Training Commercial Acumen.

Last week I had a piece run in AdNews making the case for generalists.

The short version is that we have spent the better part of a decade training people to be very deep in one channel, that we are now short of mid and senior people who can connect the craft to a business outcome, and that this is our doing rather than theirs.

I finished on a fairly hopeful note about AI giving the next crop coming through a way to build the commercial context we skipped.

A couple of people told me, politely, that I was being too optimistic. Fair enough.

But most of the replies said some version of the same thing. Yes, that is exactly what I am seeing. I have got a good senior person, or someone who wants to be senior, and they have no commercial acumen at all. So they hit a ceiling.

If part of what we do is bring people through as future leaders of our businesses, then that ceiling is a failure on our part rather than theirs. So the obvious question, and the one I want to get into this time, is how you actually train the commercial side.

It starts with your numbers, not the client's

I keep being surprised by how separated many delivery people are from their own agency’s revenue.

Not just from margin, which I understand, but from revenue. Plenty of very good senior practitioners have no idea what their clients pay. They know the scope, they know the hours, they know the deliverables, but the number attached to all of it is a mystery.

There are usually two reasons for that, and only one of them is a real reason.

The first is that it feels a bit ‘icky’.

Money is private, we do not talk about it, it does not feel right to hand the number over. I think this is a poor reason. It is an emotional reaction rather than an argument, and it is a fairly old-school one at that. If you talk to younger people about what they earn they are far more open about it than my generation ever was (for some agencies, this is a challenge in and of itself…). If we want a team that can talk fluently about numbers, we have to be a business that talks about numbers.

The second reason is more legitimate, and it is a fear of the maths-done-badly.

The maths people do in their heads (badly)

Say someone on $100,000 finds out just one of their clients pays $10,000 a month, does some quick arithmetic, and concludes that the owner is pocketing a sweet $20,000 cash off the back of their work.

That is obviously wrong. But the concern behind it is not stupid, because a little knowledge genuinely is a dangerous thing. A single number with no context invites people to fill in the rest themselves, and what they fill in is rarely flattering. Ironically, this is because of a lack of commercial experience.

The way to mitigate this is to start training the commercial side rather than leaving the team without any context.

Start with what the client pays and why

So the first practical step is that your team should know what each client pays, what that buys them, and how you arrived at the number.

That last part matters more than the number itself. Did you work backwards from hours? From a fixed set of deliverables? Do you sell packages, or a subscription, or a retainer with a scope attached? What is the utilisation assumption sitting underneath it? What did you decide to include and what did you deliberately leave out?

Then walk them through the cost inputs. What the delivery actually costs you, what sits on top of it, what is left, and why that is the number it needs to be.

None of this amounts to a finance course. What it does is give people the building blocks. And it is genuinely useful on its own, because a senior person who understands how the price was constructed makes far better calls about scope creep, about what to absorb and what to raise, and about when to go back to the client on where an additional request should be paid for.

Open book, or not

A fair question at this point is whether you should just share the P&L with everyone.

Some agencies do, in full, and if you have the culture that supports it then that’s fantastic. But if you are going to go down that road, go into it with your eyes open, and make the call for the right reason.

It is very easy to decide on transparency when margins are tight. You share the P&L, the team sees how thin it is, and the unspoken message is please do not ask for a pay rise this year. The problem arrives when you actually fix the business and find yourself looking at a 30% net margin, and suddenly you would rather not circulate it. That is a pretty ordinary way to treat ‘transparency’. If you open the books, they need to be open when things are good as well as when they are not.

Become a financial voyeur

Once your team understands your cost structure, the client conversation gets a lot more interesting, because clients are just businesses with a different cost structure.

They are paying for cost of goods. They are paying a team to deliver a service. They are paying for warehousing, freight, rent, support. Once someone can see that, they can see why a 2:1 return is a perfectly good outcome for a client with a high gross margin per unit and costs that do not scale with revenue, and a disaster for a client with the opposite model. That is the difference between reporting a number and explaining what the number means.

Two things that speed this up.

If you work with publicly listed clients, get your team into their filed financials and walk through them together. It is free, it is real, and it gives them a genuine view of the business they are servicing. It also means they can have a much better conversation with their counterpart at the client about what next financial year looks like, or how this one actually went.

And if you want to push it further, make it a more regular habit. Once a month, pick a set of financials and read them as a team. A client, a client's competitor, or one of the holding companies. Walk through what is in there, what it tells you, and how it is similar to or different from your own business.

The value of doing it monthly comes from repetition rather than from any one session. It makes talking about the numbers a normal part of how your agency operates, rather than something only the founder and the accountant do.

Okay, now what?

If you have got someone stuck at that ceiling right now, I would sequence it something like this.

Start by telling them what their clients pay and how the price was built. Then walk them through your cost stack so the price makes sense. Then give them the big-picture ratios so they can generalise it to any business, including the client's. Then get them reading real financials on a regular cadence. And only then should you expect them to start to feel comfortable holding a commercial conversation - because they’ve done the groundwork.

The thing I would not do is treat this as a training module you run once. It is a cultural change. What you are aiming for is an agency where the numbers are discussed openly and where nobody stays in their lane (because we’re making them more generalist!!). Our job in an agency is always to drive business results rather than marketing metrics, and you can’t do that without seeing the bigger picture.

That takes a while. But it is a lot cheaper than the founder being the only one who can sell.