I’ve had this thought sitting in the back of my mind for quite some time. And now, after crossing the triple-digit mark in conversations with agency owners, I’ve started to see patterns that make this sentiment ring even truer. There are honestly a number of reasons this resonates, but let’s face it…running any business is hard. That said, here are the top three reasons why running an agency can be especially hard.
1. Low Barrier to Entry
It’s incredibly easy to start an agency. You likely don’t need anything you don’t already have, and with just a little brainpower, you can land a client or two fairly quickly. I started an agency (with a partner) within 48 hours of having the idea—after swiping a credit card for $500 to buy leads, a trip to Staples, and a Chipotle burrito to hash out the details. (Those last two might not have been critical… maybe 😉)
The challenge is that this low barrier allows agencies to experience some early success without solving the difficult problems that brick-and-mortar businesses must address from day one. Most notably, how to consistently bring in new clients. That cracks the door open to long-term fragility.
2. The Marketplace Can’t Tell the Difference
This is why you often hear agency owners say, “We get all our business from referrals.” When the marketplace struggles to differentiate between agencies, people default to arbitrary decision-making: Who do I know? How close are they? Have they done something I like before? (Hello, portfolio shopping.)
This one might sting: getting all your clients from referrals isn’t the flex it’s made out to be. It usually just means that since the market can’t confidently determine who’s actually best for the job, they choose the familiar or convenient rather than the best.
3. Creative Services Are Hard
Just like art in a museum, some people adore Starry Night, and others dislike it for no particularly rational reason. Getting a client on the same page, aligning your team, and making that whole creative process profitable takes a lot of rigor, experience, and nudging.
This is also where the dreaded “Valley of Death” shows up when an agency tries to scale. The principal knows how to get things done effectively, but that knowledge gets diluted, or worse, stays locked in their head, as the team grows. Most agencies don’t “die” in the valley, they just retreat to a more manageable size.
Oh, and let’s not forget: you’re doing all of this not for one company, but for a dozen (or more) at once.
Fear Not, Friends
This doesn’t mean you’ve chosen the wrong business. Many of you have found success in spite of these challenges. And the good news? Most agencies don’t shut down because they run out of money. They’re resilient businesses, and that’s worth celebrating. Getting on the other side of some common challenges bears a lot of fruit for those that can get there.
So What’s the Path Forward?
Let’s talk about two powerful strategies that can help you rise above these challenges:
1. Unique Positioning
Because you can build a decent agency just by doing solid work for a few clients, many agencies get by for quite a while, until they hit a wall. Revenue starts to plateau, and stress builds because you’re working harder but not growing.
That wall might come at $300K… or $2M. But it comes.
Unique positioning is how you break through it. When your offer clearly aligns with a very specific audience, your messaging becomes magnetic. Prospects can now self-identify as your ideal client. You know exactly who you’re targeting, where they hang out, and what to say to earn a seat at the table.
For most agencies I work with that have nailed their positioning, the problem isn’t getting new clients, it’s handling all the demand.
That’s why positioning is often the very first thing I recommend focusing on when working with an agency.
2. Be Your Own Client
The cobbler’s kids have no shoes. The painter’s house is never painted. I get it.
It’s hard to prioritize your own business when you can trade that uncertain effort for paying client work. But think about what it signals when a marketing agency doesn’t invest in its own marketing. It undermines the very value you claim to deliver.
Agencies that do the work on themselves, who eat their own dog food, learn faster, build deeper credibility, and create a virtuous cycle. You learn what works and what doesn’t, firsthand. You become more efficient because you’re spending your own money. You build real capability, not just process for clients, but muscle for yourself.
In short: R&D your own business. It’s the best way to improve your effectiveness for clients.
Tying It All Together
The common thread here? The ability to self-generate leads is the foundation of an agency’s ability to thrive, and if desired, to scale.
“But wait Russel,” you say, “What about that part where you said creative work is hard? Getting leads doesn’t solve that, right?”
Yes and no.
Agencies that are well-positioned and deliver incredible value aren’t easily replaceable. They show up with an upper hand in the value equation…they’re sought after. That dynamic smooths over the tough parts of the creative process, and reduces the need to over-explain or justify every move to a skeptical client.
Your team also gets better, because you’ve practiced on yourselves. You’ve built expertise around your niche and honed your craft for your positioning.
Riches in niches, friends.
Sincerely,
Russel
“The Backboard”
