Although most creative agencies are aiming for growth, the goal should actually be to structure your creative agency to scale.
Did you know that scaling and growth really are two different things?
What if I told you that you can achieve it in such a way that is sustainable, and predictable, while also improving your creative output?
What structural changes do you need to make set up your agency for success?
And ultimately, what is the first step?
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.
Now that you're able to deliver a higher quality, specialized service…you have to now position it in the right way.
The goal is to make sure that you are the one and only choice for your ideal clients.
Have Audi, BMW, and Mercedes logos on your signage and in your marketing.
Run specials that call out these brands.
Make it clear to your local market that you are the "German Car Guy".
The fourth step is to create your authority.
It's time to kick up a notch and start to become the celebrity agency owner of that niche to be truly known and respected.
You can fairly easily become a guest contributor in places like Forbes, Entrepreneur, Fast Company and industry blogs.
We actually put together a directory of authority websites that are looking for guest contributors in the creative space.
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 fifth step is building seamless operations.
You need to develop procedures, templates and processes to ensure your agency really runs smoothly.
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.
You can start launching your trajectory by…
Ensuring you’re clear on your ideal client.
Confirming that it is both lucrative and where you can make a true huge impact for your clients.
Crafting your offer that positions you in the right way
Ensuring you differentiate yourself and your offers from all other options in the market.
Build out an aggressive, but achievable, plan with measurable KPIs and specific key areas to focus on.
You need to keep the momentum up by making regular updates to your lead generation systems to ensure qualified and motivated prospects are consistently entering your pipeline.
You also need to always improve and systematize your sales process by following templates and processes for…
- Proposal Presentations
- Discovery Calls
- Capabilities Deck
These should never make you feel like you're pitching, but that you're actually serving and creating impact. You’ll actually feel good at the end of sales calls. Can you imagine?
Then ultimately revamping your pricing model to one that is based on the value that you bring to clients, not the time.
You've spent years developing your expertise. And you should be billing for it, not the hour.
I want to get real.
And I'm not going to sugarcoat this because that's not who I am.
Agencies are, quite frankly, being forced to evolve, or they're gonna fade away.
This is started before the pandemic, but the shutdown kind of put it on fast forward, the pedal to the metal, if you will.
The massive change coming down the pipeline for our industry is terrifying.
There are a lot of good people, and they spent the better part of their lives developing a skill, investing their money, and putting it all on the line to start their agency.
So many of these good people will likely be going out of business in the next 12 to 18 months.
And it sucks.
It quite frankly breaks my heart.
I don't want it to be the same for you.
And I don't want you to be in the same place for the next few year…struggling to essentially just keep the ship afloat any longer.
You're going to have to adopt this new model at some point. And procrastinating is only costing you money and really your free time.
So some good news and maybe close on something a little positive is that the change really isn't going to be hard. And ultimately, you can do it.
Now, it's not something that you can plan out and execute on a Wednesday morning, and then have it fully implemented by Friday.
But it is something that you can put thought into and dedicate some time to and get your team on board, you can truly have success.
If you have the time, plan to follow through, commit to it, and really want to fully make the transition in less than 90 days, I'd love to give you some input and the framework around doing it.
You can book a time to chat with me here for free or click the button below
We’ll talk about what you have going on, and I’ll give you some direct feedback of three things that you can be doing in the next 90 days to improve your agency.
