“What exactly makes your agency so different? How can you make sure you’ll keep on, well, keeping on?”

We’d done well. The agency I co-created had notched up seven years of double-digit growth and was coming to the attention of some bigger competitors. As we circled each other like dogs in the park, they wanted to find out the secret.

“Well we’ve got good relationships…” I started, lamely.

”Come on, we all have! Are you pricing really low – managing to outsource the work overseas?” I was asked. “What about your reporting? Do you let clients have good visibility?”

I considered for a moment, thinking about the stuff that clients complimented us on. Nothing really stood out. There wasn’t any secret sauce.

We’d launched in a young market, that much was true. But we certainly weren’t part of the first wave. And its not as though we weren’t doing exactly the same stuff has hundreds if not thousands of other agencies.

We weren’t first movers; particularly cheap; and hadn’t won any awards. And we hadn’t developed any unique software that something that gave us a winning edge that the experts demanded was necessary.

What exactly underpinned our apparent success?

That got me thinking. Maybe you didn’t need a secret. Maybe the essential ingredients deemed necessary for success were actually myths.

Our experience had proved them wrong.

So for your benefit, here’s my list of the biggest myths about building an agency, the things that – in the end – I’ve found just weren’t necessary at all.

Myth 1 – You need to do everything yourself

Talking of money, when you don’t have any then you’ll probably need to do everything yourself. Of course you’ll create your own website, develop your brand, and start selling. But you’ll also do the account management, the billing and the technical support too.

I was the same. One moment I was creating an invoice, the next I was editing the website.

It’s not something over which you have any choice. You need to minimize the costs. And you need to know that everything is done exactly the way you want it.

But when it comes to growing your agency, you need to change your mentality, and here’s why.

Your most valuable resource in your business is your time. And you’ve only got a fixed amount of it.

You need to use it on activities that deliver the greatest return.

You might need to be around at the concept phase, when your client’s idea starts becoming a project. But you might not be the best person to build that project. You might be adding the most value by nurturing the client, reassuring them that your agency is a good choice.

Its almost certainly the case that your time is not best spent doing the VAT return or the payroll.

So when you want grow your agency consider where your strengths are. What activities can you do that add most value to your business? Do those and delegate others. Make the decision to use your time wisely.

Myth 2 – You need to be first

I’ve lost count of the number of business growth articles that spout the virtues of ‘first mover advantage’. I’m sure you’ve heard it too – the belief that those who are first in the market have a head start. Before others realize what’s happening the business has an established brand and revenue stream.

Once people notice what the company is up to, and how well it’s going, they’ve captured a good chunk of the market. The lead is unassailable.

It’s what Microsoft achieved with Windows.

But I have to disagree with this one.

First-movers make clumsy errors, as there’s no map to follow. They can’t learn from close competitors. It costs a fortune for them to research what the market wants and then to build it.

Those that follow can benefit from a track already cut through the forest. They see and avoid the mistakes, and can even recruit the pioneers who have learned the hard way.

Those that follow almost always win the end. Google nailed Yahoo. Facebook eclipsed Myspace.

You work in any agency. You should already know this. You’ve decided to offer a service that thousands of others already do.

It was the same decision we made. Even in 2000 there were lots of online agencies around. It didn’t stop us giving it a go.

Take reassurance from the fact that there is an established demand for what you do. See what works for others and be inspired by it. Don’t waste time trying to create a completely new thing – others have done the hard work so you don’t have to.

Myth 3 – You need to invest

When we go to events, to connect with web designers and developers, one of the most common questions I get asked is: “how do I raise enough money to launch my new business?”

This reminds me of a complaint I used to get in the early days of the agency. Friends would say ‘I’d love to do what you do but I just don’t have the money’.

Here’s the good news. If you want to start and grow an agency you don’t need money.

You don’t have stock to buy. You don’t have to have employees. You don’t need to rent an office.

Not needing money is one of the most appealing things about starting an agency.

If you’ve got your laptop, software and connectivity, you’re set. The question of money becomes: how long can you live without it?

Your wages (and then your employees’ wages) are your single, unavoidable cost. Everything else is optional.

Most of us can’t survive for long without an income. So if you plan to launch an agency then its good to lay the foundations before you give up your day job. You can create the brand and name, work out your core services, and start warming potential clients before you make it permanent.

That way your income-less period is as short as possible. And your agency is set with the best chance of success.

Myth 4 – Put all your effort into winning new customers

Of course, without winning any customers your business will never get off the ground.

But once you land your first few, another consideration becomes key: how to keep them.

Experts agree – it costs a business more to win new customers than to keep your existing ones. The fastest growing are those that focus on minimising churn.

And don’t forget: happy retained customers are far more likely to recommend you. Referrals are the largest single source of new customers for successful businesses.

We experienced this: although our new customer pipeline was pretty limp, our retention was awesome. Growth was (almost) guaranteed.

Remember that finding a new customer is just the start of your journey. Keeping them is what really matters.

 

Myth 5 – You need to make a lot of money

Yes, I really did just write that.

Bear with me. I want to tell you a story.

If you’re as long in the tooth as I am, you’ll remember the Dotcom bubble. Back in 2000 finance folks were throwing money at startups. Their value was derived from their future revenue potential.

Although a few still survive, most went bust. And that wasn’t just because they struggled to make money. It was because they spent so much at the same time.

Perhaps the most famous fail was Boo.com where champagne and first-class flights helped the team to squander millions in months.

In business there’s a simple equation that you need to get right.

Earn > spend.

Most businesses focus on the left hand side. They’ll do anything to boost the revenue. But the most successful will focus on the right hand side too.

We created our agency at the height of the bubble, so the lesson was keenly felt.

We had very standard computers, and dial-up. We had a tumbledown office in a frumpy, down-at-heel neighbourhood. We had Ikea furniture.

We didn’t start spending until we had a year’s buffer under our belt. We could afford to go twelve months without earning a penny.

That might seem extreme, but it meant that growth was stable and sustainable. When we did lose clients it didn’t seem like the end of the world. We could take some time to focus on winning new ones.

So think carefully about every purchase you make. Don’t tie yourself to long and expensive contracts. Scrooge your way to success.

Myth 6 – You need a unique service or product

In business theory books, consumers act like machines making rational economic choices about what they buy, and from whom.

In the real world these rational consumers don’t exist.

We have pre-conceptions, a psychological bias born from experience that bakes in a preference for X over Y.

Sometimes we can explain this bias. For example, I’ve a soft spot for Sainsbury’s because my mum used to shop there. I’ve no hard evidence that they’re a better choice for my groceries.

But mostly we can’t, since the bias is comprised of many thousands of factors.

Moreover, we don’t have perfect market knowledge. I don’t the price of lemon curd at the 20 local shops that stock it. I haven’t tasted them all and worked out which is the best one for me.

This combination of bias and poor knowledge means that we’re awash with poor-quality low-value products, sold to us by successful businesses.

Now I’m not saying the service that we provided in our agency was of poor quality. But I am sure that it wasn’t the very best around. We succeeded through strong relationships and transparency.

The best product or service at the best price is not critical. It can’t harm, but it’s not a must-have requirement.

So if you think your service is a bit rough around the edges; if your projects sometimes fall short of your competitors; don’t give up. Your success depends on many other factors, not least of which includes your client’s bias. Its something they trust more than anything else.

So what really matters when growing your agency?

That’s enough myths called-out. Here’s what I think makes a difference.

1. No business grows forever without great customer service. Customer referrals should feed your sales pipeline. So speak to customers, survey them; ask them why they stay (or go). Solve those problems to keep you on the path to growth.

2. Make customers feel the quality of your service. No one likes to consistently buy a downgrade, cheap-feeling product, even though it might be good value. Focus on how the customer perceives what you do for them. It lies at the heart of your brand experience.

How about you? What do you think is important to keep the wheels speeding up? Please leave a comment below.