"Why Is My Agency So Hard to Scale?" — Transcript

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1. 0:00Yes.
2. 0:01>> Okay.
3. 0:01>> Yes. So, I will I will speak pretty
4. 0:03definitively to I rarely do
5. 0:05um
6. 0:06about like this model is better than
7. 0:08that model.
8. 0:10Agencies are exceptionally easy to get
9. 0:13to and you know, caveat caveat for the
10. 0:16internet trolls of the world, right?
11. 0:17Like exceptionally easy to get to a
12. 0:18million, 3 million, even 10 million
13. 0:21dollars a year.
14. 0:22In almost any version of the model.
15. 0:25Beyond that, it becomes exceptionally
16. 0:27difficult
17. 0:28um because you have human capital. So,
18. 0:30it becomes really it's more and more
19. 0:31difficult to attract, you know, talent
20. 0:32to do higher level work.
21. 0:34Um and typically the businesses that go
22. 0:35from, you know, zero to 10 million,
23. 0:37they're servicing SMBs and VSBs. So,
24. 0:39very small business owners and and small
25. 0:40business owners.
26. 0:42If you take one of the the way that I
27. 0:44like to think about any industry if I
28. 0:46want to get into is I look at what the
29. 0:47people who are the biggest in that
30. 0:48industry are doing and think, okay,
31. 0:49what's different about what they're
32. 0:50doing versus what everyone else is
33. 0:51doing. And the biggest agencies in the
34. 0:53world service the Fortune 100. And so, I
35. 0:56take that as the natural extreme of like
36. 0:57what is the best version of this
37. 0:58business is that you deal with
38. 0:59businesses that always pay their bills,
39. 1:01they never churn, they sign five-year
40. 1:03contracts at 5 million a year, and
41. 1:05they're good for it.
42. 1:07And so, the process of agency scaling is
43. 1:11very much scaling the avatar, and you
44. 1:13basically have to just keep earning your
45. 1:15way up, which you're you're already on
46. 1:16the right track, um of how can I get an
47. 1:18avatar that actually can keep their
48. 1:19word? And once you get to there, number
49. 1:22one, and number two, you'll have a
50. 1:23telltale sign of like, am I dealing with
51. 1:25an avatar that's too low? If you want to
52. 1:27start doing more of their business for
53. 1:28them. And so, if they're like, I can't
54. 1:30close a door, right? Or I like you're
55. 1:33like, maybe I'll do my sales for them.
56. 1:34No.
57. 1:36You have to deal with a business who
58. 1:37knows how to sell because your services
59. 1:38are not I will do acquisition for you.
60. 1:40It is I will do this I will do this more
61. 1:42I'll do lead gen email lead gen.
62. 1:43Exactly. And so,
63. 1:45it really comes down to who's the
64. 1:47perfect avatar for only this very narrow
65. 1:49service that I have I have tremendous
66. 1:51margins on. And so, that's where we get
67. 1:52really clear on like, well, if they
68. 1:54actually like I've been selling people
69. 1:56who have over 10 people head count, but
70. 1:58if they have over 50, my turn is like
71. 2:001%. Yeah. And so it's like I really
72. 2:02should just build that and not have all
73. 2:04of this now. What happens is
74. 2:07we we always incur debt. So it's not
75. 2:09like there's something wrong. Every
76. 2:10business incurs debt when you start.
77. 2:12100%. You either incur talent debt, tech
78. 2:14debt, financial debt, you incur debt.
79. 2:17You want to incur the debt that's the
80. 2:18easiest to pay back.
81. 2:20Right? And so right now you can also
82. 2:21incur reputational debt. Like there's
83. 2:23debt. Um you're you're selling some
84. 2:26people that you know you shouldn't sell
85. 2:27so you can pay the bills.
86. 2:29Fine. I'm not going to get on an
87. 2:30ethical, you know, whatever with you.
88. 2:32Um
89. 2:33but the sooner you can draw the line of
90. 2:35saying I want to like if you told your
91. 2:37team work How many sales a month you do?
92. 2:39Sales velocity?
93. 2:41Three, four. Okay. I'm okay with us
94. 2:43going to one deal a month.
95. 2:46And where this gets more interesting is
96. 2:47that when you get that correct, truly
97. 2:49correct avatar, the price elasticity uh
98. 2:52changes. And so all of a sudden it's
99. 2:54like if I actually were to price to my
100. 2:55correct avatar, I might be able to
101. 2:57charge two times as much. And by
102. 2:59charging two times as much, I might 5x
103. 3:00my profit. And by doing that, I'm
104. 3:02actually more than happy to have my
105. 3:04quote revenue growth rate be slower than
106. 3:08what it was before when I had these
107. 3:09people, but the amount of operational
108. 3:11drag that you incur also like team
109. 3:13morale of like I just on board this guy
110. 3:14and he's already turned out. Like it
111. 3:15just feels like such a pain. Whereas if
112. 3:17they know that they're going to be
113. 3:18creating long-term relationships with
114. 3:19the customers, you will get a stickier
115. 3:21business that's more fun to run and way
116. 3:22more profitable. So part of this is like
117. 3:24a lot of entrepreneur
118. 3:26a lot of the correct moves in
119. 3:28entrepreneurship are counterintuitive
120. 3:31because all the intuitive ones you've
121. 3:33already done.
122. 3:34You do those naturally. You wouldn't you
123. 3:36don't think about it cuz all the things
124. 3:37that are intuitive you already did it
125. 3:38and they already worked. Where you get
126. 3:39stuck is the counterintuitive solutions.
127. 3:41They're the ones where you're like
128. 3:42wait, so for me to grow I need to sell
129. 3:44fewer people and have higher
130. 3:45qualifications. It's hard to do. That's
131. 3:47why most people don't do it. It's also
132. 3:48why most people don't make money.