The pain of staying in the race
Today I'm taking a step backwards and it hurts
Today I made a tough business decision.
I decided to freeze the hiring of my next team member. I’ve been working with a seasoned recruiting agency that specializes in hiring remote-ready talent and it killed me that I had to tell them to put the process on ice.
In business sometimes you’ve got to take a step back in order to lower risk so you can stay in the game. This was one of those times.
I run a boutique analytics agency which works with software-as-a-service and eCommerce businesses.
I’m in the process of transforming the agency so we’re focused on serving eCommerce clients only. This involves “firing” our legacy SaaS clients, packaging our services for the eCom market, and building a process for delivering value to clients. I’m working on all of this while still serving 6 clients. This significant change plus the changes in the market have added a lot of uncertainty and risk to my business which is why I decided to freeze the hiring.
This decision hurts a lot because I’ve been playing this game for a while now and haven’t yet managed to scale the agency beyond a single analyst. It’s not about having a big team, but more about having signals that I’ve got a business which can scale.
The longer I’m in the race, the more I’m learning and I’m at the point now where I feel I’m learning some critical business lessons.
One of these lessons is the challenges around scaling a service business.
In order to scale a service business, where labor is the main form of leverage, the economics have to work in your favor.
I’m fortune enough to have an experienced agency owner as a friend and mentor. He’s managed to build a 7-figure a year agency with a small team of designers, account managers, and strategists.
The economics in his business work well because he’s able to get a high return on the output of his team and leverage his brand to continue to bring in better clients.
He’s managed to productize his services so everyone from his team to the client know exactly what value will be delivered, how often it will be delivered, and in what form. The work the team does is highly structured, and repeatable, allowing for focus and improved deliverables over time. Custom work is almost non-existent. The clients sign on for a 3 month commitment and then have the option of continuing to work with the agency on a month-to-month basis.
The model is beautiful and most importantly, profitable and scalable.
I’ve been in the game long enough now that the layout of a scalable and profitable agency is clear to me.
I can now compare the fundamentals of my friends agency to my own and it’s becoming a lot clearer to me why I’m struggling to scale.
For now I’m taking a step back so I can stay profitable, focused, and allow me the freedom to say no to opportunities which aren’t the right fit for us.
It’s going to take a few months to stabilize things but I’m confident I’ve made the right decision and will reap the benefits down the road. If I’m going to build a business which has any chance of scaling, I need to work on getting the fundamentals right first.
Sometimes you’ve got to take a step back and experience some pain just to stay in the race.