Have you thought about opening your very own agency? If you're a new agency owner or you're thinking about starting your own agency in the near future, there's a lot of important details you'll need to consider. Many agency owners jp in but find that they're not as prepared as they'd like to be. Our podcast today is a converted panelist webinar. Garrett chats with a few agency veterans - Selena Vidya, President of Orthris Media, Michael King, Founder of iPullRank, and Akvile DeFazio, President of AKvertise to discuss the strategies, tactics, and challenges that come with building a successful agency.Note: At a couple of points in the episode, Garrett loses audio. But our amazing panelists kept the party going. The highlights · [2:12] Setting goals and milestones for your first year in business.· [6:55] Why your agency needs planning and processes to grow.· [8:43] Mistakes they made their first year in business.· [11:04] What you need to scale your agency.· [17:25] Why setting client expectations is so important.· [19:38] The importance of client diversification and intentionally diversifying.· [28:26] Pricing models and resource allocation in year one.· [36:08] The challenges women and people of color face when starting their agency.· [43:34] Client red flags: When to walk away from prospective clients· [45:13] Where agency owners can go to find and receive support.· [49:23] How to hone your niche as an agency. The insights: Setting goals and milestones for your first year in business Many agency owners start their business without a clear plan of action or a set of processes they can use to grow or scale their business. Agency owners are brave but often inexperienced. There are important goals and milestones your agency needs to set your business up for success. One important takeaway is the issue of identity. Some agency owners prefer to set their business up for the eventual employee hires that will take place down the road. Other agencies prefer to stay lean, outsourcing the majority of their work to trusted contractors. "Incorporation was the first thing I decided that I needed to have more set income goals personally, for myself, and then what revenue goals were for my company going forward. And in that first year, I also wanted to determine, you know, who to hire and how to hire them and eventually hire that first person and start training them up." Akvile had a clear sense of her company's identity and the revenue she wanted to bring in personally and professionally. Selena prefers to stay lean, relying on contractors to handle the work that needed to be done. "I figured out what I wanted the revenue for Orthris to be in the first year, keep the lights on, make sure that we can do what we need to do and also what I needed. But then I tried to figure out how many hours am I spending on certain key tasks that can then go to a contractor. I didn't want to go the route of doing any kind of full-time hire. And I still don't have full-time hires outside of myself and my partner. So for me, it's more, what can I offload to contractors and who is proficient enough to do that?" Why your agency needs planning and processes to grow As an agency owner, you understand the importance of generating results and outcomes for your clients consistently. It's tough to produce results if you don't have a clear, repeatable, and straightforward process your team can follow. Whether you're teaching employees or outsourcing work to contractors, consistent planning and processes are a must in the agency business. That's part of the problem because many agency owners don't necessarily know how to do "it" right. Michael knows this better than most. "You'll want to sit down and build out what your processes need to look like because that was one of my biggest problems. I just am not really a process-oriented person. If you don't have a process outlining how the work is meant to be done, you're likely going to end up disappointed with what your team does. And you're going to feel like, 'well, they only did the exact thing I told them to.' And then you're going to end up redoing the work. Come up with a methodology for how you're going to effectively serve your clients." Mistakes they made their first year in business New agency owners don't know what they don't know. The first year is typically filled with lots of trial and error. While these agency owners solved these mistakes, it's devastating for many other inexperienced agency owners. The good news is, these mistakes are completely avoidable. With some upfront planning, testing, and iteration, there's no reason these first-year mistakes should take you off guard or disrupt the wonderful things you're trying to do in your agency. Selena stresses the fact that "winging it" is temporary."Winging it, trying to figure out what works, can work, but you can only do that for so long. You can wing it as long as you need to, but I really recommend that you get just processes in place to understand what your deliverables are going to look like, how you're going to deliver them, what communication looks like, and make sure you're solid so that when you're going to plug people into your ecosystem, they know exactly what to do and how it needs to be done."Michael was operating purely on instinct which was incredibly risky."I don't know how my business ran before I committed my process. I don't know how anything was getting done because now that we have it (processes and planning) in, it's so clear, and it's so like, do this, do this, do this. And like, you know, this obviously a space to be creative within that and so on. But I don't know how anyone was getting things done before, because you know, in some cases, people were junior or some in some cases, people were coming from other environments where they did things differently. There were just so many sub-optimal ways that we were doing things before. If you're starting an agency, spend the time to write down how you do things as soon as possible. Cause it's such a game-changer. You can't really scale until you do that." What you need to scale your agency Scaling your agency is really about duplicating yourself. It's you taking the time to sit down and codify your desires, goals, expectations, standards, and processes. You create a framework your future team can follow to produce the kind of work you want. The kind of results that make your clients happy and keeps them coming back. Of course, there are objections. It's easier and faster if I just tell someone what needs to be done when it needs to be done. Why go to the trouble of documenting everything now, before there's even a need? Selena says we often tell ourselves, "I can just do it or explain it to somebody, and it'll take less time. But the reality is the time that you've spent telling people how to change and do things [is lost]. You should just docent it and get it over with; you'll save that time in the future." Even though Michael wasn't particularly excited at first, he decided to do the work. "Once I really sat down, and I was like, okay, what are these processes going to look like? It just became another cool challenge and another skill set that I had to develop; how do you actually write this down such that anybody qualified can pick this up and do it the way you want to do it? At the end of the day, that's what you're selling as an agency, your process and your people being able to do [what you've promised]. I don't know how we made it those first three years without that stuff." Why setting client expectations is so important Setting and managing client expectations is a crucial part of maintaining healthy agency/client relationships. The better you are at setting, managing, and maintaining client expectations, the easier it is to keep your clients happy, satisfied, and fulfilled. This is the key to repeat sales and consistent long-term referrals. Selena focuses her attention on communication and contract expectations upfront. "When I used to work at [other larger] agencies, and I was the client contact, I would get triggered if they wanted to talk to a director when I wasn't director level or someone above me. I always wondered, 'why does this happen?' So when I started my agency... I would try to set it up so that clients were comfortable talking to my team members and not necessarily me. I try to set the standard in the beginning that, you know, it's myself and my team; my team handles these things. It sounds like a basic no-brainer, but it's just something that, for some reason, they don't take a team member as seriously when they're used to talking to you." The importance of client diversification and intentionally diversifying Inexperienced agencies go through feast and famine cycles. Often, they struggle to maintain a steady cash flow. This isn't their fault directly; it's actually the nature of the business. As an agency, you'll want to follow the sales and marketing adage "Always Be Closing." It's a good idea to pursue opportunities consistently, so you're never dependent on a client you can't afford to lose. Akvile learned this lesson the hard way. "One hard lesson I learned, in year three is that I had two of our largest clients let us go in the same week. It was 90% of our income. And I was just like, what do I do? I've never done like formal business development. It wasn't anything that we did. It was just one of the CEOs, he quit. The whole company kind of was like, we don't know what to do. So we'll regroup. A larger company acquired the other one, and fortunately, they came back to us the following year on wanting to work with us again, under the larger brand. I struggled for eight months to try to figure out what to do. That was a huge lesson in not putting all of your eggs in one basket and not banking on those larger whale clients. If you land some of those clients, diversify so that if something happens, it's not going to impact your business severely." Pricing models and resource allocation in year one Pricing doesn't always receive the attention it deserves. Many inexperienced agency owners simply choose a pricing model — hourly, retainer, flat fee, and they run with it. But this can be a disaster. Choose the wrong pricing model, and you may find that your business is punished for being more efficient, timely, or precise. Akvile discovered that her hourly rate made it hard for her agency to grow, her revenues and profitability began to stagnate. "I started off hourly, and I soon, quickly dug myself into a financial hole because I was becoming more efficient as I progressed with my work [yet] I was making less. We're still experimenting on the optimal pricing strategy, especially being an ad agency. We started billing percentage of the monthly ad spend. I realized that maybe we should start doing a base plus percentage of ad spend, versus retainer models. So I think it depends on the client and that's why we don't publish our pricing on our website. Every client has different needs." It's also a good idea to identify the hourly models that don't work for you. Michael drew on his experience with hourly billings. "I completely despise the hourly model because I don't think it serves anybody effectively; for the client, you know, it becomes a variable cost that they can't really effectively [plan] for. It rewards the agency for showing more activity rather than showing outcomes or results. It's also just a very tedious thing to manage. Nobody wants to track their hours. No one wants to report on their hours; then you've got to chase people around for it. It's an antiquated model as far as I'm concerned; it just doesn't put the focus where it needs to be." The challenges women and people of color face when starting their agency Disadvantaged groups — women and minorities, face an uphill battle when starting their agency. Depending on your area, it may be difficult to gain equal access to people or capital. It may be difficult to partner with like-minded peers or win prospective clients over. It's a good idea to go in with both eyes open. Michael recommends doubling down on selling and certifications as a way to combat systemic barriers. "One of the challenges that I face as a black business owner is that it's very difficult to get access to capital. It's just like, all right, bank won't give me a loan, cool, sell more things, sell more things. The one thing that I would recommend, which I didn't really see the value in before is, getting, getting the official certification as a woman-owned business or as a black-owned business; Many organizations receive incentives to work with businesses of that type. So if you're in a pitch and you're being compared against a bunch of other vendors, you may get a leg up if you have the right certification." Still, the challenges are hefty if you're part of a disadvantaged group—Akvile shares her experience with networking groups. "I had some trouble early on when I'd go to in-person networking events and, you know, being a woman, I think ageism also played into a part where I would be in a group of people, and there were some older gentlemen, and they would just kind of talk over me or dismiss me anytime I was talking about my area of expertise. And I feel like the only time that they would give me their attention, even though I wouldn't want to work with them at this point, is that if I were to say something unique or that maybe they didn't think about. Suddenly they're like, 'Oh yeah, maybe you do know what you're talking about.'" Michael had a similar experience. "A lot of times I'll walk into a room, and there's a lot of the dog whistle language and so on. I'll give a fantastic pitch, one that I know crushes it for most situations. And then I'll get an email back saying, ‘Oh, we don't think you're strategic enough,’ which is basically like a coded way of saying, ‘Yeah, we don't think black people are smart.’ There's a lot of things that you'll run into; you've got to be able to roll with the punches to some degree." It's an unpleasant reality, but the good news is, this attitude is changing. People are beginning to notice this, and we're taking the cultural steps we need to turn this around. That said, this may be more of an issue in some parts of the country vs. others. It's still a barrier that requires awareness and planning. Client red flags: When to walk away from prospective clients When should you disqualify prospective clients? You'll want to do it as quickly as possible as soon as you spot potential deal-breakers or red flags, address them immediately. Point them out then, if there's no way to resolve the problem to your satisfaction, cut ties. If you can refer a potential client to another source or provider, it's a great way to maintain goodwill. The question is, how? If you're a new agency, you may not be in a position to be choosy, especially if you're trying to keep the lights on. What if you find someone who isn't a good fit? How quickly do you get out of that relationship? How do you handle those situations? "If there are any red flags and I wouldn't feel comfortable passing that person onto someone else, I will say, 'listen, I'm sorry, this isn't the right fit.' I still try to be helpful. I send them some resources, send them a few things, and then just wrap the conversation. If we're at capacity, if it's not the right fit for us in terms of industry or experience or the platforms that they want [isn't right], I have a network of people. I actually have a digital spreadsheet, so I know who to refer to, and I have a process put into place [to determine] who gets first dibs on it. It's always based on who's going to be the best mutual fit. Of course, it goes down to maybe area of expertise, or maybe they've worked with this particular type of client before. And then we do also have an area in this spreadsheet where, you know, if they have a referral fee, then we'll use that." Where agency owners can go to find and receive support No agency is an island. If you're running your own agency, you're going to run into trouble spots. You'll need help to overcome the inevitable challenges you're going to face. If you have support, you should have the connections, advice, and help required to weather the agency challenges you face. It starts with mindset. Selena started by making a decision. "I just started trying to continue to build relationships, being in communities. Traffic Think Tank is one that I had joined. That's been great for relationships and referrals and communication and all of that stuff. So I think, uh, you know, just, just continually putting your foot on the gas and never feeling like you're good with clients." What's interesting about this is the impact that Selena had on Michael's business. "It just comes down to building your network. Selena saved me a couple of times before; there was one time where we had a client, and like my whole team went on vacation, and it was just me. I was like, 'yo Selena, I need some help with content.' And she delivered. So having that network of great people that can support you wherever you find them is the most important thing." How to hone your niche as an agency The 80/20 rule plays a role in your agency. As your agency grows, you'll find a small segment or service line produces the majority of your revenue. This can happen early on in your agency's growth, or it can happen later on, after a pivot. The market is often a helpful indicator. If there's a significant amount of demand for your service and that service meets your needs, you may want to consider refining your agency's focus. Both Selena and Michael had similar experiences. With Selena, she took a proactive approach. "We started with a number of services, and we just looked at what was most enjoyable; what worked well that we were able to get results in and also what was the most profitable. So, as I mentioned earlier, we narrowed down from a bunch of the other services, and we started focusing on just three key areas: content strategy and production, SEO strategy, and the auditing process. As far as the types of businesses and industries you want to work in, I just started working with a whole bunch of different industries, and I ended up falling into working with publishers more often and became extremely proficient. So that's where we continued to push." Here's how Michael views it. "I think the market will tell you what your niche is, based on the clients you maintain, the ones you lose, you're going to learn very quickly. You've got to find that Venn diagram overlap — what you love doing and what, you know, actually makes you money. I want to build the agency of my dreams that can do big picture things all the way down to, you know, small picture things like channel-specific stuff. We did a lot of great projects that were bigger picture projects, but we don't have the portfolio to go after everybody's design work. We don't have the portfolio to do 10 experiential marketing campaigns, even though we've done one or two. So the market is just going to tell you. You can do those things, but you're going to have to do them off the back of the core stuff that you're really, really good at and can repeat." It's less about planning and more about discovery. You'll want to identify the services that mesh well with your agency services and product offerings.What’s your right now cause? Selena’s right now cause is supporting smaller women-owned businesses. Akvile’s right now cause is mentoring women and people of color. Mike’s right now cause is BlackandBrilliant.org. Connect with our webinar panelistsWant to connect with these amazing agency owners?Selena Vidya
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Akvile DeFazio
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Michael King
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