In this post, I'm going to unpack the basic issue of scalability, and show you how to structure your creative agency to scale.
But, if you are just dying to hear my voice, want to see some snazzy graphics, or are feeling lazy...
I broke it all down in this video too:
I'll just assume the reason you are not watching the video was you like to read, and not that you hate my voice or don't want to see my face.
So ultimately, how do you structure a creative agency for scale?
And why do I want to scale instead of grow?
Growth means adding revenue at the same rate, you're adding resources, scaling means adding revenue at a much greater rate than cost.
With growth, you're just adding more team members, they're working more hours spending more money. Scaling delivers higher profit margins, I would think the clear winner, but most businesses depend on growth to be profitable, they make more money as they get bigger.
So, for example, when Starbucks wants to make more money, they open more locations. But this doesn't need to be the case with agencies, a small agency can be just as profitable as a big one.
You can scale an agency easily, but you want to be really careful on the lack of organizational structure can create a nightmare scenario though, when your agency is built to scale, you'll be able to get more from your resources, and you'll be able to operate more effectively and efficiently.
So I'm going to explain the process in just a minute. But I first want to explain why it's so needed right now, the traditional way creative agencies operate is costly, and quite frankly, doesn't focus enough on getting results for their clients.
And many agencies fall into a trap. They think that they must sell more services, to get more clients, which then requires more team members and increase their cost.
These are typically full-service agencies, offering bespoke services with each client, and making 5% and profit, you know, it doesn't need to be that way.
So, to survive, thrive and scale, agencies need to shift to a modern model that is effective and truly client focused.
An agency structure for creative growth could be a specialized agency, offering productized services, using systems that generate results without you being involved, making a 25% plus net profit.
Now that we know what we want, let's break down every piece of the structure.
I call it...The Scale Method.
This six step system allows you to create a system that can structure your creative agency in a way that can scale.
The first step is specialization.
Selecting in a hyper focus on a really, truly profitable niche for your agency, instead of being described as a design agency, you'll be better off being described as a branding agency for the financial software as a service industry.
We'll break down why this is crucial over the next few steps, but you want to be purposeful on who you pick.
So, I want you to think back over the last few years.
What clients did you have the most impact on?
Not the ones that paid you the most, but which ones did you help the most.
Find the pattern.
And realistically speaking, that's likely going to highlight your specialization and ultimately be able to elevate your expertise.
The second step to leveraging your expertise.
Once you've niched down, you'll be able to leverage your expertise and deliver a higher quality service than a full-service agency ever could.
So, if you have an Audi that needs servicing, then you have two choices.
There's a place that specializes in German cars.
There’s also a general mechanic.
Which one are you going to take?
I know, as an Audi driver myself, I know which one I would.
So even though the Audi mechanic costs more, you take it to the place that you know where he's going to do the highest quality work.
So ultimately speaking, you want to be able to better position your agency.
The third step is to position your service the right way.
So, when prospects actually come to your site, they're going to see that you write for those places and instantly think, if she's good enough to write for those places, she must really know what she's doing. or he must know what he's doing.
This allows you to elevate the conversation that you're having with your prospects.
You’ll become the consultant for them, guiding them…not taking orders.
When they actually come and say, “Hey, I need XYZ”, you're actually able to tell them, “This is what actually works best”.
You’ll be able to actually help.
And what I know that the vast majority of agency owners want is to actually become a partner to their clients, and not having to take orders.
The goal is to get it to a place where it runs so smoothly that it doesn't require you to be involved.
This includes things like:
Having a CRM, centralized communication with all of your clients so that everyone can see what's happening.
Project management systems that can do the same.
Having a truly scalable lead generation system and not just be word of mouth, and not rely on when someone is going to refer you that leaky tap faucet type lead flow system, we want to really be able to control your lead flow, and
Mapping your client flow to really reduce bottlenecks in your process, from the initial hand raised to the opt in on your site, all the way to the completed project, what happens at every stage.
This also includes documenting your process so that it can liberate you, the agency owner from having to be so actively involved.
The final step, and my favorite, is adding a recurring revenue model.
Ultimately, I think that this is what every agency owner wants most, to have monthly reoccurring revenue that allows for your agency to have predictable income, and ultimately predictable profit every single month.
This is going to require a change in pricing structure, and how you package your services.
I made an infographic to help visualize the Scale Method below. Feel free to save it and use it anywhere you want.
Expected results from Scale Method.
The average hourly earning or effective billing rate for agencies on average in the US is $72 an hour.
Most of my clients using the Scale Method are in the $200 to $500 effective billing rate.
Industry wide nearly 80% of agencies earning this upper echelon of effective billing rate or specialized agencies using a value pricing structure that will have an average utilization of 55% and are 27% under budget on time for their project work.
Probably sounds like a dream, right?
Maybe sounds a little impossible, but it really isn't.
And you can have it too.
It's just looking at how your agency is functioning and starting to make a change.