An Owner's Survival Guide To Building An Ad Agency

If you're not growing, you're dying. 

This phrase is accepted as a business gospel truth. But what does "growing" really mean? 

For many companies, it's growing the number of employees or clients. Causality actually exists between those two goals, but many agencies don't seem to realize it. 

In a report from HubSpot, 60 percent of the agencies polled said finding new clients was their number one point. However, only 50 percent reported that their agencies allow for career growth. Thus, agencies want to grow their client pools, but they’re not developing people professionally for that to happen. 

Growing pains happen at every company. As companies grow, they change. Every agency of 250 people began as an agency of just five, and it evolved each time it scaled. 

Every size has pros and cons, and trade-offs happen at each growth stage. Breaking points will trip companies up if they don't change. 



What are those breaking points? What does that evolution look like? These are the four major stages of agency growth: 

Seven and smaller: Hands-on 

The agency has just started. The owners are broke and working tedious, long hours. They're directing everything and reinventing the wheel daily. 

They're pulling in business from anyone who has a buck: people met through networking, church peers — even their buddies. They want anybody and everybody to give their agency a shot to prove itself. 

Because the client mix is totally random, in terms of finances, it's feast or famine. When money comes in, everybody gets paid and fed. But during dry spells, the owner often goes hungry. 

And because they don't have the staff yet, the owners remain highly client-facing — they take calls, do strategy work, and generally stay stuck in the weeds. 

12: The middle mark 

Once an agency hits 12 employees, the owners’ load lightens. They hire enough people to help with the admin; they hire senior people who are more self-directed and take others under their wing. 

Financially, the agency starts to enjoy success. However, that means high highs and low lows. The finances are now ebbing and flowing, especially if there's a gorilla client who dominates most of the billing. 

When this type of client is slow to pay or disagrees with the bill, everything clamps down. This can be stressful: Overhead and expenses are now higher because of the increased staff. 

18: From family to team 

At around 18 people, agency owners finally start to define a new normal. Rather than micromanaging, they spend more time on business development. They’re figuring out how they want their agency operated. 

Departments are established to specialize and divide the workload. As department heads are assigned, a hierarchy develops. 

Because of this new structure, the agency goes from being a small, intact family to a developing team. There’s excitement around rapid growth, but it’s also a time to acknowledge things are changing. The shift can be jarring for employees who might now have to follow the orders of higher-ups and stricter policies. 

20 and up: Balancing solo decisions and democracy 

With a solid structure in place, the owner is freed up to make big decisions, which fall into three levels: 

Level 1: Decisions are purely democratic. The owner gathers everyone around for a team vote. The majority vote wins. 

Level 2: Decisions involve input from everyone, but the final decision rests with the owner. 

Level 3: Decisions are made solely by the owner. 

This is often a big culture shift for an agency, so it's best to announce it early. The first time an owner comes back and says, "Hey, I made a decision" without telling anyone, the employees get frustrated. They might speak up and disagree, which can be frustrating for the owner. 

The game changes at this point, and everyone should know the new rules upfront. 

Not every agency grows continuously. Often, agencies are geographically bound. Getting beyond 30 employees is usually unlikely, and for some agencies, 12 might be the magic number. No matter what size your agency is comfortable with, be aware of the changes that come with each growth stage.

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