How To Scale Your Digital Agency Without Raising The VC Funding

A digital agency is one perfect business model that can be started with zero capital and scaled to $1 Mn per year recurring revenue without raising VC money.

It is not an overrated statement.

All businesses need help with design, marketing, SEO, branding, UI/UX, videos and content marketing. You can pick any skill and start providing services.

Getting to $1 Mn is possible only when you have sales and delivery skills, plus a skill based on the type of digital agency you are putting up.

I failed at my first startup, lost 15 Lacs money but all was not lost. The failure taught me big lessons about running a business.

For one, money is not the first requirement for starting up, but skill is. If money were the case then why would startups fail even after raising funding?

I understood that all startups are not required to raise money and every business need not depend on VC money to get off the ground.

I picked up content writing and I loved digital for my next startup. Let me tell you – I had never written a single line of content in my life before entering the startup world.

I started helping startups free of cost with their content marketing work and learned even more. The efforts paid off and startup founders recommended my work to their friends who later became my paid clients.

This was the phase where I learned sales and delivery skills which are important for getting one or the hundredth client.  If anyone has intent and is ready to work hard, the idea to scale a digital agency up to $1 Mn is possible.

Phase 1: Get Your First Paid Client

When you are starting out your digital agency, you are the only employee. Being single has its own benefit in terms of lower operational cost. You don’t have to pay salaries to your employees.

You don’t have to pick a big project in the initial days. That could be a bad idea because most likely you would fail to deliver big projects as a single person team.

Start with a simple task in which you are perfect, for a single client. Make sure you pick task which can be done easily and single-handedly.

A project with monetary value as small as $100 per month so that you can learn more than you earn. Here learning should be your aim and not the earnings.

Keep up the quality and deliver as promised. By the time you are over with phase one. I am sure you might have learned the importance of quality work and delivery skills.

Phase 2: Stabilize With 3 Clients

Before starting with phase two, make sure that the first project is over and you have at least one happy client. Learn to deliver quality work before scaling up. Because quality work is the core of the success of any great business.

If your first client is unhappy with your work, then you need to wait. Repeat phase one until you get a happy client.

You won’t lose anything in terms of money but success at step one is crucial before moving to the next client.

Pick the second client by showing the results that you produced with the first client. You would be able to charge more to the second client based on your previous success.

Charge even more to your third client. The idea is to get the agency stabilised and self-sustainable.

But do not focus on maximizing profits at this stage. The primary focus should remain on delivering quality work for your clients. You can easily manage to earn $3000 per month with three clients.

If you are truly engaged with three clients, you would realise that you won’t be able to serve all your client by yourself.

You should start delegating tasks to freelancers.

Hire your own team at the next stage. A right mix of freelancers and the in-house team would help you scale up your agency.

Phase 3: Scale To 10 clients

A journey from 3 to 10 would be really exciting because you would aim to cross $10,000 monthly revenue.

You need to have the following three skills at this phase to get a number of clients

1. Delivering what you promise
2. Closing customers at a higher price
3. Working with the remote team

You would need a full-time team to serve clients well. Hire team members who are experts in their domain area and can work with freelancers.

Your job should be to convert more clients and get the quality work delivered through the team.

Gaurav Gurbaxani, CEO of Pragmites has done the same when he started his digital agency for marketing in 2009. One of his clients recommended his services in the most popular SEO discussion forum. They received so many clients that their revenues shot up from $5000 per month to $50,000 per month overnight.

That’s the power of positive reviews and client recommendations. Don’t hesitate to ask your happy clients for the recommendations and references.

Phase 4: Target For $1 Mn Revenue

The math is very simple.

Suppose you have 10 clients who pay $1000 per month, then your annual revenue would be 10*10000*12 = $120K

Either you have to increase the number of clients to 100 to cross $1 Mn mark or increase the prices.

Actually, you would do both.

If you have clients paying $5000 per month then you can hit $500K with just 10 clients.

You can also go with a variable charging model where you take a percentage of additional revenue generated with your services.

That’s the business model of the most successful digital agency handling consulting and marketing work of the world. They charge a fixed amount to start the work and then take 20% to 30% of the revenue generated by their service.

If you help a client increasing their revenues by $100K then they would happily pay $20K.

Keep these bigger goals for the later stage and begin with phase-1 that needs ZERO investment.

Conclusion

Starting as a single person digital agency is very easy where you do not have to take any risk. You need to start by serving only one customer. By the time you are over with the single project, you would come to know whether it will work or not.

No business is easy but some businesses are easy without the involvement of VC.

The digital agency business is an amazing opportunity for passionate people who want to leave their full-time jobs and start their own business with zero investment.