What I Learned From a Social Media Marketing Agency That Broke Even After One Year

After my first business, buying and selling phones, I spent a month or so figuring out what I wanted to do next. Eventually, I landed on acting as a broker in the electronics space because I still had the buyers and sellers, and sellers always needed help finding new buyers. This was a problem I could easily solve for them so I did that and quickly got back to a reasonable income, which was all I wanted, and it gave me the freedom I ultimately desired.

Around that same time, through a mutual friend, I met two bright young guys here in the Pittsburgh area. One was a web developer, and the other was a content creator and photographer. After meeting a couple of times, we decided to start a social media marketing agency where we developed websites, created photo and video content, and managed social media for small businesses in the Pittsburgh area. I always enjoyed building websites since I was a young kid and had an affection for photo/video so I thought this would be a fun little business. Important words, fun and little. . . not every business needs to be huge, hard, and boring.

Anyways, we were able to quickly start getting customers and began to produce revenue fairly quickly. Not a lot of revenue, but enough to keep the lights on and pay our bills which a lot of times is all you really need.

Here are the lessons I learned from that business. I hope they’re helpful in your business today, and hopefully you won’t make the same mistakes I did.

Create a clearer product offering and market it better.

We should’ve productized the service we provided, which is essentially turning a service into an experience. For instance, an experience for a small business owner in need of digital marketing could be setting up an initial meeting, doing a brand consultation, and letting the customer walk away with a digital marketing game plan from that consultation. If you are creating websites maybe part of that product is mailing the customer a poster wireframe hard copy of exactly what there website will look like. Maybe part of the productized service is sending every customer a $10 starbucks gift card after their service is completed as a thank you. Perhaps we could’ve also provided some sort of digital interface through which they could manage their interactions with the company. This would’ve created a much more streamlined process, made it easier to create stickier, repeat business, and ultimately create more revenue.

Create a repeatable sales process.

Most of our business came from word of mouth and referrals from people I already knew. This is great at first and helps to prove a concept, but typically it’s not scalable, and even if it’s [doable], it’s not manageable.

If you want to scale without running around like a chicken with its head cutoff, you need to build a predictable machine you can pour gasoline on in a calculated manner. You need to get to a point where you know if you put (X) into the factory then (Y) comes out. Obviously there will always be unpredictable variables and black swan events, but you want to get your sales funnel, fulfillment, operations, and deliver to a point where it is as close to a simple equation as possible. X+y/z=$$

What we should’ve done is create a simple, repeatable sales process and implement a simple system to manage that process for ourselves and our customers.

Keep your partnerships separate.

While I was running the digital marketing company, I was also still brokering electronics. What I noticed is that this caused a lot of animosity with the media company. If I had a good month brokering electronics, the media partners would potentially be upset or jealous because the media company wasn’t as successful. This ultimately led me to discontinue brokering electronics, because just like my media partners were not happy with me splitting my time, neither were my electronics brokering partners. In hindsight, I should’ve [kept them completely separate and kept my wins to myself]. I also could’ve established better rules and expectations for what my part was in each of the partnerships.

Spend money only on things that make more money.

Remember, if you run out of money you die. The game is over and you’ll have to go find a new game to play. A lot of times you also have to find new players to play the game with, which can be challenging. Sometimes you can find a new game quickly and some times it takes a long while. So try your best not to run out of money or else you might be left without any games to play which is no fun.

This is common sense but in practice it's real easy to get bored when your business starts making money and its even easier to start creating experiments to cure that boredom. I think at the beginning of a business it’s essential to conserve cash. If it’s a venture-backed business, it’s a little different, because you may be sacrificing cash efficiency for speed: speed to market, or even experimenting to find product-market fit faster than your competitors. But this is solely for a bootstrapped or self-funded company, and if you’re bootstrapping and self-funding, you need to conserve cash at all costs.

The reason is, number one, it helps you weather any storms that may come. If there’s a month with less revenue, or an unexpected expense and less profit, you’re able to make it through more easily and buy yourself more time to come up with a new game plan. The second reason is that by conserving cash, you create more leverage for yourself to take advantage of opportunities as they arise. That could be a project you need to buy new equipment for, a partnership that requires you to hire more staff, or business growth that means you need a new office space and money down on a new lease. Leverage comes in multiple shapes and sizes and Leverage is really Important so do whatever you can do find it, get it, and keep it.

The third reason is that keeping the money in the business keeps you focused on growing it, and not on wasting money or splurging in your personal life and becoming comfortable, which can easily become a distraction if you’re not disciplined. So conserve cash and invest in things that make more money. If you do this right the first time you'll have enough cash that your cash is making you cash and you can use the cash your cash makes to buy whatever you want. Simple as that.

Some of the things I invested in that did make more money were computer equipment so we could edit videos and photos and design websites, a drone so we could get video for customers, and a camera so we could create content for our customers. Even with those purchases, I could’ve bought those things used and saved quite a bit of money. But at the time I never bought things used. I always bought things brand new because you get a warranty and you can return things if needed. This was a huge mistake. Prove the model first as cheaply as possible then once a model is proven with understandable economics, make expensive long term purchase decisions from that point.

Define the value you bring and the role you play.

I did not clearly define what value I brought to the table, what my role was, or what my partners’ roles were, and we did not set proper expectations about this. I’ll talk more about this later as I'm running out of time today as I am writing this article.

Use contracts, and enforce them.

About six to nine months into this business, I had an investor approach me who was introduced through one of my partners. He was interested in investing in half the business, which would’ve helped me return all my original capital while retaining 50% ownership. This would've essentially created a free roll for me which is the holy grail of holy grails. We signed an NCNDA and I exchanged financials with him. Within about a month, he and my other two partners created their own business doing the exact same thing and took most of our major customers. This was entirely my fault and could have been prevented had I been healthier, established better contracts, enforced them, and not let people walk on me.

Make sure everybody has something to lose.

When you’re going into business with people, there needs to be an equivalent exchange. In this business, I put up all the money, got an office space, and took all the risk, while my two partners’ only risk was their time, and they could walk away at any time without losing much. This was a mistake on my part. If you’re going to put up money, the other party should put up a lot more time or bring a lot of value to the table. Partners need to be equally yoked.

Be authentic and genuine in how you present yourself.

One of the folks I was working with was a very professional dresser. He always showed up in a suit, well dressed, every single day at the office or when meeting with a client, and this is also how he marketed himself. That’s fine if that’s who he is, but that’s not who I am. As I began to buy into this image and present myself that way, I think I lost the authenticity and genuineness that made people want to do business with me in the first place. In hindsight, when you’re building a brand or marketing yourself, be yourself. It’s OK to curate it a little bit. Make sure things look nice, but don’t play too much of a character, otherwise you could end up far off the path you originally were meant for and that will not be very fun for you, I promise.

The business overall wasn’t a huge win or a huge loss. I learned a lot. We created a lot of cool websites and content. I met a lot of cool people and had a little bit of fun. I didn’t end up making much money on my investment, but I didn’t lose much either, so it was really just a break which is okay. You miss

Hopefully these mistakes and lessons can be valuable to you and your business, and I hope you don’t make the same mistakes I did.