Building an agency or successful consulting business? Then read this first.

I will never forget September 29th, 2015. This was the day after I got laid off from my last fulltime job (19 months, where does the time go?) and I was laying in bed. I’m an ENTJ with a Type A personality (aka, I can never sit still) so even though I was unemployed and didn’t have to worry about money until the end of the year because of the severance I received, my mind was already spinning with what I was going to do next.

I knew I wanted to double down on my agency business, but a background in SEO consulting, I figured it would be easy to spin up a few consulting clients to pay the bills while I worked the majority of my time developing the first membership business and model for my agency.

I was right. Over the next couple of months I picked up enough consulting to replace my San Francisco senior manager tech salary followed by taking a couple of months off consulting to get the next version of Credo out the door.

That experience, coupled with the next years running Credo, and more recently growing EditorNinja has been formative in understanding how to grow a consulting or agency business.

So how do you grow a consulting business? Here’s my process.

Leads Weekly (Consistently)

To have a successful consulting business or agency, you HAVE to have a consistent flow of qualified leads. Without this, you’re always going to be hunting, you’re going to be anxious, you’re going to sign bad clients, and you’re going to feel like you have to sell super hard.

How do you get leads consistently?

There are three steps.

Build an audience

Build (or reach) an audience on your platform of choice. I prefer the organic route, building an audience that comes to know and trust me over time, and if I offer them something that adds a ton of value to them, they’re likely to buy from me. You can also buy access to an audience through ads, if you have that skillset and cash to spend.

Be Visible to Them

Now you have to show up consistently. Give them information they want to learn, inspire them to do more than they currently think they’re capable of, etc. My rule of thumb is to post as often as you can as long as it adds value. I aim for 3-5 posts per day across the platforms I’ve chosen.

Generate Demand

Now that your audience is seeing you, you have to get them to raise their hand and say that they’re interested in something. Of course, that something is also a teaser to get them into your larger thing.

In B2B marketing, we’ve long called these “lead magnets.” That’s basically what we’re doing here, but it’s much more effective to do a lot of smaller offerings, like a worksheet or a set of scripts or hooks, than something huge that no one will ever read.

The easiest way to do this? Post something like:

I just took our most popular audit checklist and made it public. Want me to send you the link?

Then simply ask for their email and send them the link.

Sales Monthly (or as often as you want)

All the leads in the world will just waste your money if you can’t turn them into clients. So let’s talk about sales.

A Simple Offer that People Love

Your offer must contain the following:

• An easy-to-understand service that you can deliver consistently at high quality
• Pricing that lets you earn a margin and that is priced to the value they’ll get
• Follow-up campaigns that turn “not nows” into “let’s do this”

Pricing

If you are going to survive as a freelancer or an agency, you first have to charge a fair hourly/project rate. There are many different ways to price your services.

In no particular order:

1. Value-based (on your time and amount of potential revenue for the client)
2. Project-based (time required times hourly rate plus a percentage higher for management)
3. Hourly rate

At the end of 2016 I ran a digital marketing industry pricing survey and found the following spreads of pricing:

When you’re pricing your work, keep in mind your margins. The traditional wisdom for pricing work was to charge 3x what you pay an employee who is working on the project. That number has actually been upgraded to 5-8x what it costs you to deliver work.

If it costs you $1,000 to deliver work for a client, they should pay you a minimum of $5,000 per month, so you make $4,000 in gross (not net) profit. From there you pay all of your overhead, and ideally you end up with 20-30% net profit on each client each month. This then gives you cash to invest back into the business in the form of new people, innovation, marketing, and ultimately to pay yourself well.

I always counsel agencies and consultants, especially new consultants, to not charge *by the hour* simply because this is a recipe for working too much and not making enough money. At the end of the day, billing by the hour misaligns incentives on both sides – the provider is incentivized to work as many hours as possible (often up to a cap) and the business is incentivized to have them work as few as possible.

Retainers, as we will talk about later, are always the best as long as you set the right expectations. You’re not committing to a certain number of hours, but rather to getting the job done right.

A Streamlined Sales Process

I use, and teach, a four-step sales process, my DSSC framework (formerly DSSP).

1. Discovery call to make sure they need what you offer and you like them
2. Scope email to make sure you’re aligned
3. Strategy call to dig into the specifics of their project and to build trust (more time invested by the prospects means they’re more likely to sign with you)
4. Contract (not a proposal)

Enablement Campaigns

If a lead doesn’t sign with you, or they’re taking forever to make a decision, you should have a way to continuously add value to them.

Maybe you’re creating content weekly around the pain points that you know that they have. Make sure you email this to them.

Hopefully you connected with them on LinkedIn. You should be posting and helping them, and others like them, solve their problems.

Finally, you should be posting case studies, or at least telling stories about other clients you helped and the results they saw.

Solid Delivery

The last part of building a successful agency is delivering great work consistently. In my experience, work delivery is rarely an issue until an agency starts to scale headcount. As long as you’re semi-organized and good at delivering work on time, you’re golden.

The issues start when you start hiring people to deliver work. Once you start hiring, you have to start building the machine that builds the business by delivering great work.

It’s three steps:

1. Design the client’s journey
2. Build processes around delivery
3. Hire the help you need

Before you start hiring, you have to have a set way that clients come on board and receive value.

Maybe this is a kickoff call followed by an in-depth technical walkthrough coupled with analytics access being granted and traffic analyzed. You need to define 1) the steps and 2) who does it, so that once you start hiring it is still clear who owns which step.

Once that process is designed, you build the processes around delivery. For example, what’s the expectation for how quickly work gets returned? How do you communicate with your clients, and how often? What happens if there’s an issue or a change of contact? What if the client asks for work that is out of scope?

Once those are all defined and written down, now it’s time to hire.

This leads to retained work

The number one way to build a sustainable consultancy or agency is to retain clients who pay you a fair wage. Point blank, this is how you build a business.

Why? Because if you can retain clients then you are not just adding more water to a leaky bucket. The reality about leaks as well is that the more water you pour into them, the bigger the hole gets and the more water you waste.

Retaining work can be an interesting beast, to be sure. Most clients will stay with you for 12-18 months no problem, and sometimes longer. If you offer different services as you go or they need new things (or are a bigger company with a lot going on with their site), you can also always increase their retainer over time.

There’s a dark side to large retainers as well. I’ve seen too many consultants and agencies be very top-heavy with just one client, and when that client then eventually stops working with them for whatever reason (through fault or no fault on the agency/consultant’s side) they are in a world of hurt for revenue. I see it happen time and time again.

This is the challenge of retained consulting – retaining work and having a few clients paying you enough that you can cover your costs if one decides to leave you or is late on payment (this happens all too often as well).

As you sign more clients, your business becomes more antifragile. And if you’ve built your team correctly, you can scale your delivery costs up and down depending on how much work you have.

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What did I miss? Leave your comments below.

Hey, are you growing your agency to $500k+ per year? I coach agency owners through this framework and dive deep into the specific areas where you need help. Learn more and let’s chat.