Chris Simmance:
Thanks, VoiceOverGuy, and I’m very happy to have on the podcast a Rachel from Magic Digits. How are you doing?
Rachael Marshall:
Thank you Chris. Very excited to be on the podcast.
Chris Simmance:
You’ve, I mean, you’re one of one of many excited people on the world famous podcast. I went to a house party at the weekend and someone said, I recognize you. And I was like, Oh Christ, hopefully for good reasons. And a few hours later came up and said, you do a podcast, don’t you? So it’s making its way all across the country now across the world and everything.
Rachael Marshall:
Yeah, it’s
Chris Simmance:
So.
Rachael Marshall:
good. I’ve listened to a few episodes, it’s good. Yeah.
Chris Simmance:
Oh, that’s you and my mum have done that then. That’s great. So that’s my two listeners. So Rachel, first and foremost, apart from thanking you for coming on, can you just let everyone know who you are and what you do? What does Magic Digits do?
Rachael Marshall:
Yeah, absolutely. So yeah, I’m Rachel and I started Magic Digits in 2021. Prior to that, I used to be finance controller for online marketing agency, a design agency. So I was always in that sector and it was something that I was really passionate about with working with clients in the creative services sector. So I decided to launch Magic Digits. when my son was like two months old, crazy,
Chris Simmance:
Because
Rachael Marshall:
crazy
Chris Simmance:
obviously
Rachael Marshall:
fast. I won. I mean,
Chris Simmance:
you want to do insane things. Ha ha!
Rachael Marshall:
they always say there’s never a right time to do anything, but I don’t think that was a right time, but clearly it’s, yeah, a lot of graft in that first year, but it’s really paid off and it’s, yeah, we’ve grown quite a lot in the first few years that we’ve been going. We’ve got a great team of six people and we’ve got a lovely… portfolio of clients, which just keeps growing, which is great, especially based on the way some current things are in the agency world right now. I know new business can be a bit of a struggle, but we primarily try and focus on working with agencies, so in PR, marketing, branding, etc., who are small to medium-sized businesses who basically, they’re at that point. where they need to grow their business, they need to know how to do it and how to do it confidently, get support on cashflow issues, on managing their profit and loss, and how to basically take that business to the next level. I mean, we all offer all of the usual things, bookkeeping, payroll, your end accounts, all of those things. But yeah, management accountancy is sort of what we try and focus on and having a niche in the sector
Chris Simmance:
Hmm.
Rachael Marshall:
is a real benefit,
Chris Simmance:
Yeah,
Rachael Marshall:
I think, for clients who work with us.
Chris Simmance:
absolutely. And I, I feel like a broken record all the time saying that agency leaders need to know their numbers, like know your numbers. And it’s not just like client retention capacity, like talking about the numbers that pay the bills. And you know, that’s, that’s a big part of what you guys do. You know, you help with that management accounting management, the, the actual kind of this means that in terms of the numbers, because
Rachael Marshall:
Yeah.
Chris Simmance:
Like you can’t plan for the future. You can’t have a strategy that doesn’t have a financial dimension to it. And you need to be able to understand like where the money’s coming from and where it’s going to before you can realistically say where you can get to. Like the realistic part of a strategy almost always boils down to either time or money, if you’ve got lots of money, the time isn’t as important. If you’ve not got very much time, the money becomes more important. And you know, you’ve got to sort of balance those things together. What do you think, you know, you work with a lot of agencies on the financial aspect end of things in terms of like helping them understand those numbers. What’s
Rachael Marshall:
Thanks.
Chris Simmance:
one of the key areas that is not hardest to understand, but one of the most kind of like, you must have those calls where an agency leader goes, ah, like the aha kind of thing. What…
Rachael Marshall:
Thank you.
Chris Simmance:
most often for them.
Rachael Marshall:
I think a lot of it can sometimes be like, they, you know, they might have an understanding, for instance, of their profit and loss and, you know, how they’re operating on it on a daily basis. And I mean, some clients that we work with, like, literally don’t even look at it until we start working with them. And then the penny sort of drops and they’re like, oh, right, okay, that’s why we don’t have cash in the bank every month and things like that. So it’s sort of for those. Those clients who don’t do anything like that, I mean, it drops straight away because we’re very able to produce a set of accounts and talk them through it and show them how the business is operating and what we can do to try and make things more efficient. For clients who already have a decent understanding of their profit and loss, the one thing that we notice quite a lot is one, it’s like over-servicing of the clients so that they’ve got in how much they’re actually billing their clients. And a lot of the time it is an over-servicing problem. And it might be that, you know, the staff, the staff, you know, they can’t necessarily, they can’t afford to hire, but at the same time, they don’t wanna lose any of those team members that they’ve got, but they need to win more business. So it’s working with that client to understand what the current costs that they’ve got in their business in terms of their overheads and their current staff costs. What sort of, how are they managing?
Chris Simmance:
Yeah.
Rachael Marshall:
that business that they’ve got and how are they servicing it and is there any way that we can pull out more profit and even doing sometimes just things like looking at their staff, their staff costs versus their fee
Chris Simmance:
Mm-hmm.
Rachael Marshall:
is a huge thing to sort of look at and try and work out and set targets to basically make sure that they’re billing enough revenue each month to cover the costs within that team
Chris Simmance:
Yeah.
Rachael Marshall:
and it’s yeah it’s just having a bit of visibility over things like that really.
Chris Simmance:
It’s like, um, uh, like a cash accordion type thing that goes on in agencies. They’ve got lots of cash and then they’ll spend, but not think three, six months down the line,
Rachael Marshall:
Yeah,
Chris Simmance:
um, without
Rachael Marshall:
yeah.
Chris Simmance:
a plan for, you know, okay, hiring, hiring is brutal at the minute, whether you’re an employee or an employer. Um, it’s very expensive for an employer because of recruiters fees, because of advertising
Rachael Marshall:
Yes.
Chris Simmance:
fees, time costs, et cetera. Um, and you spend, let’s say you’ve got a, um, a 30,000 pound a year. exec, they’re actually 36 because you have to pay the recruiters fees, but they’re actually about 42 when you consider national insurance contributions and then you add the laptop on and
Rachael Marshall:
that. Yeah.
Chris Simmance:
all of those sorts of things. Now you need three people, that’s not £90,000, that’s £120,000 across the year and
Rachael Marshall:
I don’t
Chris Simmance:
the
Rachael Marshall:
know.
Chris Simmance:
accordion shrinks if that doesn’t keep in pace with new clients coming in. So, you know, knowing those numbers are really, really important, aren’t they?
Rachael Marshall:
Yeah, absolutely. And it’s knowing as well, like when, when is it like an okay time to invest in something as well? It’s like your business, if you have like a model where you can foresee like the next 12 months ahead, you can plan when it’s going to be potentially a good or a rough month. So you can make those assumptions like quite early on, whether you need to be a bit more reserved in your spending or whether you’re good to go basically. And that’s what we try and do. We try and reassure a lot of agency owners that we work with, like whether or not that, for instance, we’ve got one client, obviously not naming names, but like they would say, you know, that they’ve maybe been really careful with their cash, but they’re doing really well, but they don’t have the confidence to go, yes, you can hire now, don’t worry, you can, it’s okay because of this, this and this. And like, it’s that gives them the sort of, it’s just given them the right reliability that they’re okay to make that decision. But yeah.
Chris Simmance:
rude voiceover guy coming in, interrupting our lovely conversation. Rachel, what do you think you love the most about working with agencies? Because I know that you were in one and you were working in the sector, and then you’ve decided that’s not enough. You now need to work with them directly, and many
Rachael Marshall:
Thank
Chris Simmance:
of them,
Rachael Marshall:
you.
Chris Simmance:
as many as you possibly can, but you must love it. So what is it that you love the most?
Rachael Marshall:
Yeah, I mean, there’s a number of different reasons, but I think one, like, is I love the type of clients that we work with. I love the businesses that they work with and what
Chris Simmance:
Bye.
Rachael Marshall:
they do in the service that they deliver. I find it very exciting. Like, I love working with PR clients and seeing the new, like, the latest activations that they’re doing. And it’s great to see, you know, all of these, like, ideas that they’ve got. And it’s just, you know, I work, I run a finance agency,
Chris Simmance:
Easy.
Rachael Marshall:
like, in terms of creative. Like, it’s, you know, we’re very much just doers. And we do obviously think of a very strategic, but like in terms of creating, like pop-up and experiential things and things like that, like it’s, you know, we don’t do anything like that. So getting exposure from our clients and then seeing what they’re doing and how they’re thinking about how they’re delivering things to their clients, like it’s really interesting. And it’s stuff that I take away as well. And, you know, really look at their creative ideas and how they’ve thought about something and sort of try and apply it to things that we do. And yes, I think like every day is an exciting day with the clients that we work with. But also, I get a lot of joy working with business owners who want to increase the profit of their business and make their business that they love. And that’s the thing a lot of the time, the agencies that they work with, you know, we work directly with the owners of the business. There’s no share loads of shareholders involved or anything like that. and we can help that person really build their company and make it work and give them purpose and make them feel like they’re doing something good with all of the time that they’ve invested into their company. So I think it gives me quite a lot of pride to work with these agency owners and try and help them with their business for something that they work really, really hard on.
Chris Simmance:
That’s nice and to get back to the creativity aspect, there’s a lot of creativity required to be a decent agency, but you want a, to put it politely, you don’t want too creative accounting firm because
Rachael Marshall:
Yeah.
Chris Simmance:
that borders on very risky territory, just so you know.
Rachael Marshall:
Yeah, yeah.
Chris Simmance:
But no, I totally get it. I think that the… I see the same thing with the agencies that the OMG Center advises. You know, I love seeing the growth come. I love seeing the wins. And if you can work with 10, 15, 20, 100 agencies at the same time, you get to experience a small part of that every single time you
Rachael Marshall:
Yeah.
Chris Simmance:
see something really cool. There’s an agency that we’re working with that have recently been shortlisted for a global award. And that’s all off the back of their hard work. That hard
Rachael Marshall:
Yeah.
Chris Simmance:
work is only possible because they know where they’re going and what they’re doing and they work their backsides off doing it. It’s just lovely to see that. And you kind of get like
Rachael Marshall:
Yeah.
Chris Simmance:
a tangential feeling of the win as well as if you’re part of the team. It’s lovely.
Rachael Marshall:
Mm.
Chris Simmance:
So in your experience, working with all of these agencies, what do you think sets the best from the rest?
Rachael Marshall:
I would say, one is staff management is a huge one and it’s how you grow your agency is based on your staff retention and how happy your employees are. And I think one thing that I definitely see in some of the agencies that I’ve seen grown and increased their staff base and retain the business that they’ve got. It’s been through having really good things in place, knowing that their employees are happy in their workplace, that they’re getting not necessarily loads and loads of benefits, but respected. And they might get some HR support that’s pulled in. And it’s making sure that they’re working as a team together to deliver what they need to. And I definitely… I think some of the businesses that I’ve seen grow the most has been when it’s been a team effort by the company. I think that’s a huge thing and it’s team morale and you just clearly see it. You see it when you work with them whether or not it’s a nice environment and it really does make a difference.
Chris Simmance:
Absolutely. And you know, they’re people businesses, even though they’re delivering invisible services, unless it’s like an above the line big ad billboard or something like that. It’s mostly
Rachael Marshall:
Yeah.
Chris Simmance:
invisible and it’s pixels on pages. And so
Rachael Marshall:
Yeah.
Chris Simmance:
these people should be made to feel appreciated. And it isn’t just
Rachael Marshall:
Absolutely.
Chris Simmance:
salary and staff retention, just like client retention, staff retention is
Rachael Marshall:
I know.
Chris Simmance:
one of your
Rachael Marshall:
And the thing is, if you’ve got trusted members of your team working on those clients and you know, your staff turnover is just moving constantly, your clients aren’t going to be very happy about that because they grow to love and work with the team that you’ve got and trust them. So if you can maintain your staff, you’re going to more than likely retain those clients as well. So it’s just so important to invest that time into making the company, you know, a better company. a good place to work for everybody.
Chris Simmance:
It’s a people business in balance in the sense that if you have the wrong clients, because you’ve got your positioning wrong, you’ll piss off your staff because you’ll have bad
Rachael Marshall:
Yeah.
Chris Simmance:
people to deal with. Your staff will then leave because they don’t want to be there regardless of what you’re willing to pay them. You know, there’s only a certain amount of money that someone
Rachael Marshall:
Thanks.
Chris Simmance:
will take in order to stomach the thing that you give them. And
Rachael Marshall:
Yeah.
Chris Simmance:
equally, you need to have the right people in your team, which means you need to have the right values and the right leadership style. in order to have the right people to look after the great clients. You can have great positioning and have great clients, but terrible people who don’t fit. So that balance needs to be kept. And it isn’t just all about beanbags and office dogs and things like that. There are you’ve got to look after the people aspects of like the HR and other bits and bobs. One question I get asked a lot and there’s it’s usually an it depends answer because of the nature of an agency and how their finances work and things like that. What what what? What do you typically look at when you’re kind of starting out looking at like bonus schemes for staff and things? Is there a is there like a template that you can then nuance out? How does it
Rachael Marshall:
Honestly,
Chris Simmance:
work?
Rachael Marshall:
it literally varies with every single client.
Chris Simmance:
Right, there
Rachael Marshall:
Like
Chris Simmance:
we go. I
Rachael Marshall:
every client
Chris Simmance:
feel
Rachael Marshall:
has
Chris Simmance:
so.
Rachael Marshall:
a different bonus. There’s not one client I work with the same bonus scheme. It’s all basically made to suit them and the business and how they work. I mean, honestly, the variety of schemes that I’ve seen, and some of them are ridiculous, like incredibly complex. Like there’s no way anyone’s getting a bonus
Chris Simmance:
Yeah,
Rachael Marshall:
out
Chris Simmance:
yeah,
Rachael Marshall:
of that. What if they do? It’s
Chris Simmance:
all
Rachael Marshall:
gonna
Chris Simmance:
understanding
Rachael Marshall:
take you like
Chris Simmance:
it.
Rachael Marshall:
five weeks to work out. But some of them, I mean… I actually advised someone last week. So she was saying to me, oh, I really want to get a team bonus, things like this. Can we talk about some schemes that we could put in place? Now, she is in a brilliant position. She’s really doing great. But at the moment, her team is so small. I don’t think she needs to overcomplicate it. And I think as much as, and this is the thing is. making your team feel valued. I think at the minute, like, because some of the revenue is project related, quite a lot, to be honest, it’s hard to commit to a bonus structure when you don’t know if you’re actually gonna hit your target
Chris Simmance:
Absolutely.
Rachael Marshall:
in 12 months time. So why promise a bonus to your team and put that pressure on yourself if you don’t know you can deliver it? So I think one thing to do, like, in that regard, I was like, just play it on a quarterly basis and
Chris Simmance:
Mm-mm.
Rachael Marshall:
you… Like, look at the previous quarter. Was it a good quarter? Can we afford to give a bonus? If so, how much? What will that do to the figures? Will we still be profitable if we give out a bonus? What does it look like in terms of future business for cash flow in case I do clear this out? And also, do I have to do it as cash? Is there another benefit that we could give someone? Obviously you have to keep in mind, sorry, I’m finance P11Ds, things like that, benefits in kind, but there’s other ways other than just cash. So it’s, but again, it’s sort of, it’s, you could do surveys with your team, you know, if, if there’s quite a lot of people, if you’ve got like 15, 20 headcount, send a survey around, find out what’s valuable to them. Um, and then you can sort of maybe model it and adapt it on that a little bit as well. But yeah, there’s so many different schemes in play that I see. And again, they’re all sort of suited to each business and how that business works.
Chris Simmance:
Absolutely,
Rachael Marshall:
But yeah.
Chris Simmance:
absolutely agree. And so not anyone listening to this who works in an agency, I am not saying you are not smart, but when I say this, please assume that I think the best of you. The thing that agency leaders need to make sure that they definitely do if they offer bonus schemes is to make sure that the team understands where profit comes from. because it’s really easy to assume that profit comes straight out of the total revenue that comes in and there’s no other associated costs. And one of the things that I’ve seen go wrong in the past, and it’s happened time and time again, is that an agency member of staff gets paid their, whatever annual salary, so they know how much is being given to them every single month. And then
Rachael Marshall:
Hmm.
Chris Simmance:
they think, well, that client’s five grand, that client’s five grand, there’s 15 of these, there’s 20 of those, that
Rachael Marshall:
And
Chris Simmance:
means
Rachael Marshall:
we’re
Chris Simmance:
this many
Rachael Marshall:
going
Chris Simmance:
monies every year, my bonus is gonna be massive.
Rachael Marshall:
to
Chris Simmance:
And they
Rachael Marshall:
have
Chris Simmance:
don’t consider
Rachael Marshall:
to
Chris Simmance:
costs of insurances, costs of offices, costs of laptops, costs of this, costs of that. And
Rachael Marshall:
Yeah.
Chris Simmance:
whilst it’s not their job to think about how the business runs from that perspective, it’s always good to make
Rachael Marshall:
Thank you.
Chris Simmance:
it really clear, out of the 100% of all the monies that comes in, realistically, there’s about 12 to 15 to 20%, if you’re really good, of actual net profit. And that’s where the bonuses come out of at the end. And it’s really
Rachael Marshall:
next.
Chris Simmance:
important that people get it. Otherwise their first bonus after working all that hard
Rachael Marshall:
Thank you.
Chris Simmance:
may feel a bit like a kick in the nuts. And
Rachael Marshall:
Yeah.
Chris Simmance:
really, you’ve got to get that right.
Rachael Marshall:
Yeah, it’s how transparent you want to be with your team, isn’t it, as well? It’s like some companies are like, really, we’ll just tell you the profit figure and then that’s it and then you know it and other companies want to be a little bit more reserved about it. And it’s fine both ways, whichever way you want to work. But it’s sort of, it’s how can you, like it might be that some of your senior team, you know, are more aware of some of the figures than the junior team. And it could be that, you know, they’re measured a little bit more on staff costs. and their team and how are they and you know in the freelancer cost associated with that and they can manage that to a certain level and that’s you know a percentage of you know
Chris Simmance:
Yep.
Rachael Marshall:
fee or whatever if that’s managed on that level then you could give a bonus out in that regard and that incentivizes them to basically manage their team and the cost associated with their team and freelancing costs and things like that and that puts a little bit of pressure on them as well.
Chris Simmance:
Mm-hmm.
Rachael Marshall:
But necessarily, if you don’t want to give them your net profit figure, but you say basically the borders would be paid out based on us making this much turnover and clearly giving them that figure based on target and updating them every quarter and whether or not you’re close to that target. And then again, it’s based on these costs, which contribute to our net profit figure. At the minute, we’re sort of… You know, you can update, say we’re close to target, we’re not yet there yet. And it’s sort of it’s
Chris Simmance:
and then
Rachael Marshall:
updating them in that way so that they’re always aware. But again, you have to be careful of how much information you give out because you don’t want to freak out your staff if they’re like, oh, they’ve done well this past quarter, what’s going to happen? So it’s a really it can be quite a difficult
Chris Simmance:
Yeah, completely.
Rachael Marshall:
a difficult thing to discuss. And I know it’s just a constant talking point with agencies that I work with about boner structures and the best way to deal with them.
Chris Simmance:
Um, so you’ve decided that magic digits needs to put in a nice, big fat R and D tax claim and the best way to do that is to create a magic digits, magic wand and those and loads of time
Rachael Marshall:
Thank you.
Chris Simmance:
and energy goes into creating this, uh, this magic wand. Um, you can only use it once though, which is a bit sad. Um, what one thing would you use that magic wand for? If it could change one thing about every agency on the planet in one.
Rachael Marshall:
Chris, that’s a really difficult
Chris Simmance:
Yeah.
Rachael Marshall:
one, you know. I think there’s a lot of things that change with that magic wand if I could.
Chris Simmance:
there.
Rachael Marshall:
You know what? I would say one, I mean, there’s so many, Chris, honestly, just to name one is so hard, but I’m going to go with bad pairs.
Chris Simmance:
Yep.
Rachael Marshall:
Can I go with bad
Chris Simmance:
Yeah.
Rachael Marshall:
pairs? Is that a good one?
Chris Simmance:
So, so
Rachael Marshall:
That’s such a huge issue. We could get everybody to pay their invoices on time.
Chris Simmance:
Hmm.
Rachael Marshall:
And that would just solve so many cash flow problems for clients.
Chris Simmance:
Yeah, there’s a lot to unpack with that in the sense that there’s a huge amount of things that make that usually happen and sometimes it’s just ridiculous expectation management and not really making your policies clear. But sometimes it’s just because you’re working with an owner director of a similarly busy business who just gets so invoice reminders can also help quite a lot.
Rachael Marshall:
Absolutely. But yeah, so many people rely
Chris Simmance:
Mm.
Rachael Marshall:
on that cash coming in a certain period or a certain month to then be able to pay their battlefields and all of these are the things that they’re doing. And I just think, yeah, how lovely would it be if everybody paid
Chris Simmance:
Yeah.
Rachael Marshall:
their invoices on time
Chris Simmance:
Yup.
Rachael Marshall:
and you didn’t have to get legally involved and your cash flow was always correct because everyone paid according to their due date. That would just be lovely, but that will never happen.
Chris Simmance:
No, it won’t, but
Rachael Marshall:
Unfortunately,
Chris Simmance:
it will be lovely and hence why it will be a magic
Rachael Marshall:
it was
Chris Simmance:
wand.
Rachael Marshall:
fun. That’s that,
Chris Simmance:
Rachel,
Rachael Marshall:
eh?
Chris Simmance:
thanks so much for coming on the podcast.
Rachael Marshall:
Thank you for having me. No, it’s been great. Thank
Chris Simmance:
Thanks
Rachael Marshall:
you, Chris.
Chris Simmance:
a lot. And in the next episode, we’ll be speaking with another agency advisor, mentor, trainer, or partner. In the meantime, have a great afternoon.