512 clients and 5 years after starting my first agency -- this is almost ALWAYS true. If a prospect is a pain in the ass during the sales process, They were a pain in the ass as a client. Building an agency that is highly profitable (and you/your employees enjoy) starts with client selection You SHOULD NOT take on clients you can't serve or doubt every word you say. Just because they're willing to swipe their card, doesn't mean you should take their money.

I lost (literally) millions of dollars trying to 'play business' with our first agency. We spent $20K/mo on a fancy, high-rise office in downtown Dallas We spent $50K/mo on giving everyone health insurance We spent literally hundreds of thousands of dollars a month on in person, W2 payroll And the result? Me, on the phone 12 hours a day, 7 days a week trying to close deals to keep the lights on. I want to make sure I am very clear: You. Do. Not. Need. Fancy. Shit. Especially if you are under $1M: Keep it as lean as possible as long as possible. Stay remote, forever. Hire everyone that's not client facing from cheap, overseas labor. Hope this helps. --Alex

If you do not fire bad clients, you are a bad agency owner. It doesn't matter how much they pay. (Build a reliable sales system and you won't have to worry about replacing them) Bad clients delay project timelines. Bad clients request tons of revisions. Bad clients make your employees dread working. Bad clients cause founders to burn out. As the owner -- it's your job to protect your margins, employees, & yourself. Bad clients destroy them.

We built our ad + creative agency to $5M... then it burned down. Here's a short warning story and how you can avoid it: In 2020 I started an ad + creative agency with my two best friends. At first, it was awesome. We grew quickly, the work was great, clients were happy, and it felt like every day we were making progress. Our biggest differentiator (and why we were able to grow so quickly at first) was client acquisition. We were really damn good at making great offers and closing deals. But as we continued to scale past 100k, 200k, 300k/mo... That became our downfall. While we put so much focus on closing new deals and growing our top line -- We failed to put in the same amount of work on scaling our systems & teams. Oh, we hired people.. 50+ people in office (not the smartest move in retrospect lol) We just didn't equip them with the tools or the resources to get the job done. 100% on us (as everything is on you as the founder) The rapid growth dream-come-true quickly developed into my living nightmare: --10-12 hour days, 7 days a week --A calendar filled with justifiably angry client calls --Frustrated and burnt-out employees --Still trying to close deals every day while dealing with the rest of it (it's really hard to sell when your company is falling apart btw) And, the worst part: Waking up every day knowing I'd put myself here with no tangible end in sight. In the end, we sold the company for much less than it was worth just to escape this monster we'd created. Here's a few tips on how not to make the mistakes we did: #1: Put as much time into retention and delivery as you do new client acquisition. The only way to prevent building a client-chasing trap for yourself is to learn how to predictably deliver great work and get your clients to keep happily paying you month after month. #2: Focus on high-value clients you can predictably deliver impactful results for. Charge more. Take on less of the right client. Say NO to people you can't serve.

Agencies are one of the few businesses that can pull of 50%+ margins at scale (over $1M/yr revenue)... ....as long as you know how to structure your expenses. Here's how we do it to pull 80%+: **Note: I am not a financial advisor, this is not legal/financial advice, don't @ me The four categories for agency cashflow are: 1. Cost Of Delivery - your costs to fulfill a project (including employees & contractors) 2. OpEx - your day to day overhead (office, softwares, etc) 3. Acquisition - your costs to acquire new clients 4. Profit - what's left over Your goal should be for the first 3 to equal or less than 50% of your overall monthly revenue, and here's the breakdown: 1. Delivery - 25% of revenue or less 2. OpEx - 5-10% of revenue 3. Acquisition - 10-20% of revenue 4. Profit - 50%+ of revenue And as you can see, this does not include taxes -- because I am not a CPA and will not give tax advice (the IRS scares the shit out of me) Just don't blow all your profit on things you don't need for when tax time comes around. Hope this helps, --Alex