Top 5 Pitfalls to Avoid When Starting an Agency (2019 Guide to Consulting)

In terms of growing a consulting business or an agency, Sujan and I have made a million mistakes. There's so many times where we should have gone out of business, but look, lo and behold, we've both emerged to build multi-seven-figure agencies again, and we're gonna tell you how to avoid these mistakes in this video. Don't forget to leave a comment, let us know some of the mistakes you made while you were doing consulting or doing an agency, and don't forget to subscribe as well. So without further ado, I'm gonna go ahead and get started. So with Single Grain, so Single Grain is my agency, uh, Sujan has Web Profits, and we work with a bunch of different clients around the world. Uh, so one of the key mistakes I made when I took over Single Grain was trying to do everything on my own. Okay? So that's one of the key mistakes because when you don't delegate, when you're building a business, like if you're trying to go from consulting to agency, you actually, it's in your best interest to delegate to other people. Like if they can even do 70 or 80% of what you can do, delegate it, right? You are, your goal is to figure out the comfortable things, the things that you need to do next to drive the vision. If you can't delegate, you're not going to be able to grow, you're not going to be able to scale. That's fine if you want to continue to be a consultant or a freelancer, but it's not fine if you are trying to build an agency and then you're responsible for other people on your team.

That's a great one. I want to actually dig deeper on that. So along with delegating, I think it's also finding out what you're good at, what you're bad at, and really hiring for people in areas where you have gaps. So, you know, for me, I love— I'm really good at switching gears between different clients and whatnot, but I'm not a very process-oriented person. I can do things myself, I can teach people, but when I hired somebody who really can take these, the things that we always do over and over again, for a while I tried to make the team create these SOPs, but when I hired somebody specifically to create SOPs on all the things that we did over and over again, my business started to thrive, and when we onboarded new employees or offboarded employees, things didn't get lost in the shuffle. It was pretty much like, hey, Here's these 3 playbooks that you need to use. It went from like 3 months of onboarding somebody to, you know, a couple weeks and they got it.

Number 3 is culture. So people throw this around a lot, right? Especially in Silicon Valley, it's like, oh, we have a great culture, we have a great team. Everybody says that, right? So, but how do you actually build a great culture and what does that mean? Culture is basically how— it's not even defined by one person, it's how the entire company is built up, right? How people interact with each other, how people collaborate, all that different stuff. So culture-wise, here are a couple things that we do, just to give you an idea to kick things off. So every Monday we do a team lunch. We all get together. We bond that way. We even have a team called the Bond Squad who sets special events like dinners, Thanksgiving dinners, white elephants. I think maybe you can see our Christmas tree in the background. They handle all of that. And then we have our— every 2 weeks we do our happy hours. These seem like standard things, But also in addition to that, we also make sure that culture-wise, like if people— we're not even just looking at the events that we do, but it's also like we want to take care of our people. So this also kind of ties into retention because if you have a great culture, you have great retention. So we've increased our paid time off from 15 days to 25 days for people that stay at least 2 years. So we don't know if like, you know, maybe the current people right now are grandfathered in. That might change in the future. We don't know. That's just to make sure that people take time off, and when people come in refreshed, we know they're gonna do better. So culture helps everyone perform better, people get along better, and you just operate like a machine. Because if you just keep operating like a freelancer or consultant, you're not gonna be able to scale well.

Yeah, I definitely think fast and loose and giving people breaks really helps a lot with just morale. And in the agency world, you're working long hours, and you're working with tight deadlines. One mistake I really made was taking on the wrong type of clients. And I'm sure we've all made this mistake.

Yeah.

The money's good, but you kind of, you know, when talking to— you're at the closing state of a deal and the client just kind of sounds like it's not the best fit, say no. I always now look for red flags in a client. We actually have 3 or 4 different questions or things that we look for. One is their personality and can they work with our team. Are they okay when you give pushback? Because frankly, when a client works with you, they're not looking— they're looking for you to give them feedback.

Right.

You're supposed to be better at marketing than they are. But if they start really being hard to work with or not taking that pushback well, it's kind of a sign of a bad client. And then lastly, it's their attitude. I think that some clients just like to berate. There's certain personalities that just don't work. But I look for like, are they gonna be an asshole? And I don't wanna take on any asshole clients, no matter how much they pay. And every time I've broken this rule, and every few years I break this rule, 'cause it's like, it's the brand that's great, or like something good that's like, okay, maybe I'll break this rule. I kick myself in the butt, because it always comes back to like, don't take on bad clients.

That's huge, yeah. So we actually have that rule too, the no asshole rule, so that's doubling down on that. Number 5 is you have to look at the numbers. If you don't look at the numbers, you're gonna be screwed. 'Cause if you run it, you can kind of get away from this, get away with this as a freelancer or consultant where you're just kind of haphazardly doing things. But if you don't look at the numbers, you have people that you're responsible for. Also, you're paying for costs such as rent for this place, and we signed a 5-year lease for this place. Like, we're stuck here. So you have to look at the numbers. So what do I mean by that? Like, each week, like, let's say with our sales team, we'll look at the pipeline. New pipeline added, we'll look at the conversion rates, how many new sales we added. How many potential deals we're gonna close, how many qualified leads. And we're constantly looking at the funnel too. Where are people dropping off the most and what can we fix, right? So, you know, we look at it from like a sales and marketing perspective. How can we continue to optimize the sales funnel, the marketing funnel as well, and also look at the numbers around expenses? How can we keep expenses down? And then also how can we also spend some of that money if we have extra money to bonus people, right? If we're doing really well, we gotta bonus people too. So it's, you know, kind of manipulating the numbers to make sure that your company's performing really well.

Yeah, and last one I want to actually share is failure to like education, like failure on educating yourself, like leveling yourself up, leveling your team up, really, really important. So, you know, one of the things when I first started Single Grain back in 2005, I was 20. I didn't know anything about business. I was just good at marketing. Well, I went from being a good marketer as a consultant and people hiring me as a marketer to being in the business of marketing, right? So I was just a really bad CEO. I made lots of mistakes that, you know, some of which we shared, but there's a lot more I've made.

Oh yeah.

I'm sure we both have made.

Yeah.

But I think you always have to educate yourself and level yourself up. So I think it's about like the right network that you put yourself in. When I joined, and you're part of this too, EO, Entrepreneurs Organization, you're around other CEOs and entrepreneurs that are constantly leveling up. You know, learning what a P&L is, learning how to balance, you know, and look at the numbers, learning to do quarterly projections, learning what your limitations are and what are proper limitations in the business. These are all things that just don't come overnight. They don't come— no one tells you to do this or that you need to focus on it. You have to find out these new problems. So I always recommend spending maybe $5,000 to $10,000 a year or 5 to 10% of your income the first years of your business on education for yourself and your leadership team.

That's huge. If you can't do that, you can't scale well. If you're constantly in your own head and you're not— you think you're too good to get help from other people, that's where you're going to fail. Because there's people that are like this, this whole like freelancer or even entrepreneur game, it's a very lonely game. We can both kind of attest to that. It's just totally— even when you have people around you, it's just, it's totally different because they see you differently. But when you're around other entrepreneurs where you guys can share each other's pain, Um, it's a totally different story. So look, leave in the comments, let us know kind of the mistakes that you've made in terms of consulting or through your agency. Don't forget to subscribe. And in the next video, we're going to talk about how to get high-paying clients. That's the fun part, how to get high-paying clients. See you in the next video.