Is Your Agency Business Model Broken?

And we're live. What's up, everybody? Hey, it's Dimmer and I here with a quick agency vision show for you all today. Hope you're doing well. Today we're talking about your agency business model. So, Dimmer, I'm going to intro you. Let me go jump over to ECAMM Live, our handy dandy recording software. Pull you in there. You are flipping around. I got you.

I'm doing great today, man. As a crisp walk into work this morning. Nice and chilly. I'm doing well.

I was confused when you said Chris, but I'm glad you clarified that it was chilly. I'm feeling snarky today.

Why are you feeling snarky, Gray?

Probably not enough sleep. That's gonna be my. My number one guess.

Why are you not getting any sleep today, Gray?

It is day one, not day one. See, I'm tired. First week, first official week of baseball, 2019 season. Hickory High School, Hermitage, Pennsylvania. You guys can all come out and support. I expect to see you at our games this year.

Make sure you bring a check for the Booster club.

A large one preferably. If you leave.

You're welcome.

Don't worry, I'll do you a favor. I'll take care of it. That's been a great first year as head coach and it's been a lot of fun. Also a decent amount of work.

Well, I'll tell you what. If you're. If you want to know how to get less sleep, all you need to do is be a. A dad of three. All you gotta do if you want to sleep less is be a dad of three, an entrepreneur and a head coach of high school baseballers. And renovate your basement while you're at it. And you'll be there.

Isn't that hard? Guys, let me give you the.

How.

To sleep less and be a great dad for Fun and Profit title of my next book. I just like slapping for fun and profit. That's my theme of the day onto.

The end of anything.

Speaking of fun and profit, let's talk about business models. So you wrote up a little brief for me. Just shared it over in Dropbox Paper. Is your agency business model Broken? Was the title. I put that in here into the Facebook group as well. On the title slide that we had. What are you thinking? Is our business model broken?

Ours is primed, but it used to be broken. How's that for an open loop? The. Yeah, this comes out of all. I mean, all my strategy sessions. I'm talking with agency owners that are like stretched thin. They're stressed. Some are near a point of a nervous breakdown. Some are like, calloused and past that almost. And it's being in this spot is like we all. We all moved into the agency space. Whether you left corporate and you came to the agency world or you used to be a freelancer and you just upgraded the scope of your services and you needed help to do that. Like, we started this thing to achieve some level of freedom, whether that was freedom over time or freedom over role or freedom financially. Like, it was the desire for freedom that brought us here. And. And the agency business model is very attractive because there's a very low barrier to entry to get in here, like I tell you. And I started our agency, Guavabox, in our dorm room as two college seniors who didn't know very much at all. So it's a low barrier to entry to get in. But once you get in and you get running, you start servicing clients. It's pretty easy for things to get out of control. So you can get to a point where you only have five clients on your load and you're swamped. Like, you're overwhelmed, you're stressed, you're up at night, you can't sleep, you've got, like, heartburn, and there's no time to take a vacation. Anytime you do go away is a working vacation. I've got my laptop by the pool, I'm on my phone at the beach. And so just this idea of, like, why is this so complicated? Why is it a space where it's good people driven to this spot who want a certain outcome? And why is it that so many struggle to achieve that? We struggled to get there for years. And the root of it all is the business model. What is the sequence that you're using to get paid? What are the services you're providing to get paid? And I think it's a lack of leadership in that business model. And I'll dig into that more here in a second. That leads you to this spot where you're stuck. You're stuck with a job that might pay well, but it's just not a good job. It's not like a desirable place to be. Most people are stuck there where it's a lot of work and they're not paid well. So. So they get kind of the dregs on both sides. But that's my lead in Greg, before we dig into the specifics there, what are your tickle? Any thoughts?

It definitely resonates. I just Remember starting Guavabox 2011, end of 2010, and then into 2011 and then those first couple years and not that many connections. I just wasn't that aware of how pervasive this. Because you know, our only contacts, very limited at the time, were the people who are at the very early stages starting it, where you've got that excitement and you justify your mind. I mean we always justify the outcomes that we have, but we justify, well, we're not making a whole lot of money because we're just figuring this all out. We're young, we need to develop the skill set and that's all fine.

Yeah.

And the farther that you get into it, the more you realize just like any other business sector, I'd seen this in other business sectors, specifically other service based, the home remodeler, contractor. But how many people are just tired how I'm feeling today, but it's a pervasive state of tired, frustrated. We're not farther. It's dangerous. I think when that, when there becomes acceptance of that, we start to justify. Well, at least I've got this. At least I've got some level of gratefulness that we ought to have, certainly for our situation, but also not a comfort level that things are where they are.

I think it's good to bring gratitude into the situation. I hear that a lot on my calls. It's just that people, it's not that they're not grateful for the job that they have, or it allows some flexibility, but it's the lack of a clear drive and a clear passion for what you're doing. It's not bringing life. It's okay for right now, but if your agency is not life giving, then there's something wrong, something that can be honed and worked on and improved there. And that's what I want to dig into here, is the leadership that's required of you as the owner to first lead yourself and that is to challenge your own belief system and to challenge some lies you might be telling yourself about your capacity or your ability to deliver. I was talking to a guy earlier this week who's like 20 years in the industry, he's been out on his own for two years and he's telling me just how he doesn't have any experience yet. I'm like, you have so much behind you, but you're just so overwhelmed with imposter syndrome right now that you can't see the assets that I can see here. Just in a 30 minute conversation. We tell ourselves a lot there about what, what we can and we can't do. So it starts first by Leading yourself as the agency owner and having some belief in what you can build. And I think understanding your strengths and your weaknesses are important there, but not beholding to them. So if you're more visionary, like, don't just say, I can't do the detail oriented things that you need to do to grow your business, or if you're a visionary or if you're the integrator, don't do those, don't just stick to those things. But never go out and talk to anyone, right? You've got to, you gotta do your job of leading yourself if your business is gonna grow. And it also means like, don't stay in yourself. Like, you're gonna need to invest time and resources in mentors, in training, in events that pull you out of where you are and pull you forward. So you've gotta lead yourself, you've gotta lead your team and be that vision for your team. You can't just expect the team to come to the table and kind of bring the sweet sauce with them or push you forward. Like they're looking to you as the owner, not only in their day to day life is like the culture of the agency, but how you structure their roles, how you nurture them through their career path, everything, you've got to be leading them. And ultimately you're leading your prospects and your clients too. And I think one of the flaws here is that last one is often flipped where the client leads the engagement. And so therefore the team is led by the client in terms of what they need to be doing or how they need to be doing it. And the owner's left to make sure the client is happy or to fill the gaps that the team's not filling and go out, hire someone new when someone leaves. Or like it's kind of this chaotic relationship right there because you're lacking in leadership from the beginning. And so leadership requires clarity, leadership requires conviction. Like, if you're going to go out and be a captain of a sports team, like, you've got to know exactly what the game plan is. If you want to lead that team to victory, you've got to be convinced that that game plan is going to work. And that means you've done your work, you've studied the film, you've put in the hours of practice beforehand to know that that stuff is going to work out well. This isn't any different here. Business is a lot like sports. You've got to lead with that clarity and that conviction. And it's really, really hard to do that when every single client that you bring on looks different. And every single client is telling you to do something different as a team. So that's kind of the groundwork. And then from here we want to ask a few fundamental questions to help kind of guide this transition. But the business model of going out and doing things for clients, creating deliverables, creating little products, creating these little projects, or even signing up a retainer and doing the same set of stuff every single month, that's broken. It's broken at its heart because it's just doing what you're told. And you're not going to be able to build a business that serves you or a business that's life giving if all you're doing is waiting for clients to tell you what to do each month, or if you're just doing the same things month in and month out with little thought other than just meeting a minimum required list of deliverables. So leadership requires clarity and conviction.

I think that's a really good point. I'm gonna cut in.

Yeah.

Interject here. Sorry.

Come on in.

If we were just about to the gold.

Come on in, buddy.

But you're definitely, you're definitely right about that. And I think the thing that's hit me is that this like the state of frustration and mental fatigue with the business model for so many agencies. What's stuck out to me, people in this group, people listening to the podcast, we've conversations with, we've had conversations with a ton of those people. And in so many cases, it's the agencies who, you know, not across the board, but it's not like just agencies that we'd all clearly say, these are the people who would be feeling that way. Oh, yeah, no, but it's the agency that's growing 100% year over year or more than that. Everything looks good from the outside. And internally, that chaos is just eating things up and making you question, am I doing the right thing? And the challenge, the point that we get to is and where I wanted to go with this and I'm excited that you're leading there, is like, how do we. I understand. I can feel, I know something's not quite right with the business model. Like, I don't see how me continuing to do this gets me like, it looks good from the outside. There's external metrics that make it, make it look like it's becoming more successful, but it doesn't ultimately become what I want. It's not the valuable asset that I want to build. It's not the plan that I want to have for the next 10 years or whatever. So how do we looking at revaluing our business model? Like, what's the right way to build the model that we have at our agency?

Yeah, I think it starts, it starts with a series of questions. And there's kind of two ways to go about this, but the business model is going to flow from the audience. The first question to ask yourself is just who are you uniquely positioned to serve? And that's a challenge for some people. For most people that's a challenge. But who, based on your, your agency experience, if you've been there long enough, or your experience outside the agency, like what audience are you uniquely gifted in serving? And that's kind of an intersection of like industry experience, industry knowledge, knowledge of pain, knowledge of previously attempted solutions. It's a lot that goes into that and it leads into the question of who do you want to help? And that's a little bit more specific because we take your experience and we want to run that through the lens of who is out there asking for help and those people who are asking for help, how do we get as specific as possible to them? And we want to, once we're there, look at their pains. And I think the pain point is we can talk about niching. Right? Like, some people love niching, some people are scared of it. Niching is not enough. Like that is if all you do is niche. Like you've just taken, I don't know, you've taken a mountain and turned it into a smaller summit. Like it's, there's still way too much that goes on in there when you, when you approach it from the angle that we do, which is operational efficiency. And so we want to figure out how are you uniquely positioned to serve? Like, what's your skill set? What do you bring to the table? And then who out there is looking for help? And when we ask that question of who is out there looking for help, we want to then ask the follow up, what's the painful problem that they're feeling right now? Because if you're going to those people and you've done that hard work of going through those first two steps and now you're going to say, I'm going to update Facebook for those people, or I'm going to create one page websites for those people, or I'm just going to manage Facebook ads for those people, those aren't costly problems, those are business problems. But they're problems that are. There's a lot of different solutions out there for those problems. And I think that's where some agencies get tripped up around this idea of niching is they just, they fear that all it is is saying no to industries or saying no to different types of businesses, that you're going to offer the same stuff. I'm just going to do my keyword research. I'm just going to do my link building. I'm just going to do my inbound marketing, my video creation, whatever for a smaller group of people. And like, of course that's scary, but that's not it. We want to zone in on those people and say, what's the painful problem that they're facing right now? The analogy that we use all the time is like the general surgeon versus the cardiac surgeon. Like the general, like general practice, family practice, doctor, like, sees dozens and dozens and dozens of patients a day. They're all paying, you know, maybe a few hundred dollars if they're lucky, to get that diagnosis shared with them. But the cardiac surgeon is making easily three or four times the amount of money per year. Still has letters at the end of their name. Why are they put in that position? Because they solve a much more costly problem. A life or death problem is what they've focused all of their energies and they've positioned themselves to solve that. So as a business, how do we. How do we position an agency to solve a very costly problem? And we've gotten to this point and we haven't talked at all about deliverables. We haven't talked at all about what we create or how we create it or anything like that. We haven't, we haven't even opened up any free trials for project management software at this point, Greg, So that's pretty. We're halfway. Yeah, we're halfway through my list of questions. But would you, would you build on anything, Would you add anything in here up to this point?

No, I think I just bring out exactly what you're saying around that. It's not just, it's not. We're not simply saying no for the sake of saying no to things just so you're a little more focused. Like, we're saying no so that you provide greater value because you understand you can build an expertise there. Yeah, it's not. Yeah, that's. That's exactly right. Now it's a good way to communicate it. And I think that's something that is so clear. But to you and I, sometimes it's challenging to communicate that understandable way. Yeah, saying go say no just because it makes your marketing easier. That's one piece that it does for you. But that's not the only piece. We want you to be a true expert at solving somebody's problem. Good.

That when we think about solving their problem, that painful problem that they're stuck in right now, we need to be able to leverage how we're uniquely positioned to serve them, like that problem that they're feeling. We should be able, there should be something that we can do. We might not be the best in the world at it right now, and that's okay. But we need to zone in on when we think about our services. How can we help them through that, Avoid the temptation there of trying to do everything that that person needs. Right. We want to be wary of that scope and only focus on like the 20% of the deliverables that deliver 80% of the results to that person at that spot right there. But when you get yourself to a position where you have identified a specific group of people, you know their pain. You then need to know where are they trying to get to? What does success look like for them? And when you get to that spot that helps you identify like what is the one KPI that we need to be tracking and paying attention to on this journey? Like the primary thing that these people are looking for, is it new patients booked? Is it estimates scheduled? Is it new customers who check out through an e commerce website? Like what is that one thing that these people are looking for? And then you get to the, you get to the spot where you can ask the million dollar question which is what's if they, if we solve this for them, what's the next problem that they're going to have? Is it going to be they can't close those leads that we give them? Is it going to be that they don't have a follow up sequence to get that customer to come back and buy again? You know, what's the next thing that they're going to need after we solve this problem for them? And you map your client journey to solve those future needs that the client doesn't even know that they have yet. And what you're doing right there is you're equipping your client to actually realize the outcome that they're looking for. And the more time you spend in this space, the better you know that journey, the more times you run that journey, the more time you spend in this space, the better you know that journey, the more times you run that journey. And so we like just in our example when we get an agency on the phone and we start working through our process, we know the Questions that they're going to have before they come up. We know the objections that are going to be there before they even ask them. We know the next challenge once they solve these problems, what that is going to be and what that allows us to do and what we help our clients do is lead those people on that journey. As you know, as good altruistic people. Like, we should be trying to help our clients out. And so when we know where they're trying to go, we can put a scope in around what are the services that we're providing for those. For those people and only focus on what's essential. When you focus on the periphery, I mean, just doing stuff just to meet a contract requirement list, doing stuff just because some blog said it was best practice somewhere, that's a waste of time. And it brings in efficiency into the business. It brings distraction into the business. It dilutes focus. When we can identify that classic problem and scope our services so that we're only delivering the services that help achieve that outcome, that's when we're zoning in here on what we're trying on the business model that that makes sense because we're focused on what's actually solving the client problem.

Yep. Right. This is kind of change it tangentially related, but like, fear is the big thing that holds us back here. We talked a couple weeks ago about Built to Sell and the idea of hiring a product salesperson instead of a service salesperson and the different mindsets that come up. But I think that's the fear is there's this huge fear because an undifferentiated agency is so easily replaceable and the sale is so fragile. There's a fear to create friction or to create obstacles to push your customer to have to jump over. And you already feel like you've done enough because you posted your pricing on your website and they wouldn't be talking to you if they weren't comfortable with $3,000 a month. So you feel like, how much more can I push these people? The problem is we need to get comfortable with that and we need to adjust. We need to be in demand because we are experts and be differentiated. It all is in concert and works together. But what we need to get comfortable doing is saying, what's the end goal that you want? I'm the person who can get you there. I know that you came to us wanting social media scheduling and content marketing and inbound marketing and SEO and all these different pieces, but don't stress about that stuff like, I'm going to Take care of this. Here's a tactic that we use it that we use to get you there and we're going to implement that in a way that gets you to your goal. And it's not said that aggressive like you're leading them through that process, understanding and hearing them, but stepping into the expert's role that you ought to be in when you're in a place of expertise and take them from. Just like this happens all the time. And it's so easy for me in this natural context of coaching because we have to bring everything back to baseball. In the natural context of coaching, I am older, I'm more experienced and so I've got the. It's a natural fit where I'm the expert and I'd be the person who can help guide them. But it happens non stop where a kid comes in and says, I want to work on. If it's offensively, I want to work on my swing or if it's pitching, I want to throw off the mound. And our job or like this happens all the time with our pitchers because they're a curious bunch. Pitchers are just strange in general. It's like I want to learn how to throw a splitter, I want to learn how to throw a slider. Well, first we got to go back and master these pitches. But it's that conversation which is totally natural there to say, what are you trying to accomplish here? What are we doing? Maybe what we need to do. So much of this game is mental. Let's work on your mindset and what are you thinking about when you step into the box? What are you anticipating happening here? Are you guessing and trying to sit on pitches? Whatever you're trying to do. But my job there and my whole coaching staff, our job is to. To break down. What's the end goal that you're trying to have, that you're trying to achieve? And then how do we shorten the path to get you there and build the right helmets to get you there? But it's not just because you think that a longer stride is going to help you hit with more power automatically. We work on putting in a longer stride for you. It's our job to be an expert and we need to adopt the same thing and not let fear hold us back that our prospect is going to leave the team or quit on us and be done right.

Yeah.

So. Yeah, but you're exactly everything result revolves around this. Like where what are the pain? Where are they trying to go? What's the roadmap between where they are and where they're going.

And I think a lot of like, this is an identity change for a lot of agencies. Like when you first, when you first talk to them. We've got a client, every client is in the spot, every customer goes through this. But they come in as an email marketing agency, but they exit as something completely different. You come in as an inbound marketing agency, but you come out as something completely different. You come out as someone that helps a specific person solve a problem because the tactics are going to change and that's inevitable. That's what causes so much stress in the normal old school. As old school as digital agency business models can be, that's what causes the stress, is because everyone has a different idea or a different thing that they want to try out. And so you've splintered your focus. But once you shift like this and you say, I helped this one group of people solve this problem. Now all of your resources are focused on creating this proven process that solves this costly problem. And you actually get the capacity to make tweaks and adjustments and try things out. It's amazing.

Let me jump in here real quickly. We all look at the past and we laugh at all these flash site agencies of the early 2000s. Yeah, that is like four hours ago. That's not that far away. Laugh at everyone in the past in the services that, that they provided. And we have no problem laughing at them out of one side of our mouth and then on the other side saying, we're an inbound marketing agency. It's like you don't understand. I know you think that it feels like this is going to be around forever, but technology is going to change. The words are going to change. Solve a problem.

Yep, that's going to be there. Now you nail it, dude. That's a good spot to wrap because we want to get clarity on exactly who we're helping and exactly what problem needs solved. Then we go back to the lab and we articulate how do we leverage our expertise to solve this problem. And this is what we're going to focus on. And this is what we're committing to master. And we show up every single day and make that system better, make that system stronger. And what you're going to find is that you're going to become a better salesperson overnight. You're going to become more confident overnight. You're going to going to ask smarter questions. You're going to lead them with more authority and more confidence, and you're going to give them the gift of clarity because You've made this resolution, this brave jump, and it's not easy. That's a large part of what we do, is hold people's hands and walk them through the step by step and help discern this path. But let me tell you what, once you get there, it's a much better place to be.

Hey, along those lines, just our personal example. This is both a plug, but unintentional or not meant as a salesy plug, but it is one at the same time. How much better are we today at analyzing an agency so quickly and seeing here's what your business model needs to be.

Yeah.

Versus where we were when we were more scattered. We weren't focused in on that specific thing.

Thing.

But that's what we do now. It's like, how do we take someone who's not focused, has no idea where to start or thinks that they might be going on the right way, but doesn't know, doesn't have the confidence to actually make that jump or know how or what it all entails and figure out what the business model needs to be and then how the heck to actually go put the boots on the ground and implement that and hold their hand through the process.

It's more clarity every single day. It's.

Yeah. It just keeps getting better, which is exciting. It's been a lot of fun.

All right.

This has been agency vision. Thanks for joining us. We'll talk to you soon. See you guys.