Low Barrier to Entry. Instantly Profitable. Potential for Massive Growth
There's no other business model that gives this kind of instant opportunity
In module 1 of our course, we will be talking about all the reasons why you should start an agency.
I’m sure you’re probably ready to get to the good stuff. You want to know how to close deals, build a customer base, and make money. I promise, we will get there. But before we do, we need to understand the business model of agencies and why there is so much opportunity baked in.
Low Barrier to Entry
In our introduction, we talked about “sexy” businesses, such as SaaS companies or building and selling a line of products. These business models are exciting because they have tremendous scale and leverage.
Let’s imagine you create a course that helps people learn how to better organize their offices. After building that course you can then sell it an infinite amount of times. Your expenses stay the same while your revenues go up. This is a j curve and it’s a very powerful way to build a business.
Your income isn’t directly correlated with the amount of time you put in.
However, there is also a downside to this business model. Models that have a lot of scale also have a lot of upfront costs.
If you want to create a SaaS product, there is a high probability you will spend $100,000 (or more) just in developing the product. Then you will still need to pay marketing costs, customer service, sales and expenses. This means more risk and more upfront capital.
If you create an agency business, you don’t need upfront expenses, software developers or months of time to create your own products. All you need is your first client.
This is a huge inflection point for people who are ready to start their first business. Starting an agency isn’t for everyone, but it’s the perfect option for entrepreneurs who are starting at the ground level.
As soon as you get your first client, you’re a business! The barrier to entry is very low and by nature of that, the risk is very low.
In addition to having a low barrier to entry, agency businesses are also instantly profitable.
Let’s imagine you start a photography agency and you charge $1200 to take some headshots for a local cooperate business. Let’s say the job takes you a full day to do. Assuming you already own a camera, that $1200 goes straight into your bank account and much of that revenue will be profits.
Let’s give another example. Let’s say you start an SEO agency and you charge $3000 a month to build and manage the digital marketing for a chain of restaurants in your city. It’s not unreasonable to think that you will have $1000 a month in operating expenses and the remaining $2000 is profit.
Where else can you find a business model that has instant profitability in this way?
The nature of agencies makes it so you don’t have to spend money on things like…
expensive payroll companies
employees (unless you want to and we will address this in the next chapter)
office equipment, cash registers, desks and other expensive equipment
An agency business is one of the only ways you can start a business that instantly puts money in your pocket. This means you won’t be borrowing money from investors and you won’t need to convince friends and family to make an investment in you.
You will have the ability to pay your bills, have money for travel and leisure and maybe even put some extra money aside for savings and investments.
For this reason alone, agencies are the perfect business for aspiring entrepreneurs.
Potential for Massive Growth
We’ve already addressed the issue that agencies don’t have the same scalability as software products, but that doesn’t mean there isn’t huge opportunity for growth.
One of the best things about building an agency is that it forces you to be in front of the work and to be held accountable to your work. You will have to show your worth to your clients or else they won’t stick around with you.
This is where the growth lies because if you put your reputation on the line, people will talk about you. Business owners talk to other business owners about business. After some consistent work and positive client reviews, the industry will consider you an expert in the particular field that you are working in. The word of mouth will start to spread.
Agency owners that have played their cards right have more business than they know what to do with. This is how you put yourself in a position to charge top dollar and to chose the clients you want to work with.
With the right marketing, the right relationships, and a great reputation; you can easily turn your agency into a 7 figure business. I know agency owners that do tens of millions of dollars a year. I also know one person agency owners that make 7 figures and profit $200,000 - $300,000 a year.
Not bad at all!
By now, I hope you understand how the business model of agencies makes it so you can truly reap the rewards of the work you do, and how you can get started without any up front capital and without taking big risks.
Great, let’s move on to the next session where we will learn how to position yourself so that you can GET PAID to improve your skills. It’s a win win for everyone!