Okay, let’s talk about a phrase that often gets thrown around in boardrooms and investor calls: “building shareholder value.” For some of you, especially brilliant younger talent, it might sound a bit dry, perhaps even a little removed from the exciting, creative work done every day. You’re thinking about killer campaigns, groundbreaking ideas, and making a real impact – not balance sheets.
And you’re right to focus on that! But here’s the secret: building shareholder value isn’t just about making rich people richer. It’s the engine that powers your agency, creates opportunities for you, and secures your collective future.
Let’s break it down in a way that makes sense, using some regonisable analogies.
What Exactly Is a “Shareholder”? 🤝
Think of your agency like a really cool, ambitious startup. To grow, you need resources – money for new tech, bigger office space, investing in your training, maybe even expanding to a new city. Where does that money come from?
Sometimes, it comes from your profits. But often, especially for growth, it comes from investors. When someone invests in your agency (or any company), they get a “share” of ownership. They become a shareholder.
- Analogy 1: The Band Investor. Imagine your favorite local band wants to record a professional album or go on tour. They might ask friends or family to invest money. In return, those investors get a small percentage of future profits or ownership of the band’s intellectual property. They’re betting on the band’s future success.
- Analogy 2: The Kickstarter Backer (but for the long haul). It’s like backing a project on Kickstarter, but instead of just getting a product, you get a tiny piece of the company itself, hoping it grows into something huge.
So, shareholders are simply people or institutions who have invested their money in your agency, believing in our vision and our ability to grow.
So, What is “Shareholder Value”? 🌱
“Building shareholder value” means making your agency more valuable over time, which in turn makes each “share” worth more. It’s about increasing the long-term wealth of those who have invested in you.
But here’s why that’s crucial for everyone:
- Fuel for Growth & Innovation:
- The Analogy: A Video Game Upgrade System. Think of your agency as a character in a massive online game. “Shareholder value” is like the experience points (XP) or currency you earn. The more you build it, the more “XP” you have to unlock new skills, upgrade your gear (better software, VR studios!), level up the team (your training and development!), or even expand your “map” (opening new offices, acquiring new capabilities).
- Real Impact: This means the business can invest in cutting-edge AI tools, bring in top-tier talent, explore new creative frontiers, and chase bigger, more exciting clients. Without this fuel, stagnation reigns and values flatline.
- Job Security & Opportunity:
- The Analogy: A Strong Foundation for Your Dream Home. A house built on shaky ground is risky. A company that isn’t building value is also on shaky ground. When your agency thrives and its value grows, it means you are financially stable. You can confidently plan for the future, create new positions, and offer more robust benefits and compensation.
- Real Impact: A valuable, growing agency means your career path has more potential, more security, and more diverse opportunities. It means you can afford to keep your best people and attract new ones.
- Attracting & Retaining Top Talent (That’s YOU!):
- The Analogy: A Winning Sports Team. Top athletes want to play for winning teams that invest in their players, have great facilities, and a clear path to championships. A valuable agency is a winning agency.
- Real Impact: When you build shareholder value, you become more attractive to the best talent in the industry – people like you! It enables you to offer competitive salaries, exciting projects, and a dynamic work environment that encourages growth and creativity.
- Flexibility in Challenging Times:
- The Analogy: A Healthy Savings Account. When unexpected expenses hit (a global pandemic, an economic downturn), a healthy savings account provides a cushion. A strong shareholder value means the company has financial resilience.
- Real Impact: This gives us the ability to weather storms, protect jobs, and even seize opportunities when competitors might be struggling.
How You Contribute to Shareholder Value 💡
This isn’t just a job for the finance team. Every single one of you, from junior creatives to seasoned account directors, contributes to building shareholder value by:
- Delivering Exceptional Work: Great campaigns make clients happy, leading to retention and new business.
- Innovating: New ideas, new services, new ways of working create new revenue streams and efficiencies.
- Being Efficient: Smart use of resources and time directly impacts your profitability.
- Fostering a Positive Culture: A strong, engaged team is more productive and innovative.
- Driving Client Success: Ultimately, your clients’ success translates into our success.
- Maximise reccuring income: Focus more on retainer work and less on one off projects.
The Big Picture: Your Journey 🚀
Think of building shareholder value not as a burden, but as a commitment to the long-term health and prosperity of your collective enterprise. It’s about creating an agency that can invest in its future, provide incredible opportunities for its people, and continue to produce the kind of groundbreaking work that truly makes a difference.
When you build shareholder value, you are not just building wealth for investors; you are building a stronger, more vibrant, and more secure future for every single person who walks through the doors. And that, I think, is something everyone can get excited about.
NB. Wealth for investors and shareholders is important too, especially for future value – and remember you might be one of the beneficiaries of this, aim for a minimum of 60% retainer income, this will ensure there is some substance in the value when it’s your turn to exit.