Many business models are relatively easy to scale. Selling a SaaS or similar digital product? Ramp up your marketing, and when demand increases, increase your customer support in line with it.
It’s not even that hard to scale the sale of tangible products if you know what you’re doing. Again, invest more in marketing, and as demand goes up, increase your stock and adjust your fulfillment logistics accordingly.
But scaling an agency?
That’s a different story.
Why It’s Hard to Scale an Agency
Obviously, some business models are easier to scale than others, but why in particular is an agency so hard to scale?
For one, it’s tricky to maintain the right balance of staff and clients. Sure, notice periods and minimum contracts create safety nets, but they’re not foolproof. There’s always a risk that multiple clients will wave goodbye at the same time and leave you overstaffed and underfunded.
The reverse presents problems too.
It’s tough to say ‘no’ to new business – especially when trying to scale – but you’ll quickly find yourself without the manpower to cope with that business if you take on too much at once.
And that’s not all. The average agency’s profit margins are generally very low – reportedly between 11% and 20% (and often at the lower end of those figures). The lower your profit margin, the more vulnerable you are. That makes scaling not only hard, but risky.
Last but not least, when you run an agency, your product isn’t tangible. You can’t just increase production, invest more in online advertising, or get your product into more stores. Agencies essentially sell time, and the only way to increase the amount of time you can sell is by paying more people for that time.
That’s not to say scaling an agency isn’t possible; it’s just not easy.
If you want more from your agency than money to pay the bills, read on and we’ll show you how to scale your marketing agency (to 7 figures and beyond).
Increase Your Prices
One of the quickest ways for agencies to make more money is to charge more. It’s also essential if you’re going to invest in things that will help you scale.
Newer agencies are often reluctant to increase their prices for fear of losing clients, and in a way, they’re right to be.
This tactic will almost always result in lost clients, but it’s usually temporary. Long-term higher prices should mean better-quality clients and bigger profit margins. Needless to say, that makes scaling easier.
Track Time Accurately
In conjunction with upping your prices, you need to establish where you’re losing money, and which clients, employees, or tasks aren’t as profitable as they should be.
This is because over-demanding clients and underperforming employees lose agencies money all the time. In part, it’s because it’s so easy for those losses to fall under the radar.
It can be tough to spot which clients are just wasting your time, or when an employee isn’t pulling their weight or is simply working too slowly.
Figure out where you’re losing money by tracking time to the minute and adjust processes accordingly.
Hire the Right Leader
Unfortunately, it’s all too easy to hire the wrong leader (and that goes for all industries and business models – not just agencies).
Don’t fall for someone who knows how to talk the talk. When it comes to interviews, don’t be afraid to ask high-level questions and never, ever accept overly-wordy or indirect answers in response.
Likewise, avoid hiring a great manager with no marketing experience, or a marketing guru with no leadership experience.
The right leader will be someone who’s a legit marketing expert, has plenty of hands-on experience, and is a natural leader. They shouldn’t be afraid to get their hands dirty, either.
Without the right person leading the company and guiding your staff, you’ll struggle to retain clients and employees. Consequently, you’ll struggle to scale.
Hone Your Hiring Process
Has your recruitment process been a little lacking up to this point? Well, now’s the time to take it more seriously.
Wrong hires waste money and can lose you, clients. It’s also bad for company culture. It creates a ripple effect that could potentially lead to the loss of other staff members and, you guessed it, more clients.
Getting the right people on board is essential to productivity and minimizing staff turnover, which in turn, is essential to scaling effectively.
Plan for Growth
This one goes without saying, right?
But planning for growth is about more than figuring out how you’re going to grow. It’s not just about marketing, customer acquisition, and customer retention.
Planning for growth also entails figuring out exactly what you will need, and when you will need it.
What will trigger recruitment?
At some point, you’ll probably reach a stage where you’re hiring constantly, and if the right person comes along, you offer them a job, regardless of your current staff-to-client ratio.
In the meantime, you need to decide what should kickstart the hiring process – usually, it’s a certain number of new clients coming on board, or a set amount of new client spend.
Fail to hire at the right time, and you’ll wind up with overworked and unhappy staff, and lower client satisfaction.
What can you spend on salaries (and other hiring costs) in order to remain profitable?
It’d be awesome if money was no object and you could pay whatever was needed to get the right people on board, but that’s not realistic.
Figure out what you can spend on salaries in order to remain profitable before you start hiring beyond your means.
What resources will you need?
There’s much more to running a company than staff salaries and benefits. There’s equipment, training, and office space, for starters. These all cost money, and those costs will increase as you scale. Plan ahead so you know what you’ll need to spend when you’ll need to spend it, and how you’ll pay for it.
Getting the right tools in place is essential, too. Do you need a project management tool like Trello? A time tracking tool such as Harvest? Will you be using something like Slack to streamline internal communications? Or Mailshake and VoilaNorbert to help with prospecting and managing outreach?
The longer you avoid it, the harder implementing new tools will become.
Push for Growth
There’s preparing to scale, and then there’s actually growing your client base.
Once (and only once) you’ve got the building blocks for scaling in place, it’s time to start pushing for growth.
So how can you do this?
- Look at your most successful marketing channels and invest more in them.
- Push for referrals. Request your happy clients to recommend you to others, and ask them to provide testimonials you can use on your website and in other marketing materials.
- Consider collaborating with other agencies that provide services you don’t. So you don’t offer web design, or suck at branding? Talk to local agencies that do those things well, and see if there’s scope for you both to expand by helping each other’s clients.
Don’t forget about client retention, either. It’s even more important than client acquisition when it comes to scaling successfully.
Last but not least, once your agency is successfully scaling, often the best thing you can do is remove yourself from the front lines.
Don’t micromanage. You’ve hired the talent you have for a reason. Either work according to your own strengths or step back entirely and let your team take control.
Do you have any other tips for scaling a marketing agency? It’d be great if you could share them by leaving a comment below.