If I Had to Start an Agency from Scratch

“What would you do if you had to start an agency from scratch?” 

Since being asked, the question has been stuck in my head, but not because I don’t have an answer. 

I don’t believe there’s a perfect solution to any problem. Just because I’ve seen one path work in multiple ways for agencies doesn’t mean it’s the only way. 

Some full-service agencies are doing well, even though most are fighting a losing battle. 

There are also niched agencies that can’t catch a break, even though their audience is hyper-targeted. 

So, I wanted to offer a solution to this question that anyone could follow and apply what they have learned. 

Alright, here we go: 

How to Build a Successful Agency

I’m going to break these down into steps to make them easier to follow. Add or remove anything you think is necessary, but be critical about what you’d add. Keep in mind that just because something worked once doesn’t mean it’ll work forever in any scenario. 

1. Set Your Audience

You should have a clear idea of who you’re going to work with. Without this, nothing else really matters. 

There are two primary ways you can segment these people out:

• Vertically: they’re in a specific industry

• Horizontally: they’re in a specific job function

Some of the best, most niche audiences come at the intersection of vertical and horizontal alignment. 

For example, you can help HR departments, but an HR department in manufacturing looks very different than one in SaaS. They have different problems and talk about them differently. By selecting both a vertical and horizontal niche, you’re able to get more specific in your positioning. 

Other things you should look for: 

What’s the TAM?

Is the space growing or shrinking? Is it large enough to support my business? 

If the audience size can’t support growing a business large enough to achieve your financial targets, it’s not worth tackling. 

Do they have money? 

If your targeted audience is broke, they’re probably not going to pay your bills. 

We want to sell to people with money. 

A clear example I like using is from the person who told me they wanted to build an agency that created clips of personal podcasts for social sharing. 

Most business podcasts don’t make money. They’re funded by the business as a marketing channel. There’s little chance that personal podcast is bringing in enough revenue to pay for services. And if they can, there probably aren’t many more. 

So you’d have to count on someone liking their passion project enough that they’d spend money on this service. It’s probably not happening. 

Are they fun to work with?

If we’re creating an agency from scratch, we should only target people who we’d enjoy be surrounded by. 

Imagine yourself, years down the road, having to attend conferences and interviews with people you loathe working with. Shouldn’t be a thing and doesn’t need to be a thing. So let’s get it right from the start. 

Are they easy to work with? 

Fun and easy are different characteristics. I’ve got friends from college who were fun to be around, but if I needed to get something done, I was definitely not bringing them along. 

We want an audience that doesn’t need to be chased for invoices. One that can give clear feedback the first time and doesn’t come back with crazy revisions that should have been caught earlier. 

(Go watch The Client Part 1 and Part 2 by Teamwork.com)

2. Identify the Problem

The next thing I’d do is find exactly what problem I want to solve. 

This one is loaded. And while I’d love to do a deep dive here, I’m going to refer you to this massive article I wrote on the PRISM Model. 

Rather than restate everything in that article, which I STRONGLY recommend you read, I’ll express why this is so important. 

You can’t offer “solutions” unless there’s a problem to solve. Creating a page on your site titled “Solutions” and then listing all your services is wasted marketing. People are going to look at the services you offer and then go compare you to other agencies that offer the same things. 

Instead, when you focus on a problem, you truly can provide a solution. And when you understand the problem deeply and talk about it a lot, your prospects believe you have the solution, even before you mention how you tackle the problem. 

Working on one problem helps you get reps much faster than anyone else in the space, building expertise that can’t be replicated easily. This is part of your ticket to differentiated positioning. 

3. Select Your Speciality

Once you know who you’re helping and what problem you’re solving, it’s much easier to pick a service that you should anchor to. 

There’s an important distinction here, though. I wouldn’t pick a service just because it sounds sexy. I’d pick a service because it’s the best vehicle to solve the problem. In the next step, we’ll talk about creating offers, but the service you select is important because it expresses how you’ll achieve the prospect’s dream outcome. 

To find the best service for your business, you want to review a few characteristics. 

Is it Profitable?

If you can’t make money with this service, don’t bother. We’re trying to make an agency that’s successful, not just another prison. 

If you can pull above 20% profit margins without honing your efficiency, then you’re okay. But that’s just based on agency norms. I’d prefer seeing that number closer to 40% so we have more cash to play with in the business. 

Is it Impactful? 

When you get a result for your client, is it something valuable? 

No offense to some agencies, but creating a brand’s logo may feel super important, but it’s not what moves the needle for sales. 

Whatever service we select needs to have a clear return on investment. 

Is it Proven? 

Have you done this before? 

So many agencies agree to take on work because they’re afraid of saying no to revenue. But in actuality, they’re screwing themselves over by diluting their focus and making it harder to get good at things that matter. 

You want case studies, testimonials, and any evidence that proves you understand what you’re doing. 

This is as much for the client as it is for ourselves. 

Is it Enjoyable? 

Just like we want to work with good people, we want to do something that sparks a fire within us. 

If SEO makes you want to tear your eyes out, I’d recommend not doing it. 

Instead, find the things you love doing. What creative outlets are the most enjoyable for you? When you nail this, even when the going gets tough, it doesn’t feel so bad. 

4. Create an Offer

This is an article in itself, so again, I’ll refer to something I’ve written. 

These are the 5 offers you need in your agency (you can listen to an interview I did on Agency Life about the topic here). 

The 5 offers are a Lead Magnet, Core Offer, Bridge Offer, Next Offer, and Self-Liquidating Offer. 

Each has its place in the buyer’s journey, and that’s a big distinction compared to how others might view offers. Rather than having a bunch of offers for your audience to choose from, you should have one, depending on what they need at that moment. 

To create the offers, you need to understand how to create value. This requires knowing their dream outcome, having proof you can get the job done, shrinking the time to result, and then removing as much effort and sacrifice from the prospect’s part as possible. 

By adding items to your offer, you can make it extremely appealing. This article dives into active and passive additions to increase offer value. 

5. Partner-Assisted Growth

So, we know who we’re targeting, and we know what and how we’re delivering. This is enough to kick-start the agency and get in front of people. 

What I’d look at doing next is finding partners in adjacent services that I can work with. This will help us get in front of more people faster. 

A huge benefit of this approach is also that we don’t need to try doing things we’re not good at. We can bring in partners to assist in those areas, and as we build these relationships, they’ll start to refer us work that we’re good at as well. 

This allows us to create an environment in which we can all be experts in our domain and rely on each other when necessary. 

If I were focused on ads, I’d likely find an SEO agency and maybe a webshop to partner with. When our client has better SEO, we can run more retargeting campaigns, and when their site looks and works great, it’s easier to convert people. 

There are many ways to approach this, but be clear about the type of relationship you’re looking for. 

There are a few kinds of partnerships: Technical, Strategic, and Channel. 

A Channel partnership focuses on one channel is often looks like a reseller problem. Think HubSpot’s partner program. 

Technical partnerships come into play when you specific technology to help your client. 

A strategic partnership is useful when you both have something to offer the client that can lead to account expansion, ideally where all three parties benefit. 

Find the right partners and keep them close. DO NOT partner with everyone. The more partners you have, the fewer opportunities you can send to each, making the partnerships feel less valuable. Be selective, and then be deliberate in growing the relationships. 

6. Event-Assisted Growth

One of the greatest things I did in starting my consultancy was running the All-In Agency Summit. 

This event was 100% free for attendees, and I brought in 8 other industry experts to provide advice to marketing agencies. 

All presenters helped market the event and we all shared the email list. 

This helped me go from a list of 0 to multiple hundreds very quickly. Then I was able to start email marketing with a captive audience. 

Any agency can run this play as well. 

Find adjacent service providers (ideally, you can bring in your partners) and bring everyone together for a single-day virtual event. Plan it far enough out that you can gain traction but not so far that people will delay signing up. 

Make it as easy as possible for your presenters to share the event. Give them graphics, social copy, and anything else that could help.

This can get you some quick traction in a space and help you stand out from the crowd by giving you a chance to present your ideas. You get to demonstrate why you’re different. You’re giving people a chance to hear directly from you rather than doing research and hopefully determining you’re the best fit. 

Then We Refine

Once you’ve completed everything in this list, refinement becomes the name of the game. 

As you take on more clients, you’ll know better who you like to work with, which are easiest to get paid, and whether you can actually help them. 

You’ll learn more about your offer, including what works and what doesn’t. 

You’ll also understand which relationships are the most valuable for your brand. 

All of these things are super important, but only if you do something with the information. Continue refining your agency, even after you get this machine purring. 

If you want help executing on any of these, I’ve got playbooks, worksheets, guides, and more thoughts I can share. Grab some time with me here and we can chat about the best next steps for you.