Common Challenges Faced By Small Agencies and How To Overcome Them
What sort of challenges do you experience at your agency? If none, I’ll save you some time and tell you that you don’t need this post. If you experience any at all, this post is for you.
Knowing the challenges and solutions that other agencies like yours experience and overcome can be a game changer when optimizing your agency.
Here at The Campfire Circle, the agency for agencies, I work with smaller agencies as owners at small agencies are spread a little thin. Also, it usually doesn’t make sense to hire a full-time employee to manage their agency's growth. Because of that, smaller agencies tend to hire me because my rates are reasonable, and my expertise can grow agencies significantly without needing a full-time employee. Thus, in this post, I’m focusing on small agencies.
For the sake of this article, a small agency has 20 clients or less and/or an employee size of 1-10 employees. Agency Analytics recently released an excellent report on top challenges faced by agencies. I will summarize it in this post, but if you want to read the whole thing, you can do so here.
With the help of data, let’s explore the challenges that your agency is likely facing and what you can do to overcome them.
Client Acquisition
With 37% of agencies reporting that their number one challenge is client acquisition, this pain point must be addressed first.
Acquiring clients at small agencies can be tricky as the higher-ups can be spread a little thin as they do awesome client work and don’t have enough time to spend landing new clients and growing their agency.
Agencies struggling with client acquisition is the number one reason that my agency gets hired. To tell you the truth, the reason why my agency is successful is that many agencies have the antiquated idea that they are going to generate leads and turn them into clients through cold outreach. This leads to unnecessary long sales cycles.
If you think about it, cold outreach leads to longer sales cycles because you must sell a prospect on the service and then on your agency. When leads come into you, they’re already sold on the service, so it’s easier to close a deal.
But what to do instead of cold outreach to land new clients? Lead magnets! If you want more specificity, lead magnets in the form of industry reports.
Other strategies to improve client acquisition are in Agency Analytic’s report and the percentage of agencies that report landing clients through these strategies.
45% of agencies (the largest segment) report that they acquire most of their clients through referral programs and word-of-mouth recommendations
16% of agencies cite SEO and content as their strongest way to land new clients
14% of agencies say that their most significant source of new clients is digital advertising
10% of agencies utilize cold outreach to acquire most of their clients
8% of agencies get most of their clients through social media marketing
2% of agencies report that local ads are their strongest source of new clients
Time Constraints
As an agency executive, you know that timelines run agencies, and if a project isn’t on time, it can be a disaster and impact your client relationships. So, it’s no surprise that 20% of agencies report that their number one challenge is time constraints.
Overcoming time constraints tends to happen naturally when an agency gets its footing. Unfortunately, all agencies experience growing pains. It’s a delicate balance getting your client work in on time without paying for more hours than needed for any given project.
If you’re experiencing time constraint challenges at your agency, the good news is that the solutions to overcome them are relatively easy to implement. Let’s look at a few solutions:
Utilize tools that lead to time savings like Monday
Set realistic expectations with your clients
Create timelines for projects big and small
Monitor your team’s performance and how they use their hours
Track time so you know how much to quote for future projects
Let go of so many meetings (with clients and internally)
Cash Flow
13% of agencies report cash flow as their number one challenge. And if it’s not the primary challenge at your agency, you likely desire a little more cash flow, so it’s a topic worth diving into.
When faced with cash flow issues, agency owners experience intense stress and cannot grow their agency. Thus, cash flow contributes significantly to agency growth or lack thereof.
The obvious solution is to land more business to improve upon this pain point. And while that is true, we all know that landing more business can hurt an agency’s reputation if they can’t handle more business. So be sure to get your ducks in a row, and while you are growing your infrastructure, there are other easier ways to overcome cashflow issues. They include:
Check in on how you bill clients. This includes analyzing your hourly and retainer rate. You may be surprised that you can increase your rate. This also includes the terms in which they pay their invoices.
Spend some time going over your employees’ hours. Is there room to make cuts? Would it be more economical to hire a freelancer in certain areas?
Which tools and apps do you utilize at your agency? Are there some monthly fees coming out of your account each month that you don’t use much? Optimizing the tech stack you use can help cash flow.
You’ve heard the saying. “You’ve got to spend money to make money.” So while trying new marketing strategies to promote your agency costs money, they make money. So try new marketing tactics to grow your agency.
Adding new services to what your agency offers can help with cash flow as you can upsell your current clients and land new clients needing your newly implemented services.
Executing Client Deliverables
Only 11% of agencies cite executing client deliverables as their top challenge. However, even though it’s not a top challenge for many agencies, it is worth going over.
Common areas that are impacted by timely deliverables include resource management, proactive communication, robust processes, efficient collaboration, and client budgets, just to name a few.
The solution for this challenge is pretty simple. Hire a freelancer to manage aspects of your agency or a business that offers agency support like mine. Be sure to vet for expertise, so don’t hesitate to ask for examples of work and ideas.
Client Retention
With only 5% of agencies reporting that client retention is their number one challenge, I feel proud of agencies! Most agencies must be doing great work if they’re not worried about retention.
However, I’m sure there is room for improvement at many agencies, so I sourced tips from other agency owners on retaining clients, and you can read their fantastic insights here.
Final Thoughts: Overcome These Common Challenges and Grow Your Agency
All of these challenges impact agency growth and scalability. Most agencies experience these pain points at least a little bit, so agencies need to keep optimizing their processes, communication, teams, and services to thrive and grow.
A lot of times, these challenges arise because employees need more skills or time. Both of these pain points can be solved with the right talent, and I’ve been growing agencies for over a decade and would love to grow yours. If you want a free consultation to discuss how I can optimize your agency, you can contact me here.
If you think you can internally overcome the challenges at your agency, that’s great! Just be sure to always think about how your decisions and processes impact the bottom line and leave yourself room for improvement.
What is the biggest challenge that you would like to overcome at your agency? I’d love to read about your challenges in the comments below and weigh in with free advice!
