't. It's not worth the legal costs. The legal cost is going to cost them 20,000. It's annoying. And they're probably not going to pay you the other half. But, yeah.
Deepak: Pete. Thank you so much, buddy.
Pete: No problem, mate. I enjoyed it.
Deepak: And everybody, thank you for tuning in. See you.