Concentrating on Your Core Competency

Five years ago, Vistage Associate Charles Lutz and his partner Dave Kuhlmann headed their own full-service advertising agencies with approximately 25 employees each. Since then, they have merged and formed Kuhlmann, Lutz & Brown Inc. to accommodate a major client’s plans for national expansion and a public stock offering on the New York Stock Exchange.

Houston-based Kuhlmann, Lutz & Brown focused the vast majority of its efforts on its largest customer — until three years later when the client decided to take all of its advertising functions in-house. Eighty percent of the agency’s revenues were eliminated overnight.

“The good news is that the agency was quite streamlined at the time we lost our major client,” explains Charles. “We had extremely good control of expenses and had accumulated a significant amount of working capital. Because of that, we were able to keep the company intact and go about getting new clients and diversifying.”

With the loss of business came several alterations in the company, the most important being elimination of many of the company’s services.

“We became more like consultants,” Charles says. “We now focus on creating business and marketing plans and assisting with proposals for funding rather than on traditional advertising. We center our efforts on being business strategists. Of course, when necessary, we still are able to create full advertising programs using traditional materials like brochures, videos and presentations, but it’s not a major source of income.

“Because we’re focusing on our core competency and making the majority of our money in implementing services rather than traditional advertising products, we don’t have to worry about the threat of that one phone call from a major client putting us out of business.”

If he had it to do all over again, what would Charles do differently?

“I would have spent less time on our major client. We focused on the client rather than our own business and prospect development,” Charles says. “We were busy and had a false sense of importance. I would definitely have diversified from the day we opened for business. It was a serious mistake not to leverage the publicity we received when we first opened.

“I’d also have spent more time determining how we would run that business, rather than just jumping right in and being happy we had a major client. We should have spent more time determining how our company should operate rather than focusing on getting nice office furniture.”

Today, Kuhlmann, Lutz & Brown has many clients with diverse sources of revenue. The agency has steered clear of industry giants and focused on small- to mid-size companies that are growing.

“Five years after the merger, we’ve created both a team culture and a structure that lets us be highly adaptable,” Charles explains with a smile. “We didn’t manage our success very well. We certainly didn’t leverage it at the time into new business. Now we know better and are focusing on what we do best with our clients. Changes took place by necessity, not choice. But it’s all worked out wonderfully well.”

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