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Consult or Launch an Agency?
Get this wrong and you'll suffer.
1,203 Words | 5 Min 0 Sec Read
Today we’ll be discussing whether you should launch a consulting service or a Done For You agency.
While there are many parallels between the two, choosing one over the other can have a dramatic impact on your lifestyle and income.
Let’s dive in.
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Today, we'll discuss consulting vs the agency model.
As you may or may not know, both consulting and agency services are designed to achieve the same thing: Help businesses hit their goals.
What you might not be as familiar with, however, is how each group of professionals goes about doing so.
On the surface, the main difference is that consultants provide advice (Done With You) while agencies do the actual work (Done For You).
But for you as an entrepreneur (or online freedom seeker), that small shift in wording creates a world of difference regarding the type of business you build.
See, by not doing the work, it's implied that the company's team will execute your system / do what you tell them.
On the flip side, when you run an agency, you have to have both the system to follow and the staff needed to execute it.
The implications of this are profound.
First and most important, consulting is dramatically more leveraged than agency work. Mainly because clients pay you for your time (whether directly or on a project basis) and then go implement what you tell them to do without you being involved in that implementation.
If you're good at what you do and serve a high dollar value niche, going this route can allow you to make $500 - $1,000+ per hour.
The problem?
No matter how you slice it, you're still trading dollars for hours.
In fact, while consulting is more glorified than freelancing, in terms of equity value they're nearly the same: Zero.
Meaning, unless you build a consulting firm - where you're the CEO and manage a team of consultants - you will never be able to sell / exit your biz.
Mainly because similar to a Personal Brand, if you disappear, there's no "business" left for someone to buy.
On the flip side, agencies can be sold as part of an acquisition. Why?
Because unlike the consulting model, the operation of an agency isn't dependent on any one person. Instead, it's dependent on employees and the systems and processes they follow.
And because of that, as far as investors / buyers are concerned, an agency is a "real" business.
So what does this mean for you?
In simple terms, there are Pros and Cons to both.
Here are the upsides of the consulting model:
If you're good you can coast working 10-20 hours/week while earning $250 - $1,000+ per hour
Doesn't require you to hire any full-time staff
Involves working with big companies that have large budgets
Can be done remotely (you can work from anywhere)
You can start today for $0
Sadly, there are some pretty serious downsides:
Breaking into an industry you don't have experience in can be difficult if not downright impossible
Because the work isn't Done For You, you can't make guarantees (which can make it harder to get off the ground as a beginner)
In general smaller businesses don't hire consultants, so you'll be stuck prospecting to larger and more corporate / bureaucratic clients (of which there are dramatically fewer)
Sales cycles are longer, which can be hard to navigate if you don't have corporate sales experience
You carry 100% of the responsibility, so bad word of mouth (given you'll likely be operating in small niche) can be fatal to your success
Your income is limited to what you can earn per hour and how many hours you work per week
As you can see, the upsides of consulting are awesome...if you can navigate the downsides. At the same time, the agency model has an equal number of both positives and negatives.
Here are some the upsides:
Agencies can be sold / exited as part of an acquisition (where buyers write you a 7-8 figure check)
With an agency, your earning potential is - in theory - unlimited (my first boss scaled his to 9-figures...)
Agency work can be - and is meant to be - outsourced to employees (while consulting work cannot)
Small businesses hire agencies, so your pool of potential prospects is exponentially larger relative to consulting
You can start today for $0
Sadly, as many people have learned the hard way, agencies are incredibly difficult to succeed with. Here are some reasons why:
Hiring and managing employees is arguably the hardest and most stressful part of being an entrepreneur
Agencies have notoriously low margins as far as online businesses are concerned, meaning the company will likely need to clear $300K to $400K in top line revenue before you'll take home $100K in salary
Agencies aren't acquired nearly as often as SaaS, eCom, or micro-Internet businesses
Agency owners are famous for working long hours
Constant phone calls (unofficially) require you to live in the same time zone as wherever your main clients are based
Agencies have become insanely saturated / competitive, to the point it can be incredibly difficult just to land your first client
As you can see from the above, both options involve their fair share of upsides and downsides.
Which was the purpose of today's issue: To lay out the good, the bad and the ugly oso you can choose which model is best for your situation.
If you want a lifestyle business and have the expertise needed to work with larger companies, odds are consulting is the better choice. But you'll pay for it by trading dollars for hours and not building equity.
On the flip side, if you don't mind working long hours and dealing with a ton of stress in the pursuit of building a business you can exit and retire from, the agency model is the way to go.
And whichever you choose, understand neither will be "easy."
But if you do the work, the reward can be worth it.
It's also possible you read through the above lists and realized you're not a good fit for either of these models.
In which case: You're welcome!
💡 Takeaway: Both the consulting and agency models offer a variety of Pros and Cons. And because of that, the model you choose should be based on your personality, preferences and long-term business goals.
🎁 Resources:
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