Why I Don’t Like the Traditional Agency Model and Why I’m Moving Away from It

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As a web developer running my own business, I’ve come to realize that the traditional agency model is fundamentally flawed and unsustainable for long-term growth. Here’s why I’m moving away from it and how I’m changing my approach.

The Scalability Issue

The main problem with the traditional agency model is its lack of scalability. In this model, if I want to increase my income, I need to take on more projects and write more code. As a single person, this quickly becomes unmanageable. The more projects I take on, the busier I get, and the more I need to delegate.

Increasing Costs and Diminishing Returns

Hiring additional team members might seem like a solution, but it introduces a cascade of new challenges. For instance:

• Developers: Hiring more developers means more people working on projects, but it also means more coordination and oversight is needed.
• Project Managers: To manage the increased workload, a project manager becomes necessary. This is an additional cost without direct billable output.
• Account Managers: As client interactions increase, hiring account managers to handle communication and expectations becomes essential.
• General and Office Managers: With a growing team, there’s often a need for general or office managers to keep everything running smoothly.
• Office Space: A larger team might require a physical office, adding rent and utilities to the expenses.
• Tools and Software: Each new hire might require additional software licenses and tools, further increasing operational costs.

My New Approach

While I’m moving away from the traditional agency model, I still provide websites and web applications for clients. However, my day-to-day operations and the way I run my business are changing. Over the past couple of years, I’ve been developing SaaS products designed to help agencies run more efficiently and manage cash flow. One such product (still in Alpha) is an application to track and receive prepaid blocks of time, allowing for ongoing client services with minimal admin and approval processes.

Benefits for Clients

This new approach has enabled me to create larger applications for clients who might not have been able to afford them upfront. By working in smaller, more agile increments, clients can spread the costs over months rather than paying a large deposit upfront. This method allows for quicker approvals and the ability to start work immediately on smaller tasks, improving overall efficiency.

Challenges and Solutions

One of the biggest challenges I face as an agency owner is managing slow lead times for small projects and maintaining cash flow. Traditional retainers are difficult to track accurately, and I’m not comfortable with clients paying for a retainer if not all of it is getting used. With my new system, I can clearly track hours and be transparent with clients about how and when their time is used.

Advice for Others

If you’re a developer or business owner considering moving away from the traditional agency model, this approach can provide more flexibility and efficiency. It allows you to focus on developing quality code and solutions while ensuring your clients receive the best service possible.