The Biggest Problems Agencies Face (and How to Overcome Them)
Agency entrepreneurs dream of creating thriving businesses where they spend their days making beautiful things and helping their clients grow businesses. While all of that is true, the agency model isn’t without its own challenges.
You’ve probably been in that situation before. You want to do what you love: make beautiful design projects your clients will love – but you’re stuck responding to emails, pouring through spreadsheets, and worrying about your revenue.
Fortunately, the challenges of a typical creative agency are well known. Here are the biggest problems you’re likely to encounter and how to solve them.
As service-based businesses, design and web agencies sell the labor of talented professionals. The agency makes an arbitrage on the talent by charging a markup on the designer’s time (that isn’t to say the agency itself doesn’t provide a service – surely it does).
Essentially, the talent of the designers is the product the agency sells. It’s hard to justify a profitable price if the talent is poor. Furthermore, the quality of the talent is often what sets one agency apart from another. This makes acquiring and retaining talent paramount.
How to Find and Keep Quality Talent
First, open your borders and consider candidates that live outside your geographical area. This will give you access to a much larger pool of applicants. Yes, there are plenty of challenges that come with managing remote workers, but those challenges are worth the trouble.
Second, pay a fair rate. Talented people know their worth and expect to be compensated for what they bring to the table. If your employees feel like they aren’t paid enough, they’ll resent the business and produce poor work. Instead of giving large raises infrequently, give incremental raises often to continually remind your employee that you value their labor.
Third, make your employees feel valued by listening to their ideas. Don’t brush off their suggestions as “above your pay grade.” Take their issues and complaints seriously and honestly consider their feedback.
Differentiating From Other Agencies
The creative agency model has a low barrier of entry. It’s easy for a couple of people to get together and call themselves an agency (or even one person masquerading as a team). What’s more, early agencies without much overhead can compete on price.
To be successful, an agency has to find a way to stand apart from the crowd. Offering “full service,” “an integrated approach,” and “powerful ideas” puts you in the same box as every other agency. Even your years of business and list of client testimonials aren’t original.
How to Differentiate Your Agency From Others
First, you have to understand yourself. What problems do you solve? Whom do you help? How do you serve your customers, manage the design process, and price your service? If your answers to these questions are all over the place, pick your favorite categories.
For instance, if you often build websites for brick-and-mortar businesses, perhaps this should be your niche. Instead of building sites for any business, focus on helping a narrower market. This will help you communicate and add more value to those clients.
Next, try these strategies to stand out:
- Commit to your core strengths. This might mean sticking to print design or corporate design.
- Carefully create a process that insulates the client from tedious work. For instance, gather necessary information (preferences, colors, logins, contact information, etc.) all at once instead of dripping questions on the client.
- Build relationships with contractors so you can provide work for your client that isn’t your specialty.
- Take a unique position for all projects, such as “The customer always comes first.”
- Use a unique pricing model that appeals to your target audience.
- Become an industry thought leader. Give talks, seminars, and free information that position your agency as absolute experts.
The best way to differentiate yourself is to figure out what your clients value the most and be that.
Managing Projects
Creative agencies sometimes tend to overlook the process they use to manage projects. They don’t want to think in structure terms, so they end up with little process. Unfortunately, an inability to effectively manage projects can quickly destroy an agency.
How to Manage Projects
A strong process starts with a mindset. Everyone in your agency needs to understand the benefits and purpose of a project management system. Egos must be checked at the door. If someone is unwilling to follow the process because they “need freedom to create,” they’ll hold back your agency.
Next, you need the right tool. I recommend experimenting with different tools like Trello, Basecamp, or ActiveCollab. Find one that feels comfortable and that you’ll actually use.
Then you’ll need to arrange your process so work is done seamlessly and fluidly without any interruptions or miscommunications. You might start each project with a proposal, then a statement of work, then each phase of the project (mockups, wireframes, coding, review, revisions, etc.). Make the process visible to everyone so there’s no confusion and deadlines are never missed.
Irregular Cash Flow
Cash flow is one of the biggest problems agencies face. Creative agencies that complain about cash flow problems can usually be broken down into two categories.
One type has gaps in their cash flow because they aren’t continually pitching new clients. Even when there’s plenty of work on your desk, you should be hunting more. If you switch everyone’s focus to completing the work, you’ll have nothing to work on next when the first project is finished.
The second type of agency with cash flow problems focuses on one-off project work instead of maneuvering clients into retainer relationships. Agencies like this spend a lot of time sending proposals.
How to Fix Your Cash Flow
Never stop sending out proposals and marketing your agency. Even when times are good and money is flowing in, you should be seeking more revenue. A business that isn’t growing is dying.
Furthermore, convince your clients to pay monthly retainers for regular services. In most cases, you’ll earn less per hour, but the sustainable and predictable income will make operating and growing your business much smoother.
Generating Leads
At their core, every business comes down to sales. You can’t sell your service without strong leads.
The B2B Technology Marketing Community has found that “Nearly 50% of B2B marketers’ lead generation budgets will increase this year, compared to 44% that will remain the same and 7% that will decrease.” Agencies are spending more money than ever to obtain leads.
Even if your proposals are on-point and your salespeople are great at their jobs, you can’t sell your work if you don’t have a pipeline of leads.
How to Collect More Leads
Naturally, you need an online presence. Your website should clearly communicate your brand, its values, and show samples of your work. A high converting website has social proof like testimonials, a simple breakdown of your work process, along with descriptions of who you’ve helped and their results. Use your social media profiles to interact with your ideal customer, not other designers.
Find a channel where you can be unique. You might create a branded app, a YouTube tutorial channel, content marketing. Simplify your proposal process so you can spend less time pitching without sacrificing quality.
Finally, streamline your process so you can put more resources into growing your book of clients. Every minute you can save completing work (without sacrificing quality) is another minute you can use to grow your business.
Overcoming these challenges isn’t about luck or finding the perfect clients. Experiencing any of these problems doesn’t speak to your skill (you aren’t struggling for leads because your website is bad, for instance). These challenges can be systematically defeated as long as you approach them objectively.
What challenges does your business face? Let us know on Twitter.