What kind of agency are you?
Marketing and Creative Agencies are fairly easy to categorise. Whether you’re in digital, design or marketing, the chances are that you will recognise yourself here.
STAGE ONE: 0-3 people
55% of agencies
Easy stuff this. You’re a good designer and/or marketer and have a few contacts, so you decide to start your own agency and hey presto, you’re off! Overheads are low, confidence is high, you love doing what you do and you can work where and when you like. The trouble is, since this seems like a perfect place to settle, you may well be here forever. It’s a stage with pitfalls too, as you’ll find that holidays are difficult to take and new business is hard to secure.
STAGE TWO: 4-8 people
25% of agencies
Clearly, you’re good at what you do. You’ve found your niche, and people want to use you. New business comes along too, but you often have a tendency to focus your work solely on these new clients and forget to look for further new business. This effectively stops you from growing.
STAGE THREE: 9-12 people
15% of agencies
You’ve found a client that you’re growing with. They keep giving you more and more work, which seems brilliant - though you start to realise that they’re dominating your workload. Since you’re working well with them and you’re still growing, you focus all your energy on advancing their interests.
This means new clients are very reluctant to come to you because you’re overwhelmingly under the thumb of this dominant client. New opportunities pass you by, never really getting the attention they merit.
STAGE FOUR: 12-30 people
5% of agencies
You’re an agency of some size now - a big player. You’ve crossed the threshold of being just a collection of people, now logically organised into teams, with clients that have stayed with you for some time. You’re not overwhelmed by one dominant client, instead work with a handful of large clients, many medium-sized clients and an abundance of smaller ones. You’ve settled on the processes, disciplines and specialisms with which you want to work, all of which allow you to accurately predict where your revenue will sit, your possible profit margin and an idea of where you can grow.
However, the pitfalls remain. You’re struggling with talent recruitment issues, not to mention that all the local competition want to knock you off your spot, meaning you need to constantly pitch for new business whilst still maintaining client confidence and satisfaction. Because of the resulting need for more business structure, overheads become higher, and management and financial structures become necessary too.
STAGE FIVE: 30+ people
<1% of agencies
99.5% of all agencies will never get here. It’s rare, particularly if you’re away from a big city. But the economies of scale kick in and profitability may well come back.
To maintain this position, you need to have a USP, otherwise agencies in all of the above categories will sneak onto your blindside and take you on. Key staff may leave and form their own micro agencies and take your clients and / or staff, irrespective of what it says in their contracts. It can be a real minefield at this stage.
<0.1 STAGE SIX
Get me out of here.
This is hardly ever achieved, with a financial exit usually on the cards.
I’m very confident that most, if not all of you, will be able to identify with at least one of these six stages. Being the boss or owner of an agency is hard - very hard, especially when clients and staff become increasingly demanding. Approached in the right way, however, and it can prove a very rewarding experience. With the right guidance and the right resilient mindset, anything is possible.
Just get out there and do it!
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