Why Agencies Stall Around $1M in Revenue

Early on at the agency I ran, someone would ask what we did, and I'd tell them we did custom software design and user experience. They'd say "cool," and that was it. If your agency has stalled around $1M, that conversation is a big part of why.

Key Takeaways

• An agency stuck around $1M most likely has a positioning problem.
• Many agencies get to $1M by taking on a wide variety of work while they figure out what they're good at.
• Describing your work by specific engagements and outcomes gets referrals moving.
• Spend your selling time on people who want to talk to you.

Why do agencies stall around $1M?

It's most likely their positioning. Many times, to get to that initial milestone, you have to take on a large variety of work while you grow and figure out what you're good at.

In any agency, the first three to five years are all referral-based. Referrals matter more than anything else, but they can only get you so far, and somewhere around year three or four they dry up.

How do you fix positioning at $1M?

Start with how you describe the work. At the agency I ran, I switched to talking about specific engagements and outcomes, and that changed everything. When someone asked what we did, I told them we had just launched a new blog for a client that helps increase their conversions.

Where should the founder spend selling time?

Early on at the agency I ran, I was charged with going out and getting sales. I spent six months talking to a lot of people who didn't want to talk to me.

Then I got really angry about that and decided I'd only talk to people who wanted to talk to me, and that's where growth started.

How does Schmidt Consulting Group help an agency at $1M?

At this size, Schmidt Consulting Group's work with an agency starts with positioning.

Mentorship is twice-monthly counsel for agency founders on pricing, hiring, clients and direction. You set the agenda, and your team does the work.

Advisory is a weekly operating rhythm for growth: a written plan, one priority at a time, and a review of results every week.

A two-founder production studio worked with us twice a month. In those sessions they built a list of companies, and it got them a meeting with Google.

You hear the fee on the first call. If you're still deciding whether outside help makes sense, start with when to hire an agency consultant. Our guide to agency growth consultants shows what the work looks like. Why Agency New Business Stalls Between $2M and $5M covers the next stall.