I have to admit that I have trouble “turning off” during the holiday season. I enjoy time with family and friends, watch a few movies and football games, read a bit more fiction, but I still come back to thinking about the business. My guess is that a lot of entrepreneurs / business owners are in this camp, continually reflecting on what went right and wrong over the past year and looking ahead to how the next year can be better.

Last night, I found myself asking the question: “Is the business more valuable than it was just a year ago?” and while certain indicators like revenue and headcount were down for Barrel in 2022, I felt completely certain that as a business, we’ve come a long way in being more disciplined, collaborative, and skilled than we were a year ago. The numbers will take a bit longer to catch up to all the progress we’ve made, but sure enough, I’d rather be where we are today vs. where we were a year ago, which is a promising sign.

Overall, I’m very grateful that another year lays ahead. Despite all the mistakes and setbacks of the past year, enough things went right to keep us in the game. I’m entering my 17th year playing this game, and honestly, it’s still a game I want to keep playing.

About Agency Journey: This is a monthly series detailing the happenings at my agency Barrel, founded in 2006. You can find previous episodes here.

Highlights

Mixed Results in Finishing the Year

In September, I outlined the goals for finishing the year on a strong note:

• Wrap up the three lingering projects from 2021 that have dragged on all year.
• Launch two time-critical client website projects as planned with no quality issues.
• Successfully organize and host a great team retreat in October.
• Sign at least 4 new client projects.

The results have been mixed:

• Wrap up the three lingering projects from 2021 that have dragged on all year.
  • We wrapped up 1 completely but still have lingering pieces for the other 2 which will spill into 2023. They won’t be huge resource sucks but still a bit of a thorn on our sides.
• Launch two time-critical client website projects as planned with no quality issues.
  • We were able to achieve this. We had a slight hiccup with one client at launch, but quickly resolved it. We have follow-on work with both clients.
• Successfully organize and host a great team retreat in October.
  • Mission accomplished. Our retreat in NYC was great. Only drawback was that many of us got COVID.
• Sign at least 4 new client projects.
  • This was a major disappointment. We signed 2 new client projects. We had 2 more at the contract stage but couldn’t get it done for the holidays. One may not be 100% anymore since the scope has changed quite a bit, requiring us to re-estimate the budget, which then triggered a new round of reviews.

What really helped us get through the quarter was strong account activity with existing clients. We had higher than expected billings thanks to change orders, add-on projects, and increased scope on time & materials engagements. We kept utilization high and delivered for our clients. We also had productive business review workshops with several of our clients with an eye towards priorities and initiatives for 2023. A few clients are cutting back and signing smaller retainers while others are keeping steady or looking to increase their commitments. There are still a lot of conversations to be had in January.

Wrapping Up Strong First Full Year for Both Vaulted Oak and BX Studio

Under the Barrel Holdings umbrella, Vaulted Oak and BX Studio are nearing the end of their first full year as businesses. We’ve been very happy with the growth and trajectory of both and impressed with the leadership of Jason Fan (VO) and Jacob Sussman (BX). Both companies worked with a strong roster of clients, delivered immense value, and continued to maintain strong margins throughout the year.

The challenge in 2023 will be in scaling operations while keeping good margins and establishing a strong pipeline of new business opportunities. Vaulted Oak has done a great job of being a sticky business that continues to retain long-term clients and has mostly recurring revenue. BX, on the other hand, has been focused on landing a high volume of new clients and delivering on low cost and quick turnaround times. We will continue to lean into this model in 2023 in order to establish our name in the Webflow space and build relationships with up-and-coming businesses. In the long term, as the needs of our clients get more sophisticated, we’ll be ready to serve them with more custom and enterprise Webflow solutions.

Speaking of establishing our name in the Webflow space, two sites that BX Studio built were featured on Webflow’s Year in Review 2022 website. Headspace Health (designed by Barrel) and Vayuu Tech (designed by Sam Day) were both shown in their showcase of sites. In November, Jacob also gave a talk at Webflow Conf on how BX helped a client build a booking site on Webflow. We look forward to expanding our presence in the Webflow ecosystem in 2023.

Reflecting on a Negative Glassdoor Review

It had been a while since we got a searing negative Glassdoor review, but after a couple of reads, I thought it was an instructive one to share. I think the feedback here accurately captures a lot of the challenges and upheavals that we felt earlier in the year when we were scrambling to rescue several projects that had gone sideways while also trying to reduce cash burn through layoffs and other cost-cutting measures. It was a hectic time, and it’s unfortunate that for some, we weren’t seen as approachable or willing to listen.

I truly believe that things have come a long way since then (backed by stats like % of projects completed profitably this year), but what I’ve learned is that every person has their own version of reality that can shape a narrative very different than mine. The best I can do is lead and behave in a manner that impacts the business in positive ways. I’ve learned that what may feel like supportive, encouraging, and warm behaviors in my mind doesn’t always get received that way, but it doesn’t mean I should stop trying.

I did want to clarify the note about the wine club purchase, though! I had put down $600 on my personal credit card to help test out a client’s wine membership program and had noted this to the project team. I ended up giving the client feedback on the unboxing experience but the purchase was not a business expense. But here again, it’s a great reminder that actions and words will be interpreted in all manner of ways, no matter the intention. Not a big deal, but it had me shaking my head a bit. Oh well – as we like to say at Barrel: all feedback is information. Take it in stride and keep moving.

Related: Check out my response to a Glassdoor review in Episode 11 and to a handful of reviews back in 2014.

Top of Mind

Lessons to Take into 2023

I wanted to share four lessons I’m taking into 2023. I’ll continue to repeat these over and over again because they helped me understand the business more deeply than ever.

1. Execution is Critical, Don’t Let Things Slip

“Execution is a systematic process of rigorously discussing hows and whats, questioning, tenaciously following through, and ensuring accountability. It includes making assumptions about the business environment, assessing the organization’s capabilities, linking strategy to operations and the people who are going to implement the strategy, synchronizing those people and their various disciplines, and linking rewards to outcomes. It also includes mechanisms for changing assumptions as the environment changes and upgrading the company’s capabilities to meet the challenges of an ambitious strategy. In its most fundamental sense, execution is a systematic way of exposing reality and acting on it.” (Larry Bossidy, Ram Charan, Charles Burck, Execution)

We learned the hard way through a bunch of fires and losses that it’s incredibly important to be on top of the work we’re doing for clients. We invested in having more robust accountability systems (check out our CXO Lucas’s article on this) to ensure that we could mitigate risk on client accounts while also delivering the work profitably. Our partners and team leads are quick to be hands on when necessary to ensure nothing slips through the cracks. Only through consistent execution are we able to retain clients, grow accounts, and establish more stability in the business. This also means happier clients who end up referring us more work as they move on to new opportunities or share our name within their network.

2. Don’t Delay the Hard Decisions

Time and time again, we’ve been reminded that the road to progress requires the making of hard decisions. Whether it’s a layoff, a firing, a tough client conversation, a discontinuation of services, etc. the hindsight debrief usually reveals that we should have acted sooner. Rare is the analysis that we acted too decisively, too quickly. We’ve done a much better job of surfacing performance issues and being on top of finances on a weekly basis that I’m confident we won’t be ignorant of or shy about confronting any tough realities (e.g. having to downsize) this time around. The challenge will lay in actually making the decision, and while I’m not looking forward to such a moment, I’ll be sure to remind myself of this lesson.

3. Be Explicit About Expectations for Performance and Behavior & Hold People Accountable

It became apparent to me through the course of 2022 that hoping for certain types of behavior from others without doing anything about it (or at best, by giving some subtle, friendly-sounding feedback) was a sure way to be disappointed. What works better is to be crystal clear and as explicit as possible about certain expectations (e.g communication response times, cameras on during Zoom meetings, being on top of client comms, completing assignments as promised, etc.) upfront and then to point out when these expectations aren’t met. In cases where people do their jobs, there’s really nothing to speak of, but when there are people who continually fall short, it’s clear that there’s an issue that can be addressed head on.

The bulk of the work needs to be done upfront in defining the expectations and getting the buy-in from anyone who works at Barrel. We have plans in 2023 to “re-onboard” the team to our expectations and the behaviors that form the foundation of our culture. I did a version of this in 2022 in my CEO on-boardings, but in hindsight, I think my message was still a bit too subtle and with very little in the way of systematic accountability. We will involve all the partners and team leads this time around and tie in the expectations very tightly with our performance management system.

We’ve seen how detrimental it can be when a handful of people continue to underperform and either communicate poorly or fail to follow through on their commitments. We’ve also seen how things can quickly turnaround when these people are replaced by those who live up to the standards we expect. We’ve often made the excuse of “being patient”, “giving it time”, and “being supportive” as a way to avoid calling out underperformance. I would rather us call out underperformance much sooner and let the person show otherwise through their actions.

4. The Best Business Opportunities Come from Existing Relationships

In analyzing our new business wins of 2022, it was clear that most of the consequential wins came from existing relationships. These included former client stakeholders who moved to different companies, former clients referring their peers, our contacts at Shopify, and former prospects who may not have worked with us but kept in touch. We won a few deals via outbound sales emails and marketing, but not the most promising in terms of fit and long-term growth.

What our win analysis confirms is something we’ve known through the years: the best business opportunities come from existing relationships. Clients who move on to new companies and bring us along are fantastic in that they know what to expect and already trust us at a deeper level. Referrals from those who know us are more likely to be better qualified since they know the budgets we operate on and are familiar with our strengths and weaknesses.

So what is the underlying takeaway? We must invest time in deepening relationships with those who are most likely to bring us the best kind of new business in the future. This means taking care of our existing clients, keeping in touch with former clients, and strengthening our relationships with various tech partners like Shopify and others. These are no-brainer observations, but it clarifies things for me to write it out: time spent on deepening these relationships should be prioritized over time spent on other channels like outbound sales and marketing. The latter are important for sure, but they can be outsourced or delegated to specialists while team members like myself, the partners, and team leads must all invest time into maintaining ties with those we already know well and deepening ties with those who’re newer and less familiar.

Shared with Partners

“To have been judged a good year, a firm must not only achieve its volume and profit goals, but do so in a way that both builds new skills and strengthens client relations.” (David H. Maister, Managing the Professional Service Firm)

Following this quote, we fell short on volume and profit goals, but did build new skills and strengthened client relations. I look forward to revisiting this next year so we can affirmatively say yes to everything.

“Healthy organizations believe that performance management is almost exclusively about eliminating confusion. They realize that most of their employees want to succeed, and that the best way to allow them to do that is to give them clear direction, regular information about how they’re doing, and access to the coaching they need.” (Patrick M. Lencioni, The Advantage)

I love this framing. What I mentioned above about being explicit about our expectations for performance is really about eliminating any confusion. The cycle of clear expectations, timely feedback, and continuous coaching is one that we’re eager to execute in the coming year.

“If you’re perceived as a negative person—always picking, pulling, criticizing—you will simply get tuned out by those around you. Your influence, ability to teach, and opportunity to make progress will be diminished and eventually lost. When that happens, you become useless, a hindrance to progress. When your feedback is interpreted as a personal attack rather than a critique with positive intentions, you are going backward.” (Bill Walsh, Steve Jamison, Craig Walsh, The Score Takes Care of Itself)

I’ll posit a counterpoint to this: your intention and even your demeanor as coach/feedback giver may be positive, but the person receiving the feedback may process everything as negative, so no matter the feedback, it’s taken as a personal attack. This isn’t always on the one giving the critique–the person receiving it may be too close-minded or tethered to a fixed, non-growth mindset.

“A particular form of stress might be good for one person and bad for another.” (Todd Hargrove, Playing With Movement)

This is related to my previous answer: feedback/criticism might be good for one person but bad for another. Put another way, perception could be formed in vastly different ways.

“In the extreme, masterful design may be all but invisible, a point made eloquently by Lao Tzu some 2,500 years ago: The wicked leader is he whom the people revile. The good leader is he whom the people revere. The great leader is he of whom the people say, “We did it ourselves.” This type of leadership is not without its rewards. Those who practice it find deep satisfaction in being part of an organization capable of producing results that people truly care about. In fact, they find these rewards more enduring than the power and praise granted to more traditional leaders.” (Peter M. Senge, The Fifth Discipline)

I think about this quote a lot. “The great leader is he of whom the people say, ‘We did it ourselves.'” Powerful, inspirational stuff.