Are Digital Marketing Agencies Scalable?

Are digital marketing agencies scalable? So the phrase that you hear all the time is that, oh, services businesses, they're not scalable. You have to trade time for money, blah, blah, blah. And I'm here to tell you that, well, they're actually very scalable. So previously I worked in tech and I believed the same thing. Talk about valuations for a second. I've had a handful of friends sell their agencies for a 15 to 20 times multiple. And what that means is that if your agency is doing basically $5 million a year in profit, then you can get a 20x multiple on that, right? That's basically $100 million. Now, the environment that we're going into now, valuations will probably come down. But I'm just saying that there are a lot of companies out there that are looking to buy agencies, especially private equity. And there's also larger agencies that want to gobble up smaller ones. The other part is that agencies that I know of, they're cash-flowing machines because they have adjusted their business model to focus on recurring revenue. And they've also added in other service lines to keep churn low or retention high so they can retain their clients for longer. And so the whole thing about, oh, agencies are too much headache, they're not scalable. Well, if you hire a good team around you, if you hire people that have been there, done that, then you're not really trading your time for money. These are cash-flowing machines, and then you can do whatever you want with the cash afterwards, whether you want to just take it and pocket it, or you can reinvest back into the business, or you can invest into other opportunities. And so a case in point here would be my friend Andrew Wilkinson, and he has a company called Tiny, and the main business is an agency which spits out profits. And he's bought other businesses like Dribbble, he's bought Creative Market, WeCommerce as well, which is publicly traded. And, you know, the portfolio of companies do into 9 figures a year. And so that's one way of doing it. Then you have the Gary Vees of the world who's built his audience. His agency also does 9 figures. And then my podcast co-host Neil also does 9 figures as well. And so these are great businesses if you know how to operate them. And the good news too is that this business is very evergreen. It's going to work for the long term because people are always going to need help. They're always going to need services to get things done. And, you know, if you want to do agencies, do agencies. If you want to do SaaS, go do SaaS. There's really good examples of that. But the key thing is that you focus on the thing that's in front of you. And if you have good examples of people that have built 9-figure, 10-figure businesses, then why not you? Why can't you do it? I think what happens is a lot of people get distracted. Oh, you know, let's start to do this affiliate thing and then let's start to do this education thing and then let's start to do this SaaS thing. And what happens is because you are diluting your efforts, you're not able to bring in 100% versus someone that's working on it at 100%. And you might be smarter than those people, but at the end of the day, it just doesn't matter because the focus is arguably what matters more. The focus, the determination, bringing that mission to your people, bringing your core values to your people, and then that's going to align everyone and drive things forward. Now, in terms of getting clients, we've talked about this, are agencies scalable? But here's a different way to get clients using events. So just check out this video over here. You'll learn how to get clients using events over here, and we'll see you over there.