There are lots of great reasons to start an agency: you can control the type of clients and projects you take on, you can handpick your team, and, if you play your cards right, it can provide financial wealth.
But running an agency can also be extremely challenging, even downright miserable sometimes, although few people admit it.
If you’re starting your own agency, chances are you probably worked in one before. You have a general idea of how they run, who does what, how clients get pitched, how work gets invoiced, and so on, so it can be tempting to plough ahead with your new business without taking the time to think it all through.
While there is no silver bullet to ensure success, here are 10 things to keep in mind as you start to build your business.
1. Find a co-founder
There are people who will disagree with the suggestion to find a co-founder: “I run a great agency, and I don’t have a business partner, plus I get to keep 100% of the profit.” But for most people, having a business partner reduces the loneliness, stress, and isolation that can come when you’re a sole founder.
“As a single founder, I felt like I was carrying a weight that I couldn’t share with anyone,” Alex Turnbull, CEO & Founder, Groove
Have you noticed anything among some of the most famous advertising agencies?
- Ogilvy & Mather
- Saatchi & Saatchi
- Wieden + Kennedy
- Goodby Silverstein & Partners
They’re all named after the partners who founded them. Running a business is hard, especially at the beginning, and it’s twice as hard doing it alone. Finding a good partner can be challenging, but the pros will outweigh the cons.
The key is to find a partner you know and trust, and preferably one who has a skill set complementary to your own. If your background is in design and development, a great potential co-founder might be someone with sales and account management experience.
There’s not much point in two founding creative directors, neither of whom are experienced with sales, client management, or operations. While you might both share some knowledge and skills, your agency leadership needs a broader spectrum. You need to be able to define yourselves from each other, as well as your roles.
2.Get a physical location
Working remotely is very popular; you’ll hear about the pros from many people who prefer working from home, and from business owners who love the cost savings. But does working remotely work for an agency?
When you’re starting out, it’s tempting to forgo bricks and mortar to save money. However, to be taken seriously by the kind of big paying clients you want in your roster, you’ll have to show them that you are a legitimate firm and not a fly-by-night operation running out of your basement.
Like it or not, inviting a prospective client to your studio impresses them. And while they should hire you based on your agency’s abilities alone, a stylish, well-designed workspace can help you stand out in their minds as an established, successful firm.
To work well, agency teams need to be in close communication every day with opportunities to brainstorm together. While email, Skype, Slack, and other collaboration tools are fantastic for keeping in touch about minor things, they’re cumbersome and impractical for brainstorming and creative meetings.
Whether you’re working on a visual identity, a video concept, or a social media strategy, creativity flourishes when people get together casually. This bonding is what creates culture, and the work improves as a result. When people work from home on a regular basis, it hurts the culture because they work in silos and don't collaborate.
Culture is difficult to change once it’s established. It’s tricky to tell people they need to come into an office by 9:00 am every morning if you've already let them work from home in the past, so start out on the right foot and invest in a decent workspace to start building your agency culture.
3. Figure out your unique value proposition
So many people start ‘agencies’ and leave it at that. But starting an ‘agency’ is like a retailer saying they’re opening a ‘store’. No one opens just a ‘store’. A retailer picks a specialty - shoes, books, makeup, clothes, toys - and then positions themselves within a niche. So women’s shoes, children’s books, men’s clothing, educational toys.
Even general retailers like Walmart have a niche - they may sell ‘everything’ a household needs, but they do it at the perceived lowest price. They position themselves as the most affordable option for the everyday, average person. That way customers know why they should come to that store, if there’s anything there they need or want to buy, and if it’s in their price range.
More agency owners need to think like retailers. Yet there are countless full-service agencies. ‘We do it all!’
Positioning is your first step when starting an agency, and essential if you want to scale. Before you pick a name, rent the office, hire the people, or look for clients, you need to define your positioning:
This is who we are.
This is what we do.
This is who we do it for.
When you’re a small agency looking to get big, it can be tempting to look at the large agencies for inspiration to see how they’re positioning themselves. But if you visit a lot of big agency websites, many of them are terrible.
They talk about the awards they’ve won, how great they are, and how cool and quirky their team is. Everything is about them. “Me, me, me.”
“If we’re supposed to be storytellers, we need to tell the right story,” says Jason Swenk, an entrepreneur who grew his digital agency to more than 100 employees, sold it for a profit, and now works with other agency owners to help them scale. “If you start positioning yourself as the star, then that delegates the client to the sidekick or damsel in distress. No one wants to be Robin in the Batman story.”
The key, according to Swenk, is to position yourself as Alfred, Batman’s trusted advisor who will guide your clients to success. Positioning is critical, and your position as an agency should never be ahead of your client.
Whatever service you offer, you need to double down on a niche. No more generalizing. Look at what specific problem your company is really good at solving (and one that you also enjoy doing) and specialize in that.
Is there something innovative you can do that most of your competition doesn't talk about? They may be doing it, but if they don’t talk about it or promote themselves doing it, then you have the competitive edge.
Agencies are often wary about defining a unique position or niche because they’re afraid they’ll alienate leads. But you need to filter out people who aren’t your ideal clients and attract those who are. If you don’t define who you are and what you do, you’ll end up with clients who aren’t a good fit.
Clients who aren’t a good fit become unhappy clients. Because they’re not a good fit, you can’t please them, you can’t deliver the best results for them, you can’t solve their problem, and they’re probably not going to make you much money. Meanwhile, because they’re unhappy, they might be complaining publicly about you and damaging your reputation.
It may mean that inevitably you’ll lose clients who don’t value or even need your services. But that’s OK because then you can focus all of your time making the people who want to spend money on your agency, the people whose problems you can solve, happy.
So it’s critical to define what your agency does, who you do it for, and then stick to it.
4. Flex your brand power
Your brand is one of the most important assets of your business. No matter how great your product or service is, if your brand is weak or misguided, you’re going to have a hard time differentiating yourself in the market and connecting with your target audience.
Brand is the deciding factor for most people when it comes to purchasing decisions, even if they don’t realize it. Your brand can be the tipping point, good and bad, when all else seems equal.
The right brand can help you survive the roller coaster of the business world. It builds connection, loyalty, fans, and champions. The right brand strategy can turn customers into ambassadors. It can help you win the unwinnable price war.
Your brand can provide a roadmap for making decisions about your marketing strategy, public relations, product/service development, customer support, communications, hiring, and employee performance.
You may not be a household name (yet), but for anyone who interacts with you, you need to make an impression of value and expertise, which will help you escape being pigeon-holed as a commodity.
You can’t charge premium fees if your branding looks like the Dollar Store. It’s not enough to buy Facebook ads or post on Instagram; the design and the messaging are what make an impression and convert customers. If you look high quality and have a strong positioning, this will start to build your brand as a premium service. Then you can charge premium prices.
You need to start developing your brand right from the beginning of your business, and constantly monitor it.
5. Hire these three roles first
When you’re starting an agency, your first three hires need to come rather quickly. Every hire should free you up as the founder so you can get out and sell, bringing in more clients to grow your agency and expand your team.
Let’s look at this scenario as an example:
You’re starting a digital agency with a focus on the automotive industry, and it’s made up of two founders; one of you is a designer/developer, the other is a marketer.
There’s only so long that the two of you will be able to execute the work you bring in. Every hour that you as co-founders spend designing a website or managing a marketing campaign is an hour when you could be out selling to potential clients and closing deals.
So your first full-time hire should take care of whatever is chewing up the most of your time.
If the designer co-founder is slammed with design work, then hire an experienced designer who can take the reins, not a junior or an intern who the founder will need to mentor and monitor.
Every hire should be able to jump in with both feet to take on client projects and execute them extremely well.
You’ll need to oversee the work at the beginning to make sure the quality is in line with your agency vision, and that clients are happy. You need to make sure the jobs are profitable but don’t get too hung up on micromanaging every detail.
Once you hire your head designer, developer, and marketer to lead and execute client work, you’ll be free up to manage accounts and bring in new clients. Your main job at this stage should be getting more clients in the door.
Eventually, you’ll need a project manager so the team can focus exclusively on executing on deliverables. The project manager should also ensure profitability of projects. Later, as you grow, you’ll want to hire account managers to manage relationships.
6. Resist the temptation to hire cheap labour and interns
If you freelanced before you started your agency, you’re probably used to controlling every aspect of every project that comes through your door, and that can be a hard habit to break.
Now that you own an agency, you may be tempted to continue managing clients yourself and hire a junior person to take care of the monkey work. Before you take that approach, stop and think big picture about the type of agency you want to build.
Do you want an agency where you’re tied down to every project and need to attend every meeting because you don’t trust your employees to lead? Not only will that earn your agency a poor reputation, but it’s also incredibly inefficient. It will hold you back from getting out and selling, which is the most important thing you can do as the founder.
On the other hand, maybe you’re thinking about outsourcing production work to freelancers on a per-project basis, so you don’t have to commit to paying someone a regular salary. This is a terrible long-term strategy.
For starters, freelancers are generally more expensive per hour than employees, which will eat into your profit margins. More importantly, you can't build a great team culture with contractors, especially when you're a new and fragile agency.
You need a team of full-time, experienced professionals who will grow with you, give you their best work, and help build a great reputation for your agency.
There are only two situations where you should hire a freelancer for your agency:
- If the work is one-off, transient type of work
If one client needs a promotional video and you don’t ever intend to offer that as a core service, then it’s OK to hire a freelancer videographer to partner with you on the project to execute the video.
- If you’re temporarily short on resources
Maybe somehow all your clients ended up with deadlines in the same month (you need better planning if that’s the case, but we know how clients are…) and there’s no way your team can humanly complete everything you’ve committed to in that time frame. If there’s no chance of moving deadlines, then hire freelancers to help with copy or design work to get your team over the hump.
7. Implement systems and processes
Systems and processes provide leadership, set expectations, and ensure consistency without you needing to micromanage every action. You need to empower your team to succeed. Proper process and defined systems are essential to successfully scaling your agency.
Systems and processes are like recipes. If you’re building a fast food chain, you don’t leave it up to each cook at each location to cook things the way they want. There is a strict recipe to follow, so the client gets what they expect every time. Afterall, managing client expectations is at the heart of every successful agency.
While every agency is going to do things a little differently, there are some standard processes you should define so everyone knows what happens when, who does it, and what the outcome should be:
- Human resources
- Pricing and billing policies
- Onboarding new clients
- Creative briefs
- Tracking time
- Disputes with clients
- Delivering work
- Managing client expectations during a project
- Attracting new talent and retaining your existing team
- Generating and qualifying new leads
8. Don’t burn people out
Generally, when you ask a client about their deadline, you’ll get one of two answers: yesterday or ASAP. Sometimes both.
You don’t have to accept that. Agency people are routinely chewed up and spit out by expectations to regularly work until late into the night and during weekends.
Let’s say you run a pizza shop where customers expect their pizza to be delivered in 15 minutes. But, for you to deliver within 15 minutes means the pizza won’t be fully cooked, and you’ll have to speed, risking damage to your car and the safety of the delivery driver and the general public. So, would you give in to customer demands, or put your foot down and tell them you’ll need the full 40 minutes?
Allowing clients to dictate insane deadlines will burn out your team and result in sub-par work that no one is proud of, or happy with.
9. Don’t micromanage; make your people the stars
One of the hardest things to do as an agency owner, actually almost any owner, is to step out of the spotlight.
Some agency owners want to be the stars and micromanage their employees. The question to ask is, “Is this really in the best interest of our clients, or it is in the best interest of my ego?” Your agency will suffer on many levels if you don’t stop doing it.
You hired good smart people with specialized skills for a reason: you can’t do everything, and you don’t know how to do everything. Let them do what you hired them to do. Empower them to flourish. If you keep interfering, it breeds resentment and diminishes confidence with the result being weak work and a desire to leave your agency.
Nothing hurts an agency’s reputation more than staff turnover. After all, in a service business, your people are your product. If your team is different every month, clients will get frustrated, they’ll lose confidence in your agency, and they’ll end up moving on to another shop.
10. Make sales and marketing a priority
Clients are the lifeblood of any agency. But you don't get them if you can't sell, and unfortunately, most designers, developers and marketers hate to sell. If you’re starting an agency, you need to get used to the idea that your main job is selling.
When it comes to sales, you might be tempted to do one of the following:
- Hire a salesperson right away
- Outsource selling to a partner/referrer
- Position your agency as a subcontractor to bigger firms that will feed you work
These are all short-sighted mistakes. If you want your agency to be successful, you need to start out by selling to clients yourself. Here’s why:
- A hired salesperson will never be able to represent the agency like the founder would.
- An outside partner/referrer will only bring sales contacts to the table, and doesn't have the knowledge and passion about what your agency actually does. They likely won’t be able to bring in the kind of long-term clients your agency needs.
- Working for a bigger agency means you get the scraps of their projects and you won’t be able build relationships directly with clients or take credit for your work.
The most successful agencies are built off of the blood, sweat, and tears of people who could sell. They took a chance by picking up the phone or booking a plane ticket to pitch a client, and they were told no a lot more than they were told yes. Once you land a big client, it gives your agency the cash flow and breathing room you need to develop more business.
It's easy to focus on selling when you don't have any work. The hard part is sticking with sales after you land a couple of clients. You should be able to let your team lead projects, and you should only stay involved at a high level to ensure quality control and offer insights.
Selling is your job now, so you better get used to it.
May the Force be with you
Owning an agency, or starting any kind of business, is not for the faint of heart, but if you want to evolve past a one-person shop and compete for great clients, keep these points in mind. Take the time to plan out what kind of company you want to build, make sales your focus, and invest in a team and culture that will make your job of selling an easy one.