Are the agency problems you face so much different than those of your competitors?
As it turns out, creating agency problems is not an expert skill — most agency owners struggle with the same ones.
Even if your situation is unique, you still have the agency scale menace to fight without having the clue what causes your inability to turn out the winner.
19 Fatal Agency Problems to Avoid (and How to Scale an Agency the Right Way)
If you wake up at 3 am with anxiety, are impossible to hang around with because your talk only about your agency problems, and feel like no solution is in sight, there is an agency scale blueprint you can use to move past the struggle. But first, you must understand which detrimental agency problems prevent you from scaling.
1) Growing fixed costs.
The issue with agency scaling is that costs grow as you expand your client base. You get new clients, start new projects, need new skills, must hire employees with the relevant expertise, and, all of a sudden — growth turns negative. You cannot grow your agency as your fixed costs grow in parallel, year by year.
2) Recommendations and hope are your client-winning strategy.
Sales is not a business for shooting blanks. Relying only on hope and referrals is one of the biggest mistakes you can make for the agency scaling success.
Clients don’t just crop out of the woodwork, come knocking on your door, or get referred by thousands from your colleagues. To scale an agency, you need to have a system that sets you up for a surefire reach out to the perfect client —the one that is seeking exactly what you have to offer.
3) Working IN, not ON your business.
Do your work all by yourself, afraid to let go of control, and thinking that no one can do the job as good as you can? You end up working 60-80 hours per week, exhausted and stressed, begging for more time to somehow magically show in your calendar.
Being the jack of all trades and not the leader your team needs will generate more agency problems than you can handle. You will end up heavily involved in every aspect of your business, rather than delegating tasks to experts in relevant fields and establishing the winning strategy yourself.
4) Lack of QA and quality control in outsourcing.
The stories you hear about outsourcing gone wrong give the impression that something is wrong with outsourcing when that is definitely not the case. If that were the case, no business would have existed beyond the constraints of localization.
The source of poor outsourcing lies in the missing quality assurance framework and quality control standards: it is up to you to create that framework and set up standards for your team and make it an integral part of your hiring rules and workflows.
5) Advertising without a proven funnel strategy.
Running ads for the sake of it is another huge agency problem.
Advertise high-value offers to the right people in the right context.
Such a funnel strategy includes channel omnipresence and creating a lead capture that will connect you with the perfect client, not just with any client.
6) Chaos in service delivery and client acquisition.
Why do agency owners suffer from a massive workload which even 80 hours per week cannot cover? The answer lies in not systemizing and automating service delivery and client acquisition.
If you don’t have a system in place you can come back to any time when you need to acquire new clients or deliver a productized service, you lose irreplaceable time that snowballs to stress you cannot handle.
7) Blind spots in task delegation
Blindly delegating without having a leadership system that lets you strategize, delegate, and automate can be detrimental for agency scale. Effective delegation is based on making the difference between tasks you need to do yourself and tasks you delegate to others.
8) Personal involvement in every project.
If you suffer from the God complex, you may think no one can do the job as well as you can. It is impossible to scale and grow if you want to have 100% control of every aspect of your business. What you can control is building a reliable, trusted, and secure project structure to let go of the reins of a project that others can execute, and much better than you, to that end.
9) Having no KPIs to monitor team and business performance.
Scattered, distracted, and puzzled. That will be your mental (and revenue!) state if you don’t have the clue about how you measure the agency’s success.
KPIs are metrics you can come back to at any point to test whether what you do will get you where you want. In other words, KPIs are the numbers that show you the returns on your expenditures.
So, if you have a tendency to lie to yourself about how successful your actions and decisions are, KPIs are definitely there to break any illusions.
10) Growing only with static teams of full-time employees.
Growth is dynamic. Scaling with static team structures can cause a lot of agency problems. People are your most valuable resource because they bring in the skills to awe clients. So when you think of how to navigate a complex business ecosystem with competitive technologies, make your teams as adaptable as possible to evolve with the changing environment. Working with global freelance teams is a rubberband employee system that is simple to scale and sustain.
11) Spending 6-8 hours in meetings every day.
Even 3-4 hours is too many hours for meetings. And many agency owners spend way more than that on tiring Zoom calls. The logistics of all that is even more exhaustive, never mind meeting scheduling apps.
The secret to producing a lot more time in your work schedule is optimizing meeting time. This usually means reducing meetings to bare necessities and placing a high price tag on effective meeting communication.
12) Not monitoring billable hours of team members.
One may think this is a no-brainer but so many managers miss on this simply because they don’t have the time or are focused on more important tasks.
Luckily, there are ways to monitor what you do with work hours that can be automated and require minimal setup on your part.
13) Relying on hope that service providers get projects done.
Hope is a driver for daily goals and a precursor of achievement. But it is a poor business metric.
You cannot rely only on hope to get delivery. Replace hope with trust, but trust created by secure support systems. Establish the rules of the game and ask service providers to commit to them. Commitment is the verifiable face of hope.
14) Selling services individually.
Selling every service always individually is a major agency problem when you run a service-based business. Despite your best efforts, you risk failing to meet client requirements. Working on client goals is a more effective way to understand client needs and service them with the productized service delivery method, instead of just selling individual services.
15) Tolerating profits below 15% EBIT.
You don’t need profits, you need profitability. And remaining under the 15% EBIT margin is a quick way to create profitability problems, and many other agency problems from this list.
Check this metric continually and periodically, and take actions to make any corrections to move past the levels of tolerance for low-profit margin.
16) Having no idea where the next client comes from.
If you don’t know where and how to find clients, then you need to ask yourself questions about your business model. A revenue-generating business strategy is based on specifically knowing your target clients, where they, are, what bothers them and how to link to them. An omnipresence sales funnel is one way to do this without too many headaches.
17) Trying to retain demanding employees and clients at any price.
Talent retention is tough in today’s competitive technology landscape. But that doesn’t mean you should settle for every client and every talented employee out there. Identify your ideal matches (for clients and employees) to maximize return on investment. You cannot be everything to everybody. Forget about that.
18) Selling the same commodity services all your competitors sell.
Again, it is not a big secret you need a USP. But when it comes to services, agency providers somehow lower their standards and jump on the same bandwagon as everyone else. Avoid this fatal agency problem by explicitly defining the solutions for client problems. Even if you don’t invent a genius solution, but only add value to an already existing one, make sure you highlight that in your offers.
19) Agency-oriented (instead of client-oriented) sales pitch.
Clients are magnetically drawn to an agency that spills out, loud and clear — what’s in it for them. You may promise you do all sorts of magic in your offer but it won’t hold any value for your client if it doesn’t speak their language. This is nowhere more true than in software projects.
Therefore, avoid using the language “we do…” and “we are”.
Focus on “you get”.
How many agency mistakes have you made that resulted in fatal agency problems?
There is no need to beat yourself up. The only way from here and onwards is up.
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