Top 10 challenges start-up marketing agencies face (and how to fix them)

Launching your own marketing agency from scratch has to be one of the most exciting and, if successful, fulfilling endeavours you can possibly undertake.

But if you’re already part of the agency world, you’ll no doubt already know that this business comes with its own unique set of challenges.

There’s deciding what your specialist niche will be. 

Then you’ll need to find clients, which means hiring the right talent to manage them.

How will you create an image that stands out in a crowded market without a track record? 

And then there are all the important details that hold it all together – cash flow management, technology and tools, managing your time, sustaining growth, and handling the stress involved.

Here we list the top ten hurdles that come with starting a marketing agency, together with concrete workable solutions and valuable advice to help you navigate the early stages of agency life, and achieve success and growth.

Challenge 1: Client acquisition

Challenge: How do you find your first clients, and just as important, how do you build their trust in you so you keep them

Why it’s a problem: Acquiring clients will be your first priority as a start-up. But at the same time, you’ll be searching for offices, trying to build a talented team, equipping yourself with business technology and tools, and developing a good contact network.

The solution: Decide your niche, which will probably be determined by your area of expertise. If that’s in social media, say, it’ll make sense to start a social media marketing agency.

Get active networking and on social media so people know about you and what your agency can do for them.

Create a LinkedIn business profile. Describe the service you provide and mention any previous experience that you or your employees have in the field.

Reach out to your current contacts – letting them know about your services. Since these people know you or may have worked with you before, they’ll be more willing to work with you.

Challenge 2: Pricing & Profitability

The challenge: Just how do you set about deciding what to charge for the services you offer to clients?

Why it’s a problem: How do you balance that with juggling your overheads, paying your staff and yourself, covering your utility service costs, and ensuring a healthy profit margin for the business?

The solution: Use value-based pricing and go out of your way to give your customers a great service. Define a clear scope of work that sets realistic project boundaries and outlines what tasks, deliverables, and timelines are included and excluded. And conduct regular cost-benefit analyses using efficient software tools. (insert link to features page).

Challenge 3: Talent Acquisition & Management

The challenge: To become a successful marketing agency, you need to hire the best people you can get. And when you’ve found them, you have to do the right things to keep them.

Why it’s a problem: Every other marketing agency in town is on the lookout for top talent. The quality of your people, and thus the quality of your work, is what sets you apart as the agency that clients want to work with.

The solution: Know just what you want from the people you’re hiring, and use clear job descriptions to attract them. Do all you can to offer them competitive benefits – even if they’re non-monetary initially – because your future depends on them. Creating a vibrant company culture goes a long way towards hooking the right fish. Offer comprehensive opportunities for training and development.

Challenge 4: Cash Flow Management

The challenge: Effective cash flow management is crucial for your financial health and long-term success. Tracking and controlling the movement of money both into and out of your business ensures there’s enough to meet your obligations and operate effectively. 

Why it’s a problem: Cash flow mistakes are common to many new start-ups unfamiliar with the nuances involved in monitoring, analysing and optimising cash inflows and outflows. 

Without a well established client base or a clear financial plan, new startups may experience payment delays, irregular payments or simply unexpected expenses, making it difficult to manage reserves.

One solution is a business retainer that will provide you with a stable and regular income, allowing you to better plan your business operations. Another sensible move is a contract outlining clear payment terms. You should also monitor all expenses to find ways to reduce costs. Create and update cash flow forecasts on a regular basis to anticipate any potential issues. And lastly, consider establishing an emergency fund.

Challenge 5: Scope Creep

The challenge: Your client begins asking for more than was agreed upon in the original brief, but is reluctant to pay for it. This is scope creep.  

Why it’s a problem: The client might think it’s something you should accept without objection, but it means you’re losing out in both time and money terms. There may be requests for new features, functionalities, or deliverables not part of the original plan, leading to increased project costs. 

The solution: Detailed contracts, change order processes, and clear communication of boundaries. Start each project with a clearly defined contract of what’s needed and what will be delivered, and ensure that any changes are documented and approved. That also means maintaining effective and transparent communication channels between stakeholders, which is where project management software will help to track progress, manage tasks and control changes.

Challenge 6: Differentiation in a Crowded Market

The challenge: You’re an unknown outfit trying to gain a foothold in a fiercely competitive arena filled with established agencies and highly talented people. You need to find a sure fire way to stand out from the crowd.

Why that’s a problem: You’re hoping to break into a business where people make a living by getting their clients noticed, and yet nobody even knows that you exist, so your biggest challenge will be to get yourself noticed. 

The solution: Be different. Take a leaf out of John Hegarty’s book and zig while the world zags. Develop a USP for your agency. Come up with a specific feature or benefit of what you offer that makes you stand out from the competition. Be willing to innovate and offer more flexible and personalised solutions. Create a strong brand identity linked with bold creative strategies. Provide a more hands-on and personalized experience, with direct access to account managers and a focus on building strong client relationships.

Challenge 7: Building a Strong Portfolio

The challenge: Your agency doesn’t have a pile of award-winning work to show prospective clients, because you haven’t done any work for prospective clients.  

Why it’s a problem: It’s an uncomfortably circular problem. You somehow have to find a way of showing that you’re capable of producing the kind of work a prospective client is looking for. The only solution is to actually do some.

The solution: Do some pro bono work for non-profit organisations. In other words donate your time and expertise to support these organizations without charging for it. 

Be sure to create some case studies to detail the problems that your work has solved for them.

Another fix is to be your own client, create some self-funded projects, then produce some great work for them to show off your dazzling graphic design and/or copywriting skills.

Challenge 8: Time Management & Workload

The challenge: As a new start-up you’ll have too much to do, but not enough time to do it, juggling multiple roles like sales, marketing, delivery and admin.  

Why it’s a problem: Each of these roles has its own distinct disciplines and demands, and you’ll need to learn what works and what doesn’t for all of them as you go along. That said, there are real, workable ways of tackling this challenge.  

The solution: It’s all about time management to reduce the pressure of your workload. Start by deciding which tasks should be prioritised to meet your goals; breaking down large projects into smaller ones; managing distractions; delegating if that’s an option – even externally; employing automation tools. These can be anything from simple to-do lists and calendars to more complex project management and time tracking software. 

Challenge 9: Technology & Tools

The challenge: Technology is what connects you as a marketing agency to the world and your clients, and getting the right tools can make all the difference to how smoothly your operation runs.  

Why it’s a problem: The success of your agency will stand or fall on the efficiency of your communications tech, which means getting it right will be a crucial factor in everything you do. The question is, how do you decide between the multitude of essential tech choices and software options available when money is in short supply. 

The solution: The only way forward is to do your research. Study what’s on the market. Check out what other people in the marketing business use and recommend. Run a few trials. Leverage free/freemium tools. Start small and stagger your investment in software. You’ll be engaging customers across a number of marketing channels, so you’ll need the right tools to suit your purposes.

Using a tool like co.agency is perfect for start-ups who don’t have the budget for big-ticket systems like Zendesk and want to reduce admin and communication time as much as possible to increase the amount of time spent on client work. co.agency can help you build better clients relationships and retain clients if used correctly. Booking a demo is the best way to get to know co.agency.

Challenge 10: Scalability

The challenge: Your objective as a start-up agency will be to move beyond being a small operation to blossoming into one that can sustain continued growth, but how are you going to make that happen?

Why it’s a problem: Growth was naturally your goal as a start-up, and that will also be the only real measure of your success as an agency. The big downside would be if all of your hard work failed to create that growth within a reasonable timescale.

The solution: Effectively scaling your agency depends on strategic planning, picking the right niche, a talented team, leveraged sound technology and investing in infrastructure. Other important factors include producing great work, along with a brilliant service for your clients, and staying on top of market trends.

Summing up

Still set on starting your own marketing agency? Of course you are. You know there’ll be some stiff challenges to be met and overcome, but that’s just part of the reason why you’re doing it.

The reality is that it’s a continuous learning process where you need to be flexible and able to adapt quickly to market changes and evolving client needs. 

You must be ready to experiment and be willing to try new approaches, to provide a more hands-on and personalised experience, with direct access to account managers and a focus on building strong client relationships.

Another reality is that constant proactive planning and smart strategic thinking are crucial factors if you’re to achieve success.