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I started an agency and sold it to another after 6 years. I had a business partner; we started with about $20k of our savings. We did not have investors or family money, but yes, I know agencies who started with family money. In those cases, the family takes a deciding share of the business - not great when they don’t understand the business. My business partner and I continued to work FT the first year. To gain our first client, it’s all about networking. Networking, networking, networking. We took PTO and used it to meet several projects in person in a day. Before becoming profitable, we gave a lot of free work away. Free plans, free audits. By year 3 we both worked on the business full time and had about $3M in billings.
We pulled out in quarters. I went PT first, then my partner and so forth. We sold a lot of high service, low out of pocket work in the beginning with MarTech partners with rev share. Once we had about 4 deeply embedded accounts that got us to 80% utilization, we began pitching for larger media accounts. Rigorously project managing and biz dev planning- sat every two weeks to adjust and project like clockwork. We always made sure we were free at the same times each month to bust out strong pitches. Very clear scopes and rate based card helped us push back on scope creep and our clients liked the transparency without the % negotiations. To hit bigger accounts, we plugged into adjacent agency types that lacked our specialization. We specialized in high regulation industries, pharma, health, law, finance, utility tech. Two large accounts, plus our loyal high volume clients allowed us to hire. We split during the pandemic; partner wanted easy stability at FT again with 2 kids off to college. Divided accounts and I took mine to a former employer.
Chief
I’m in the process of also starting something with my partner. I wouldn’t exactly call it an agency, but more of a collective since we don’t want to grow. We just want to be super small, lean, and agile. Just us two and freelancers when needed.
We are in very early stages, but are starting to approach previous clients that we had good relationships with, whom we know liked working with us. We both have different trajectories and relationships and we’re trying to take advantage of all our possible contacts. We don’t want to be anyone’s AOR. We actually just want to be invited to pitch projects against their AOR. Like big, fun juicy projects. We’re pretty confident we can win some of those pitches and a couple of those projects per year would be enough to support us both handsomely.
I have a friend who is doing just that. He’s living my dream and taking in the dough while doing great work. He started with a good client relationship when he was an employee and then when his non compete contracts expired, he approached the client and the client invited him to pitch big budget broadcast projects against their AOR. He’s an uber talented creative and the slow, bureaucratic, bloated, expensive holding company AOR hardly ever stands a chance. The AOR still has all the media and tons of boring ass but profitable business from them, so financially it hasn’t affected them that much.
Have a spouse that works.