How to Start & Grow a Marketing Agency – From Freelancer to a $2M ARR

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How do you go from freelancer to running a multi-million dollar agency?

Here are the 20 things I did (good and bad) to start and grow a digital marketing agency.

And I hope it can help you.

1/ Pick a Niche

In order to be the best and charge a premium, you must focus. Some options for focus: Vertical focus (EX: PPC for SaaS) Horizontal positioning (EX: Email Marketing Specialists) Or own a tech stack (VWO agency) or a trend (Influencer Marketing firm).

 

2/ Jump on an Emerging Trend

If you become a TikTok Studio 1 yr after they launch ads then you have a chance to be #1. If you launch a SEO firm today, not so much. Jump on a new tool (airtable agency), new movement (Community Marketing ), or new industry (Cannabis ad agency).

 

3/ Be Vocal About What You Don’t Do & Tie Your Scope to ROI

Your sales call should be a disqualifying call. Be honest about what you don’t do. When someone falls into your sweet spot they will believe you. Always tie your services to sales so your “value” is never in doubt.

 

4/ Do Free Work if Referrals are Built In

In the early days, do free work to (1) build your portfolio of case studies, (2) get 1 amazing reference, and (3) get referrals. Ask them before the engagement, “if I do a good job would you mind being a case study on my site?”.

 

5/ Find Clients with a Bottoms-Up Approach

Buy a list of your dream 500 clients. Write down questions those clients have. Package that content in a shareable way (ebook, blog, webinar, podcast) and give away for free.

Send newsletters with free advice. Do this manually.

 

6/ Do Value Based Pricing

You could do hourly or project based pricing. But, I like value based pricing with monthly retainers bc it’s about impact, not hours. Recurring clients give you predictable revenue.

Just make sure your work is tied to sales so ROI is obvious.

 

7/ Bill Upfront to Improve Your CCC

This is tactical but important. Don’t invoice at the end of the month. Invoice upfront. Your Cash Conversion Cycle is everything when it comes to bootstrapped businesses.

I use ChargeOver and bill like a SaaS. My AR went from 60 days to 14.

 

8/ OverIndex on Phenomenal Onboarding

Optimize client onboarding to give a great 1st impression.

  • Show a roadmap by wk 1
  • Get a quick win by wk 2
  • Tell them something they didn’t know about their customer or business by wk 3

The client should say “Wow, this agency is legit!”.

 

9/ Build the Machine

Fire yourself from the day-to-day. Hire these people:

  • Specialists: If you’re a design firm then hire designers
  • PM: The right one will save you hours of time
  • Sales: This allows you to truly run your firm

Document everything w/ SOPs to make this happen.

 

10/ Hire Senior People, Not Junior People

I disagreed with this advice until I did it. Junior people can work BUT they require hand holding. The right sr. hire will do your job 3x better and grow revenue.

They remove problems from your plate.

Do this sooner than you think.

 

11/ Streamline Communication & Kill Email

Train clients not to email or text you. Funnel everything to Slack. If you have a good project manager + a good process then the client will respect your discipline.

We do weekly meetings & Slack updates. Our PMs respond within 4hr.

 

12/ Leverage Tech to Be a 1-Person Sales Org

I never manually schedule calls, send follow ups, or make custom pitch decks. Here are the tools I use:

 

13a/ Sell Your Strategic Process, Not Your Execution

If a sales call immediately goes to talk about your price and them setting the due dates then you’re losing.
You must be a decision maker, not an order taker.

 

13b/ Sell Your Process, Not Your Execution

Here is how a sales call should go when selling a process.
  • Understand their #1 problem
  • Qualify (or DQ) them on the call
  • If qualified, show how your process is built for them
  • Give examples how your process has helped brands like them.

 

14/ Build Up 4+ Months of Burn Before Making a Hire

If your headcount costs you $40k per month then you want $160k in the bank before making your next hire.
Some companies want 6 months or 12 months but if you have recurring retainers with low churn you can be more aggressive.

 

15/ Know Your Unit Economics as an Agency

Here are the metrics to track as you grow your agency:
  • Cash in Bank
  • Headcount as a % of Sales (Keep under 50%)
  • Profit Margin
  • AR & AP
  • Client Churn Rate
  • Team utilization rate
  • Leads in pipeline
  • Client satisfaction
  • Team NPS

 

16/ Invest in Thought Leadership to Create a Content FlyWheel

Here are the types of content to create as an agency thought leader:

 

17/ Get Leads in a Predictable & Repeatable Way

If you want an agency that’s built to sell then you need a lead machine that’s not dependent on referrals. Invest early in channels like SEM, SEO, partnerships, and cold outreach to diversity leads.

 

18/ Fire Bad Clients Quickly

Bad clients don’t just take up more time & headspace. They burnout your team and A players.
Fire them politely.
Short term: It might hurt margins.
Long term: It builds company morale.
Tip: Always finish strong w/ clients and never burn a bridge.

 

19a/ For Your Team – Embrace Results (Not Hours) & Give Generously

If you want A+ players, give them a lifestyle you would want.
And give spot bonuses to employees that over-deliver and push the business forward.

 

19b/ Examples of Creating a “Work Lifestyle” for A Players

  • We have NO client meetings on Mondays & Fridays.
  • People can work any hours they want outside of client calls.
  • Anyone can take a 3 day weekend anytime – no questions asked.
  • Side hustles welcome.
What would you want?

 

20/ Culture is Everything

How to control culture?
Get Tactical about the habits that make your culture. And applaud them.
Some examples:
  • No repeat work
  • No jerks
  • Founder’s mentality to work
  • Default to kindness
  • Show Don’t Tell

 

Want more like this? Check out my podcast episode below where we talk about the lessons learned growing a $2M ARR agency.

Jim Huffman

Founder & CEO GrowthHit. Startup mentor at Techstars, General Assembly, and Sephora Accelerator. Author of The Growth Marketer’s Playbook #1
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