How to build an agency

Here’s a brain dump of everything I know about building agencies:

First, why you should believe me

Worked at a giant ad agency for years. Also at an independent one. And also built my own. Made $200k in 2019, got fed up, fired most clients and am now focusing on software for the first time.Definitely read The E Myth Revisited and learn about value-based pricing here and here.

  • In the beginning, being an agency for agencies helps get you off the ground and give you a constant stream of clients without having to put in the work to get clients yourself.
  • Niche down. SEO agency for private clinics is better than SEO agency.
  • Make sure you’re actually an expert in your niche.
  • If you’re not an expert yet, don’t be afraid of quantity. Just go on upwork or fiverr and take a bunch of really shitty, low paying jobs. You’ll only need 5-20 to really get the reps in and become good. And then you’re an expert.
  • The work is important. But also kind of commoditised. The reason people pay you is because they trust you and you’re guiding them. It’s actually more important to be able to tell them “here’s what you can expect. here are common pitfalls.” than it is to be world class at your technical skill. I.e.. technical ability is table stakes, the big boys are good at client management.
  • Value-based pricing = don’t charge by the hour. If you have a hard time understanding value-based pricing. Just create packages. E.g. Don’t charge by the hour to create a website. Instead do this “Small SAAS website with 5 or less pages costs $10k”.
  • Clients aren’t stupid. It’s just that there’s an information and experience asymmetry. They need your help for something they know nothing about. If they knew all about it, they wouldn’t need your help. So don’t waste time getting upset with them for their ignorance. Instead, guide them. Don’t ask open-ended questions and expect them to make a decision. And then get upset if the decision they made was bad. Instead, give them 3 options and the consequences of choosing each.
  • Always share the process with your client upfront. Whether or not they ask for it. Set expectations. And remind them of the expectations.
  • Don’t be afraid to fire clients.
  • Your main job is to balance supply and demand. You have to get REALLY good at hiring freelancers and getting clients. Too many clients and not enough freelancers/employees and your agency collapses. Too many employees and not enough clients and your agency collapses. Always keep a roster of freelancers on hand. Take the time. Spend years to build up this roster. It’s worth it.
  • Good margins = 60% profit. Ok margins = 40% profit. Anything below that should be for a learning experience.
  • Doing work for no money is fine. Doing free work isn’t. If your client isn’t giving you money, make sure they’re giving you something else instead – experience, a testimonial, a pipeline of new clients, and so forth. Use your imagination, there are usually wayyy more opportunities to collaborate than you realise!