Starting and Growing Your Digital Agency: $100,000 Insights with Shay Berman
Photo by Marvin Meyer
The e-commerce sector has witnessed tremendous growth during 2020 and 2021. More companies are focusing their efforts on online retail and there has been a surge in entrepreneurship, as well.
All of this growth has led to an increased demand for digital marketing agencies, as well as other digital agencies. It’s something that Shay Berman knows all too well as the owner of one of America’s biggest marketing agencies.
It’s also something I have a lot of experience with, as I have been involved with the e-commerce sector since the beginning and have helped many companies to fulfill their potential and get their big break online.
In this guide, I will be discussing digital agencies with Shay and offering some insights into how to launch, grow, and nurture such a company. Shay is perfectly placed to provide insights into this sector and was more than willing to talk about his own growth, along with his tips, recommendations, and strategies.
You can see the whole guide and video below, during which we will take a deep dive into all of the following topics:
Hiring Young or Old? Should you hire young employees or older employees? Many digital agencies opt for the latter and put experience before anything else, but Shay has other ideas. He discusses the reasons why you need to focus on the younger generation while keeping a few wiser and more experienced employees around.
Hiring Friends, Family, or Outsiders? Should you hire people you know or not? It’s a question that divides successful entrepreneurs and one that doesn’t have an easy answer. We take a closer look at this topic and ask when it’s right to hired loved ones and when you should stick with people you don’t know.
What Not to Do: As with any experienced business owner, Shay Berman has made several mistakes over the years and has learned from all of them. Throughout this guide, he talks about the things that he has discovered.
Do You Need a Premises? Can you afford to rent a building? Do you even need one? These are very important questions, and they need to be answered before you launch your business. We address the times when you should consider a premises, when you’re better off doing it online, and when you’re ready for the middle ground.
How to Diversify: If you start off as a social media marketing agency, how do you know when it’s time to move into Google Ads, SEO, and content marketing? Shay Berman addresses the topic of diversification, talking about the times that his business expanded into other areas and helping you to make the same decision for your digital agency.
At the end of the video and accompanying guide, Shay Berman offers his $100,000 advice. If you’re starting a digital agency and need to be pointed in the right direction, this insight is not to be missed.
Make sure you read to the end for the $100,000 advice and for the countless other priceless titbits that precede it.
How to Start and Grow a Digital Agency
Shay Berman founded his own digital marketing agency, Digital Resource, back in 2014. Thanks to his tireless work and his boundless ambition, the company became one of the fastest-growing online businesses in the United States.
In the latest episode of This Week With Sabir, Shay Berman assumed the hot seat and offered some great insights on starting an agency, growing your team, and establishing the solid foundations that every successful digital agency needs, including strong company culture and a roster of high-paying clients.
If you’re hoping to start your own agency, whether it’s a social media marketing agency, content agency, or one based around SEO and other online services, his advice is invaluable.
You can watch the full interview below. In the following guide, I’ll expand upon the topics discussed and offer some additional insights into starting an agency.
Hiring Your Team
Agencies are often started by freelancers, former agency workers, or business owners. They have some experience in the services that they’re offering (social media marketing, SEO content creation) and they’re not completely green when it comes to running an agency, either.
As Shay Berman can attest, the owners of digital marketing agencies often wear many hats, from CEO to manager and even worker—they’re not averse to getting their hands dirty. However, there is a limit, and if you want to grow your agency, you need to think about growing your team.
The unique thing about running a digital agency is that you’re always limited by the size of your team. The more employees you have, the more work you can complete, and so growing your team is one of the most important considerations when starting an agency and that will remain true even as the agency grows.
The following tips will help you when signing those first few people or growing your team.
Hiring Young People
There is a lot of bias against Millennials right now.
The media has painted them as an entitled and lazy generation, but that couldn’t be further from the truth. Sure, it applies to some of them, but the same could be said for all generations.
Not every Millennial is lazy or entitled, and contrary to what the tabloids want you to believe, they’re not all obsessed with avocados either!
There are benefits to hiring younger and older employees. The former can be very ambitious. They are sponges and they will absorb any information that you give them.
If they start working for you when they are in their early or mid-twenties, they could be ready to lead your business in half a decade or so.
On the flip side, older employees have a lot more experience and wisdom. They have been there, done that, and bought the tee-shirt, as the saying goes, and it’s very useful to have that experience in your business.
In a digital marketing agency, you need a mixture of both but Shay Berman recommends that you focus more on younger employees that can grow with your company.
Think of it like a football or basketball team.
You want a team of youngsters as they have the energy and the ambition to drive you forward. At the same time, however, you want a few older and more experienced players in there to balance things out and educate the younger players.
The older employees are not babysitters and they shouldn’t be given superiority based purely on their age. You still need to hire/promote based on merit, but by hiring mostly younger employees and keeping a few older ones in the mix, you’ll get the perfect blend of ambition, wisdom, and experience.
Use Employees as Partners
Once you find people with ambition, keep their job descriptions loose, give them freedom, and don’t tie them down to specific roles.
That’s the secret of running a successful digital agency.
The focus, therefore, is not just to find someone who is good at marketing or communicating with clients. You need someone smart, sharp, ambitious, multi-talented, and willing to learn.
Build a company culture based around freedom and versatility and you’ll create a team that is just as flexible as you are and becomes just as dedicated to the growth of your business.
They become your assistants, and in doing so, it means you’ll always have someone to call upon when needed.
Don’t Give Anyone All the Keys to the Castle
As your business grows, you will notice people who are doing more for your business and these individuals should be given more responsibility. Make them supervisors, make them managers, but don’t give anyone all the keys to the castle, especially in the early stages.
Unless your business has grown to the point where you literally can’t manage, you should always be the main person. You’re the one who cares the most about your business and you will always put that business first. The same can’t be said for your employees, as they are more likely to put themselves and their payrolls first.
During our discussion, Shay Berman spoke about making this mistake himself very early on and it’s a story that many business owners can relate to.
Of course, you need to give your most trusted employees some control, but not all of it.
For instance, let’s assume that one of the first people you hire is a skilled marketer who doesn’t have a great deal of experience but seems very ambitious.
They make some very good decisions and seem committed to helping your business to grow, and so you give them more power, before eventually putting them in control of all customer accounts and acquisitions. They are the first line of contact for your biggest clients and it means that you don’t need to deal with the daily requests and complaints.
Several months down the line, that employee decides to leave and they take all of those clients with them. As the point of contact, they were the ones that your clients trusted, and because your employee knows what they want and what kind of offers will win them over, he’s able to take them from you.
That’s just one example and it’s a perfectly legal one. You could also be stung by employees who try to rob you blind or use their position to hire friends, family, and pilfer your coffers at every opportunity.
Of course, that doesn’t mean that you should never hire anyone in a position like that. There will come a time when you need to step back and put someone else in charge. But that should come after years of trust and there should be a team of people around them.
Hiring Freelancers vs Staff
When growing your team in a digital agency, you really have two options.
You can hire freelancers and keep everything digital or you can hire full-time staff members.
There are pros and cons to both. In the online age, you could be forgiven for thinking that freelancers were the best option. However, there’s a reason that the biggest digital marketing agencies have full-time employees.
A good freelancer will be there when you need them, but you’re not always their number 1 priority. They have other clients demanding their time and while they are usually very loyal to their long-term clients, they also work on a first-come-first-served basis.
If someone comes along and offers them a contract that takes 10 to 15 hours of their time every day, you’ll have to find someone else or wait longer to get the work done.
Full-time staff is only working for you and you have their full dedication throughout the working day.
At the same time, however, you have to pay them well and ensure that they are incentivized because you don’t want them leaving your digital agency to become a freelancer.
Freelancing is a very uncertain industry and freelancers don’t have much job security, but they can make a lot of money and if they have the contacts, they won’t have a problem finding a job, either.
It’s something that a lot of employers just don’t understand.
As an example, a friend of mine works as a full-time freelance writer. He has numerous clients and works 10+ hours a day 7 days a week, always making sure those clients are happy.
Job security was a massive issue in the beginning, but after a few years, he was literally turning clients away.
Last year, my friend told me about a new client who really liked what he was doing and wanted him to sign a full-time contract.
The client made all kinds of promises, including the fact that he would earn “twice as much” and would only need to work 5 days a week. My friend was dubious—and rightly so—but he played along.
When the offer finally came, it was for a $30,000 salary that would require my friend to move halfway across the country. The client had assumed that he was a struggling writer, one who was freelancing because he had no other choice.
What he didn’t realize was that the “struggling writer” earned over $100,000 a year and had the complete freedom to live where he wanted and take vacations as needed.
Freelancers aren’t always that busy and they don’t always earn that kind of money, but they can, and when you’re growing your team, you need to know what you’re going up against.
Job security isn’t enough to keep them there—you need to pay them well, incentivize them, and ensure that there are plenty of opportunities for growth.
And if they want to take on a few freelancing jobs on the side, encourage them to do so. They can make a little extra cash and it will keep them happy. They may even realize that being a successful freelancer is not just about having a little free time on your hands, which could discourage them from leaving.
Hiring Family, Friends, and Outsiders
Gary Vaynerchuk—one of the biggest names in digital marketing and a great barometer for anyone starting an agency—recommends hiring family members and friends before moving on to people who don’t have any ties to you.
Shay Berman did the opposite, choosing to get outside help first.
There is no “better” solution. It all depends on what your close circle of friends is like and whether or not your family would actually provide the assistance that you need.
It’s a fine balance. On the one hand, family members will be loyal and they are more likely to work for the benefit of you and your company. At the same time, they will be more likely to argue and it may mean you’re not hiring the best people for the job.
If a sibling or cousin just doesn’t feel like going to work that day, they’ll give you a lame excuse and not expect you to do anything about it. After all, they’re family—you wouldn’t be heartless enough to fire them.
You would never get that with a non-family member.
There are certain expectations and a level of accountability that you don’t always get with friends and family members.
Another problem with hiring family members is that you’ll start a trend that can be difficult to stop, especially if you have a large family and a lot of nagging aunts, uncles, and cousins.
For instance, you might start by hiring your siblings, as you know they will work hard for you. That’s fine, and no one will question that. But in the next phase, you move onto your hardest-working cousins, and then a fewer second-cousins.
You’re cherry-picking the best ones, just like you would with any other application process, but before you know it, your Aunty Linda is on your back asking you why you didn’t hire your cousin Steve.
“Yes, I know he’s lazy. I know he spends all day playing guitar and smoking pot. But he’s your cousin.”
Before you know it, you have half a dozen people on your payroll who are there just to keep the matriarchs and patriarchs happy. You’ll be keeping more money in the family, but your business could pay the penalty.
If you’re hiring family, you have to be very careful and don’t let them take liberties. The same is true (albeit to a lesser extent) with friends. In such cases, you have a different problem. If they start underperforming and you realize that you need someone else in that role, your only option is to demote or fire, and that will harm your friendship.
Also, what happens when your cousin stops showing up for work and starts costing you clients, but you don’t want to fire them because you know they’re going through a difficult time?
In any other situation, the employee would keep those difficulties to themselves, ask for some time off, or just battle through. If they are a family member, they are more likely to just take liberties and assume you will give them a break.
Of course, you should always support your employees and never give up on them just because they are having a hard time. But that doesn’t mean you should bankroll them for many months just because they don’t feel like going to work.
Taking all of this into account, it’s easy to see why Berman opted for a different approach to GaryVee. But at the same time, if you can hire family and friends and make it work, you’ll create a friendlier and more connected workplace and you’ll also be helping your nearest and dearest financially.
Family and friends support one another and create a great company culture, but as you can see, that approach is not without its problems.
Finding a Balance Between Earning and Growing
One of the most difficult aspects of running a digital agency and growing your team is to manage the uncertainty.
It’s something that freelancers live with on a constant basis and when you’re running a social media marketing agency or content agency, you’re essentially just a freelancer working as a collective.
The cycle usually looks something like this:
You start your agency. You have the capital to hire a team and keep things ticking over.
You get a few clients. Times are good, and so you invest in growing your time.
Client numbers drop. Bills pile up.
You get stuck in a rut, with escalating expenses and low income.
You finally get more clients.
Times are good again.
It’s cyclical and it’s a process that you just have to get used to when starting an agency.
The good news is that it won’t last. Just like a freelancer who has been working for many years and has established relationships with numerous companies and entrepreneurs, you will eventually reach attain stability.
You could refrain from investing so heavily during those slow times, but what happens when the big clients land and you suddenly realize that you don’t have the resources to give them what they need?
Shay Berman recommends investing when you can and using the downtime to reassess, conduct post-mortems on completed projects, and train your staff.
As any freelancer will tell you, one of the worst things you can do during that downtime is to binge Netflix all day and ignore your work. It’s easy to fall into that trap because you don’t have any clients demanding your time, but once you slip into those bad habits, it’s hard to get out.
As a digital marketing agency or content agency, it’s especially important to avoid wasting that time.
At the very least, you should be spending that time looking for new clients and putting those employees to good use, whether that means advertising, social media marketing, or even conducting interviews on shows like This Week With Sabir!
Running a digital agency is not black and white; it’s not about moving from the good times to the bad times and back again. There are a lot of grey areas and how you exploit these areas will dictate whether or not your business is a success in the long term.
It’s also worth noting that it’s not always your fault if you don’t have clients.
Again, we can look to freelancers as an example here. Many freelancers quit during the first few years as they assume that all of those stalled and canceled projects are a result of bad work. They see those downtimes as a failure on their part, and that’s not always the case.
Sometimes, budgets run dry, plans change, leaderships shift, and all of this impacts the work that they need. You could absolutely nail a job, excel in all areas, and still not see any more work from that client.
It’s just how the cookie crumbles and you need to persist if you want your digital agency to succeed.
Thinking About a Physical Location
One of the biggest decisions you need to make early on is whether or not to rent a physical location. Shay Berman did, and he greatly benefited from doing so. However, it’s not for everyone and if you don’t have a lot of capital or experience behind you, it makes more sense to keep things online.
A physical location will give your agency more credibility and will help to promote positive company culture. It also gives you and your employees some stability; something to latch onto.
You go to work every day. You see your employees face-to-face, and you can arrange for job interviews, staff meetings, and you can also invite your clients to your door.
It certainly adds some credibility, but that seems to be more of a generational thing and you’ll usually find that younger entrepreneurs and business owners won’t care if you have premises or not.
What’s more, after the events of 2020, many business owners have changed their approach and are no longer willing to do a lot of traveling, nor do they place quite as much emphasis on face-to-face meetings.
Take a look at my discussion with Matt Higgins for more information on these changes and what they could mean for digital marketing agencies.
The main problem with a physical location is the expense. You could be paying thousands of dollars a month to rent a large building. If you’re just starting an agency, that’s a massive and completely unnecessary expense.
You can pay a full-time writer, designer, or developer for the same price.
On the flip side, if you do everything online and all of your employees work remotely, you don’t have to worry about the added expense. You can conduct all of your meetings through video conferencing software and you can start slowly and build at a more convenient pace, knowing that you’re not constantly trying to place catch-up with your rent.
There is a middle ground as well: co-working spaces.
A co-working space allows you to rent part of a building and benefit from all of the features that go along with it. You can hire employees to work there and you can conduct meetings and interviews, as well.
It’s on-demand office space and it is completely scalable.
It’s not going to work for everyone, but it’s a good option to have.
The truth is, there is no easy answer. It all depends on your capital, your needs, and the type of digital agency that you’re running.
What I can say with absolute certainty, however, is that it’s not a decision you should rush into. Don’t go out there and rent the biggest building you can find before you have even hired your first staff member.
Ease into it, start small, and build from there.
As a business owner, you are a mentor to all of your employees. Not only will they learn from you to further their own careers, but their growth will also help you.
If you can take an employee from a minor role and teach them everything you know, they could turn into a leader, someone who could be indispensable to your business.
You also need to let them make their own mistakes. You got to where you are today by trying, failing, and learning from those failings, and they need to do the same.
That doesn’t mean that you should give them a bunch of money, send them on their way, and let them trip, fall, and lose everything. But it does mean that you should encourage them to follow their ideas and beliefs and encourage them to find teachable moments from their mistakes.
After all, it doesn’t matter how many times you tell people, “Don’t touch that, it’s hot”, they won’t truly learn for themselves until they touch it and get burned.
It’s the human condition. We have a habit of ignoring everything that people say and going our own way regardless.
If you notice someone within your organization who is outperforming expectations and seems ambitious and eager to learn, it’s your duty to nurture them and turn them into the hard-working entrepreneurs that they need to be.
Of course, there is a chance that they will go their own way and start their own business, leaving your company behind. But that’s the risk that you have to take, and if you keep incentivizing them, encouraging them, and paying them a wage that they deserve, there’s a much greater chance that they will stick around.
How to Diversify Your Digital Agency
How do you know when it’s time to diversify?
It is one of the biggest questions that people have about starting and growing a digital agency.
For example, let’s say that you start with a social media marketing agency. You hire a strong team and you start working with a few major clients.
The money is flowing and times are good, but clients are also asking you about Google Ads and content marketing.
They’re offering you 300-500% more money for these services, and if you say no, you know that they will go to another digital agency and you may lose the social media contract as well.
After all, most companies want to keep things simple. They don’t want to hire multiple contractors and companies when they can hire one.
Shay Berman says that it’s all about timing. You shouldn’t try to diversify too early, and you definitely shouldn’t try to do too much too early, but if you discover that you’re leaving a lot of money on the table, it could be time to spread your wings and incorporate some other elements into your digital agency.
Until then, you should think about outsourcing.
You’re saying to those companies, “Yes we will take those contracts and do that work” before giving it to someone else and taking a cut.
The problem with outsourcing is that you’re operating as a middleman, and so a large chunk of the money being paid for the job is not going toward the people who will actually complete it.
To make matters worse, many other digital agencies outsource as well. You could be outsourcing to an agency that’s outsourcing to an agency. The line could be several agencies long, and you may find that there’s so little money left at the end of the line that the work is being completed by an underpaid, inexperienced freelancer.
Outsourcing is not about offloading the work to the first person that will take it. You need to vet the digital agency very carefully and make sure they complete professional work.
Once you establish a relationship and start sending them a lot of work, you can gradually hire the relevant members of staff and complete some of that work in-house. As you keep growing your team and agency, you can keep more of the work in-house, until you’re eventually doing all of it.
It’s a gradual process and it’s one that should work across all agency types. However, it needs to be handled with care and there is a lot that can go wrong with this process.
You could also invest heavily and build your own team as soon as you get the contracts. But that’s a very risky strategy.
What happens if the work is substandard and you never get another contract?
It’s better to take things slowly—your reputation is at stake.
Some of the areas that digital agencies often consider for expansion include:
Paid Advertising: Google Ads, social media marketing, Bing ads, YouTube ads—it’s a pretty expansive category and it’s also where all of the money is. You will need a large team if you’re hoping to hit all of these areas. Just because someone is a master in Google Ads, doesn’t mean they will know how to build a following on YouTube, nor does it mean they will understand how Facebook Ads work.
SEO: Organic digital marketing is a key component of any online business and it’s a strategy that should be adopted alongside paid advertising. Generally, a few good writers can do all of the work for you but you’ll also need to think about keywords, audits, and content plans, and for that, you’ll need an SEO expert.
Written Content: Content creation is often tied into SEO and most writers understand the basics of SEO. However, it’s an area that also encompasses product description, product packaging, emails, guides, and pretty much any written content that goes on your site.
Design: Content agencies usually include a team of designers. They can create everything from infographics to logos, product designs, and social media posts.
Developing: If you can build and maintain a strong development team in addition to the above, you will have most bases covered. Not only can they build and maintain websites, but they will also help with app creation and more.
The $100,000 Question
As always, I finished my discussion with Shay Berman by asking him for his best piece of advice. It’s the $100,000 question because if you’re starting your agency, it could help you to generate more than 6-figures in value.
Shay told me that the most important thing is to understand that there is always a way to achieve your goals.
It might not be obvious at first, but there is a way through, around, over, or under, and if you keep pushing, you will get there eventually.
Set goals for yourself. Raise the bar. It doesn’t matter if you achieve those goals or not, as you’re the only person judging you on them. What matters is that you have something to aim for.
It sounds like a cliché, but you’ll hear the “don’t give up” advice from most successful business owners, artists, actors, writers, and pretty much everyone else who has made it big.
There is a statistic that says most businesses will fail within the first 10 years, with a fifth of them failing in the first two years.
So, if helpful advice really is easy to come by and persisting with this advice and some basic common sense really is the solution, why are the failure rates so high?
Imagine that you have 100 new businesses across multiple sectors.
First, discount the ones that were built on a shoe-string budget following a drunken “business plan” conceived at 2 in the morning. Then, discount the ones created by people with more money than sense, as well as those who just wanted to brag that they were business owners.
Next, take away the ones who don’t work hard and spend all of their time expecting others to do everything for them and then wondering why they fail.
Finally, remove the ones who give up because of their career or social life, as well as the ones who just get bored with the business or move onto different things.
What you’re left with are the successful businesses, the 35% that make it beyond the 10 years.
In other words, persistence really is the key, and as long as you’re doing everything right, you’ll get there eventually.