The biggest game-changer in professional services is being profitable without staying on the hamster wheel. Why is it so common for agency leaders to throw themselves under the bus by not paying themselves a 6-figure salary? How do we optimize our FTE, and why is this a key metric in profitability? What does it take to get out of the implementation trap? On this episode, Karl Sakas shares the most common growing pains of digital agencies and how to overcome them.
"Implementation is the lowest margin activity. It’s too easily commoditized." -Karl Sakas
3 Things We Learned
Why choosing a niche on market research alone isn’t enough
In the agency space, people say they are doing market research on the niche they choose, but they are going about it the wrong way, Take a long hard look at where you came from, your experience, and where your passion lies. That’s the zone you should strive to be in. If you don’t know the space, it’s going to be tough to get any success.
How marketing processes lose their value
Digital agencies exist as a result of the explosion of software and expertise around it. This creates a new protected labor force, and as more agencies and freelancers join that space, the less they charge for their expertise. This is how we get into specialization and the opportunity for a higher hourly rate.
The 3 models that define agencies
Every agency service fits into one of 3 models: think, teach, do. “Think” is strategy, “teach” is training and empowerment, and “do” is implementation. There’s a higher need for thinkers and teachers because there is a surplus on implementation. Thinking/strategy is harder to sell because it’s intangible, but it’s a lot more valuable.
Whether you’re building a lifestyle agency or a business for equity, the vision for your agency is key because it determines the direction you take. It’s important to know which way you lean, and then optimize everything toward that preference and goal. As the value of “doing” goes down, teaching and thinking have become the way forward for digital agencies to remain profitable.
Guest Bio-
Karl Sakas is an agency business expert, management consultant, executive coach and author who helps digital agencies conquer their growing pains. Go to https://sakasandcompany.com/ for more information and to sign up for his Weekly Tips newsletter, and follow @karlsakas on Twitter.
That's all for this chapter of Beers with Max! Hope you enjoyed this week's festivities. As always, if you want to join our virtual happy hour, grab your favorite brew and click the red button below. Til next time, keep your beer chilly and your leads hot!
