How do you scale an agency from $100k to $1m ARR?
Scaling a business is hard, and I would argue: Scaling a service business is even harder.
At the end, you depend on people to deliver client services.
From $0 to $100k ARR, it’s usually about finding the right service for the right market and choosing a marketing channel that works for your agency. At this stage, you’re usually still quite involved in the day-to-day operations as a founder.
So how do you move to the next stage?
From $100k to $1m and beyond, it’s much more about building a company and a repeatable business: Putting the right people and systems in place to allow you to scale.
In this post, I’ll explore 7 priorities you should focus on as a founder to grow to that magical $1m in annual revenue mark.
Learnings from 3 founders of $1m+ ARR agencies
First of all, a side note.
I usually find business advice too vague (founders often give advice about very unique things that only happened to them!) and thus not very actionable.
I’d rather to learn to founders that are doing the same type of business, with similar priorities and objectives, and that are a few steps ahead of me.
This is why I decided to talk to founders of 3 agencies which scaled to $1m ARR to see what learnings they had in common:
1. Sam Shepler from Testimonial Hero, a done-for-you remote testimonial service ($3m+ in yearly revenue)
2. Kenny Schumacher from Delesign (who just recently sold his business)
3. Sebastian from DoFollow, an SEO agency.
I also suggest you to give them a follow on Twitter, they’re all putting super valuable content that might help you in your agency owner journey.
To deliver services at scale, one of the key element is to have strong systems to deliver client services efficiently.
Even if you’re executing those systems by yourself at the beginning, it’s a good mindset to adopt to help you scale.
One way is to achieve that for your agency is by productizing your services.
In other words: Package your services, systemize service delivery, and find a repeatable way to sell them.
So how do you get started with systemizing service delivery?
We wrote a short guide on creating SOPs for your agency but here are the 3 important takeaways:
1. Determine your goals (delivering services in a more repeatable way)
2. Document processes (use diagrams, flowcharts, and bullet points)
3. Train your team to implement those SOPs
Here are some tips to create your SOPs:
1. Create a source of truth for everything that happens in your agency.
Tools like Notion are great for this. You can centralize company rules, time off requests, team trainings, as well as service SOPs, all in one place.
2. Accompany your SOPS with videos
For example, if you create a “Client onboarding checklist” with 10 steps, add a small video as well. This will help your team to visualize exactly how it works and clear any doubts.
3. Keep it simple and improve over time.
If your SOPs are overly complicated… your team won’t read them. I’d also encourage your team to contribute to those systems. For example, you can create an internal wiki for client services and invite your team to spend some time each month to improve it.
Focus on hiring
Another focus area to grow to $1m ARR is building a strong team.
Specifically, here are 3 areas I would focus on:
When I asked Sebastian from DoFollow what to focus on specifically he said: Culture.
Culture becomes becomes way more important once you grow.
Never hire just for skill but for culture-fit. Make sure you know what your core values are, how they are reflected in your company culture and what type of people won’t be a good fit. Having a strong team will carry you a long way, especially when things get hectic.
2. Hire great leaders
In addition, Sam Shepler said to me “You need great people, and more specifically, you need great leaders at the head of every function.“
Build the people and the people will build the business. Take time to figure out what you want to stand for and what your company culture is focused on.
3. Figure out your mission and vision
Take time to figure out your mission and vision for the company and the dent that you want to leave in your industry.
Talented people always have options so you need to have at least a reasonably inspiring vision for the future to attract them.
Automate as much as you can
Everything that can be automated should be automated.
This will free up your time but also your employee’s time so they can focus on high value tasks.
You can also use ManyRequests to automate parts of your service delivery. For example:
- Create service packages
- Onboard clients
- Run automations (example: auto-assign requests to team members or change status automatically)
- Use Zapier to trigger automations (example: Create requests automatically) and connect to other apps
And way more, you can start your 14-day free trial here.
Outsource inbound sales
This is another important one.
As you may have realized when going from $0 to $100k: Not all clients are a good fit for your agency.
Hiring someone to focus on inbound sales to assess whether a lead is a good fit is key to grow.
Ideally, this person could be someone who previously worked in a role delivering services for your agency. They’ll know whether incoming leads are a fit or not for your services. They will spot red flags and put themselves in shoes and pick the best clients for you.
Double down on marketing channels
Sam Shepler told me: “If something works: Double, triple, or quadruple on that channel until it’s maxed out.“
There are no participation trophies for using more channels. Don’t peanut butter your marketing dollars and your time and marketing time and energy around evenly.
Figure out what is working and push as hard as possible on that until you can’t scale it further. Then stack additional growth channels on that, and repeat.
For example, Kenny Schumacher “tried every single marketing channel possible” until they were able to make paid ads work through Google, at ~$200/paid conversion.
Read more: The complete guide to client acquisition for agencies.
Say no more often
Sebastian Schäffer said to me: “Success doesn’t come from doing more but from doing the right things“
Allowing yourself some time to think about high impact activities will give you leverage to scale.
A good way to start doing this is to ask yourself: How much do you value your time?
Is it $100/hour? Is it $1000/hour?
What are the tasks that are worth your time, and which one should you delegate?
Kenny Schumacher told me: “Delegate to allow yourself to focus your time on the most valuable tasks.“
“Early on I was spending 10+ hours daily doing everything without too much to show for it. After $1M ARR, I was spending ~1 hour/day while still providing much more value than I was at 10 hours/day, as I was focusing on activities that moved the needle.“
Get coaching and support
Finally, the journey to $1m ARR may be difficult. Things get stressful.
Sebastian Schäffer added: Get support from a coach or therapist. Understand your own patterns and limiting beliefs is super important when it comes to building culture but also growing a business in general and for your own sanity when things get stressful.
Adding to this I’d also say: Build a supportive network around you. Your network can be incredibly valuable to support you along your journey. Learning from those a few steps ahead of you is helpful to avoid common mistakes.
Here are some ways to build your network:
1. Share your learnings. It can be by getting on podcasts, Twitter, blogging, or simply sharing in communities and Facebook groups about your experiences.
2. Join communities of like-minded entrepreneur. We run Productize Community, one of the biggest communities of agency owners that want to productize and scale their services.
It’s very possible to run a service business doing $1m ARR on 10 hours a week if you get your processes and team right.
The change is not easy, getting coaching and a supportive community (we run the biggest community of productized services) help to do that.
Find great people, make the goals clear, and then be ok to release some control and get out of the way.
That’s it folks! I hope you enjoyed this read. If you’re looking to scale further your agency I encourage you to check out ManyRequests (a client portal software specifically built for agency owners) and start your 14-day free trial here.