How to Grow an Agency from 0 to $100k ARR: 7 priorities
For most agency owners $10k a month in revenue is an important milestone, sometimes enough to go full-time on their agency.
For most agency owners $10k a month in revenue is an important milestone, sometimes enough to go full-time on their agency.
The strategies and tactics to achieve this milestone and are very different than going from $100k to $1m, or $1m and above.
The idea of this post is thus to help you prioritize what you should be working on as an agency owner in the early days.
Here are the 7 areas I would focus on as an agency owner to go from $0 to $100k ARR.
Focus on positioning
One of the highest impact activity you can do at the beginning is to work on your positioning.
Positioning is answering the following question:
What place does your agency occupy in the minds of your ideal clients and how is it distinguished from your competitors?
Spend time to identify:
- Who you help
- What problems you solve for them
- How your solution looks like to solve these problems
- How you're doing it better than competitors
One way to answer positioning is to fill the following:
"Competitors believe [x] but we believe [y] so we do [z]" (thanks to Marc Thomas for coming up with this formula!)
This is a great way to help prospective clients understand how your agency services can benefit them over alternatives available to them.
Productize your services
Once you've identified your positioning and who your ideal clients are, it's time to decide how your solution will look like to address their needs.
My recommendation is to productize your services.
Why?
- Easier to sell
- Standardized delivery
- Get paid upfront
If you want to have repeat sales (or recurring revenue), the more standardized your services are (in terms of pricing, scope, delivery), the easier it is to sell them.
By productizing, you essentially remove friction from the buying and delivery process, allowing you to scale faster.
When packaging your services, decide on the following:
- Scope of service
- Pricing plans
When you're starting your agency, keep the scope of your services narrow and the pricing simple.
Complex services or pricing with a lot of add-ons add operational complexity and more back and forth.
Ideally, you want clients to be able to self qualify by reading content on your website, and then purchase your services as if they would buy a product off the shelf.
Run (and track) numbers
When I wrote earlier about the most common mistakes agency owners do, not knowing numbers is one of them.
Having a sound business model where you make enough profits to reinvest in growth and where you know which strategies and tactics to grow is really key.
So make sure to keep your agency profitability and key metrics in check.
First of all, run numbers on your business model:
- What's the gross margin?
- How much are you paying the team?
- How many clients can be served with one team member?
- What are your other costs (software)?
Next to this, it's also useful to run some scenarios:
- How many clients do I need to break even?
- How many clients do I need to pay myself [xxx] in revenue?
- At which revenue level can I start hiring a project manager?
Finally, start tracking the following agency marketing KPIs:
- Traffic
- Marketing leads
- Demo calls
- Set up conversion goals in Google Analytics
- CAC and LTV
Identify growth channels
Once you've got a good understanding of who your ideal clients are, you need to get in front of them.
Depending on what type of service you offer, your pricing level, and client type, some channels might be more effective than others.
What should you focus on at the beginning?
Experiments.
In the end, your goal will be to identify a repeatable, cost effective, and - the holy grail of marketing - a a scalable channel.
A great way to approach marketing at the very early days of your agency is to ask the following question:
"Where do my ideal clients typically hang out?"
Once you know this, run experiments with one of the following channels:
- Cold outreach
- Paid advertising
- Content and SEO
- Affiliates and referrals
Focus on understanding the following:
- Client: Are the clients acquired on that channel a good fit for my agency services?
- Messaging: Does the messaging fit?
- Offer: Is the offer a fit for that channel?
Focus on social proof and authority
Another key area of focus for early stage agencies is to build social proof and authority.
Let's face it, prospective clients don't know if you'll be able to deliver when you're just starting out.
While some might take a leap of faith on you if you offer guarantees (money-back for example), it's essential to build trust.
There are two ways to do this:
- Social proof
- Thought leadership
Social proof
One of the best way to get social proof is by getting 1 or 2 trustworthy names to use your service.
For example, Cold Email Studio, a done-for-you lead generation service started contacting YCombinator companies from the most recent batch and offered their services for free to them.
This helped them not only mention on their site that they're "Working with YCombinator" companies but it was also a great approach to build trust with new prospects.
Thought leadership
Another way to build trust is through thought leadership:
Position yourself as an expert on the subject.
A great example of using this strategy is BuiltForMars, a UX consulting service:
On their website, they made 39 case studies of well known startups.
In addition, they also focused on key areas: Streaming platforms and Fintech. This helped them establish themselves as a UX thought leader in these industries and sell audits priced between 5 to 50k.
Start setting up systems
One of the mistakes agencies do is to start setting up essential processes too late.
As a result, agency owners feel they are always needed in the business, can't delegate, and can't focus on crucial tasks such as marketing.
I would look at setting up the following systems as soon as possible:
1. Client onboarding
- Billing and invoicing
- Onboarding new clients
- Intake forms
2. Client communication
- Kicking off new projects
- Handling revisions
- Sending final deliverables and/or client reports
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Hire out for service delivery
Once you have set up the essential systems and processes to deliver your services, it's time to start hiring out team members so you can free up your time and focus on growing the business.
A great way to get started with hiring is to do a "task audit" of your day-to-day work as an agency owner.
- What tasks should be delegated?
- What tasks should be automated?
- Which areas of the business do I enjoy doing and want to keep doing?
Once you know this, you can also consider the following:
- Do you want to bring part-time or full-time staff?
- Which positions should you be hiring for?
- Is the team paid per project?
- How does process for onboarding new team members look like?
Wrapping up
The early stages of setting up an agency and growing from $0 to $100k are a lot about experimenting but also laying the foundations for future growth such as processes an identifying successful marketing channels.
In addition, keeping track of numbers of agency KPIs is essential so you'll know later to double down on what works or be able to identify leaky buckets.
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