How to Take your Digital Agency to the Next Level & Sell the Agency

By Jason Swenk on May 18, 2014

In this session of The Smart Agency Masterclass, I chat with Raj Choudhury, co-founder of Spunlogic — which became one of the largest privately held digital agencies in the Southeast, before it was acquired by Halyard Capital in 2008 to form Engauge.

In the beginning.

Raj started out doing what he loved. In their early 20’s he and his business partner, Jeff Hilimire, were building basic websites mostly for the tourism industry. Raj traveled the globe, building websites for ski resorts and backpacking groups in exchange for passes.

“We didn’t really realize what we were doing. We didn’t even know what an agency was.” According to Raj, “There were no real barriers. We just did something we were passionate about.” In fact, it wasn’t until they landed a gig for $65,000 that they realized they really had a business on their hands.

The realization that they could sell.

Like most agencies, Raj’s experienced growth in stages – having one to five people, to 10-18, 20-25, and so on. Sometimes companies stall out at a certain stage for various reasons. Maybe they’re comfortable being a mid-sized agency. Or perhaps they just don’t know what to do next.

“We grew because we were very aggressive in nature,” Raj says. But it wasn’t making money motivating them. They were just passionate about what they did. “It went from being a hobby to being a business.”

For agencies looking to make it over that 10 employee level, Raj says to be smart about your sales pipeline, “Don’t underprice yourself because cash flow is a problem.” He’s right.

[clickToTweet tweet=”Be disciplined about how you handle your cash flow or else you’ll find yourself in a constant struggle.” quote=”Be disciplined about how you handle your cash flow or else you’ll find yourself in a constant struggle.”]

Early on, Raj brought salespeople onto his team believing it would help secure business. What he ended up learning is that salespeople are great at finding and cultivating relationships, but it’s the founders who are usually best at closing the deal.

Building a culture and team you can trust.

Raj attributes the company culture to their being so young when the business started. It was about having fun, sharing experiences, and being edgy. They were a family with everyone passionate about making the business a success. Though he does share a word of warning, “As you grow, be sure to take a look at your staff. People who do well at small agencies may not do well at a mid to large agency.”

As far as building a team you can trust, Raj says to take a look in the mirror and ask yourself if you’re ready to let go. If you’re not, you may not have the right people around you, or you simply may not be ready for the growth. If you want to get to the next level, you’ll need to learn to delegate responsibilities. “You can’t be effective if you micromanage,” he says, “You’ve got to share the load and trust your team.”

Part of delegating and team trust comes from you taking the time to help your business thrive. Don’t just be a reactionary leader. If you’re constantly taking meetings and putting out fires, you’re not helping your business.

The low points.

It wasn’t all rainbows and sunshine for Raj. “We made so many mistakes,” he admits. Instead of looking at the mistakes as failures, Raj says they took them down new paths. He doesn’t regret the experience learned from making mistakes, including the knowledge of when to pull the plug. Admitting there is a problem and knowing when to just stop, is a big – often hard – lesson learned.

When you’re just starting out, landing that $50,000 project feels amazing. It feels less than amazing though when you realize that project actually ended up costing you $100,000. It’s that kind of mistake Raj says led them to start using discovery scoping. A discovery phase can really help you get a better understanding of the client and the unknowns.

Building long-term client relationships.

It’s not just about landing the client. You want to build long-term relationships with them. Raj did this by making sure the client looks amazing all the time. This way they’ll remember you down the road. He also advises allowing your team to build relationships with their counterparts in the client’s company. It helps to build trust, as well as identify new opportunities.

Another thing Raj did was host lots and lots of roundtables, including topics from email to emerging tech, and so on. They invited clients and let them network amongst themselves. “It wasn’t a sales meeting,” he says, “but it still helped promote our brand.” By creating a community for their customers, Raj’s company was able to build trust and drive business.

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