Boutique agencies have 3-10 clients, networking their way to sales and charging based on hours and deliverables. These agency owners are feeling the crunch. Losing only one client means losing a significant portion of revenue. However, having fewer clients means easily providing a higher level of service while still having time for your personal life! Dave Valentine breaks down boutique agencies: client management, hiring high-caliber employees, simplifying your services, delegating power, onboarding processes, and how to leave the boutique model when you’re ready. Our goal is to make your life and business healthier. Welcome to the InWork Podcast.
David Valentine 0:08
All right Inwork Podcasts, it's Wednesday. That means it's agency podcast. And today I'm coming to you from the living room of my river house up in the mountains.
I know that I'm normally my office, but it's a it's kind of beautiful. And I wanted to be in here today. So today, what I want to talk about
is, is the boutique agency model going away? I, here's what I mean by boutique agency model. Boutique agencies typically work with
low in three high end, maybe 10. Clients, and they tend to network their way to sales, they
usually charge based on deliverables. So hey, we're going to build you a website, we're going to run your E newsletter, we're going to do those sorts of things on a regular basis on a project basis, whatever. And we're going to charge you based on hours and deliverables, right time and material.
I've talked with a number of agency owners who are feeling a crutch. And the ones that are feeling a crunch are typically in this space. The reason why they're feeling this is is that if a client decides to leave, it's a big portion of the revenue, I mean, just imagine you have five clients, they're all paying you the exact same amount. If one client leaves no matter how much or how little, it is, it's a significant portion of your revenue, it makes up 20% of your rev. Now, if you extrapolate that out to like a large scale business, Apple, Amazon, if they lost 20% of their revenue, in a month, because a bunch of people got upset with them, their stock prices would tumble, I mean, just completely evaporate. And that's what happens to boutique agencies, there's this thought that having fewer clients means I can control more. And I can provide a high level of service, while also enjoying a decent life of running my own agency. The reason why I want to talk about this, and I'm so passionate about it is I used to own a boutique agency.
And it was almost Good grief, you know, Siri, every time
I almost killed myself doing it, as I've talked about many times on other podcasts and a couple times here. And the reality is, is that if you're going to run a boutique agency, you really have to escalate your price points, that's number one, if that's really something you want to do. Number two, you really need to get away from selling on time and material. Because what happens every single month, you're gonna have clients that are going to argue with you about how many hours you actually spent on a project, they're going to ask you to discount it. And they're going to fight with you whenever you want to do something that's going to be helpful for them. So instead, what you should do is say, Hey, this is what it looks like for us to help your business be successful. Here's what we need from you in order for your business to be successful. And explore it in that direction. Right. So
if you're gonna do that, then you need to do what I've coached other boutique agencies to do. Your minimum payments should be 10k a month, you should be working your way up to $25,000 a month retainers, right? Because you're going to be working with clients that are going to be needy. So it's just a matter of how much do you want to pay yourself? How many teammates do you need to have in order to find the sort of success that you need, right? And these are all things that you can work on with your team to really flesh out. But it's going to be something that's really, really important. And as you explore this, if you're going to stick with the boutique model, just realize you can have no fewer than 10 clients. Why do I say this? Well, you can't lose more than 10% of your total revenue from one client. It's also going to negatively affect your valuation if you ever decide to sell if you have a client that's a disproportionate size. I actually experienced this when I was looking to buy some agencies. I would go look at some agencies and they would have one client that was worth 80% of their revenue to multimillion dollar agency very strong relationship with the client. And it's not worth anything because if that client leaves they go from being a multimillion dollar agency to only doing a few $100,000.
You want to have client diversity client diversity leads to higher valuations.
The other thing that needs to be stated is,
whenever you're engaging in some sort of boutique model, you really have to have lots of hands on touch, you're going to have to hire higher caliber people. That's just the reality and the nature of the beast, if you only have a few people or a few clients, you're gonna have to hire really qualified people, or you're going to have to do a lot of the fact checking and work yourself. And that's going to be the reality of your situation. Right. So that's just another thing to keep in mind.
If it were me, and this is what I've done with all the agencies that I own, right now, I would go away from the boutique model, I would go to a model where you can create a service that functions like a product, something that you can sell on repeat, in fact, I'm always looking to find ways to eliminate even a salesperson, right, because I would love it to just be transactional. It's like so many things could be. And whenever you get to that spot where you realize that what you really want is freedom. And freedom is not just about making more money, it's also about having time, then you really start to think differently. So for me, I got to this place in 2019, when I sold my first agency where I was just like I want to do something that doesn't require a lot of Dave, I knew would require a lot of money for the first year to two years. And then I could step away. And that's exactly what I did with my biggest agency. So I grew it to two and a half million, and then handed over the keys to my operator and my chief product officer, which is a title that many agencies don't have. But when you move from being service only and time and material to a product, you now can have a chief product officer. What that did for me was it allowed me to go and invest in multiple other businesses. While this business cash flowed like crazy. And I had already started some other ones anyways, but I was able to invest a lot more time and energy into those to get those in the same stratosphere as well. So as you're looking at what to do with your agency life, really consider what it is that you want to do. And for most agencies that are out there, at least the agency owners I talked to, they don't want to stay in a boutique model. They just don't know how to get out of it. So if you're one of those people, you're like, I don't know how to get out of the boutique model. Dave, how do I do that? Okay, let's talk about that.
Are you an agency owner that's tired of being tired, you're trying to find the next client, make sure that your client success team is actually doing their job and generating results for clients. And you can't keep going. You haven't taken a vacation while you're tired. And you know, this isn't sustainable, but you're not sure what to do next. If you're ready to grow and scale your agency without killing yourself, and to actually enjoy your life. Go to dream agency quest.com. And check out the dream agency quest program. The Dream agency quest program is designed specifically for you by yours truly, I've done this with multiple agencies now over the years. And as you all know, I've built and grown and scaled my own agencies with great success, it's time for you to experience the same. When I was in your shoes, I remember hearing similar pitches from different people. And I didn't believe it. The thing that I didn't realize was that even though I was a really smart person, there were some things that you can only learn through wisdom and experience. Now, I've been doing this for 10 plus years, and I want to give you everything that I've learned. The best part is it's not just the courses or being a part of a mastermind, it is all those Plus, we're actually going to write your cold email outreach, cold LinkedIn outreach for you. And we're going to show you the very same tools that the STR agency that I own, actually uses to book its own meetings for their clients. If you're ready to grow in scale, and then find operational efficiencies so that you can exit and work as little as possible in your agency, go to dream agency quest.com and click on the Schedule a console button for more information.
So if you're done with that, and you don't want to do it anymore, create the most simplistic and valuable service that you can. Okay, so I do this with agency owners in my dream agency quest program. I do this with agency owners in some podcasts, recordings that are coming your way that are going to be really fun.
Essentially, what you're going to want to look for is okay, what is that service or that service we provide right now that actually has high margin that does scale? Okay. So let me give you some examples. I have
have worked with an SEO company. And they're really big into content creation, to go on people's website, there's also some nuts and bolts of SEO that can be done right like that are that are all viable options for someone to just have a standard operating procedure to go do. And if you're one of those individuals, and you're like, Man, I need some sort of product for SEO, there are lots of things you can do now, especially with the rise of AI, where you can start to really expeditiously create volumes of content that's going to score well in Google, as well as have a list of items that can be checked off on a regular basis of, Hey, are we doing this on the website or not? To make sure that you're improving that ranking system? So that wouldn't be a case where you could say, Okay, we're going to guarantee that if a client stays with us for two years, a year that we're going to six months, whatever it is, we're going to rank on the first page for very specific keywords in X amount of time. Obviously, if they're, you know, trying to rank on soda, that may be a challenge or beer, probably not going to rank number one, right? However, they may rank number one in best craft beer in Seattle, that may be possible. And so it really just comes down to how can you productize it and make it really, really simple, because and I say simple, for reason, simple, allows you to sell more simple allows you to have more leads, and it's also going to be something that any staff member can pick up and do for themselves, the more complex a process is, the more challenging it is to fulfill. So you want to find that simple process. What is that? How do you make that work? Once you figure that out, you're now in a good position to start to really take on new clients, you want to have systems and processes. So as an example, all of my agencies have the exact same process in the onboarding is look different, but I'm gonna walk it through with you so you can hear and see what I'm talking about. So the first thing that happens is we have a sales conversation, it usually takes 30 minutes, the first 15 minutes of that conversation, it's just discovery, hey, are they a good fit for us? I'll tell you a secret 55 to 60% of the time, they're not a good client, right? Maybe they're an asshole, maybe they don't have a good total addressable market, maybe they don't have a great story. And we're going to be reading PR articles for them. And they just haven't done a whole lot. Maybe they have an expectation that when we redo their website, all of a sudden, it's going to fix all your sales problems, whatever it is, right? They're not a good fit. So
that happens about 55-60% of time after we do the discovery, we say, Hey, listen, you're either disqualified, you're not a good fit, sorry. Or we say, Hey, you're a great fit for a program, can I tell you about it, then we tell them about it for the next 10 to 12 minutes, and handle any questions they have. At the end of that we say okay, what do you want for next step, most people want to see a proposal because our pricing is transparent. It's on all the websites of all the agencies. And we also are very transparent about our processes. Okay. So once they sign the agreement, within 24 hours, they get two things. Number one, they get a video, that shot on someone's distraction device, right? We use loom and we record ourselves and send it over to them. And it's just a high ranking employee, or maybe another owner of one of those agencies saying, hey, super excited that you're on board, can't wait to work with you, your count manager, your marketing director, your publicist, whoever it is, right. They're going to be reaching out in the next 24 hours. And to schedule an onboarding call, hopefully, we get that onboarding call scheduled in the next two to three business days. So then, like clockwork, their point of contact at the agency, their marketing director, their publicist, their account manager reaches out to them, and says,
If we said hey, we're going to schedule that onboarding call. Let's get it scheduled now. So they schedule the onboarding call onboarding call for each of the agencies usually takes 45 minutes to an hour. Each agency is a little bit different, but that's kind of what we have going on. And then after that time period, we have a week go by, and then we show them some samples, whether that's website mock ups, you know, some mood boards, or if that's, hey, here's some sample email, copy, direct mail, copy, what have you, or, Hey, here's a mock up of the pitch that we want to use to get you on a podcast, whatever that is, we really leverage that as an opportunity for them to kind of give us the thumbs up thumbs down, it's a key point and then we start getting
into a meeting cadence meeting with them every other week. Different agencies have different lengths of time for those meetings. But that's kind of the idea. We're just going through, hey, what do we need? What do we need to be doing to serve you? Well, and so that's really it. And that's a great way for people to understand the process and how we work. So if you're wondering, you're like, hey, I want to move to a non boutique model, that is a way to get started, find a service that you can productize that you can make really simple that will allow you to sell really well and quickly and then leverage that into your success. I hope you're having a great week and I hope it's a kick ass one. Until next time, catch you.