Bootstrapping is often essential for a new digital marketing agency. Banks may not lend to you without a lengthy track record of success, and venture capitalists aren’t lining up to hand over million-dollar capital rounds to dime-a-dozen agency startups.
Even worse, the competition out there is fierce. According to Statista, there were nearly 14,000 advertising agencies in the United States in 2016.
The hard truth of the matter is that many agencies fail — and often, whether you win or lose isn’t just about your skills. It’s about how long you can survive on a small amount of bootstrapped cash until you build your critical momentum.
I know because I’ve been there. And to help you overcome this hurdle, I’ve put together four lessons based on my experiences bootstrapping my agency.
Lesson 1: Get The Right Clients
Sounds fairly obvious, right? But I learned early on that bad clients can bring you down. They can cause friction, they can upset your team and they often don’t make you any money. So make sure that any new client you bring on is a good fit for your agency.
This might not seem like an obvious bootstrapping tip; too many people ***ume that bootstrapping is just about relying on personal income and sweat equity. For me, it came down to getting the best from our current situation.
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This was a hard lesson to learn. When you’re getting started, it's tempting to take on every client that comes your way to make sure the cash flow is there. But for me, that's a false economy. I’ve had plenty of bad clients over the years, and I can tell you that all they do is drag your business down.
Learning to spot the signs of a bad client early on can save you from these issues. One of the signs to watch out for is scope creep, or being pushed to do more than what a client has paid for. I don't have a problem with clients who are on a budget, as long as we can agree on what's being done at that rate. I find that clients who try to get around that tend to be disrespectful in other ways. Another big warning sign for me, being in digital marketing, is clients who don't know what they want. It's hard to help a client achieve results if even they don't know what they're looking for.
Lesson 2: Be Smart With Your Cash
Every business needs to be cash conscious. But one of the problems you may have with a digital marketing agency is that you’ll have employees or team members who know what the great tech offices around the world look like — and they’ll often expect something similar.
But perks don’t make the company. Don’t fall into the trap of kitting the office out with all sorts of technology and hip games like foosball. Think about going fully remote, as we did. Your cash flow is too important when you’re bootstrapping to waste money on office goodies.
Lesson 3: Hire Team Members Who Can Embrace Different Specialties
Expanding your digital marketing agency means making sure you have the right staff. But this can also be costly. You need people who know what they’re doing, but people with years of experience can get expensive fast.
When I started expanding my agency, one of the things we did was seek out people who could embrace different specialties but still work together (and we often brought them on as contractors rather than full-time employees). The search engine optimization lead would work closely with the content lead, the content lead would work closely with the outreach team and so on.
It might seem odd to have designers sometimes working on outreach in partnership with that team, but the knowledge they gain in doing so is invaluable. Having team members this close to each other's work means that you can build a team that works well together and that understands how their work is connected to the work of others.
Lesson 4: Invest Time In Training And Onboarding
Early on in the life of my agency, I invested a ton of time into creating training and onboarding materials, and it’s one of the best things I did for the company.
When you’re starting out, it can be tough to get everything done. Founders bring the work in, they do the client work, they handle human resources and they’re the primary contact for employees and clients. Creating training and onboarding materials early on helped me exit that cycle. With my initial set of materials, I was able to train my first few team members on the approach I wanted the agency to take. Once they were trained, they were able to take over training the next batch, which allowed me to take myself out of the equation and free up time for other projects.
A few of the different materials I created as part of this process included checklists for:
• Creating content
• Promoting content
• Calling in sick or booking vacation time
• How to answer the phone
• How to undertake an SEO audit
These aren't all of the materials I created, but I think you get the idea. At the end of the day, make your goal to document your training and onboarding processes so that your team members don't have to ask the same questions over and over again. It’s all documented for them.
Bootstrapping may not be easy, but the freedom and control it can offer are unparalleled. It also forces you to home in quickly on what your competitive advantages are so that you can start turning them into revenue. Agencies that can’t differentiate themselves often fade out quickly — no matter how much money they start with.
Hustle. Iterate. Stay lean until you can afford to go big. In the end, you’ll likely be glad you bootstrapped your way to success.