By Nathan Paris
So many agencies I have worked with over the years had the same experience of typically starting as a solopreneur (or with a partner), and what seems like overnight, they look up and are at full capacity and starting to feel the common stress of……“How do we deliver while still being able to take on new work?”
Below are suggestions for agencies looking to profitably grow to the $500,000 – $5M in annual revenue, without the huge weight and costs of building their own internal team of specialists.
You might be a team of 1, 5, or 10, but if you are are focused on how you could scale to profitably increase your client base…hopefully this will help.
Every agency get to this point and without figuring out how to both fulfill on deliverables while simultaneously being able to get new work, agencies tend to go into “Cashflow Chaos.”
The chaos usually shows up on a P/L with sporadic high and low months which typically match their tempo of completing deliverables, which frees up their time to find more clients, which causes them to put their heads down to deliver…and the cycle continues.
Eventually to end this cycle, the owner begins to look to scale, which leads to the question of to outsource or build an internal team?
HR¨ Managing¨ Training…take it away
Let’s start with the obvious and probably the #1 which is on most Agency owner’s minds when I have a chat
with them. As sexy as it sounds to have a huge office and staff…most agency owners I speak with, especially the ones that have done it before, actually cringe†when they remember the pains of hiring, firing, managing and training teams of specialists.
One I spoke with last week, shared with me how his last Agency was making over 20M annual revenue, but how he would never do it that way again sharing with me “the days are gone of needing the office in the city and large outgoings to build a very profitable agency.”
Teams of specialists
“Teams of specialists” is the key, and killer for many, as when you run an agency, you start to have “pods” of specialists: facebook ads peeps, marketing automation nerds, copywriters, web developers, designers, seo geeks,…
Each of these specialties contains a completely separate tool set of skills that, requires a TON of training and managing to keep everyone skilled up and performing… which for your agency equates to high overhead The “new breed” of agencies are looking to run more lean by scaling more profitably through outsourcing the specialty work.
What are you good at not necessarily same as passion
I would suggest the first question when looking to better leverage your agencies time is to ask “what are you
Now everyone defines “good” differently, as some people describe this as “your passion”. However I am not a fan of “focus on your passion”, as there are plenty of areas of business that peeps might not be passionate about, but are hands down what will increase the agencies profitable revenue.
So I would suggest looking at where, in your agency, hour for hour, does the value you add to your clients also add the MOST profit to your agency.
The most successful businesses I have ever met are eventually able to systemise and focus on what makes them profit. It gets to the point that they do the ‘boring’ extremely consistently…and the growth of the business is their passion, not necessarily the deliverable.
Where are the profits
So is it the copy and facebook ads for client acquisition, but not the mundane of setting up the funnel and automation?
Or is it walking the client through the Digital Marketer blueprint and delivering the strategy for their funnels?
Where do you provide the most value AND where are you most profitable?
Front end or back end 99% of the time as agencies look at where they spend their daytoday activity they usually find that the profitable revenue is on the front end of the business. I.e. the sales, strategy, and client relationships (front end)…and the backend, the actual deliverables, are where they could increase their profitability if could better scale and outsource.
How do we scale our backend to increase profitability
Now I wouldn’t recommend just randomly offloading everything. Instead start by breaking your deliverables into the areas of specialties and skills sets as typically these are chunks of work you have the highest probability of splitting off to other specialists. So take a project and break into the deliverable stages, maybe than start to look at areas such as creative and technical, and than get deeper into the specifics like web development and marketing automation skill sets.
Remember, you are looking for areas of specialty that you do NOT want to spend the costs on training and managing…so by offloading we will increase our profit by having OTHER specialists take on the work. Now look at these deliverables, can you create a briefs for these individual chunks of work?
Do the numbers…will outsourcing that deliverable remove some stress from the team and increase profitability?
If so, time start looking for someone to deliver on them.
Finding the right partner or service provider
Alright you have deliverables that can be, and should be, outsourced.
The great part about breaking into specialties is you know what to look for….not just “marketing”, but a specific skill set, which typically is easier to weed through the many to the few.
Here are a few questions to keep in mind when interviewing a specialist service provider:
● How will this service provider integrate into our current process?
● How do they interact with our team?
● What is the process for a project?
● Do they manage timelines and quality on their end?
● What are standard lead times for deliverables?
● How is it tested, how are dates communicated and committed to on their end?
● Do we want our service provider to interact directly with the client?
● Do we need a 100% white-label solution?
● How do they train staff and maintain their staff and capacity?
We need to expect some changes on your side, but ultimately we want to find a company that, as seamless as possible, we can place directly into our process of delivery.
Profitability Scaling your Agency
Hopefully by outsourcing the specialist work, it will allow you to profitably scale, so you will be able to be seen as “full service” agency, without the costs and overheads of a FULL service agency.
Want to learn more about how to scale and grow your agency? Join us on the Gold Coast 10th & 11 August for Digital Marketer Down Under a industry event that will change how you see the agency of the future.