What I’d do differently as an agency owner if I started over in 2025 with Drew McLellan

Running an agency can be a lonely proposition, but it doesn’t have to be. We can learn how to be better faster if we learn together. Welcome to Agency Management Institute’s Build a Better Agency Podcast presented by White Label IQ. Tune in every week for insights on how small to mid-size agencies are surviving and thriving in today’s market with 25 plus years of experience as both an agency owner and agency consultant. Please welcome your host, Drew McLellan.

Hey everybody. Drew McLellan here from Agency Management Institute with another episode of Build a Better Agency. This is one of my solo cast, so no guest today, just you and I hanging out talking about something that is on my radar screen. So I will tell you that if you’re listening to this real time, you know we are rounding the bend to the new year. Many of you are winding down, getting ready to celebrate the holidays, and we are as well. And I wanna just tell you how grateful I am that we got to spend the year together. So thank you so much for being a regular listener. Thanks for coming back every week. Thanks for letting me know which episodes you love, what you find value, what you do with the information.

It’s gratifying to see how you are applying what we’re teaching in the podcast and the amazing guests that we have. So super excited about having you with us every, every week and I’m glad and grateful that I get to do this with you. So thank you for that. So as you know, with every solo cast, we give away a seat at one of our workshops to an agency owner. And all you have to do to get in the drawing is this, you just need to go wherever you download the podcast. So maybe Google, apple, Spotify, iHeart, wherever you get it, and leave a rating and review that helps us know what we can do better. We read every one of them, but here’s What I, here’s the important part, I need you to take a screenshot of the review and then email it to me at [email protected].

And the reason why I need you to do that is because in most cases on those platforms you have a username and we can’t tell your real name, we can’t tell your agency name, and we sure as heck can’t get your email address. So if you will take that screenshot and send it to me, that would be super helpful. And every time we do a solo cast, so every five episodes we give away a free workshop seat. So this, this month’s winner is Scott Hill from CI Design in Milwaukee. So Scott, congratulations. We will reach out to you and make sure you know how you can get your free seat at a workshop. Super excited. So that’s a value of about $2,000. All you have to do is get to Denver.

The rest of it is on us. You just get to Denver, have a hotel room, and then we have you come into the workshop for two days. We feed you with a workshop and hopefully we kind of feed your brain and your soul at the same time. So we would love to have you join us. Alright, so as I was saying, it’s the end of the year. You’re all thinking about 2025. And so in the podcast group on Facebook, I asked the question, Hey, what do you want me to talk about in the next solo cast? And one of the suggestions was, if I was starting an agency today, what kind of an agency, what would it look like? And why would I start it to be What I, What I envision it being?

And so I thought that was a, a fun way to end the year and also to get you thinking about maybe how you realign for 2025. I’m not suggesting you start, you shut your di your agency down and start all over. But how do you create more abundance for you and your team in 2025? So first thing I would do is I would, and again, I’m assuming I can wave a magic wand and all of this just happens naturally. I’m not suggesting this is easy, I’m not suggesting it’s instantaneous, but it’s just a game we’re playing. So I get to make the rules and my rule is that I wave a wand. And so for me also, that means that I’m gonna avoid making all the mistakes that I made when I started my agency back in the day because I didn’t do a lot of these things for a long time.

I had to learn them just like you’re learning them. And so, but this is make believe and so we’re gonna make believe together. So the first thing I would do is I would build an agency with a goal of that agency being between 15 and 26 people. And the reason I say that is because remember we see the financials of hundreds and hundreds of agencies and one of the things that we see is that we see where agencies are most profitable. And and on average, I wanna underline that on average agencies, between 15 people and 26 people are the most profitable year after year after year. And there are a couple reasons for that. Number one, it’s still a manageable size and agency owner with a strong leadership team can still be very entrenched in the agency, have a lot of control over sort of the vision and how things are delivered.

But it’s not so small that everybody is wearing 12 hats and running around like a chicken with their head cut off. Everybody has a lane, everybody has an area of specialty. So you don’t have a person who’s account service and also doing accounting. And in most cases the agency owner is freed up to do the new business and the mentorship that they should be doing. But what we find is that agencies between 15 and 26 people get very close on average to that 20% profitability that we believe is a best practice year over year. An agency of every size, and I want to emphasize emphasize this, an agency of every size should have no problem being profitable at 20% every year regardless of what’s going on in the economy.

With the election, what’s going on with your team, you should be able to run the business by the numbers so that you’re always hitting 20% profit. But it seems to be easiest at that 15 to 26 size. So I am all about doing things that are easy. So that’s What I would do is I would make it that size. Plus I think back to my agency and that was the size I loved the most. It was enough people that there was a lot of energy and a lot of diversity in the team, but it was small enough that I still knew everybody and I felt like we had, you know, a both a professional and a personal connection. And so for me personally, that was a size that I enjoyed running the agency the most.

Second location, I would have a physical office and I would be in office at least three days a week, everybody in office on the same days. And I would be hybrid. The other two, I would work really, really hard to have everybody in a geography where we could work together in person. I know in today’s world that’s almost impossible that it, to find the kind of talent that you want, you would have some remote employees. And in fact I would have some remote employees and I’ll get to that when I talk about the staff composition in a minute. But over the last many years before Covid, during COVI, after COVID, one of the things that we see very consistently is that when people have FaceTime together, they create a different level of connection and they are more dedicated to the agency, they’re more dedicated to their teammates.

The agency is stickier, they have less turnover, they have less angst, they are more productive, they’re more billable. So I would, I would do a hybrid model where we were in three and working from home on two. So thinking about the structure, I would make sure that I have my thinkers in house. So I’m talking about my account service people, my people who are cultivating relationship with the clients, who are helping the clients grow their business, who are thinking strategically on behalf of the client. And I would be making sure that I hired and trained those people to understand that one of their big jobs is to grow their book of business, is to understand that their responsibility is to help their clients achieve their goals, which helps the agency achieve our goals.

So it’s not about selling more, it’s about being more in tune with the client’s business, taking them bigger, better ideas, helping them achieve their goals, which then in many cases, in most cases means that we’re gonna get to do more work. And so I would have those folks in-house, in town, again, I would have a niche, so I’ll talk about that in a second. So our clients would be all over. So we would be traveling to those clients, but I would try and have those folks in house. I would’ve a smaller set of What I think of as the production team, the doers, artists, writers, web dev people, those sorts of folks. I would have media if I’m gonna have that in-house, but probably at 15 to 26 I’m not gonna have that in-house.

I’m gonna partner with someone to do that. But I would have those folks in-house. I would’ve a smaller team of those people and then I would have a great freelance bench and I would have contracts with those freelancers so that I am first in line when I need them. And the reason why I would do that is because I want to be able to ebb and flow my payroll costs based on the number of clients and the amount of work we have. Because again, I am gonna be committed to delivering that 20% profit from the get go. This is a mistake that I made and I know a lot of people make, is that when you start, you’re just in in startup mode and you’re spending a lot of money and you’re not making a lot of money or for a while you’re making a ton of money and then you hit that brick wall and all of a sudden you’re stuck.

And so I would be working really hard to run the business by the numbers from day one, that 55, 25 20, and I might steal from the 25, right, to put more money into payroll, but I’m not gonna steal from the profit. I would, I would make a commitment to myself and my team that we’re gonna have a profitable agency that we all benefit from through profit sharing and things like that, our bonus program. And then I would also have some folks who worked overseas. So anything that we did that was task oriented, that was very repetitive. Today, many agencies are really doing a great job of expanding their team by hiring folks from either the Philippines or South America or some other country where you can still get great employees, well trained, well educated.

These are not just VAs, these are people who are good at their job, whether it’s dev or it is design work, or it might be, it might be tasks, it might be social media posting, whatever it is. But something that I could financially expand my team without grossly impacting my payroll. So that would be the mix of teams, thinkers in smaller team of doers in some folks internationally, and then a really strong freelance bench, which is what, what most of you look like today. But with those folks, I would start right away with the one-on-ones. So I would be meeting every other week or I or their boss.

’cause at 15 to 26 people, obviously I would not be everybody’s supervisor, whoever’s the supervisor is, they would be meeting every other week with their employees. They would be going through the one-on-one sheets, they would be doing that sort of download with their clients. If you are not familiar with the one-on-ones, we’ll put that in the show notes. Super powerful tool. Everybody says that it is one of the best things they implemented and I didn’t do it for many, many years. So I would, I would add that I would do the one-on-ones and then every 90 days, part of the one-on-one, the one-on-one meeting series is that every 90 days at the end of every quarter, you would do a sort of a mini review. So the very first question on the one-to-one sheet is what’s your quarterly growth goal?

So every employee would have a career path and they would have a quarterly growth goal that’s helping them get better at their job and helping them prepare for the job that they aspire to next. And I’m gonna know what that is because we’re having one-to-one meetings. So I’m gonna know if they want to, if they’re a junior woodchuck and they wanna be a woodchuck, or if they’re a junior woodchuck and they wanna shift over to something else, I would be helping them actively helping them get the skills, soft and hard skills that they need to keep adding more value to the business to feel like they have a career path and a growth path. And they don’t have to leave my agency to keep growing and making more money. And every 90 days we would review that and do a mini review so that their annual review is sort of a slam dunk at the end of the year.

I, in terms of What I would do, in terms of who we would serve, I would absolutely have a niche. Doesn’t really matter in this scenario what the niche is, but it would be very narrow. So I have said a million times to all of you on this podcast in person, there is no niche too small. I, I have met many agency owners that had a niche that I was like, oh, I wonder if there’s enough business in that for you to sustain the agency. And the truth of the matter is, you know, if there are 500 or so of those businesses in your country, wherever you are, you know you need 20 of ’em. Ideally you’d have 20 clients. So again, this has never happened.

I’ve never seen it. We do have a couple agencies that are close, but ideally you’d have 20 clients that are each 5% of your a GI that way if one of them leaves, you don’t have to lay off half of your team, you don’t have a big gorilla. But if there, if I only need 20 and there are 500 in the world or in my country, I can build my business having 20 clients, maybe I lose one or two a year and I replace them with somebody else, that gives me a long runway. So don’t think that your niche has to be so broad that it’s 20,000 companies. I’m not saying that five hundred’s the ideal number, but what I’m saying is it can actually be that small. So I’d be niched number one.

It would be something that we have a passion for that we’re excited to do. As you know, we have a a worksheet where you can kind of think through what niche is the right fit for you. We’ll put that in the show notes as well. So I’d niche down and then What I would do is I would make sure that the services we offered, whereas recession proof as possible. So I’m gonna take a pause, be right back, and then I’m gonna tell you what services we would offer in my imaginary perfect agency of the future. Right? Be right back. Hey everybody, thanks for listening today. Before I get back to the interview, I just wanna remind you that we are always offering some really amazing workshops and you can see the whole [email protected] on the navigation head to how we help scroll down and you’ll see workshops and you can see the whole list there with descriptions of each workshop.

They are all in Denver and we’ve got them throughout the year for agency owners, account execs, agency leaders, CFOs. We have a little something for everybody no matter what it is that you’re struggling with, people, new business, money, all of those things we’ve got covered. So check ’em out and come join us. All right, let’s get back to the show. Alright, we’re back. And we are talking about as the, as we round the bend to 2025, if I were creating an agency from scratch today, I had a magic wand. So it just worked out perfectly the way I wanted it to, which we all know is not the way that happens. What agency would I create and why? So we just talked about the fact that we would absolutely have a niche in terms of the services we would offer.

I would focus on three areas and all of these frankly are based on the book that Steven Wener and I wrote Sell with Authority because I see over and over again how that works amazingly well. Both A, as an agency to sell your services, but B, when you apply the methodology of that book to your clients, how well it works for them to sell their products or services. And odds are we would, our niche would be a B2B niche. And so it would be more about services than product, but works just the same for products as well. So based on sell with authority, What I would focus on is sort of three areas. Number one, I would focus on PR and content.

I would help our clients create really helpful content. I would help them be a subject matter expert. I would help them be the resource for their industry that everyone turned to when they needed help and advice and obviously services. And then I would augment that with good old school pr. There’s still a ton of value in earned media. When I look across the boards of all the agencies, one of the subsets of agencies that’s really crushing it financially in terms of hitting their metrics are our PR shops. They’re doing really well. They’ve done, they’ve always done really well. It’s pretty recession proof.

So I would do a combination of content, sell with authority, modeled content and pr. And then I would have part of our business that would focus on helping our clients grow wallet share of their existing business. So focusing on, and this was, this was something that my agency sort of specialized in, was recognizing that this how people spent money on marketing and sales was sort of backwards. That we spend all this money and effort going after prospects instead of, we should be doing is trying to grow the book of business that we already have. Trying to get the clients who are already giving us money every week or every month or every day to give us more money to be even more valuable to them, to be even more indispensable to them.

So we would do that kind of work and that would be a, a series of pr, it’d be content, it would be email marketing, it would be probably some conferences and on sites, things like that. And then I would also focus, and again, using content and pr, I would focus on internal communication. So today having a, a robust employee team that is connected, that is engaged, that stays a long time, is such, such a money saver for businesses that I would focus on three things. One, get the employees to love being there and be raving fans and help you sell.

Two, get the clients that you already have to love being there, be raving fans and help you sell. And three, in terms of prospecting, PR and content to attract those perfect right fit clients who are going to be that sweet spot for you that will allow you to grow your business. So that, that’s what we would offer. I think a couple other things that I would do is I would, I would be very committed to running the business, as I said by the numbers from the get go. And I would be very thoughtful about my role. So like many agency owners who start their business, when I started, well shoot, there was only two of us when we started, but as we grew, What I didn’t do, which is the mistake that many of you have made or are making is I didn’t get out of the client service side of the business fast enough, which meant that I was doing my job, which is sales and mentoring the team and paying attention to the business, like the operational side of the business, watching the numbers, things like that.

I didn’t do that for the first several years. Took me a while to get out of being everybody’s go-to on account service and being the strategy, the driver of strategy inside my agency. So I would hire differently if I were creating this mythical agency, I would hire somebody more senior who could really lead the account service team or whatever it is that you all did. So I also was a writer and so I did a lot of the writing early in the early days. So I would, I would make sure that I, my initial hires, again, I can do whatever I want. Wave the magic wand would keep me from having the clients think of me as their doer that I was, that I would never be their whoopee that they had to call, you know, when they were having a problem or I was never the one who was meeting with them for status meetings.

Yes, I would show up for some strategy meetings and, and some things, some bigger picture things. But I would very much protect what my role is, which would be sales and mentorship and running the business so that I didn’t have to extract myself from client relationships, which took me many, many years to do. So I would not make that mistake. The other thing I would do is I would sort of know myself well enough to know that operations is not my gift. And so I would very quickly have somebody who’s gonna take over the operations side of the business. So whether I have a COO or that’s an accounting person, A CFO, A bookkeeper who also, if we’re smaller, is helping with some of the operational things.

But I would, I would focus on that and make sure that I wasn’t getting caught up in the systems and the processes, the things that I’m not naturally good at. And I would focus my time and attention where I belonged, which is creating content, creating relationship, helping clients grow their book of business, but very focused on the big picture strategy and sales as opposed to being in it and really having to figure out how everybody else did it every day, all day. Because again, early, early days of my agency, that was, that was my role was I wore all those hats, just like many of you are wearing those hats. But I would step, I would, I think it’s much harder to get out of it than it is to never get into it.

And so I would, since I get to do this how I want, I would make sure that I was never in it. The other thing I would do is that I would be very smart about how I paid myself. So as we do valuations for agencies and as we help agencies buy and sell other agencies, one of the recurring themes that we see and hear is that when an agency owner has underpaid themselves or gone without a paycheck for a long season, all you do is diminish the value of your agency. You have no idea how influential your total compensation. So that’s gonna be W2 income, dividend income, your retirement contributions, 401k or simple IRA, your pass throughs.

And then if you have it a defined benefits program that you’re paying yourself. Well when those five areas is really critical to the long-term success of your agency and if you’re dropping 20% to the bottom line, there’s no reason why you couldn’t or shouldn’t be able to do that. And so that’s What I would do. I would also, every once a quarter I would have a offsite with my team to build team building for us to continue to grow. I would invest heavily in professional development and my team there is nothing more disruptive to an agency of 15 to 25 people than having a key person leave. And so I would be investing a lot in those people.

And by the way, not just sending them to workshops, not just getting them courses or doing that, but I would be investing time because I would have the time to truly mentor them and to help them grow and to encourage them and support them. That’s one of the things we hear all the time from your employees is they want more of you. And I wasn’t always great at that. So I would, I would be better at that. So really What I’m saying is the agency I would create if I were creating an agency from scratch are based on a couple things. One, all the lessons I learned as an agency owner. Two, all the lessons I learned and Danielle and I see as we coach and consult with all of you and help you undo the mistakes that I’ve been talking about through this episode.

And number three where I think the puck is going. I, yes, AI is impacting our business. Yes, international employees are impacting our business, but I believe that if we can help our clients through smart strategy, through good counsel, through great work, if we can help our clients keep, attract and keep great employees, attract, keep, and grow, actually that’s What I should say. Attract, keep, and grow great employees, attract, keep, and grow their clients so that they have very little churn of clients and they are growing that book of business by 10% every year and attract and keep prospects who are the right fit, who wanna hire you for the right reasons.

I believe that that is universal, that when we have great counsel and we have a niche and we understand that niche and we can really teach and coach and counsel our clients in that niche. So again, it’s not about talking about marketing. So I was with an agency owner yesterday and their niche is financial. And What I said is all your content is around financial marketing, but you’re not teaching them about the industry. You’re not teaching them about what’s important in their, you’re not demonstrating that you understand financial services. And their niche is more narrow than that because financial services is not a niche, but let’s just say their niche is local credit unions.

You need to demonstrate to your prospects and your clients that you understand the world of credit unions, local credit unions, you understand their challenges, regulatory challenges, legal challenges, staffing challenges, marketing challenges, client retention challenges. It’s not just marketing. It’s that you are immersed in their industry, in their niche just like they are. And you layer on top of that your marketing expertise, that’s when you are really a subject matter expert. That’s when you can sell with authority. And so I, I would do that. I would, I would embrace that. I truly believe that is the way of sales.

I truly believe that’s the way we connect with earn a client’s business and keep a client’s business for a long period of time. And so my agency would be super focused on all of it. Alright, so I’m curious how far off is my ideal fantasy agency from the agency that you have today and the agency you are working on creating for 2025. And what are you gonna do to close the gap? And by the way, your fantasy agency might not look anything like mine. That’s one of the great things about owning an agency is that you get to do it the way you want to do it. And so I am all for that. But having a clear idea of how to do that and where you’re going and what you’re willing to sacrifice to get there is important.

So as you round the bend into the new year, be asking yourself at the end of this year, how do I want my agency to look different? How do I want my team to look different? How do I want the clients we serve to look different? How do I want us to look different to the world? How do I want to be a subject matter expert? And in what and how do I wanna make sure that it’s clear that we are that subject matter expert? So with that, my friends, I wish you a really happy New Year. I am so grateful for you. Thank you for listening again, Scott, congratulations on winning the workshop. And last but not least, a huge shout out and thank you to our friends at White Label IQ. They’ve been the presenting sponsor for many, many years and they come alongside agencies and they do white label design dev and PPC.

So whether you have folks that do that on your team and you just need an extra set of hands or maybe you wanna outsource the whole thing, this is, they’re the go-to for many a MI agencies. They are born of an agency so they understand how to price so that you make money as well. And they also understand how critical it is to exceed your client’s expectations. ’cause they do it every day. So head over to White Label IQ dot com slash aami and check them out. Okay. Hey, have a great new year. Let’s all start off 2025 with a bang and be really thoughtful about where you want to go this year and how you’re gonna get there.

And if we can be helpful, we would love that. Alright, thanks for listening.

That’s all for this episode of AAMIs Build a Better Agency Podcast. Be sure to visit agency management institute.com to learn more about our workshops, online courses, and other ways we serve small to mid-size agencies. Don’t forget to subscribe today so you don’t miss an episode.