Growth is a difficult stage. Done correctly and you can achieve your goals. Done incorrectly and it can kill the business.
You’re ready to scale when you have a roster of clients and a solid team to service them. It’s even better if you’ve started to turn in profit. But that’s not totally necessary.
As these things happen, you move from a startup into maturity. You’ll consider hiring new employees, increasing spending, and expanding the business. Most companies can't afford to do these all at once. So where do you begin?
This checklist is for digital agencies considering scaling. If you can answer yes to all these questions, then you’re ready to move to the next level.
Scaling with confidence requires having a predictable revenue model. Rapid revenue increases aren’t everything. You need to see how things are evolving.
Review all activities, expenses, and metrics compared to revenue-generating. Does revenue exceed expenses? Do you understand your costs?
What is key is that you feel able to predict revenue based on those things that are within your control. This should make it possible to recognise the links between inputs and outputs.
To know when a business is ready to grow, you need to understand what activities lead to revenue.
There are different ways to sell your time. In the past, agencies charged per project. But you are not tied to this revenue model.
Experiment with different models for different clients. It will surprise what works and what doesn't.
You have a wide variety of methods. You can try out strategies like subscription models, retainers, and others.
One exciting emerging trend is equity-based work. Instead of immediate payment, you receive equity, profitability, or revenue from the client.
When working with startups this can be a very lucrative opportunity. For example, artist David Choe painted Facebook’s headquarters in 2004. He had the option of a $60,000 payment or stock option for the same amount.
Choe opted for the latter and ended making $200 million on the deal. Not all startups are going to be Facebook. But if you have the privilege to work with a promising company, it can pay off.
Many agencies now use recurring revenues over campaigns. In this variation on retainer relationships, you bill monthly for a fixed set of services. For example, you may create X blogs per week for a set rate.
Or you can charge based on ad-spending and revenue generated. So if clients spend $1000 on ads, you get a flat fee of $100 plus a percentage of revenue generated.
These different methods give more opportunity to control revenue and plan for scaling.
Profitability isn’t the sole factor in determining expansion. You must be able to project sustained positive cash flow.
Investment in expansion takes time to bear fruit. What's the worst-case scenario? Can you handle six months of new hires not generating new clients?
Give yourself plenty of cushions when forecasting profits and projecting costs.
The next step is determining how sustainable growth will be. Do this by taking into account the money and time spent on generating each element of revenue.
Here are other ways you can manage positive cash flow:
Personnel is key to deciding to scale. You must be able to rely on your current staff to act as a strong foundation for what you plan to build.
Do not hire more employees and add to your overhead if you have any doubts.
A solid core team requires at least three to five people committed to the long term. Incentivise these employees with equity, bonuses, and other compensations at your disposal.
Don’t be greedy. These people are the key to lasting and real success, so it pays to reward them.
When you’re ready to scale, you'll need to upgrade your system. Scaling places huge demands on resources. Externally, you'll handle increased volumes of traffic. Internally, you'll have many more projects going on.
So you need to make sure you have all the tools you need in place.
Stability and speed are essential to your infrastructure. To keep up with your agency’s needs, you may need to consider upgrading to a more powerful hosting plan.
What you choose must offer scalability, cost-effectiveness, resilience, and security.
Consider getting a dedicated server or a virtual private server (VPS) hosting.
The decision depends on many factors including:
As a digital agency, you want a hosting option that provides the most freedom and flexibility.
Dedicated servers are essential for businesses with a growing user base. They provide additional resources and security needed for high-traffic websites.
Dedicated servers are for digital agencies that:
With VPS hosting, you receive a set of processing power and storage resources. It's limited but easy to set up and more affordable.
For newer digital agencies, this is a good option before making the move to scale. VPS makes it easy to add virtual resources as needed.
VPS hosting is also ideal for digital agencies focused on less resource-intensive tasks. Blog creation and social media marketing agencies are a good fit.
Virtual hosting is good for:
Bigger isn’t always better. Scaling your business means also scaling your marketing efforts and everything else you do.
To scale up, examine the processes you currently use. This will help find ways of streamlining. It will also determine which marketing efforts are driving a positive ROI. You can then cut back on what doesn’t work as well.
Successful scaling is about knowing what attracts and what retains existing clients.
When your clients are satisfied, you’ll be well-positioned for growth. And you can use their testimonials and case studies to attract more clients.
You need to be prepared to serve more clients. This also means anticipating higher volumes of help requests and traffic from your clients’ end.
So it’s important to scale your client support plans to keep pace with your business’s growth. Make sure you dedicate employees to specific clients.
Delegate to them the authority to solve problems and move forward. This will give you the time to focus on moving forward.
Now you're ready to start implementing your scaling plan. Here's everything you need to do:
To scale your business, make sure you have the right infrastructure in place. You’ll need a powerful hosting plan to handle intensive demands from multiple websites as you onboard more clients.