{"id":5524,"date":"2016-02-03T12:20:59","date_gmt":"2016-02-03T12:20:59","guid":{"rendered":"https:\/\/authorityhacker.com\/?p=5524"},"modified":"2022-01-17T07:08:34","modified_gmt":"2022-01-17T07:08:34","slug":"agency-pitfalls","status":"publish","type":"podcasts","link":"https:\/\/www.authorityhacker.com\/agency-pitfalls\/","title":{"rendered":"#12 The Agency Traps: Pitfalls of Running An Agency or Consultancy"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><b>What you will learn<\/b><\/h3>\n\n\n\n<ul><li>\n\t\t\t\t\t\t\t\t\t\tThe Pros &amp; Cons of running an agency\/consultancy<\/li><li>\n\t\t\t\t\t\t\t\t\t\tWhat we learned running an agency for 4 years<\/li><li>\n\t\t\t\t\t\t\t\t\t\tWhy we quit running an agency<\/li><\/ul>\n\n\n\n<p>Before we started running authority sites, Mark and I ran an agency for 4 years.<\/p>\n\n\n\n<p>We started it on the floor of the single room we rented here in Budapest and grew it all the way to a 30+ people office that serviced fortune 500 companies and up and coming start ups around the world.<\/p>\n\n\n\n<p>\u200bA lot of the tactics we actually teach here on Authority Hacker come from these times where we had to scale a lot of white hat inbound marketing.<\/p>\n\n\n\n<p>\u200bWhile this is not the core focus of this site, we know a lot of you guys are running one man consultancies or have online marketing jobs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The Pros of running a consulting business<\/h2>\n\n\n\n<ul><li>It is very easy to grow a 5 figures\/month business selling done for you online marketing services.A lot of the work can be outsourced and marked up easily<\/li><li>You don&#8217;t have to be good at everything online marketing to be successful, you just need to master 1 thing and sell it as a service.<\/li><li>It is a great bridge between the time you quit your job and the time you can live off your sites.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">The Cons of running a consulting business<\/h2>\n\n\n\n<ul><li>Handling clients is a huge time sink<\/li><li>It is hard to motivate yourself to work on your own sites after spending the whole day working on someone else&#8217;s site.<\/li><li>You have more incentives to pick up one more client than taking 5x the time to grow your own sites<\/li><li>The margins are mediocre<\/li><li>Big teams can be a headache<\/li><li>It does not feel like freedom<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">What we learned running a consultancy\u200b<\/h2>\n\n\n\n<ul><li>Re invest a % of your income to build passive income \/ your own businesses.<\/li><li>Start your own sites before you start your agency.<\/li><li>Don&#8217;t scale too much like we did, just to the point where you can finance your own sites.<\/li><li>Retention trumps sales, work on keeping your clients and upselling them.<\/li><\/ul>\n\n\n\n<p>Your turn now! Do you have an agency \/ consultancy or do you plan to open one? What are your learnings?<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Full Transcript<\/h4>\n\n\n\n<p>Welcome to the Authority Hacker podcast, the place to learn field tested, no BS tactics to grow hack your online business and finally, live life on your own terms. Now, your hosts, Gael and Mark.<\/p>\n\n\n\n<p>Gael: Hey guys, welcome to the Authority Hacker podcast. Today we are not going to talk about authority sites actually, we are going to talk about agency stuff and consultancy stuff because the truth is, we didn&#8217;t start building authority sites just after we graduated or even just after we quit our jobs. What we did was we actually created an agency that we grew for the first 4 years. Mark is with me on this podcast- how is it going Mark?<\/p>\n\n\n\n<p>Mark: Hey, good. I think it was about 4,5 years actually.<\/p>\n\n\n\n<p>Gael: Yeah, so we have done that for a while, and actually that started as just us trying to pay our bills here in Budapest. We were actually sharing an apartment and I remember working on the sofa and you working on the dinner table. But, it grew to actually a team of over 30 people eventually, and we sold that agency like in early 2014. So we didn&#8217;t quit the game very long ago, we started authority sites before that, but we have had an income stream from the agency and we haven&#8217;t talked too much about it and I know that a lot of our listeners either walk in online marketing and are thinking of like starting their own thing to make some money, or they already are freelancers, or they already have their small agency or they just want to see if it&#8217;s a good idea. And we actually have more experience still with the agency than we have in authority sites, at this point. So, I think it&#8217;s cool that we talk about it. And, we actually know a lot of people who run agencies and one man consultancies that wanted us to share experience. So, let&#8217;s just start with why this is actually a good idea as a business and why would one consider doing that, maybe before running your own sites- do you want to talk about that?<\/p>\n\n\n\n<p>Mark: Yes. So, first of all to say there is advantages and disadvantages to running an agency consultancy, whatever you want to call it. And I think the both, Gael and I, having been through for 4,5 years perhaps we may come across to saying it&#8217;s a negative thing, but I think it&#8217;s good that we start with this because there are many positive stuff as well. And I guess the reason we did it, was because it was easy to get into, it was easy to start, and more importantly, it was easy to start making a decent, a livable salary off of it.<\/p>\n\n\n\n<p>Gael: I think when you sell your time it&#8217;s easier to make money, then when you sell like e-books or any kind of affiliate offers or something, it&#8217;s usually a little bit harder to sell then just saying, &#8220;Hey, I&#8217;m just going to do that for you,&#8221; it&#8217;s very easy to just come up with services, kind of like pivot and change if it doesn&#8217;t work out or if you are building like a service or software or something it&#8217;s quite difficult to actually change what you are selling.<\/p>\n\n\n\n<p>Mark: Exactly, and even before we started the agency, I was selling my time, I was working on Upwork as web site project manager, I was freelancing, this was just like a level above it, starting the agency. But I think the reason we got into it was because we saw there was not massive but like a decent amount of money to be made there and it would enable us to quit our jobs and like do something and build something that we owned. So it was like quick way; we knew, just because the previous work we&#8217;d done, like bits and pieces, like looking back we really didn&#8217;t know that much back then but we knew enough to sound like we knew what we were talking about.<\/p>\n\n\n\n<p>Gael: Yeah, I mean, just to give some context, Mark was a project manager building websites on Upwork, he was just a for-hire-project-manager, specializing in building websites. I was actually an account manager in an SEO agency where I just ran SEO campaigns and did that kind of stuff. So, together it was a pretty good skill combo and we had a little bit of experience in the industry but we didn&#8217;t have much experience selling, it was like I in a common job, I wasn&#8217;t running everything in the company and so on, same with you- you just were given missions and paid per hours, so we had to figure out a lot actually.<\/p>\n\n\n\n<p>Mark: Yeah, I mean a lot of the first 6 months was really just figuring out how to do stuff and kind of improvising in many cases and kind of just figuring things out because-<\/p>\n\n\n\n<p>Gael: That&#8217;s what starting a business is.<\/p>\n\n\n\n<p>Mark: Yeah, absolutely. And, my point there is- it&#8217;s quite- I won&#8217;t say easy because it certainly took a lot of time and effort, but it&#8217;s certainly very doable to do that, as an agency or as a consultancy, because you can kind of bullshit your way a little bit. I know that this sounds bad but-<\/p>\n\n\n\n<p>Gael: This is what business is essentially guys.<\/p>\n\n\n\n<p>Mark: Absolutely the truth, most of the people you are working with, do not have a clue about online marketing, so even if you have a bit of a clue, in most cases way more than everyone else.<\/p>\n\n\n\n<p>Gael: I must say that it&#8217;s something that really struck me in working as an agency is even like an online marketing directors and stuff in really big companies have no freaking idea what they are doing. They are reading Moz and they are just doing what they read there last week and then they change the strategy next week when they publish another blog post.<\/p>\n\n\n\n<p>Mark: Maybe that&#8217;s another option, like if you don&#8217;t want to start an agency you can become an online marketing director of the big company.<\/p>\n\n\n\n<p>Gael: In terms of the pros, to get back to the pros, it&#8217;s one thing that I find really striking when we started is all it took us to really get started is buying $500 of tools to do like the rank tracking and the reporting and a few things, but with $500 and our time and a laptop each, we were ready to start, we were ready to offer our services. Like there is so many things that don&#8217;t require much, if you are thinking now like optimizing Google my places page for local businesses, you could sell that for a $100 it wouldn&#8217;t be very difficult. And literally, this takes 15 minutes and all you have to do is have a chromebook or even you could do that on the netpad if you really want to get started, you can make your first $1000 on a netpad, and buy your laptop from that. And get started from there, you really don&#8217;t need any resources, almost. And that&#8217;s also what got us started, because we were like 20 something, I arrived in Hungary I had 600 euros on my bank account, and I don&#8217;t think you had very much either. So I think that&#8217;s the thing that&#8217;s definitely a pro.<\/p>\n\n\n\n<p>Another pro is that a lot of the work that you will sell is outsourceable pretty easily on sites like Upwork, Elance and that kind of stuff. Obviously, you need to know what you are doing and you need to be the project manager here, so it doesn&#8217;t mean you will have no work, but it means that the ground work it&#8217;s not very difficult to outsource things like doing little call citations, doing basic link building, doing social media management, whatever you are selling as an agency, these very basic tasks it&#8217;s you can hire someone on Upwork at $7 or $8 an hour that can do that in an all right way and you could be charging $20 or $30 an hour as an agency and just making the margin. Obviously as I said, there is still work, you still need to manage these people you need to make sure that what is done is done properly, and most importantly, you need to be the face of the agency in front of the client which does take an incredible amount of time and we are going to get into that into the cons of running this kind of business, but it&#8217;s pretty easy to arbitrage a lot of small tasks as an agency and we have done that quite a lot when we ran the agency actually.<\/p>\n\n\n\n<p>Mark: Yeah and this is especially true, if you live somewhere like London or New York, and you can go and meet your clients face to face, then, that&#8217;s a kind of like even more value that you can provide just by talking to them face to face rather than on the phone, a lot of people especially older people just prefer that way of working. So you can obviously charge a lot more than that then if you are doing it all remotely.<\/p>\n\n\n\n<p>Gael: Yeah, and because we actually had an office in Hungary, and we had pretty affordable rates just because we were in a cheaper country, a lot of other agencies would literally just outsource work to us and we would just do the work and they would just do the facing their customers and that is how we get a lot of our business in the agency. If you really have no geographical tie or something and you are able to move into cheaper country, it&#8217;s quite easy to recruit people there, build something that is a little bit more solid than what you would get from Upwork for example that other agencies can trust and just resell that like have them resell the work and just they make their profit but you can still make a decent profit because of the difference in salaries between where you are and where they are and everyone wins. And that&#8217;s a very easy way to get a lot of work, like we&#8217;ve got people send us tens of thousands of dollars after talking to us on Skype from other agencies, right.<\/p>\n\n\n\n<p>Mark: Yeah, and you would be amazed, because like there is a whole chain of activity goes on here like there is an agency will outsource to us, and another agency is outsourcing to that agency and that client is working with the other agency on top, so it&#8217;s kind of like going through 4 different people here which presents its own sets of problems, but it just highlights how much there is 4 middle man then, there is a lot of people making money off of this client and-<\/p>\n\n\n\n<p>Gael: The funny part is, when we had like an agency outsource to us and we had the client of this agency also outsource to us for like similar tasks, so they wanted to compare and stuff and we would end up with all the work anyway. That did happen a few times actually.<\/p>\n\n\n\n<p>Mark: If you bought a guest post between 2012 and 2013 there is probably like 50% chance that we built it for you.<\/p>\n\n\n\n<p>Gael: Yeah, at some point we were doing over 700 guest posts per month with our team, it was insane actually.<\/p>\n\n\n\n<p>Mark: Over 1000 some month, I think.<\/p>\n\n\n\n<p>Gael: Yeah, it was crazy, we really owned a lot of that market for a while. But another pro to running this kind of agency business is that when you run an authority site you kind of need to master the whole chain of events, right, you need to master the content creation, then you need to master the process of driving traffic to it, then you need to master the process of converting, that content, and if you are actually providing the service if you are not affiliating or if you are not doing advertising then you need to also fulfill the product or the service that you are selling, so that&#8217;s a lot of things to be good at when you are starting whereas when you sell online marketing services you could be good at just one thing, like for example, for us as we just said, that was guest posting. We were really bad at monetizing traffic back then, but we were really good at ranking websites and that allowed us to just sell that one skill and make money of that and eventually with that money we actually built our sites etc which we are going to get into in a little bit, but it&#8217;s much easier to get started and just to master one part of the process, get good at it, improve your skills and get paid to improve your skills actually. I think that was a pretty good one. Do you have anything to say about that?<\/p>\n\n\n\n<p>Mark: No.<\/p>\n\n\n\n<p>Gael: Ok, and finally I think a good case for that business model is that it&#8217;s a great bridge between quitting your job and living off your sites. I think a lot of people are visualizing these processes of like oh my god, I am going to build a site and in 3 months it&#8217;s going to make enough money for me to live off it, and I am just off my job- well it usually takes a little bit more time than that especially when it&#8217;s your first venture. Like now, when we start websites it goes a lot faster and the people that we know that start new websites it goes a lot faster because we had the experience, but f you don&#8217;t have it, then the truth is it could take a year, it could take a year and a half, it could take two years by the time you can actually make a full time living, a comfortable full time living from your website. In that time, you would still be too busy to kind of run a job so you can&#8217;t really have a full time job, but you also need some kind of injection of money coming over time so it&#8217;s either going to come from savings that you have made while you had a job, or it&#8217;s going to come from freelance work and gigs on the side etc, and online marketing services is a great way to build that site income while you are actually building up your more passive income streams. I think I know a lot of people and a lot of people in authority hacker pre are doing that- it doesn&#8217;t mean it&#8217;s a bad thing, they are building it up and over time their income is growing but yeah, it does take time-<\/p>\n\n\n\n<p>Mark: I somewhat disagree with this, I just think the phrasing of it is wrong- so you said it&#8217;s a good bridge, it&#8217;s a bridge but it&#8217;s a less risky bridge or it can be perceived as a less risky bridge so a lot of people if you have a full time job, and you just want to like start building an authority site and it could take a year before you start making decent money off of it that&#8217;s quite risky because it&#8217;s a year of your life you are not making any money, and ok, you have savings but what if it doesn&#8217;t work etc, etc, versus you go into running an agency or a consulting business you can start making decent money in one or two months quite easily, it depends how you do your sales and marketing stuff I guess, but it&#8217;s feasible to do that and so than you are only, there could be like a couple of months when you really do not make much money. But, and as we&#8217;ll get into in the next section the case against doing this it can actually delay your long term goal if that is to start authority sites. Because there is I call the agency trap but there is a bit of a time suck, I don&#8217;t know what the right phrase for that is, it can a lot of time and distract you a lot from your actual goals, that&#8217;s my point.<\/p>\n\n\n\n<p>Gael: Yeah. Let&#8217;s just jump into the case against that, so the case for that is essentially well, it&#8217;s easy money. But the case against it is well, yeah, as I said even though you can outsource stuff, dealing with clients can be extremely time taking, I remember a client that I had to call every week on Friday and literally some of these calls would last 2 hours, I wouldn&#8217;t get paid for it or anything, it&#8217;s just like if I wanted to maintain that client, I just had to explain every single little bit to him and obviously that wasn&#8217;t a great client, but there is a lot of clients in this industry, but there is not a lot of great clients, and a lot of clients-<\/p>\n\n\n\n<p>Mark: I would say most clients are pretty terrible.<\/p>\n\n\n\n<p>Gael: Exactly. So you get them to pay the bills and the money will come in, but it&#8217;s going to take a lot of time and it&#8217;s sometimes very difficult to get them good results even though with our sites, we do it pretty easily, like now we only work on our sites and we are like oh my god, like I can&#8217;t believe the results we get compared to what we got for clients and that&#8217;s because they have certain requests so they want verify everything or they don&#8217;t like these, or they don&#8217;t want to do something etc. And as a result it kind of cripples your entire strategy so not only is it much more difficult to get results for people but it also takes like ten times the time and I can see people that I know that run agencies that really struggle with that.<\/p>\n\n\n\n<p>Mark: Classic example of this is we had one client who wanted his like a landing page or something designed in a specific way, he liked the look of, but a lot of what he wanted was very counter to something which converts well, so we made the point like do you want to make money off of this or do you want it to look good? And like, that&#8217;s a pretty sort of harsh question to ask a client but it was we would make like a big differences, and he was like I would prefer it to look good.<\/p>\n\n\n\n<p>Gael: And that&#8217;s when we stopped working for him.<\/p>\n\n\n\n<p>Mark: So, like there are people out there that think like that, or can&#8217;t think like they are running a proper business and you are going to have to deal with that and not only is it frustrating to work with, but it&#8217;s actually because six month after, they made these decisions when your campaign isn&#8217;t doing so well because they have said well I don&#8217;t want to make money on this or whatever, then they blame you because it&#8217;s your responsibility to be the online marketing person and get results. So, it can be very difficult, very frustrating, sometimes and just annoying.<\/p>\n\n\n\n<p>Gael: Yeah, it&#8217;s one of these things where we had clients fire us because they had too much to deal with, and then, if you don&#8217;t do well then you also get fired because well, it&#8217;s kind of like in the agency, you kind of incentivized to be just average which is also very frustrating, especially when like, we are so like optimization oriented and we like going deep etc. I had very little occasion to do all the crazy stuff that we talk about on authority hacker for clients because we just get stuck with really stupid stuff.<\/p>\n\n\n\n<p>Mark: Yeah, and then incentives for- I mean, this depends on how you structure your sort of billings but usually you will do some kind of like fixed price per month, like a retainer or kind of fee, it&#8217;s quite rare that you will have incentives tied towards achieving certain things because it can be quite difficult to sort of define those and actually judge whether or not you will be able to achieve them. There were times when we made clients tens of thousands of dollars in a month and they were paying us like a $1000 a month and we would like increase the bottom line by just so much and it was like well, ok, cool, what are we doing next month to do that even more.<\/p>\n\n\n\n<p>Gael: Which is fair to them, I mean, that&#8217;s the deal we make.<\/p>\n\n\n\n<p>Mark: Yeah, it&#8217;s just a little draining.<\/p>\n\n\n\n<p>Gael: There is no incentive to be really good unless you make like a percentage of sales but then you need to be way more involved in their business. It&#8217;s a little complicated. Another thing that also takes a lot of time is sales actually, like the selling process tends to be very long especially for small businesses, they don&#8217;t understand anything about anything on online marketing and because they don&#8217;t understand anything about anything, they are not going to judge you on your performance, or like how much technical stuff you know and how many cool authority hacker tactics you have learned, they just going to base it on how they like you essentially. And, for people to like you, you need to spend a bunch of time with them so it&#8217;s not uncommon to like have 4, 5, 6, 7 sales calls with these companies and half of them or even more than that still fall off and never sign up with you, so you will spend a lot of time making sales without getting paid as well.<\/p>\n\n\n\n<p>Mark: Yeah, and a lot of the time as well they will just like fade out and just take your proposal and or your several proposals and then you won&#8217;t hear from them again. To be honest it&#8217;s happened more with like people and you then random people, which was very strange to me.<\/p>\n\n\n\n<p>Gael: Yeah. Another thing that I think is a bit of a trap in the agency is once you actually get all of that going, so there is always difficulties but eventually you figure it out as you run things, like you want to make money, you have more of an incentive to get and get another client than start a new site because getting another client to pay you $2000 or $3000 a month is not that hard as an agency, but building a site that makes $3000 a month, it can be like 6 to 8 months of quite a bit of work, then it&#8217;s passive and it&#8217;s great but getting a new client that pays this much can take 3 weeks-<\/p>\n\n\n\n<p>Mark: And you kind of get that like living in the moment kind of mentality as it were, so you are massively disincentivised to start sites and put in all the effort, you really are not getting paid much if anything for the first 6 months, 8 months, it depends on the site and stuff obviously, but as Gael said, it&#8217;s so like once you get this going it&#8217;s so easy to like get 2 or 3 new clients to pay you$100, $2000, $3000 a month.<\/p>\n\n\n\n<p>Gael: Exactly, getting an extra 10K revenue is like, I was like, ok, I&#8217;ll do it this month and then it wasn&#8217;t so difficult. I mean, obviously, then you have to deal with clients dropping off etc, as you age and stuff, but it is pretty easy and so it kind of like kills the incentive to actually start your businesses, like your real businesses and you end up kind of like trapped in that, and I think that&#8217;s why we ended up doing this for 4 years, I think in our mind, we wish we did it like a Year and half and something and moved on.<\/p>\n\n\n\n<p>Mark: Yeah, definitely, and I think one of the reasons why we got it going so long is because for us, we hired a lot of people full time, and we got like an office and we became like a real company, I mean we always were a real company but like, this entity that has kind of like heart beat of its own, yeah. And like if you have 10 freelancers working for you on Upwork, you can just stop working with them tomorrow, it&#8217;s not a big deal-<\/p>\n\n\n\n<p>Gael: It&#8217;s a button to click.<\/p>\n\n\n\n<p>Mark: But if you have 30 people and a 2 year lease on your office, it&#8217;s like, there is massive cost to stopping this really.<\/p>\n\n\n\n<p>Gael: Yeah, I remember. We stayed way too long in that market I think and to be honest we just got out of frustration of like not being able to do what we wanted, but if we didn&#8217;t have this frustration and didn&#8217;t have this will to actually push the models further and if we didn&#8217;t actually start Health Ambition back then, we probably would still be running that agency right now.<\/p>\n\n\n\n<p>Mark: Yeah.<\/p>\n\n\n\n<p>Gael: Another thing that makes it very difficult to actually start your own site when you run an agency, is kind of like the barista syndrome, it&#8217;s like you are like, &#8220;Oh if I see another coffee today I am going to kill someone&#8221; well I&#8217;ll tell there at the agency, the thing you say is, &#8220;If I see another website today, I&#8217;m going to kill someone.&#8221; And as a result, because you&#8217;ve been working on your clients&#8217; sites, all there as a result like the last thing you want to do after you are done with your job is go and work on your website and as a result, things take way longer than they should because you are kind of like, there is this-<\/p>\n\n\n\n<p>Mark: You burn yourself out really.<\/p>\n\n\n\n<p>Gael: Yeah, I mean, there is this theory where you can only make a certain number of decisions per day, and that&#8217;s why Mark Zuckerberg for example wears the same clothes all the time so he doesn&#8217;t have to think about that. Well, I think you just burned it all out, especially when it&#8217;s about the same topic by midday running your agency and then after that it&#8217;s like there is no will anymore. And I think with Health Ambition in the beginning, we didn&#8217;t actually touch it for several month sometimes, it was still coming and going out and stuff, some people would have taken care of that, but nothing was happening other than that.<\/p>\n\n\n\n<p>Mark: I remember like back at the start we worked like really hard all day, all night kind of thing. Then, as we got going, it evolved into more of this like 10 am to 6 pm kind of routine, and then after that I would just go home-<\/p>\n\n\n\n<p>Gael: Then I went to Thailand.<\/p>\n\n\n\n<p>Mark: Play video games or go to the pub, that was kind of normal evening, whereas now, like in the last year, almost every night during the week at least it&#8217;s like I am working doing shit until 2 a.m. just because, ok maybe I start a little bit later, but it&#8217;s just because it feels much more rewarding, even though the actual revenue coming in is certainly starting to build quite nice here, but initially, it wasn&#8217;t but I felt much more ownership of what I was doing and I felt like this is actually something which can really make a lot of money in the long run and it felt like something that was worth working towards.<\/p>\n\n\n\n<p>Gael: I think one thing that is really good is when you run an agency with something that is really frustrating is that you can put your heart into a project and you can go really at it and so on, but at the end of the day, the client can still choose to end a contract, either at the end of the term that you have selected with them or for us, it was a month to month thing so like actually every months the clients can choose to stop paying and stop using us. And so, it was really frustrating, we were like it was non-incentive to actually work really hard on projects as well, because no matter how well you did, if the business owner just didn&#8217;t feel like it you would lose that client whereas when we work on our own sites, it&#8217;s like, well this site is not going to quit on me, so I can actually put some effort into it and I know it&#8217;s going to be over the next 12, 13, like 12, 36 months or whatever, it will pay off a lot of money eventually and that&#8217;s why I think you have this motivation.<\/p>\n\n\n\n<p>Another thing that I wanted to point out that is kind of similar to that is it didn&#8217;t feel like freedom, it felt like having many bosses because essentially you are still attached to the wheel of your few clients, I mean, unless you have really big agency and you have a lot of other clients, when one client quits especially if it&#8217;s a big spender, it does affect your bottom line quite a lot at the end of the month. Whereas right now, if one Authority Hacker pro member quits, it&#8217;s not whatever but it&#8217;s not going to change anything in the company that we are running. And that is, you basically- the decision of one person can affect your bottom line directly and that is huge dependency that feels very much like having a job actually.<\/p>\n\n\n\n<p>Mark: Yeah, there were times when we had clients who were making up like 30% of our monthly income, like one client. So, when that client quits, it was like, &#8220;Oh shit.&#8221;<\/p>\n\n\n\n<p>Gael: Yeah, exactly, and very often for us it was like I don&#8217;t know, I think there is kind of the survival mode when you are like not making a profit when you are kind of like grinding it back up, but for us it was like oh we are making good profit and boom- that client that generated most of the profit would quit and it&#8217;s like survival mode let&#8217;s build it back up but it&#8217;s like you kind of have to grind for survival or as like for authority sites we grind for growth but survival is basically passive and that is what I really like actually.<\/p>\n\n\n\n<p>Mark: Yeah, that&#8217;s a good way of putting it.<\/p>\n\n\n\n<p>Gael: Ok, I think we said enough bad stuff about the model now. Let&#8217;s just talk about what we learned running an agency, especially stuff that can be useful in terms of transitioning away from your job and also building authority sites and more passive stuff. Do you want to start?<\/p>\n\n\n\n<p>Mark: Yeah, so you have to spend money to make money, and the most important thing that is the people you hire, like do not hire these kind of like $3 an hour SEO experts, you will see from India normally on Upwork.<\/p>\n\n\n\n<p>Gael: They will rank you number 1 for every keyword.<\/p>\n\n\n\n<p>Mark: Yeah, I mean like that kind of stuff is just not going to work. You have to be realistic about that it&#8217;s very often, it&#8217;s much cheaper to hire a good person from US, Western Europe kind of thing then it is to hire a cheap person from Asia for example because they will get more done and more quality work done, and you won&#8217;t have to check everything, you won&#8217;t have to fix it, you won&#8217;t have to fire them and hire other people to fix what they have done. So, don&#8217;t be afraid of like spending a bit more if someone is a freelancer to get quality work done. And this especially true and the stuff that clients can really see, so like any reports you are doing or writing for the blog, that kind of stuff they really care about that.<\/p>\n\n\n\n<p>Gael: Yeah, I think another part as well is talking about the office actually. So, how many offices did we have, like 3?<\/p>\n\n\n\n<p>Mark: Yeah, we had 3 offices.<\/p>\n\n\n\n<p>Gael: So we had 3 offices over 4,5 years, which is a pretty good turn of a rate per changing office, but it overrated actually we spend so much money on offices, how much did we say we spent in rent in offices and you need to consider that this was in Budapest which has some of the cheapest rents in Europe which is really cheap.<\/p>\n\n\n\n<p>Mark: It&#8217;s hundreds of thousands of dollars easily. I would say that it&#8217;s not just the cost of rent, but it&#8217;s like all these other costs that you don&#8217;t think about and we&#8217;ll actually do a podcast on the merits of offices because some people may be considering these for their authority site business, but there is a lot of hidden costs that you want to expect like it&#8217;s not just rent, but like the utility costs can be quite high, and then you are running a lot of computers, electricity can be pretty sizable, like cleaning and these kind of costs, little things like water for the water cooler, toilet paper for the bathroom, you would be amazed how much stuff of that like that you are through when you have 30 people in there, it&#8217;s really quite surprising.<\/p>\n\n\n\n<p>Gael: Yeah, I mean even if you don&#8217;t have 30 people, because you have less income it&#8217;s still a sizable part.<\/p>\n\n\n\n<p>Mark: Yeah, you have to buy like pens for the whiteboards and like cups and mugs for the kitchen and washing powder&#8230;I don&#8217;t know how many like electrical cables we have bought over the last 4 years but we had like boxes of these things, we just seem to need them for also things like power adapters, these kind of things, you just really there is all these costs when you are running an office which you don&#8217;t get from working at home.<\/p>\n\n\n\n<p>Gael: You know what the best part is- everyone was still just talking on Skype and not talking in real life. That just killed me, because like there was all these costs and eventually I think it&#8217;s just modern days, like people talk on Skype when they are not like right next to each other anyway. And so, that shows us right now that everything can be done from a laptop actually, if you just buy a laptop for your employees, you own it, they just give it back to you, it&#8217;s basically way cheaper even if you buy them a MacBook or something that is a little bit fancy that is still way cheaper than running an office, and actually people tend to like chat more and communicate quite a bit more now it&#8217;s probably better to spend this kind of money into like meeting up once or twice a year and having some real meaningful meetings, rather than like having permanent office base etc.<\/p>\n\n\n\n<p>Another thing that I wanted to talk about and it&#8217;s probably one of the last things, it&#8217;s actually two things- one thing is especially if you are in US or Western Europe, hiring people is very expensive, but outsourcing offices can be actually quite cheap, and you Mark and I do not hire this great deal of people but if you spend like $20 or $30 in like high quality people from India for example which we do, right now for our sites for like designs and stuff, it&#8217;s actually pretty good and it&#8217;s still way cheaper than what you would get in US and stuff and if you want to outsource, it is the right way to do it. It&#8217;s spending a lot of money like western money in cheaper countries it&#8217;s where you get the best quality work for an affordable rate rather than trying to be the cheapest.<\/p>\n\n\n\n<p>Mark: Yeah, I mean it depends on the individual, but if you spend $30 an hour, on like a designer from South East Asia, you are going to get someone really exceptional like the same what you pay $100 an hour in the US for. So, always consider those options.<\/p>\n\n\n\n<p>Gael: And I think the last point on what we learned is that retention and upselling clients is what makes or breaks a business. As we said earlier, we had clients that were like up to 30% of our income, and you realize that it&#8217;s much easier to make a client spend extra $1000 a month than it is to get a new client to spend a $1000 a month, we had some clients that spend like in 5 figures a month no problem. And so, it&#8217;s really about building this relationships and upselling, upselling, upselling, one more service which we have done ok, but I think we could have done a better job at. This is what makes or breaks a business as a consultant more than like finding a lot of new clients all the time. Anything else to add Mark?<\/p>\n\n\n\n<p>Mark: Yes, just one more thing- I think if you are starting an agency as a sort of bridge to do something else, to start an authority site or whatever, from the start, you need to set aside a specific amount of time each time, each week, and certain amount of money each day, each week, to work on that. Otherwise, you will do what we did and you will end up 4,5 years later thinking oh shit, we should probably start doing this now.<\/p>\n\n\n\n<p>Gael: Yeah. I think you should start right away, basically just don&#8217;t delay, just use part of your income every month to grow what you really want to do, and don&#8217;t say like I am going to do it next year etc because you end up never doing it like we did basically, I think that&#8217;s something we learned that is quite important.<\/p>\n\n\n\n<p>Alright, cool. Let&#8217;s just wrap up this podcast, what you learned is the agency thing or the consultancy thing is a good thing if you are a complete beginner because you can actually master one part of the process, usually like selling link building is a good idea for example, for information we were selling one guest post for between like $90 and $150 a piece so it is pretty easy to make $2000, $3000 a month doing like guest post service for example. And it&#8217;s a great way to bridge that between quitting your job and building your sites but you still need to set some time and money apart, make sure you start your sites basically I would recommend that you almost start your sites first before you quit your job and then a few months you will know when you see it&#8217;s taking off, but you would like to spend like one third of your day on your site and then two thirds on like making some money to finance everything and cut your bills, that&#8217;s when I would recommend to actually start this kind of like services or agency or something like that. And finally, I would work on outsourcing as much as possible and probably not scaling it too much, not to the point where you have 30 people like we did but rather like to the point where you have 10, 12 clients that maybe make you $5000 to $10000 a month so that you can both pay your bills but also invest in your project and not be afraid of like outsourcing content, hiring designers, and do all the things that will make your site grow much, much faster and we said in another podcast, having a little bit of money to spend every month will make a big difference in the growth of your site. Anything else you want to add Mark?<\/p>\n\n\n\n<p>Mark: No, that sums it up quite nicely I think.<\/p>\n\n\n\n<p>Gael: Cool, well thanks guys for joining, we&#8217;ll see you guys in the next episode and don&#8217;t forget to subscribe if you like this podcast, go on authorityhacker.com\/podcast and you have all the ways to subscribe, and you will find all the other episodes of the podcast as well if you want to listen to them, and we&#8217;ll see you guys in the next episode.<\/p>\n\n\n\n<p>Thanks for listening to the Authority Hacker podcast, if you enjoyed this show, don&#8217;t forget to rate us on iTunes, and send us a screenshot on authorityhacker.com\/bonus to claim your free premium Authority Hacker training.<\/p>\n","protected":false},"author":20,"featured_media":0,"template":"","meta":{"om_disable_all_campaigns":false,"_uag_custom_page_level_css":""},"categories":[19],"tags":[5],"acf":{"coauthors":null},"uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"gs-tiny":false,"xl":false,"xxl":false,"xxxl":false,"xxxxl":false,"xxxxxl":false,"1536x1536":false,"2048x2048":false},"uagb_author_info":{"display_name":"Gael Breton","author_link":"https:\/\/www.authorityhacker.com\/author\/gael\/"},"uagb_comment_info":0,"uagb_excerpt":"What you will learn The Pros &amp; Cons of running an agency\/consultancy What we learned running an agency for 4 years Why we quit running an agency Before we started running authority sites, Mark and I ran an agency for 4 years. We started it on the floor of the single room we rented here&hellip;","_links":{"self":[{"href":"https:\/\/www.authorityhacker.com\/wp-json\/wp\/v2\/podcasts\/5524"}],"collection":[{"href":"https:\/\/www.authorityhacker.com\/wp-json\/wp\/v2\/podcasts"}],"about":[{"href":"https:\/\/www.authorityhacker.com\/wp-json\/wp\/v2\/types\/podcasts"}],"author":[{"embeddable":true,"href":"https:\/\/www.authorityhacker.com\/wp-json\/wp\/v2\/users\/20"}],"wp:attachment":[{"href":"https:\/\/www.authorityhacker.com\/wp-json\/wp\/v2\/media?parent=5524"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.authorityhacker.com\/wp-json\/wp\/v2\/categories?post=5524"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.authorityhacker.com\/wp-json\/wp\/v2\/tags?post=5524"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}