Why I hate the agency model

Joe Freelancer (JF) has spent the last few years as a service provider for his clients.?????

It was a struggle at first, but over time he’s become increasingly competent and confident in his skills…

His clients are happy and getting good results…??

And he’s even getting lots of referrals. 

JF is making more money than at any point before in his career…

So you’d think life would be good…

But the truth is…

JF feels TRAPPED. 

Why?

Because with more clients and more money…

Comes more work and longer hours… 

And this eventually leads to JF reaching a breaking point.?

It happens on his wife’s birthday, or during a vacation in Mexico…

A time where he “should” be enjoying himself

But where instead…

He’s either totally preoccupied with thoughts of work…

Or he’s actually working nonstop…

Even though it’s the last thing in the world he wants to be doing. 

It’s wildly frustrating…??

JF had told himself that this vacation/birthday/whatever was going to be different…

That he’d be able to truly enjoy the moment…

But instead, there he is, plugging away… 

So he says to himself: “something’s gotta change”…

And that’s when it hits him.

JF has what seems to be a revelation: 

“Why am I the one doing all of this work anyway?” JF asks himself. 

“What if I could just hire a team of people to do the work instead? That way I can just focus on getting clients (which I enjoy doing), while my team does all the heavy lifting (which I’m tired of doing).” 

And once he has this glorious “insight”…

There’s this moment of elation. 

JF has figured it out! 

And he almost can’t help but laugh at himself…

Because it’s so obvious now, why didn’t he see it before?

So without putting too much more thought into it…

JF dives right into building an agency. 

He comes up with a cool name for it…

Creates a website for it (after all, he’s got a “real” business now!)…

And he starts hiring other freelancers either locally…

Or remotely through websites like Upwork. 

Then, the next time he talks to a prospective client…

He explains that he’s the owner of a boutique agency that provides XYZ service(s) to clients…

His language is all about “us” and “we”…

And he’s feeling really proud of himself…

Because now he’s leveled up big time in his life. 

The End. 

…

…

…

…

Yeah. F***ing. Right. 

Here’s what happens next: 

It turns out that because JF has never actually built a team before…

He quickly finds himself in over his head. 

Suddenly he goes from being the technician (or artist, if you’d prefer)…

To being the manager…

And these are entirely different roles. 

As Michael Gerber illustrates in his phenomenal book on this subject titled The E-Myth…

The fatal assumption that most people make…

Is thinking that because they understand the technical work of their business…

They also understand how to run a business that does technical work. 

Does that make sense?

In other words…

Just because you’re a good copywriter, doesn’t mean you understand how to run a successful copywriting agency…

Just because you’re a good media buyer, doesn’t mean you understand how to run a successful media buying agency…

Just because you’re a good real estate agent, doesn’t mean you understand how to run a successful real estate agency…

Just because you’re a good lawyer/doctor/yoga instructor/roofer/plumber/electrician/personal trainer/whatever…

It doesn’t mean that you’ll be successful at running a business that does any of those things. 

This is vital to understand…

Yet most people get it wrong…

And that includes our friend JF. 

He’s never read The E-Myth…

And that’s unfortunate…

Because this is what the next year (at least) of JF's life looks like: 

JF quickly finds that a lot of the people he hired aren’t nearly as good at the technical/creative work as thought they’d be. 

As a result, he starts spending more and more time reviewing their work…

Or, worse still, he gets in the habit of just redoing their work entirely…

Because he thinks “it’ll just be faster and better if I do it myself.” 

Worse still…

Because he went and signed on a bunch of new clients under the assumption that his new hires would be the ones doing the heavy lifting…

Now JF isn’t just reworking one or two projects…

There’s a queue of ten or twenty projects that need his attention…

Projects that he feels like nobody can do perfectly but him…

And this leads to a TON of work for poor JF…

To the point where he begins noticing clumps of hair accumulating by the drain in his shower. 

Seriously…

If JF didn’t feel like he had enough hours in the day before…

Now he REALLY doesn’t have any time…

And he’s more stressed than ever, unhappier than ever, and it’s taking a toll on his relationships and his health. 

Plus, to make matters WORSE STILL…

As JF spends more and more time revising other people’s work…

He finds himself taking shortcuts or settling for “good enough”…

Deadlines start getting missed regularly…

His reputation starts to suffer…

And before he knows it…

The very agency he built to help him reach scale…

Is now having trouble getting new customers.

MAN! It doesn’t get much worse than that, right?

Well, actually it does…

Because soon JF is dismayed to discover that he’s actually not making any more money than he was as a freelancer. 

Why?

Overhead, for one thing.

He’s hired several people to help fulfill the promises he’s made to clients…

And since most of them underdelivered…

He’s been spending all of his time fixing or redoing their work, instead of prospecting for new business.

As a result, his agency’s effective “hourly rate” has actually dropped dramatically…

Because a project that once took JF 10 hours solo…

Now takes one of his “hires” 40 hours…

And then he still spends 5-10 hours revising or reviewing the hire’s work too. 

So to sum it up…

JF is overworked…

Underpaid…

And starts to resent his clients…

Even though none of this is their fault…

It’s HIS fault that he can’t fulfill on his promises.

And at this point one of 3 things happens: 

1. JF tries to throw more money at the problem by hiring new/different technicians. 

He thinks “well I got it wrong the first time with my hires, but now I know better.” 

Every now and then this works out. 

But more often than not, JF just repeats the same mistakes. 

Because if he wasn’t good at hiring the first time, why would he become great at hiring the second time around? 

Plus a lot of JF’s issues have less to do with the people he hires…

And more to do with how he trains them (or, more appropriately, how he doesn’t train them).

Turns out, JF doesn’t actually know how to train his hires…

So instead, he just throws them into the fire and then feels burned when they underdeliver. 

2. JF hires an Operations Manager 

He thinks…

“Okay well, obviously I’m not great at running a business. Silly me, that was my mistake. I just need someone who can manage hiring, training, and all of the other processes in my business. That’s the solution!” 

And sometimes it is… 

But a lot of the time what really happens is that JF is trying to hire his replacement…

And as soon as the Operations Manager is in place, JF abdicates responsibility entirely. 

Well following JF’s abdication…

Life is good for approximately 30 days…

But then suddenly he comes into the office, or checks in on the business via Slack while he’s out on the golf course…

And realizes that his Operations Manager is completely overwhelmed and has no idea what she’s supposed to be doing.

 Turns out, the Operations Manager has no idea how to hire or train technicians either…

And the OM certainly doesn’t know much about business development. 

So to JF’s horror…

He comes back from his mental vacation…

And finds that the Operations Manager has indeed built a machine…

But most of the parts are either missing or the wrong fit…

Kind of like if you were to build a sports car engine out of plastic and junk metal. 

3. JF throws up his hands and goes back to being the technician/creator. 

This is probably the most common scenario. 

I know it’s what I did after my first agency.

The agency was profitable, but my God did I get burned out. 

Why? Pretty much all of the reasons I mentioned above. 

I actually think most of the time, #3 is the right move for JF to make…

But there’s a HUGE caveat here…

Which is that JF needs to learn how to charge way more money for his work. 

That’s where he normally gets it wrong.

He goes back to technical work, but he keeps charging what he was before…

And so yes, he feels more relaxed and less stressed for a while…

But before long…

The same problems he had initially begin reemerging…

And at this point, JF either gives up and gets a job…

Or he continues to live a life of feast or famine…

Where he always feels slightly unfulfilled…

Because he knows he could have done so much more in his life. 

—

And that's why I generally hate the agency model. 

It’s not that nobody every builds a successful agency…

I know several guys who are running 7, 8, and 9 figure agencies right now…

But they are the exception to the rule. 

Plus most of the successful agency owners I know only achieved success on their third or fourth try…

And it happened after they’d spent hundreds-of-thousands…

Or even millions of dollars…

Failing and screwing up. 

So if you’re a freelancer right now…

And you’ve been thinking about starting an agency…

Hopefully, this helps you to think more deeply about that decision.

And if you’re an agency owner right now who feels stuck in their business…

Don’t fall into the trap of thinking you can’t get out…

Because it’s never too late to pivot. 

—

Okay, that’s it for now. 

On my end, I'm about to start my day…

– SPG

P.S. Seriously, read The E-Myth if you haven’t already. I can’t recommend this book enough.

P.P.S. This post originally came from an email I sent to my private list. If you want to see more stuff like this from me, you can apply to join my list using this link.