I sometimes meet agency owners who are still in the ‘start-up’ phase of their agency’s life cycle. Typically they have worked at larger agencies and decided to set up on their own for a number of reasons, including frustration with a large agency model and/or lifestyle (starting a family, moving out of London etc.).
I’ve seen agencies come and go over the years and here’s a summary of some of the reasons why agencies either thrive or only just survive.
Lack of funding is obviously important and if you haven’t got either funding or a nice juicy client to help you through those early days, then you’re going to struggle to grow. Nearly all growth requires investment in some shape or another, whether financial, emotional or your time.
Unless your service offering solves a specific problem it will be difficult to justify why an investor should throw their hard earned money into your venture. Which is why finding that first client is so important – most agencies I know have started with a client they’ve worked with for years in previous agencies, allowing them to fund their subsequent growth.
Not having a service/market fit is another major reason why agencies fail to succeed. To start a successful business you must offer a product or service that is sellable and that fits into a market, either niche or mainstream. It therefore makes sense to speak to your proposed target audience to determine the level of need for your particular services, then ensure that your value proposition addresses the current and future needs of your proposed customers.
Another really important factor is who you decide to set up the agency with, either as a co-founder or as an early hire. According to CB Insights data, 23% of companies fail due to having the wrong team – and in a people-led market, you can see how crucial these decisions are.