The 10 Biggest Lessons I Learned in the First Two Years of Running a New Agency

Thinking about opening your own shop? Here’s some food for thought.

Two years ago, in the midst of the pandemic, I quit my job and opened my own small ad agency. It’s been quite a ride (see the video update below) and I’m proud of our success.

But success is boring! 😀 I’m more interested in what can be learned from the struggle…and there’s been plenty of struggle. So for those of you who might be contemplating starting YOUR own thing, here’s a countdown of the top 10 lessons that I’ve learned since we opened our doors.

Lesson #10 — IT’S HARDER THAN IT LOOKS

A funny thing happens once you start your own agency: your LinkedIn and Instagram feed fill up with ads for growth hacks and gurus and “easy-to-follow” business plans.

They are selling certainty in an uncertain world. It’s tempting to think that there’s some hidden code and if you can just unlock it, it will be smooth sailing.

That’s baloney. It’s hard AF.

Yes, you can learn from others. You should absolutely tap into the knowledge of those who have gone before you.

But running a business is hard. Most of them fail. Even if you do everything “right,” you’re still going to have ups and downs. It may not work.

I’m incredibly glad I started the agency, but boy, there was a LOT I didn’t know going into it. (Sort of like parenthood, if you realized how hard it was, you probably wouldn’t make that baby!)

It’s humbling. It made me appreciate how lucky I was to work at so many great agencies before striking out on my own. Creating, growing, and sustaining as successful ad agency is not for the faint of heart.

The ad trades and LinkedIn are full of cheerleading. When you see it (even from me!) take it all with a grain of salt. Every business (especially an agency) fakes it until they make it. You don’t see all the missteps and screwups and middle-of-the-night wake-ups and “why does that net revenue number have a minus in front if it?”

So…a hat tip to all of you out there building your thing. I know the day-to-day grind doesn’t make for sexy, inspiring social posts. But I respect the hell out of everybody out there, putting in the work.

Lesson #9 — BUILD YOUR LIST

It doesn’t really matter what you thought you job was going to be before you opened your agency; once you do, your #1 job is SALES.

People always ask me, “How do you find your clients?”

When you start your agency, it’s 100% from your existing network—people you’ve worked with before and referrals from those people.

(It’s one reason why most founders need a little “seasoning” before they give it a go — you need to develop that network and reputation before you hang out your shingle.)

But even if you’re an old fart like me, with a deep pro-fesh network built over 30 years, it’s probably not enough to sustain a business, long-term. You need to cultivate new prospects.

You need “a list.”

People that may need your help. If not today, maybe at some point in the future.

There’s no shortage of advice out there about HOW to build a list. (Once you open an agency, YOU get put on a million lists…people who want to sell you a service to grow YOUR list.) Some are valuable. Most are snake oil.

But the bottom line: you need to build your own list. You need some tools to track people. (A CRM, if you want to get all acronym-y about it.) You need some tactics to cultivate that list over time.

One of the nice things about Agency SOS’ mantra (“help for people who build brands”) is that our ongoing tactics are all about providing assistance, so it doesn’t feel grubby or sales-y—we’re providing a service. If/when people need help, they’ll think of us. So far, it’s working.

When you’re a freelancer, your “list” is probably a spreadsheet of creative managers that you go to with periodic “I’m available” or “got anything cookin’?” emails. It’s a bit more complex at the agency level, but the same general principle applies.

Two years in, I’m glad I plugged in my CRM on day one and tracked everything. (You won’t remember that phone call or email exchange two years later, I promise.)

Our system isn’t perfect and we have a long way to go, but I’m dead certain that our list is a critical component of our success, now and in the future.

Lesson #8 — GROWN-UPS FTW!

Every industry needs new blood. Countless thought leadership pieces have been written about the importance of mentorship and training and setting juniors up for success.

But that ain’t what we’re doing with SOS.

From day one, our model has been “small teams of experienced peeps who can wear more than one hat.” That’s not newbies.

Yes, the vets are a bit more expensive. But you get what you pay for. Plus, you don’t need them as long because they get the job done faster, so it’s probably more cost effective, in the long run.

Most of all, it’s just a pleasure to work with bona fide grown-ups—people who handle their business.

Who can take an assignment and run with it, without micro management.

Who show up to the meeting with more wonderful work than you expected.

Folks who can come up with a big idea AND write the social post AND build a deck AND present to the client.

It’s not necessarily an age thing. We work with Gen Zers that are old souls. And we know plenty of people who’ve been around the block who still don’t qualify for “grown-up” status.

But those that do are worth their weight in gold.

So thank you, seasoned pros. I’m grateful for your contributions and can’t wait to work with you again.

Lesson #7 — YOUR BRAND WILL EMERGE

I always say, “You don’t really know who you married until you have kids.” (Mike Tyson’s famous, “Everybody has a plan until they get punched in the mouth” is a more prosaic version.)

When you start a new business, you have hopes and dreams and a plan…but you don’t REALLY know what kind of business you’ll be until 💩 gets real. That’s when your authentic self emerges. (You may or may not love who shows up in those moments.)

Regardless of what your website proclaims or your self-promoting social posts tout, the WAY you work will start to define who you are. Your “brand” will emerge.

That’s definitely true of creative agencies. Because, while we do sell outputs (the ads themselves, the brand strategy deck, etc.) we mostly sell an experience — a way of working that leads to those outputs.

Are you easy or complex? Big or small? Experienced or new? Fast or slow? Cheap or expensive? Calm or stressed?

In the first two years, I’ve discovered more clearly what Agency SOS is. I’ve learned my role in it and (brutally!) my strengths and weaknesses.

Do I see the press that the flashy creative shops get and feel a twinge of jealousy? Of course!

But I like who we’ve become — a boutique problem-solver. A place that a not-quite-Coke-level brand can call and say, “I’m trying to unravel this,” and we can help point them in the right direction, whether that’s via our services or somebody else.

I like that we are an “Advertising 911” resource for brand managers. We’re good at it. It keeps our work interesting — whether that’s figuring out the best email marketing strategy or producing a big-budget TV campaign.

It’s not always what I envisioned when I opened the doors two years ago. But you become what you do. I like what we do. I like what we’ve become.

Lesson #6 — GET THE RIGHT TOOLS

There’s an old saw about the startup founder who got so wrapped up in getting ready to open his business…that he forgot to open his business.

If you’re a planner (like me!) you do your homework, research your options, and prepare. I did that before I opened SOS.

But you can get too complex too soon and never really get off the ground. (As Greg Hickman says, “Start simple and get ninja later.”)

That’s especially true when it comes to tools.

You definitely need them to run your business. Especially in our mostly-remote work era.

Picking the right tools sets you up for success. Picking the wrong ones will bog you down. (“Wait…I wanted to run a creative agency, not an IT department!”)

For me, the three that I absolutely couldn’t run my business without are Google Workspace (the best value in business, IMHO), Quickbooks Online (the easiest way to run your finances), and Basecamp (a project management and communication tool that keeps all our projects in one place.)

Quickbooks may be the MVP. Starting a business is ALL about money and numbers. You have to have a grasp on cash flows and your P&L and your balance sheet. Keen awareness of the finances helps keep our services affordable for our clients, profitable for our contractors, and financially solid for our partners.

Above, I mentioned “building your list.” I’m a fan of Copper, my CRM that’s fully integrated with Gmail (which means I don’t really have to think about my CRM), and Surfe is a nifty little tool that connects LinkedIn to Copper.

When I started, did I realize that I’d be nerding-out about my “tech stack” two years later? Nope. But getting the right set of tools has been critical to our success.

Lesson #5 — CHOOSE YOUR PARTNERS CAREFULLY

I dreamed about opening an agency for a long time before I actually opened an agency.

Way back in 2017, I had a series of conversations with a fellow creative director about hanging a new shingle. We had lunches and meetings and wrote each other long emails titled, “20 reasons you don’t want to open an agency with me.” Followed by emails titled, “10 reasons you MIGHT want to open an agency with me.”

We didn’t make the leap. She took another gig. I took another gig. We both did fine.

Then, in 2020, I had more conversations with a different creative director about opening a new shop. We had breakfasts and meetings and wrote each other similarly long emails about our hopes and dreams. We even went so far is to put together a deck with different names of agencies. One of them was “Agency SOS.” I bought the URL.

We didn’t make the leap. She took an ECD job at a big agency in New York. (With a guaranteed salary and great health benefits! Smart.)

But as the pandemic wore on, I realized…I didn’t want to wait any more. So, two years ago, I opened as a single-member LLC.

There’s no doubt that decision simplified things. Don’t get me wrong, it’s hard to have it all on your shoulders (and a little lonely.)

But you don’t have to negotiate every decision. You can move faster. And it’s easier to sleep when you know that only ONE family’s livelihood is on the line, not two or more.

When I talk to other agency founders, the relationship with their partners is a huge part of it. It’s your business “marriage,” for better or worse. And it’s harder to be a couple (or throuple…or septuple…)

It might be better. Many hands can make lighter work. Teamwork makes the dream work. (Add your own cliche here.) The strengths of your partners can balance your weaknesses. But it’s not without its complexities and trade-offs. Think long and hard about who you start your agency with.

But I think of “partners” in a more expansive way: the key people who I invite to be part of the SOS team for our projects.

They are probably MORE important for a shop like SOS. These folks aren’t “hired guns,” they ARE the agency as much as I am. So picking the right people, with the right skills, and the right temperament is critical. (See Lesson #8 — Grown-ups FTW!)

Lesson #4 — YOU’RE GONNA WEAR A LOT OF HATS

Even if you have great partners, great employees, great advisors and helpers and mentors…if you open an agency, you better get ready to get good at stuff you’ve never done before.

If you’ve spent your career at a big company, you don’t fully appreciate how much infrastructure and redundancy is there to support you. When you work for Gigantic & Partners, somebody else takes care of a lot of the crap.

When you open your agency, YOU have to take care of the crap.

And there’s a lot of crap to take care of.

Did my two semesters of college accounting really prepare me to manage a P&L? (No, friends, it did not.)

Did I really want to spend several days figuring out how to connect Mailchimp to our CRM? Or write a bunch of apology letters when I screwed up the integration and auto-subscribed a bunch of people to our newsletter who did NOT want to be subscribed?

Did I want to dive into the minutia of tax policy or how our pricing model impacts profitability? Did I want to spend four hours on hold with the IRS to discuss a tax bill I didn’t think I had to pay until October? Did I want to BEG the Xfinity tech to please come to my house and re-connect my Internet so I could run my business?

I wanted to make funny commercials. Go on production. Be the boss.

Turns out “the fun stuff” is a pretty small part of running any business. Especially at the beginning.

SINCE we opened, I got some wonderful coaching about prioritizing my time and calendar. I’ve learned to offload more things to other folks. (I have a ways to go; but admitting you have a problem is the first step!)

But if you’re not a person that’s comfortable juggling a lot of different tasks, I’m not sure I’d recommend agency ownership.

Lesson #3 — LONG-TERM IS HARD

The first year after you start an agency can be a little deceptive.

For most, there’s a pop of attention when you open your doors. Your LinkedIn post gets a flood of likes. (Many of them from people hedging their bets that you may employ them one day, but it’s still nice.) You may even get a little press. (Our theme song video was the gift that kept giving in the early days.)

Your network comes through. You land a project or two. We were lucky in that we pulled one or two big fish into the boat pretty early on. I know lots of folks who opened their agency with a “founding client” — a relationship they were bringing from a previous gig.

But the early euphoria doesn’t last forever. Those first projects end. You realize there’s no guaranteed AOR-money coming in. The day-to-day muck rears its ugly head. Oh, and that “founding client” that you thought would be your bread and butter for years to come? They get snatched up by a bold-face agency that’s always getting press in AdAge.

Building something that’s built to last — that can sustain itself for years to come — is a lot harder than sending out the press release announcing “there’s a new creative shop in town!”

And I gotta be brutally honest: I still don’t have any idea whether SOS is built for the long-term. I mean, I HOPE it is. I’m working my butt off to find the right sustainable path. But it’s hard to know.

What makes it tricky is that there’s a tried-and-true “creative agency model” that I’m not all that interested in following.

I’m not looking to get big; I like being micro small with a select group of clients, a core group of collaborators, and good margins. I’m not interested in puffing up the P&L to eventually sell to holding company. I’d like to build a business that does good work, is well-respected by those we serve, and can support my family.

My hypothesis is that such a model will borrow as much from consultancy and education as it does from traditional agencies — coursework and trainings as well as creative development and production. (“We can fish for you…or teach you how to fish.”)

But maybe I’m wrong! 😀 That’s the challenge (and the fun) of steering this ship. Trying to figure out how to make sure our second birthday isn’t our last.

Lesson #2 — YOUR NETWORK IS EVERYTHING

There’s no way I would have been able to get SOS off the ground and get to the two-year mark if it wasn’t for the professional network that I’ve built over the past 30 years.

That network has meant everything — providing clients, collaborators, mentors, and referrals. They’ve helped pay our bills, solve our problems, and save my bacon.

We live in an era where 8-year-old TikTokers are millionaire business moguls, so “experience” may not feel like a real benefit these days. But I promise you, we wouldn’t still be here if it wasn’t for those established relationships.

I have a million people to thank. (Many of you are reading this post! Thank you!) But I can never fully express my gratitude. It’s moving when people go out of their way to help you…to invest in your success, just because they’re good eggs.

A story that’s a good example…

The day I announced the opening of Agency SOS, my friend and former colleague P.J. Koll called me and said, simply, “What do you need?” We’d worked together at GS&P and he’d left to open WTBR, his successful production company.

“You need space to work? Come use our offices whenever you want. You need budgeting spreadsheets? Let me share ours. You need an accountant? A lawyer? A bank? Let me introduce you to people I trust.”

It was the first call I received. Minutes after I posted “I’m starting my own shop.” Incredibly generous. I’ll never forget it.

Similar acts of kindness have been replicated over and over by others. It’s just…wonderful.

In recent months, the Bay Area tech world (and many of the agencies that serve them) have been rocked by layoffs. You see lots of shell-shocked folks posting on LinkedIn for the first time in years, looking to activate a network that they now need.

My advice: don’t wait for a layoff to connect. I know lots of people feel weird about cultivating their network. But it doesn’t have to be slimy if it comes from a genuine place — gratitude for the work that you’ve done together in the past.

Write those notes! Go for those coffees! Jump on that Zoom! Send that text!

Make an effort to stay connected to the best people you’ve worked with. Not because you’ll need them in the future, but because they make your life richer.

Lesson #1 — REMEMBER WHY

When you’re running a new business, it’s easy to get distracted.

There are a million different things competing for your attention. Opportunities pop up left and right, and it’s not always easy to figure out which ones are legit. Plus, people come out of the woodwork to sell you stuff; it takes focus to remember that YOUR agenda and THEIR agenda may not overlap.

I have not been immune to the distractions! I can’t tell you how many times over the last two years I’ve thought, “Did I just waste a week on THAT?”

Starting an agency is a LOT. The stress of it all can overwhelm at times. There are days when I find myself scrolling through open jobs here on LinkedIn and think, “Life would be simpler if I just went back to a full-time gig, with a boss and regular paycheck and secure benefits…”

BUT…then I remember why.

On the day I opened the SOS doors, I published “5 Reasons I’m Starting a New Agency.” I’ve revisited it from time to time to remember.

It boils down to this: at some point, you need to take control of your life.

Building your own thing isn’t a vanity project (although it does require a fair does of hubris.) It’s a way to secure the life you want for yourself and your family. To craft a way of working that works best for you. To remove the insecurity of getting blind-sided by layoffs.

Don’t get me wrong, starting your own thing is no guarantee of financial security — far from it. But at this stage of my career, job security in full-time employment is an illusion. Taking matters into your own hands is as much defense as offense.

You get to a place where you have to ask the question, “Who am I working for?”

I’ve always poured my full self into my work and my employer has reaped the benefits. (Me too! Compensation! Growth! Opportunities! Benefits!) But north of 50, you realize that you only have so much time left. I want to spend my remaining years working for myself.

It’s funny…so much of the brand strategy work we do with our clients is about answering the question, “Why?” Strip all the marketing b.s. away and focus, clearly, on why you exist as a company. Reminding myself to do the same has been the #1 lesson over the last two years.

If you’re curious about some of the facts and figures from our first 24 months (number of clients and projects, total revenue, etc.) watch the video below:

John Kovacevich is a creative director and the founder of Agency SOS. He writes a weekly email highlighting three bits of creative inspiration for modern marketers. You should subscribe; it’s free and it’s good.