Scalability is never easy if you’re a service business. Production is reliant on manpower and manpower is the most volatile resource in any company’s war chest. Humans have distinct personalities, interests, motivations and temperaments. They can’t be bought and sold either. Achieving total control over the labor force is pretty much a pipe dream unless you’re running some kind of cult. For those of us normal entrepreneurs, the best we can hope for is to establish good relationships with the people around us and unify our goals for a limited period of time.
As such, most service business owners will be happy to grow their revenue by 20% annually at 30-40% profitability. That’s really just how services work and it’s precisely the reason why these types of businesses rarely get venture capitalist backing. It’s almost impossible to replicate the services rendered by a true master in a particular craft.
The SEO industry is no exception to these fundamental truths. After reaching a certain level of stability, revenue tends to plateau and stay the same for a while. At GDI, we experienced the very same thing. For an agency that’s 19-man strong, there was a point when we hit a wall and revenue growth stagnated. During the predicament, the obvious way forward was to staff up and acquire more clients. However, that also meant investing more time in marketing ourselves, taking on more salary and training more people.
And all these for what? For the same 30% margins if we’re lucky?
Not that I was averse to those risks. If anything, I’m the type who needs to be restrained from these things because I can be gung-ho to a fault. I have a big heart when it comes to challenges but at some point, that heart also has to pump blood into my brain. There had to be a better way to increase revenue and profits without taking on so much more risks.
Fast forward to the start of October: we did some tweaks in the way we work. By invoking the Pareto Principle and focusing on the activities that drive the bulk of the cash flow, we were able to double our income in 2 months and increase profitability from 32% to 58%. Best of all, this was done without taking on more salary from new employees. Our client base also remained roughly the same. Yet, the difference in business performance was night and day. So what did we change?
The answers to that are so simple, they’re borderline stupid. I’d love to beat myself up over not realizing them sooner, but I’m a first time entrepreneur and I figured I should cut myself some slack and chalk this up to my maturation process.
Here are the things we did right:
I Freed Myself from Admin Work
Every employee has his strengths and weaknesses. That includes the CEO. Me knowing a thing or two about SEO doesn’t mean that I should also be an expert in taxation and accounting. Unfortunately, that was what I tried to do until recently.
I tried to be the head of finance while being the company’s errand boy, HR director, chief morale officer, SEO strategist, head trainer, sales manager and CEO. While that may sound heroic to some, it really was insanity. At some point, you just have to admit that you don’t have the brain and physical stamina to wear all these different hats.
I separated these hats into two buckets: the ones that only I could do for GDI right now and the ones that someone else could do for me. As it turns out, that looked something like this:
|Roles Only I Can Play
|Roles Someone Else Can Do
|Head of finance
|Head SEO Strategist
|Chief Morale Officer
By recognizing the areas that I’m not great at and by hiring someone who can focus and spend time on them, I had more time for things that made a bigger impact on the company. My bandwidth was reallocated to thinking of ways to optimize the company’s cashflow and to innovate our internal processes. The result was the development of new processes and technology that allowed us to offer services that are very rare in the field of SEO. We were able to increase sales without necessarily increasing the amount of manpower it took to serve all our clients.
A lot of people think that being busy all the time makes them more productive. That would be true if you’re a manual laborer who gets paid by the hour. However, entrepreneurs sometimes need to hustle less and think more so they can come up with ideas that will result in significant business growth. A busy mind is a place where there’s little room for creativity, critical thinking and imagination.
Speaking of innovations, we were able to come up with to new methods that have been key to our growth spurt. Basically, we’re now able to secure link placements from .gov, .edu and major news sites at a much higher rate.
I can still vividly remember how the ideas hit me. I was taking a shower before going to sleep and I was thinking about link building and how it’s become the biggest revenue driver for our business. I pondered how there are so many link builders out there and how everyone was chasing the same things: guest posting opportunities, broken link replacements and resource page listings.
I also knew that a lot of SEO clients want links that aren’t acquired from the usual guest posting and broken link building tactics that have been done to death by now. I mean, let’s be honest: practically every webmasters in competitive industries are jaded by now after receiving countless outreach emails from SEOs who hope to score links. Most of them either ignore the now have very strict editorial guidelines, grant only nofollow links or even ask to be paid for iblishing links.
Even in the best case scenario where a link builder actually scores a contextual, dofollow link, he can be sure that a site that granted him that favor has done it for others in the past and will do it for others in the future. With all those external links sharing the equitry from one site, the power of the links is stretched thin and much of its potency is lost. It’s easy to see why a lot of clients desperately look for fresher ways to acquire links.
When you think hard about it, 80% of all link building methods are basically glorified forms of link begging. I was getting a little tired of it and I wondered how the power to secure rare links mine.
When the idea hit me on exactly how to do that, I literally had to lie down because I felt lightheaded and thought I’d fall over. After developing the core of the idea, I added some other wrinkles to make the process unique to us and practically impossible to replicate. I searched the web hard for similar processes but couldn’t find guides on how to secure links from high-authority sites with good consistency. Thatleads me to conclude that either nobody has come up with what I discovered or nobody is talking about it because the value is virtually unlimited.
These are techniques that I probably can never blog about and share to everyone. The potential for abuse is just too great. However, I did share the core with Jason Acidre, who’s probably the only person in the industry I’d trust with that kind of insight. Other than that, we’d have to leave these things in the classified info section.
Bottom line: if you want backlinks from .edu, .gov and big time news sites, we might be able to help you acquire them in an editorially granted way.
We Grew Accounts from Within
It slightly amuses me to see other SEO agencies brag about ranking on the first page so they can attract a steady stream of inquiries. I wonder why there would be a need for an infinite stream of leads when the sizes of their teams are finite. Do they lose clients at such a fast rate that they constantly need to replace them?
I’ll probably never know the answer to that, but what I do know is that effective services and good client-agency relations dramatically reduces churn. The majority of our recent growth can be attributed to clients expanding their engagements with us and not from new accounts. When we spoke to our clients about our new processes and techniques, they were eager to be the first to reap the benefits. Being our loyal partners, they were given top priority. Right now, we see no reason to offer the new services to the general public because we had a ready market for them.
Another factor for growth was the fact that some clients who stopped their campaigns with us after the initial engagement eventually came back. These are people whom we’ve been friends with even after we stopped working together. When the need for more SEO work arose again, they knew who they could trust and they re-engaged.
And then there are referrals. Part of the growth is due to new accounts, but most of them are from referrals that existing and former clients made. These types of leads are much easier to close and they tend to make better clients thanks to the initial rapport.
That doesn’t mean we don’t get new customers from our presence in search engines, though. We identified a couple of keywords that yield the best types of customers and those are what we focused on. Aside from that, we see no urgent need to try and take over the SERPs for every keyword related to our business. We know for a fact that some of the guys who rank at the top can be hired for $350 per month and that’s just not our segment of the market.
We Focused on the Most Profitable Work
Going into the changes we made, we already knew what clients go to us for and what makes the most financial sense to us. These are as follows in this order:
- Link building
- Full SEO campaigns
- White label SEO campaigns
- Content writing
In GDI, we have three types of clients: those who are on retainer, those who variable but consistently large monthly work orders and those who order irregularly. We’ve come to conclude that clients who have small and irregular order patterns are the least profitable and they tend to give the staff the most stress. We decided to discontinue accepting piecemeal work and instead consolidated the bandwidth left behind by the vacuum from the accounts we got rid of.
As a result, we were able to use the manpower we freed up on link building and SEO campaigns with clients who are on retainer. Our income became more regular and people just knew what they had to do month in and month out.
We Audited and Streamlined Writers
Content creation is the cornerstone of our operations. Without written content, link building, SEO campaigns and stand-alone content accounts wouldn’t run. With only 15 people in the company who can write and edit, we knew that we had to make the most of every drop of manpower if we were to continue serving serving more than 60 websites at a satisfactory level.
Three months ago, we developed a way to quantify each type of content creation task so we can distribute the equitably to writers and editors. We started applying this and we established guidelines on how work can be take on, delegated or deferred to another member of the team. The result was pretty good as it made workloads very transparent and it helped everyone understand what each other was doing all the time.
This translated into a more balanced environment where nobody coasted while someone else was swamped. It also became easier to see who was delivering beyond expectations and who was lagging behind. As a result, we were able to apply help where it was necessary and we were able to minimize costs associated with hiring freelancers to work on tasks that spilled over. By earning more and spending less, profitability significantly improved.
We Quit a Few Things
When we established GDI, we envisioned it as a manifesto against traditional in-house digital marketing teams and poorly run agencies. We wanted an environment where we knew the value of every task we were doing and how it impacted both our clients and our own agency. It was also an upraised middle finger pointed at so-called digital marketing “gurus” who made us do stupid and pointless tasks in the past when our founders were still employees.
As a result, we became a team of enthusiastic, creative nerds who liked what we did and loved working with each other. We were a happy-go-lucky bunch that also happened to perform well enough to be loved by both our clients and the local SEO community.
That got us to a certain point of success. We became a trusted name in the industry and we became financially stable. However, I also knew that we had to “grow up” at some point. That didn’t mean we would lose our fun-loving nature as a team – it only meant that we can become a more professional bunch that consistently added more polish to the way we did business.
Honestly, there was little I could ask for from my team. Everyone here is trustworthy and everyone has shown the willingness and ability to go “beast mode” with work when the situation calls for it. Instead of asking the team to do more, I asked them to do less. Specifically, I asked them to start quitting the following tendencies:
For anything you don’t want to do, there’s bound to be a built in excuse to not do it. We recognize that regular people find excuses not to be special every day. Anytime you fail, you can just blame an external factor. However, we don’t fancy ourselves as a regular group of people. We’d like to think of each member of the team as a winner and winners find ways to be great in anything they do regardless of circumstance.
Regular people know what they need to do to win. Special people do what they need to do to win. They know that the path to victory is the one that most people avoid because it’s too challenging, too exhausting or too intimidating. We recognized that if we want to stand out, we have to run towards the challenges instead of running away from them.
Relying on Guesswork
Anytime you’re not sure about what to do at work, look it up on the web, ask someone who might know better or do some testing of your own. Bad results can be minimized by relying less on guesswork.
Relying on Others to Take Ownership
In the past, we’ve had to deal with the younger members of our team hesitating to take full ownership of the work they did. In their minds, their seniors and managers always had to give the work a final stamp of approval before it’s submitted to a client.
That was fine when the business was small, but as people grew with the company and as the number of clients we handle increased, we had to make an attitude adjustment. People had to feel like they owned the accounts they handled rather than feeling like mere service providers. This meant greater commitment to quality and less reliance on perceived authority figures. This also meant taking greater initiative and accepting responsibility when things don’t go as planned.
While the old adage says “err on the side of caution,” GDI believes in “err on the side of action.” As I always tell people, it’s easier to ask for forgiveness than to ask for permission in GDI.
“My Bad, Now F*ck Off”
One way people tended to deflect criticism after making a boo-boo is to say “my bad” because there’s no comeback for that. When someone acknowledges responsibility for a mishap, the conversation is over.
Well, not really.
Taking responsibility is one thing. Applying corrective action is another. You can’t just say “my bad” to shut your supervisor up. You have to take action on it as well. Words are nice, but making things right is really the only acceptable form of atonement.
Liking to be Liked
This doesn’t mean you should be an asshole, but it does mean you can’t be afraid to step on people’s toes when necessary. Far too often, Filipinos try to avoid confrontation because we fear that an employee or a colleague might take it personally. However, this kind of misguided tact can promote a culture where people are not held accountable for their actions or the lack thereof.
I preached quitting the need to be liked because we want to promote an environment where there are no sacred cows. Even I can be called out by a new employee if I’m not doing my job right. Criticism and suggestions should and will always be welcome as long as they’re accurate, professionally conveyed and constructive. If someone takes issue with that, they have a problem – not you.
These things are not easy to give up for most people, but then again, GDI doesn’t envision itself as a part of the “most people” category.
In conclusion, I’ll leave you with this little nugget of startup wisdom from GDI friend and mentor Sam Nam:
In his book Zero to One, PayPal founder Peter Thiel said as much: no fundamentally flawed startup can become a great company. GDI still has a long way to go, but I think we’ve gotten started on the path of refining our fundamentals.