All GuidesInterviewsNewsOpinionPatch NotesResources
Back To Posts

Value Added Ep.07 — Why Having an Agency is the Worst Decision You Can Make

#News

14 Jun 2020

3 Comments

Value Added Image

So, what’s the deal?

Why does everybody in digital marketing want to run their own agency?

Is it because virtually every SEO course and blog brainwashes beginners into the belief that being an agency owner is the be-all and end-all?

Jarod and Jonathan are successful agency owners — so obviously they see the upside.

But, they also encounter people who get into the agency business for the wrong reasons:

Low Barrier to Entry

There is a common perception that having an agency is easy money.

After all, anyone can get a logo designed on Fiverr and hang out their shingle as a digital marketing agency.

The barrier to entry is so low as to be almost invisible.

But, in the real world, running an agency is far from a free ride on the gravy train.

“I made a lot more money, and I worked a lot less, when I was freelancing.

I didn’t have to worry about nearly as much as I have to worry about now.

I just had to worry about getting a couple of clients, retaining them, and having just enough lead generation so that if a client left, I could replace them.

My profit margins were very, very high, like 80 – 90%, because I had pretty much no expenses.”
Jarod Spiewak

Freedom

In the beginning, you’ll probably have to work with any client that comes along, just to keep the lights on.

Once you attain a certain level of success, you can potentially pick and choose the projects you work on.

But if the freedom to pick and choose your clients is a fundamental reason you want to get into the agency business, you’re probably better off working freelance.

The very systems and processes you must put into place to enable an agency to grow can hamstring your ability to take on projects that don’t work within that framework.

“I get plenty of leads coming through, where I think, ‘Oh, this is a really cool business.’

I know I have the skill to work on the project and help them.

But I also know that the project doesn’t conform to my agency’s current systems and processes.

It would take up too much of my personal time and energy to be worthwhile — even if we billed them $5k – $10k per month.

As a freelancer, I would totally do it, because I only need a few projects at a time, and can be way more flexible than I can with an agency with employees and somewhat rigid systems in place.”
Jarod Spiewak

Scalability

One reason freelance or in-house SEOs often wish to start an agency is to build a scalable business.

Another is to reduce the burden of performing the work themselves.

For example, a highly proficient technical SEO consultant launches an agency with ambitions to hire employees with a comparable skillset.

In theory, this should enable them to take on more clients and potentially offload some of their labor and responsibilities.

Both goals are desirable but treacherous to achieve.

Competition for talented (or even competent) employees is fierce.

It’s a struggle for even well-established agencies with deep pockets to find the right people — let alone a newly minted startup.

“In specialist industries, trying to hire people that can replace a highly technical founder is always going to be very difficult and very expensive.

Partly because, as that ‘super technical’ founder, you are always going to hold people to a very high standard.

People have this huge misconception that they’re just gonna get some clients and then find an awesome SEO that’s as proficient as they are, and then they’re just going to sit on a beach.”
Jonathan Kiekbusch

Additionally, aspiring agency owners often drastically underestimate the amount of time it takes to attract and retain clients (and employees.)

“Schieler” is pronounced Skyler

Jonathan’s German sensibilities are rocked when frequent SEOButler guest contributor Schieler Mew reveals live on air that his name is pronounced ‘Skyler’.

For those of you already running an agency or thinking about starting one, there’s plenty of other nuggets, including:

  • How to qualify potential clients
  • When to raise your rates
  •  The right time to ‘fire’ a client
  • When to white label or involve a partner

Subscribe to the Value Added Podcast — featuring SEOButler founder Jonathan Kiekbusch and Blue Dog Media head honcho Jarod Spiewak — to be notified about future Live Streams and Podcasts.

Subscribe

3 Comments

Astro Capital OU

Hey guys, great chat. I started out running an agency and then went fully on the affiliate route after I made some of the realizations you’ve gone through. More people interested in starting out their agency/freelancing business should check out your chat.

I’m sure not the first one to ask, but could you please upload this podcast on Spotify/Google Podcast too? It’s very hard for me to listen to it while working out on YouTube

    zeke

    Hey!
    Thanks so much for the kind words.
    Yes – absolutely Jarod and I have been slacking, we will get it onto spotify, itunes and google play ASAP.

Edward van Aken

Hi Guys,
Great conversation. I had the same problem with web design.
Too many customers calling all day to have some minor change made.

Now I have only one customer left and his payment pays for all my business expenses.
That means that all my other income is pure profit.

I focus now entirely on affiliate marketing and just outsource certain things.
Made my life a lot easier.

Too many people want to “grow big” without seeing the consequences.

Edward

Leave a Reply

Your email address will not be published. Required fields are marked *

*

Like the article? Read some more: