How small is too small? If you are too small to supply your clients with the normal services of an ad agency you are in for an uncertain future. Project work is your agency’s bread and butter and that gives little, if any stability.
My advice for anyone who is about to start an agency is to write a business plan that includes growth goals. If you’re like me, a creative, you are at a loss on how to do this effectively. That’s why I count my blessings for partners who have an abundance of left-brain capabilities. The key reason for continuously being in a growth mode is that agencies are actually always shrinking. Recent history shows client tenure for agencies is also shrinking. I read recently that on average it’s less than three years. I’ve also learned as much as 20% of annual billings can be lost yearly through normal client attrition. If these numbers are anywhere near correct we all need an aggressive new business program in place to survive. Anyone who’s been around this business for very long knows a shrinking agency is a dying agency. If you wait until you’re shrinking to try to start growing I have only one other piece of advice. Pray.
My view is that a small boutique should strive to grow into a full-service agency within the first 10 years of its life. You can decide what size agency you’d like to run ultimately, but I don’t think you should try control it to such a degree that you create an unsafe situation. There is nothing more dangerous than be too comfortable with a certain size.
Certainly there are other opinions on this subject and I’m interested to hear them. So can a small agency be small and stay that way? Can it maintain the exact size its owner(s) want it to be or do they have to let growth happen to survive?