The 6 Pitfalls to Avoid When Starting a Marketing Agency
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Part 3 of a 5-part series: How to Become a Consultant
Did you miss part 2? No problem โ you can find it here!
In terms of growing a consulting business or an agency, Sujan Patel (Web Profits co-founder) and Eric Siu (Single Grain CEO) have made a million mistakes. So many times when they should have gone out of business, lo and behold, they both emerged to build seven-figure agencies again.
In this article, theyโre going to share with you the mistakes they made along the way so you donโt have to.
6ย Pitfalls to Avoid When Starting a Marketing Agency
Mistake #1 โ Trying to Do Everything Yourself
If other people can even do 70 or 80% of what you can do, delegate it. Your goal is to figure out the things that you need to do next to drive the vision, and if you canโt delegate, youโre not going to be able to grow, youโre not going to be able to scale. Thatโs fine if you want to continue to be a consultant or a freelancer, but itโs not fine if you are trying to build an agency.
Related Content: How We Built a B2B SaaS Marketing Agency Unlike Anyone Else
Mistake #2 โ Not Knowing Your Limitations
Along with delegating, you also need to figure out what youโre good at, what youโre bad at, and hire people in those areas where you have gaps. Sujan is really good at switching gears between different clients and whatnot, but heโs not a very process-oriented person. He can do things himself, he can teach people, but when he hires somebody who can take these things that they always do over and over again (he hired somebody specifically to create SOPs), his business started to thrive.
And when they onboard new employees or offboard employees, things didnโt get lost in the shuffle. They were essentially able to hand over playbooks that they needed to use, which turned the onboarding process from three months to a couple weeks and they got it.
Related Content: How to Start a Marketing Agency in 2023 (From a 7-Figure Agency CEO)
Mistake #3 โ Not Paying Attention to Company Culture
People throw this concept around a lot, especially in Silicon Valley. They say: โOh, we have a great culture. ุงุณุชุฑุงุชูุฌูุฉ ุฑูููุช โ Everybody says that. But how do you actually build a great culture, and what does that mean?
Culture is basically how the entire company is built up, how people interact with each other, how people collaborate, all that different stuff. Studiesย show that the likelihood of job turnoverย at an organization with highย company culture is a mere 13.9%, whereas the probability of job turnover in lowย company cultures is 48.4%.
This means that there is a strong correlation between employee happiness and productivity: Theย Department of Economics at the University of Warwickย found that happy workers are 12% more productiveย than the average worker, and unhappy workers are 10% less productive. In fact, unhappy employees cost American business overย $300 billionย each year. So it literally pays to make sure your employees are happy!
So culture-wise, here are a couple things that they do at Single Grain:
- Every Monday they do a team lunch as a way to relax and bond. They even have a team called the Bond Squad that sets up special events like dinners, Thanksgiving dinners, white elephants, Christmas parties, etc.
- Every two weeks they do happy hours. These seem like standard things, but in addition to that they also make sure that culture-wise, itโs about more than just the events that they do; itโs also that they want to take care of their people.
- This ties into retention, โcause if you have a great culture, you have great retention. So theyโve increased their paid time off from 15 days to 25 days for people who stay at least two years. Thatโs just to make sure that people take time off, and when people come in refreshed we know theyโre going to do better.
So culture helps everyone perform better, people get along better, and you operate like a machine because if you just keep operating like a freelancer or a consultant, youโre not going to be able to scale well.
Because in the agency world people tend to work long hours with tight deadlines, you definitely want to give your people breaks to refresh and recharge, which really helps a lot with morale.
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Mistake #4 โ Taking on the Wrong Clients
One mistake Sujan made was taking on the wrong type of clients. Weโve all made this mistake. The moneyโs good, but suddenly youโre at the closing stage of the deal and the client just kind of sounds like itโs not going to be the best fit. To quote an old advertising campaign: Just say no.
You should always look for red flags in a client. Sujan has three or four different questions to ask, or things to look for:
- Their personality. Can they fit in and work with your team?
- Are they okay when you give pushback, because frankly, when a client works with you, theyโre looking for you to give them feedback. Youโre supposed to be better at marketing than they are. But if they start really being hard to work with, or not taking that pushback well, itโs kind of a sign of a bad client.
- Their attitude. Some clients just like to berate, and there are certain personalities that just donโt work. Ask yourself: are they going to be an asshole? No matter how much they pay, working with assholes is not worth it. Every time Sujan has broken this rule โ and every few years he breaks this rule, โcause the brand is that great โ he kicks himself in the butt. Because it always comes back to: donโt take on bad clients.
Mistake #5 โ Not Looking at the Numbers
You have to look at the numbers. If you donโt look at the numbers, youโre going to be screwed. You can kind of get away with this as a freelancer or consultant where youโre just kind of haphazardly doing things. Remember, you have people that youโre responsible for, and youโre paying for costs such as office rent, so you have to know what your numbers are.
For example, each week Eric gets together with the Single Grain sales team and theyโll look at the pipeline, the conversion rates, how many new sales they added, how many potential deals theyโre going to close, how many qualified leads they got, etc. ุณุจุงู ุงูุฎูู
And theyโre constantly looking at the funnel, too: Where are people dropping off the most and what can they fix? They look at it from a sales and marketing perspective โ how can they continue to optimize the sales funnel, the marketing funnel?
He also looks at the numbers around expenses. How can they keep expenses down? And how can they also spend some of that money, if they have extra money, on bonuses for people? So itโs kind of manipulating the numbers to make sure that your companyโs performing really well.
Mistake #6 โ Thinking You Donโt Need to Learn Anymore
The last mistake on this list is failing to educate yourself. Like leveling yourself up, leveling your team up. 365 bet This is really, really important.
When Sujan first started Single Grain back in 2005, he was 20 years old. He didnโt know anything about business, but he was good at marketing. Well, he went from being a good marketer as a consultant, and people hiring him as a marketer, to being in the business of marketing. So he was, in his words, just a really bad CEO.
He made lots of mistakes, some of which are shared here, but there are a lot more heโs made, too. So you always have to educate yourself and level yourself up, but itโs also about the right network that you put yourself in.
Sujan and Eric are both members of EO, Entrepreneursโ Organization, which is great because youโre around other CEOs and entrepreneurs who are constantly leveling up, too, so you can learn from each other about things like what P&L is, learning how to balance and look at the numbers, learning to do quarterly projections, learning what your limitations are, and what proper limitations are in a business.
These are all things that just donโt come overnight. No one tells you how to do this or that you need to focus on it. You have to figure out these new problems. So Sujan always recommends spending maybe $5K-10K a year, or 5-10% of your income, on education for yourself and your leadership team.
Thatโs huge. If you canโt do that, you canโt scale at all. If youโre constantly in your own head, and you think youโre too good to get help from other people, thatโs where youโre going to fail, because being an entrepreneur is a very lonely game. Even when you have people around you, itโs totally different, because they see you differently. But when youโre around other entrepreneurs where you can share each otherโs pain, itโs a totally different story.
Watch the full interview with Sujan Patel here:
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