What prevents an agency's growth? 5 surprising factors

A creative agency can be considered successful for all manner of reasons. Perhaps their work is highly regarded by industry peers. Maybe they consistently delight their clients with what they produce, going above and beyond. However, what many agencies struggle with is growth. They often reach a certain point, usually still with a small team, and cannot seem to grow any further on their own. 

There are a number of reasons why this may be the case, with both internal and external factors contributing. So, in this article, we will be discussing what prevents an agency's growth, using five different factors as an example. So, whether you own an agency, work in one, or are simply involved in the creative industry, this should give you some insight into what agency owners and employees can do to help their organisation reach its goals for growth in a more efficient and effective manner.

So, what prevents an agency’s growth? Some common yet surprising factors

They’re not focusing on profitability enough

There are very few creative agency owners out there who started their company because they wanted to make huge profits and get rich quick. In fact, the majority of them started because they wanted to reach another specific goal, usually more related to the creative work they produce. From my experience, this is usually gaining a reputation for producing amazing quality work among peers and clients alike. Of course, it’s great to be motivated by factors aside from money. But, it could actually be the one thing that is hindering an agency’s growth! After all, you need to be somewhat money-minded in order to achieve growth, as the more sales, clients, and revenue you have coming in, the higher the rate of growth tends to be. 

So, agency owners who want to grow need to shift their focus more towards profitability. This doesn’t have to come at the expense of high quality work, however. You can have both! Shifting your focus towards profitability means different things for different agencies, but some key suggestions include:

  • Looking at client profitability. Are all of your clients actually making you money? If not, why not, and what can be done about it?
  • Review your hourly rates for each member of staff. Are you charging what they’re truly worth? Could you increase these rates, or are there any rising stars who you could charge more for?
  • Look into utilisation rates. How much of your team’s time is being taken up by chargeable work? The higher your utilisation rates are, the more profitable your agency tends to be. 

If you want to discover how your agency’s profitability measures up to your competitors, my free benchmark tool can show you. Click here to fill it out today. 

They’re not hiring the right people

When it comes to what prevents an agency’s growth, people are absolutely key. The people in your team can be the difference between steady rates of growth and none at all. For optimum growth, you need to have the right people in the right places. And, those people need to be motivated to do their best work. If you are struggling to grow, take a look at the people you have in your organisation. Are they the best fit? What could you do to motivate them further?

It’s also important to take a look at your hiring processes to ensure that you are attracting the high quality candidates that you need. Some factors to consider include:

  • Where are you advertising your openings? Don’t just use the same couple of job boards and hope for the best. Research where people in your industry look for new opportunities and advertise on a variety of platforms to encourage a diverse group of talent to apply.
  • How are you marketing your agency to potential candidates? Don’t forget, it’s as much about finding the right fit for them as it is for you. What benefits do you offer? If you have a great package, make sure you’re shouting about it in your job postings. And if you don’t, consider implementing one. The best candidates don’t want to work for agencies that offer little in the way of benefits.
  • Involve current employees in the hiring process (especially if they have the qualities and skills you’re also looking for in new hires). This not only helps the existing employees to feel valued, but they will be able to share insight into what it’s actually like working in specific roles, and you’re more likely to hire somebody that the whole team will get along well with. 

Poor staff retention

On the other hand, it is common for agencies to find that they are hiring the right people, but they are not staying with them for very long. Poor staff retention in creative agencies is a common problem. In fact, many people in the industry have accepted it as standard. It can certainly inhibit an agency’s growth. Hiring new people constantly is an expensive process, and if key roles have constantly got someone new in them, not much progress is going to be made. 

But it truly doesn’t have to be this way. There are things you can do to improve staff retention, such as introducing regular, formal appraisals. This gives employees a chance to raise any issues and have them rectified. But, it also gives employers a chance to pick up on anything that needs improving from the employee. Overall, it breeds an environment of mutual trust and openness in the workplace. I also recommend setting SMART goals at these appraisals, so employees always have something concrete to work towards, which can aid their happiness in their roles. 

To read more about staff retention in creative agencies and how it can be improved, click here to read my blog post on the subject

They aren’t staying on top of trends

Many agency owners tend to be fairly stuck in their ways! This isn’t always a bad thing. After all, if you are making great creative work and your clients are happy, what’s the problem? Well, refusing to stay on top of the latest trends can surprisingly be what prevents an agency’s growth. The creative industry is a fast-moving space. Staying on top of the latest happenings is important if you want to stay on top of your competitors and offer something that sets you apart from the crowd. While it can be a great industry to work in, the creative space is quite saturated. So, if you don't have your finger on the pulse of what clients want from you, you may find it hard to attract new clients. And, this is key for increasing your revenue and, ultimately, for growth.

Outside factors can play a major part

When it comes to what prevents an agency’s growth, it’s not all about what happens within the business itself. Often, external factors can also play a big role. A good example is the ongoing Covid-19 pandemic. This stunted the growth of many agencies, as plenty of existing clients decided to slow down work, and new clients became harder to come by. 

Of course, not a whole lot can be done about factors such as this. Nobody could have predicted the pandemic and the effects it would have. When it comes to agency growth, however, it will be interesting to see what happens as restrictions start easing and things begin to go back to ‘normal’. Which agencies will have spent this time preparing for new strategies, and which ones will continue to struggle having not prepared at all? Some may even have managed to grow during this tough time, and have actually come out stronger. 

When it comes to external factors such as a pandemic, creative agencies can be hit very hard, stunting their opportunities for growth. Overall, though, it is important to look at the opportunities that these situations present (such as increased time to focus on growing the business when it is possible again), so that the agency has the best chance of weathering the storm and being successful in the future. 

Final thoughts on what prevents an agency’s growth

There are plenty of factors that can contribute to an agency struggling to achieve growth. Whether they come from inside the organisation or externally, they can have a big impact. For agencies who want to grow, it’s important to assess these factors and anything else that may be contributing to the issues at hand. 

Sustainable growth and a high quality creative output is possible, but it’s a fine balance to achieve. You may want to consider taking on the services of an outside expert who can help you accomplish growth for your creative agency, alongside your other goals. I use my 25+ years of experience in the industry to help agencies do just that! To learn more about me and what I do, click here to visit my website, or click here to get in touch and discuss your individual requirements today. 

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