How to scale an agency business at the right time
Discover the critical difference between growing and scaling your business, and learn when to focus on each strategy to prevent getting stuck in entrepreneurial limbo.
Scaling at the wrong time, even if you scale successfully, can get you stuck as a founder.
There's a big difference between growing and scaling.
This article looks into how to have intent around which you are doing.
What's the difference?
Growth
Growth is a voyage of discovery. It's how you started your business. Growth involves:
- Finding new types of clients
- Experimenting with what you offer
- Becoming more strategic
- Understanding the value you deliver and increasing it
- Learning and adapting
As a founder, you must be actively involved in every aspect of the business during the growth phase. It's your innate curiosity that drives this process. As a founder you are a natural grower!
It's likely, however, that you could benefit from a deeper understanding and a more intentional approach to the process.
Scaling
Scaling occurs when you find repeatable ways to add value that don't require your direct involvement.
- Documenting processes
- Outsourcing work or hiring
- Productising value to make it easy to buy
- Refining and optimising what you offer
Scaling let's you sit back and watch it go.
If you ever want to remove yourself from the business then you'll need to add some scaling to the mix.
But you have to do it at the right time.
The mistake to avoid...
… is scaling too early.
Grow until you have the right clients, offering and business model, then you can scale.
Scale the wrong thing and it doesn't matter how many leads you bring in you will only be scaling problems.
Things you don't want to scale:
Low value/high support offerings
Clients rarely continue purchasing low-value offerings. If you're spending your time serving many non-repeat clients, it's a double whammy: you're using hours running those projects and then more hours winning new business. Leaving less time for growth.
Low rates
Someone is always going to be on your lowest rate and it's a pain to get that increased. Make sure it's not lots of people.
Low profit
The rate might be ok but maybe you have to staff it up with expensive people. Don't scale until you can deliver work efficiently and that profit margin is where you need it.
Avoid scaling before you have grown. It's normal when you start out to be lower value, have lower rates and make lower profit. So don't start off by trying to scale until you've improved those elements.
How do I get my clients to sign retainers?
If you're scaling at the wrong time you might be asking yourself this question:
How do I get my clients to sign retainers?
This could be the wrong question to ask.
It may be the service you offer doesn't lend itself to retainers. It may be that retainers aren't valuable or affordable to your current set of clients. You are trying to solve the unsolvable.
You need to grow and find a level where people will retain your services. If you scale before that then you are scaling a non retainer model. And if you do that you will get what you'd expect to get. More clients that it's hard to sell retainers to.
Maybe you should be asking:
How do I win clients that want to sign retainers?
Setbacks in scaling can lead to growth
Sometimes things that halt your scaling can help you grow.
It's counterintuitive but losing a big client, having a marketing push fall flat or encountering something outside of work that restricts your time, can actually be a catalyst for growth.
I've ended up growing because:
- The big client was on a low rate and using up a lot of my time on a low value activity.
- That marketing campaign failure told me my offering wasn't ready and I went back and improved it.
- That constraint made me prioritise and drop the things I was doing that weren't taking me to the next level.
Often they work together
A lot of the time you'll be doing both.
For example, hiring someone whose skills overlap with yours but who can do some things you can't.
They will be able to work on the type of projects you do, so you can do more of them (scale). They can offer new value within those projects and working with them evolves how you work (growth).
Finding the perfect balance
I wish I could tell you that you could decide exactly when to grow and when scale. But you don't have that much control.
You can have intent around when you try to grow and when you try to scale though.
And you can define a vision for where you want to get to. Grow into that and then scale out
In everything you do,
- Every client you work with
- Every marketing activity you perform
- Everything you consume (including this article)
ask yourself which it's helping you do; grow, or scale.