On Today’s episode Seth is joined by guest Karl Sakas, an agency consultant and executive coach. Seth asks Karl what the biggest mistakes people make when scaling their agencies. Karl discusses how he got started in his career and how he found his niche helping businesses grow.
Karl discusses the importance of being selective in the early stages of scaling, how to focus on what you want during growth, and when to make yourself optional. Seth and Karl discuss the four stages of agency satisfaction and balancing that with client satisfaction. Seth asks how agency leaders and owners can balance their involvement in their company’s growth. Karl gives insight as to how owners can control their involvement based on their needs.
For more on these topics:
On Today’s episode Seth is joined by guest Karl Sakas, an agency consultant and executive coach. Seth asks Karl what the biggest mistakes people make when scaling their agencies. Karl discusses how he got started in his career and how he found his niche helping businesses grow.
Karl discusses the importance of being selective in the early stages of scaling, how to focus on what you want during growth, and when to make yourself optional. Seth and Karl discuss the four stages of agency satisfaction and balancing that with client satisfaction. Seth asks how agency leaders and owners can balance their involvement in their company’s growth. Karl gives insight as to how owners can control their involvement based on their needs.
For more on these topics:
BluShark Digital
Welcome to the SEO Insider with your host, Seth Price founder of BluShark taking you inside the world of legal marketing and all things digital.
Seth Price
Welcome, everybody. We're here with Karl Sakas, Sakas and company, an executive coach, and an agency consultant. Welcome.
Karl Sakas
Thank you, Seth. Good to be here.
Seth Price
Yeah, I've read a lot of your work and enjoyed you from afar. Tell us what are some of the things that you think as people are scaling an agency that you see some of the biggest mistakes people making?
Karl Sakas
One is assuming that what worked before is going to keep working now and into the future. if you aren't looking to grow your agency, you know, you can keep doing what you've been doing. But there are certain breakpoints as you grow, you know, when you grow past 5 people, 10 people 15, 25, 50, and more, you're gonna have to add new structure to your team. You're gonna have to change how you do your job. And for certainly true, if you're running a law firm as well, you know, back in the day, you're doing a bit of everything. And now you're focusing on certain things, ideally, the highest value activities, which you as the owner are doing, that's going to vary by what you want, or where your firm is, has to be intentional about it, rather than just getting sucked into doing the latest firefighting.
Seth Price
You know, on my companion podcast with Vern Harnish of scaling up and as I've built the agency along with somebody who's sort of, I've grown and grown up with it, who does sort of day-to-day operations. It's amazing. You know, while we think agencies are unique, there's a lot of basic fundamentals that the traditional business gurus have put out there that, you know, when executed, right, you know, teams and communication, and huddles, and, you know, planning and all those things, that in one sense, there are a lot of things that are unique and a pain in the butt about running an agency. There seems to be plenty that sort of fit into more traditional business buckets.
Karl Sakas
And, part of our work is putting together the pieces finding the right combo, that works for you and discarding the parts that don't work for you.
Seth Price
You know, it's something you said, I think it would vary. I've seen multiple times both through Price Benowitz and Scaling that from two to 40 lawyers, and then the agency which now crossed 150 law firms. One of the things that I always see though, and you talk about it is that it's one thing if you're doing something, or you have a bunch of direct reports doing it, but as it gets to scale, and you're one or sometimes two, and at some point, three or four steps removed, you know, quality control, and management, all of those things, a completely different skill set than when you when you started with a half dozen clients.
Karl Sakas
Absolutely, and the bigger you get the more challenging. You know, for, for instance, the agencies I work with are typically under 100 people. But in my volunteering, I ran an American Marketing Association chapter, an AMA chapter, a triangle. And we had 100 volunteers and 700 members altogether. That's a lot of potential stakeholders. And so you need to focus and build a good team, and give them structure. Because even if you have the best possible person on the team, if they don't know the values, goals and resources to consider, they're not going to make great decisions on your behalf. They're gonna do their best. It's not necessarily what you need them to do. They can't read your mind. How did you fall into this niche? I started in digital marketing as a high school student in the DC area, I went to a stem magnet school, learn HTML, Thomas Jefferson, learned HTML freshman year started building websites working with small businesses, nonprofits, and you know, back in the days of, you know, dial up and IE three, and you know, submitting those search directories and that kind of thing. And I found, you know, I enjoyed helping businesses grow, you know, fast forward a bit experience doing investment research for several years working in New York. And ultimately, after working in one agency, and then another as a project manager or director, Client Services, Director of Operations, I realized there was an opportunity, which is that agencies typically start when the owner or owners you know, love the work, they have more work to do, and they start an agency. And now suddenly, instead of being a marketer, or a designer or developer, now you are a business owner, and you've got a million things to do, and not enough time, and everyone is depending on you to pay their rent or their mortgage or other expenses. It's a lot of pressure. And I realized there was this opportunity where I like all of the business side of things coming from an agency operations background. My parents were both career army officers my dad went to West Point, grew up helping in the family small business after they retired. One of my grandfather's was a business professor at Cornell for 40 Some years business and leadership and management and digital marketing and agencies. You know, I put all that experience together and launch what's now Sakas and Company have worked with one on one hundreds of agencies on every inhabited continent.
Seth Price
So, talk to me a little bit about that. How, what are the sort of pain points that you end up? That, like, you know, is it specific? Like you see certain stuff in the earlier stage mid stage? And, you know, what are some of those different pieces that you sort of generalizing understanding each one's different sort of looking at, if we could break it into those three categories? What are sort of the the things that you that you see, as the highest value, value adds in each of those stages.
Karl Sakas
In the early days, it's about building marketing, whether it's a funnel or a flywheel or something to get leads in the door so that you can be more selective in your sales process. You know, speaking with a client recently, where they were launching a new agency, they're a year in already approaching $2 million in sales, which was pretty good in the first year for for an agency. But they they were saying yes to almost everything and they were wondering why they're overworked. It's like, well say yes to everything, you're gonna be working like crazy. And your team too. So in their case was about being more selective. You know, for some agencies, it's how do we get the business in at all. So that's a key early stage thing. At the mid stage, a lot of agency owners, especially if they're leaning toward, you know, if you think about the lifestyle versus equity agency continuum, if the goal is to keep running the agency, they want to get out of all of the data that, you know, not be sending the invoices and ordering printer, toner and things like that. I call them, you know, and so ultimately, you know, you think of that about becoming more and more optional, as you run your business, whether it's an agency or law firm, or any kind of professional services firm. And so in that case, it's figuring out how do they get things off their plate to focus on what they want. So a client in Massachusetts, for instance, a few years ago, I was like, I'm working nights and weekends, you know, I want to be able to see my family again, you know, what do I do and we went through through my executive coaching program, and he reported he was able to eliminate night and weekend work. And you know, and spend time with with other priorities while still raising prices. So that's often an inflection point. And people lean toward running a lifestyle agency, keep running, it is profitable business. There are also some people who lean towards, if we think about lifestyle versus equity, they lean toward building equity, selling a business selling their agency, not everyone does that every one wants to. But in that case, you have to make yourself completely optional. Because if you aren't optional, you're not going to be able to sell or you're not going to get get a very good deal. When you sell you might have a super long earnout, that kind of thing. You know, so in that case, it's less about making yourself optional for the things you don't want to do. It's as optional as possible. For instance, a client in Toronto was seeking to become optional. And she found that it worked, she took a multi week honeymoon trip, and came back in town, she didn't really have much to do anymore, she had succeeded, she negotiated and accepted and has moved on to run into business. So those are three things, finding clients in the first place, and then being selective about them, sorting out how to get rid of the things you don't want to do as you grow. And if you choose to do an exit, how do you remove yourself from the business completely, so you can get a good deal?
Seth Price
Awesome. You know, one of the things we're talking about before we went on air was the fact that you had some interesting productization or advice for end users, you know, Blushark does, primarily law firms. But what talks a little bit about that?
Karl Sakas
Well, in any business where you work with clients, you know, you're gonna have some ups and some downs. You know, I've been working with clients since I was a teenager as a web designer, you know, my clients were anywhere from 20 to 50 years older than I was. And so I've been developing a lot of clients skills, and certainly, you know, made some mistakes over the years. When it comes to working with clients, there always going to be some ups and downs. And a lot of agencies and law firms focus on client satisfaction, and that is important. You can't ignore client satisfaction. But I would say we need to also pay more attention to agency or firm satisfaction. How happy are you in your client relationships, and I've identified four stages. And if you identify which of the four stages you're in, in the agency or firm Satisfaction Index, and identify where you want to go, you can start making positive changes, rather than feeling like you're getting pulled in every direction by your clients. I can share the the four and glad to answer any follow up questions on that if you'd like. Okay, well, in stage one you are in and you could imagine, you know, like a gas gauge or a meter. In stage one, you are powerless. You're just out whatever the client wants, the client is going to get. You can't say no, it feels like you can't say no, because you need the business, you need the relationship. Stage two is going from powerless to overwhelmed. Overwhelmed is still not great but you know, you can start pushing back. If they're requesting something that doesn't make sense. You're feeling somewhat more secure in the relationship, but it's still not great. Ideally move to stage three, which is confident you're feeling confident in the client relationship. They asked you for advice, they're usually listening to the adviser or your partner at that point. Exactly. Yes. Yeah. Well, we that's what we strive for. For sure, it's not, you know, a vendor relation.
Seth Price
I'd like to start out that way. And some people come out of the box that way, and some needs to be earned.
Karl Sakas
Some can, and a lot of it comes down to confidence, and also the clients you're working with, and you know, what they're they're dealing with. And if you want you can go from confident, right, you know, things are good shape to valued. When you move to valued on the agency or firm.
Seth Price
That translates to they won't make a move without speaking to you.
Karl Sakas
Exactly. I had a client like that as an agency project manager, where anytime he wanted to make a big decision, he wanted to get our agency's advice. That even came down to his hiring people, to his hiring other agencies for work that we didn't do. But he wanted us to help bet the other agencies we got paid for doing that. It was a great deal that he was pretty demanding. But you know, he paid well. And so when you're valued, you know, you are the trusted advisor, as they say.
Seth Price
Let me ask you about that. Yes, I love that. And look, our motto at Blushark is we want to be their partner, you look as a vendor is not gonna be nearly as productive as it's a partner. Right. And I love the fact that I built it with people who I like know, and trust they like know, and trust me, but I find that this is that they do want many, many do come and I'm thrilled to speak to them. But it's a non monetizable event. Generally, it's part of the overall engagement. So it's not a bad thing. But I have done, for the most part, a really good job of putting good teams in place that are self sufficient, they can make the sausage in a positive way they can put out fires. But that if you are that it is one thing that is hard to replicate yourself. It could be the it could be a rockstar like you Karl, that was the account rep but they didn't hold on to you long, because you have bigger and better things to get to. So look, the the balance between that piece of it I love, but it does require a pound myself or my presidents flesh back in the game, because generally that's where they want to go for that level.
Karl Sakas
Here's a way to think about that. If you know for you and everyone listening, if you want to get yourself out of all of the day to day, there are ultimately six roles within my expertise in an agency, you've got account management, keep the clients happy, and often sell them more work. Project management, which is getting worked on smoothly and profitably. You've got your subject matter experts, your designers, your developers, your analysts, people doing the kind of heavy day to day billable work, you're still going to build for am and pm but subject matter experts are focused on their craft. You've got strategists who are sort of a super subject matter expert, they're a bit more like an account manager, they're usually good with clients, they've got a broad skilled or they're thinking strategically, you also have you know, roles five and six, you've got bizdev you know, your marketing, sales and partnership people. And finally, support about agency operations and leadership. If you're like, how do I get out of that? Well, it's going to be hard to get away from agency leadership, or leading your firm in general, right? You can't advocate that.
Seth Price
You can't With Your Money solves every problem. You hire a high level CLO?
Karl Sakas
Yeah, absolutely. I occasionally hear from people who are like, I want someone to do all of it for you know, $60,000.
Seth Price
This would be a 200,000 plus options type person.
Karl Sakas
Exactly. high DPI based compensation plus bonuses, profit sharing, and or some sort of equity incentives. But, you know, in bizdev, often you're hanging on to that as the fault leader within the business, that kind of thing. The easiest thing to get off your plate is the subject matter expert work, you know, doing keyword research, for instance, like, you don't need to do that you can find someone who can do it. You may want to hold on to account management and maybe you delegate project management, more of the behind the scenes, more internally or even things. It can be hard to delegate the strategy role, because you know, you're thinking strategically you develop all this expertise, you're going to pay a lot for the strategist at a client mentioned you wanted to get rid of doing all of the strategy work or much of the strategy work himself. And, you know, I kinda have to hire someone, they're going to be expensive. I said, How much do you think you'd pay them? And he's like, probably 150,000 said, yeah, that's about right for the skill set. It's like it's a lot of money. I said, Yeah, but you're a more than 150,000 person and you're done. And now, it would be overall better for you to focus on the higher value things, get someone there and even at 150, a strategist is going to be billing more than that. And they're helping coordinate even more work that boosts the billables. Even further, you need to be need to be, you know, no pun intended strategic about it. If you hire someone who's incompetent, or who isn't getting the billing done, or doesn't have billables to do, you're going to be in trouble. But think about those six roles. Am Pm SME, strategist Bizdev and support, start taking pieces of those off your plate.
Seth Price
Right No, I think it's one person gave me the analogy, one of the big writers, I can't remember who it was that talked about the idea that you have an org chart, you may just not have persons in all those places in your aspiration to start checking those boxes off and putting them in there. There's a guy who's sort of on the outskirts of digital marketing, he was more law firm growth, the late the late Stephen Fairly, who was pretty sort of early on leveraging paid social and legal space, work with law firms on, you know, a, a, you know, building building law firms with different sort of monetizable widgets that he would sell. Rainmaker Institute what we've got, but the reason I bring him up was, he was sort of a larger than life guy from stage one of the best guys you'd ever see from stage. And very often, the agency owner is the one who gets the speaking gigs, whether it be PubCon, or other places you go, you, you people see you they like you, you know, do they fall into your funnel? And eventually they hire you. My question is, is as a is, in your experience, is that something that eventually doesn't have to be the agency owner? Or is that something that generally stays with you until an exit because it's very hard to scale yourself with somebody that you're not afraid that might leave at some point, if they're not a partner in the organization.
Karl Sakas
The big driver for that is where you fall on the lifestyle versus equity continue on. If you have no interest in selling, you're going to keep doing this one fine setup, why would I sell, I'm just gonna go start another agency, like, let's get this running as smoothly as possible, keep doing it, he lean toward the lifestyle side of things, keep being the thought leader, I would recommend enlisting people on your team to help diversify that. So you're not having to say yes to every single speaking engagement, as you know, rise up your stature. If you lean more toward the equity side of things, I would strongly recommend getting your next layer of your team involved in things. Because, you know, we talked about making yourself optional, if you want to do an ad set, I was talking to a friend who works for a private equity firm, and he talked about his ideal target. You know, in their case, it's at least 2 million a year and EBITDA earnings before interest, taxes, depreciation, amortization. And it also needs to be a business that is not owner dependent. So yeah, so...
Seth Price
In doing so, it's just fascinating. So it's also owner dependent, is that the only way to get business, but it is, it seems if you as you go down that chart, right account management, the clear path to getting people in there, you know, you know, subject matter experts find people smarter than yourself, those are all viable. But the one piece that always seems tough, is the thought leader piece, and I guess larger agencies often get people, but there's very often that sort of Pinnacle, that you've had the most years doing and getting yourself into these conferences doesn't happen overnight. And that it's not always transferable to other people. And there's a certain amount of risk as an agency owner doing that. And so , that, to me is always been interesting, because it is the least lifestyle friendly, some people really like it. But with kids it can be it can get old, fast. And so, it's always seemed to me one of the trickier ways that you know, you know, where you can't be in two places at once. That again, you can you can layer it, and if you need to, like if you want to, whether it's for exit purposes, or whether it's for lifestyle purposes, at some point, you don't want to be the only essential person at the same time. You know, when you look at most of it, at least from my perspective, as I look at most of the great agencies, they may have a team that can speak, but their principal is the one that is usually the one most in demand.
Karl Sakas
Often and part of that becomes you know, if you think strategically about where you want to go, if you're running your firm, and you don't want to run it forever, you want more options. You know, you're training up your next layer, you know, your VP is or your directors depending on how you structured it. So that maybe you get a an invitation to speak for, you know, a second time to a group you spoke out a few years ago. Maybe they don't meet your threshold anymore for audience size or targeting or this or that. You could say hey, you know, we're glad to participate. I'm not available then but my colleague so and so. They're an expert on such and such, they would be an amazing minutes.
Seth Price
And it's 50/50. Sometimes it works. And sometimes they're like, no, we want you as nobody. That's that's the decision you decide
Karl Sakas
Yeah, part of that, though, is, you know, I'll work with clients with agency owners who want to either start speaking or speak more, that was my first book: The in demand marketing agency, how to use public speaking to become an agency of choice. It's a whole process, you know, it's like, if you want to get really good at it, you're going to be investing a lot of time and money on it. But, you know, you can make a significant increase with a relatively small amount. For instance, just knowing you know, the next time you do a talk, if you're doing talks, get video footage, it doesn't have to be perfect. Ideally, it's good, but you know, maybe it turns into B-roll. If you weren't capturing that footage from the events before, you're not going to have that to run in your speaker reel. And more and more events require video before you apply. So that's ultimately being strategic and planning ahead. So when you need it, you've built the assets, you've started building it. Same thing with with training your team, don't expect somebody to suddenly start presenting, you know, sign a book to read, send them to speaking training, encourage them to join Toastmasters or potentially the national speaking, Speaker Association, NSA. You know, it's a layered approach. And you know what some of those employees might quit.
Seth Price
But all they say to someone, if you don't, you know, one of the things if you don't invest in your employees, they, but you know, if you know, they may quit, but you if you don't invest, they may stay. So it's, and you know, to quote, Malcolm Gladwell is time on task, it's not going to come out of the box the way you want it to be. It's how many times can you, you know, if your friend is trying to break into stand up comedy is no different, right? They, they work every gig they can, because you just got to do it 1000s and 1000s of times, in the remaining time, I'd like to take you back to you talked about from the agency perspective, which is awesome, but I play in both worlds, right, since I'm an end user and an agency. And we'd love to get the hear your perspective on how an end user a law firm or any other client? Should be you're getting the most out of the agent? Is it the exact flip of this? Or do you have a different rubric for an end user?
Karl Sakas
Few things to consider. And for sure, you know, you want to have a good relationship, whether you are the client, or you know, you're working with clients, I do have some unique perspective on working with end users, which is that in all of my all of my professional work, I'm working only with agencies, through my volunteering, I run a CMO mastermind groups, these are brand side only through the American Marketing Association. And I'm hearing what they're talking about, about working with agencies, you know, they're thinking about revenue attribution, and about how do they sell the CFO on getting additional budget? And how do they manage the CEOs expectations about what's going on and things like that, when CMOS said, If I'm going into a board meeting, and I'm sharing an update as the CMO, he's like, I need 15 minutes, I need to be in and out. It needs to be like a commando mission in and out if I'm there longer than 15 minutes, I screwed up, something's wrong. Yeah. So certainly some perspective from them. And of course, having been a client, you know, as well, you know, when it comes to finding the right agency, I'm certainly a fan of finding a specialist agency, an agency that knows your industry, rather than is learning it
Seth Price
You know, so we've pitched that all as, you know, we come from a point of view of like, you Don't dabble in legal, you either do it or you don't. So many nuances, you lose your bar license, there's competitiveness issues and legal that are not in other areas. So, like, I get that...
Karl Sakas
You know, sort of the you need heart surgery, you want a specialist, and not just any cardiologist, but one who, you know, or cardiac surgeon who's done that exact procedure 500 times and for and hopefully hasn't killed anyone, you know, kind of kind of thing. So ideally, a specialist agency, there could be some exceptions to that. But you know, ideally, specialist, you also want to consider how are they doing in their own marketing? You know, if they're selling SEO services, like, do they rank?
Seth Price
It's funny you say that because for many years, our own agency didn't really pay much attention to SEO, we got our clients for speaking. And we are cobbler shoes, your like, and I see a few of our competitors out there who have put some, some real really invested into it. So it's interesting. You know, I personally in the B2B space look differently at SEO like I don't personally sell SEO to B2B clients, our world is the B2C world and where it seems to have a, at least in the local search arena, a much bigger effect that I can get ROI and it's been a better value proposition. But it's just so funny because it's something we internally we struggle with, because you want to have it there for an affect, even though it may not actually be a client generating mechanism. where they're randomly looking organically for things that most people are going through some trusted source to get there.
Karl Sakas
And even if someone is referred in, they're still going to look at your website. So you know, when was the last time the blog was updated?
Seth Price
Understood? Optimization. It's a decision because you may not actually need it for what you're doing. And it may not bring ROI. But is it a look and feels that a trust factor? I've struggled with that a little bit and that I don't I feel silly putting good money after bad at the same time. It just like you want to have a pretty website, is that something that you need to be present? And on the shortlist when people are looking?
Karl Sakas
And a lot of that'll depend on how sophisticated your clients are, you know, they are super sophisticated, they're gonna have higher expectations versus if you're focusing on a smaller business smaller firm, like they just need someone to help.
Seth Price
So even when they do, the question is, it's almost like a circus trick. And you're like, you know, is it really the end, the end result is how have you. So again, it's just funny, we go through the back and forth internally on that ourselves.
Karl Sakas
It's a tough situation. The third thing that comes to mind, if we think about, you know, if you're an end user or hiring agency, ideally, go to a specialist, or at least start there, then look at how the agency is doing its own marketing or doing the services that you would be buying from them. And the third thing would be what is the experience like from a client service perspective? Do they show up on time for the call, even starting in the sales process? Do they show up on time? Do they, you know, remind you about the link to use? Do they give you an idea of what they're going to cover? Do they ask you what you need from the call kind of thing? Is there any sort of an intake process for instance, I won't get on an exploratory call a sales call until people have completed my pre intake questionnaire, because I know from having done hundreds of them it'll help the potential client have a better experience. I could sort out sometimes they may not be a match I can let them know that save everyone the time couldn't couldn't
Seth Price
Agree more. We got to the point where we asked gross revenue, just know what we're dealing with. Because you know, you can tell an order of magnitude about whether where somebody is and again, get get them the help they need. You know, fascinating. Is that the is that the final? The final final pillar?
Karl Sakas
I mean, there's many more, but I would start there.
Seth Price
Yeah, awesome. For those, that want to get in touch with you or learn more about you what is the best way to learn about Karl and your consulting?
Karl Sakas
If you're on Twitter, @Karl Sakas as K-A- R-L Sakas on Twitter, or visit my website, Sakas and company.com. That's S-A-K-A-S and, the word company.com. I have hundreds of articles on running your agency more smoothly, more profitably. And if you run a law firm, most of the advice applies as well. I appreciate it.
Seth Price
Well, thank you, Karl. It's been an honor. A pleasure to have you here today. And hopefully when things get back in person, we'll get to see you at a conference in a fun location real soon. Looking forward to it.
Karl Sakas
Thanks.
BluShark Digital
Thank you for tuning in to the SEO Insider with Seth Price. Be sure to check back next week for fresh insights into building your brand's online presence. episodes are available to stream directly on Blushark Digital's website.