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The 5 Exits to Help Scale Your Agency, with Mandi Ellefson – Episode 91




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Last updated Dec 4, 2023


The 5 Exits to Help Scale Your Agency, with Mandi Ellefson – Episode 91

Last updated Dec 4, 2023 | 0 comments



This week, founder of Hands Off CEO and creator of Scale to Freedom, Mandi Ellefson, discusses how to scale your marketing agency.

About Mandi Ellefson

Mandy Ellefson is the founder of Hands-Off CEO and creator of the Scale to Freedom system.

She helps agency owners scale their business, thus allowing it to run profitably without them. She’s the host of another great podcast called The Hands-Off CEO podcast. Her upcoming book, Scale to Freedom is coming out soon and will be generating proceeds for a good cause.

When Mandi isn’t helping successful service businesses scale and make their companies run without them, she can be found whipping up culinary delights or mountain biking.

Points of Interest…

  • Scaling Your Marketing Agency in a Global Environment 3:55
  • Common Challenges When Scaling Your Marketing Agency 5:40
  • Client Management to Scale Your Marketing Agency 9:05
  • Operations Management to Scale Your Agency 14:25
  • Client Strategy When Scaling Your Agency 24:14
  • Potentially Exiting Your Company 25:16


Scaling Your Digital Marketing Agency in a Global Environment

It’s an absolute pleasure to chat with Mandi again (our first conversation, which happened a bajillion lifetimes ago in 2019, can be heard here). She’s here today to talk about the Five Exits you, as an agency owner, need to experience in order to get an eight figure business that generates six figures a month in profit. The best part? You don’t actually need to be present for this to happen!

After (quite rightly) congratulating each other for not only surviving the last three crazy years, but also managing to scale in the process, we address how it’s becoming increasingly difficult to scale commodities right now. Why is that?

“Here’s the thing; while the delivery might be easier, the sales side of it is becoming harder and harder; you’re now competing with developing nations that can provide those same deliverables but for a fraction of the price.”

One of the many ways Mandi and her team manage to mitigate this is by driving exceptional outcomes while delivering this exceptional service in a way where you can scale your business AND be profitable. By extension, you can afford to hire equally exceptional team members that will permit you to let go of the management side of things. Hence why Mandi focuses on helping CEOs to develop their Operations Managers to the point whereby they can run the business for them.

Incidentally, Parakeeto and the team at Hands-Off CEO are experiencing similar stages in growth right now; we’re in a position buy back the very highest value time in our business, which requires very expensive and thus experienced senior people. As a result, we’ve done some things recently that is s making that possible for us – people that we otherwise wouldn’t have been able to afford if we were still charging what we charged when we first started!

Common Challenges When Scaling Digital Marketing Agencies

So, what are some of the main issues clients are coming to Mandi with, and some of the symptoms people might be feeling that require addressing in order to scale?

“One of the biggest indicators is that you have really good results, and really great case studies – maybe they’ve worked with clients before where they’ve added a million dollars plus in results for their company. What they want now is to bring on more of those clients! But, at the same time, they’re aware that to focus on generating more growth to onboard such clients, they need more quality team members.”

We’re all too aware of how hard it is to build a team of new employees in this market; you can’t merely hire anymore, you need to recruit. On top of that, in Mandi’s experience, not only must you be able to recruit quickly, but also be in a position to fire just as expediently. Why? Because the market we’re currently in is filled with a lot of people that aren’t work motivated.

Therefore, it’s vital to locate those superstars and foster the work culture in which they can not just grow, but thrive, along with you as you grow your agency. And what do you need to bring on those team members? More cash!

It may seem like you’re in this endless chicken-and-egg cycle of needing more employees to service new clients to get more cash to pay for the team, but there is light at the end of the tunnel. In fact, ***Mandi outlines such a case study from 7:31 minutes***

In short; the operations leader should be really taking on more so the CEO can actually grow. However, that can only happen when the CEO is aware of what to ask of them. Mandi is seeing a lot of cases whereby the CEO is even aware of what their Operations Manager should ideally be doing…

There is a little something I frequently refer to as indigestion versus starvation. An agency thinks it’s starved of something, but really it’s a case of serious bloat that can be remedied by a methodology we refer to as Revenue Replacement Versus Revenue Addition. ***I expand on this from the 8:23 minute mark***

Client Management to Scale Your Digital Marketing Agency

To recap; we at Parakeeto help agencies, just like yours, grow 60% over one year without hiring a single person or changing any of your cost structures. How? By getting all of your clients to look like these three over here that are twice as profitable as everybody else.

This is the starting point to generating much higher profit for each service you’re offering to each client. As Mandi puts it…

“The services/clients that are generating the smallest outcomes you’re gonna be able to charge the least amount for. If you’re charging a higher amount, then you’re ripping off your clients, so you should really eliminate them. Ask yourself how you can sell your services whereby you generate at least 5 X ROI for your clients. If you can guarantee that, you will have people beating a path to your door. “

Look at how you can create a hot offer based on the case studies you have (from ALL the data you’ve been keeping…), and then use those case studies to leverage your offerings and, through lead generation, land your optimum clients.

Please don’t be afraid of being deluged by potential clients; this is the best possible context for you to run your businesses. If you’re concerned by not being able to service your new client base, that’s a personal blockage you need to work through because it’s clearly holding you back. Don’t believe me? ***Tune in from 10:46 to learn more about this mindset**

Operations Management to Scale Your Agency

We’ve addressed getting out of the dreaded Cash, Client, Capacity cycle, which really circles back to finding the area where you can add more value, and extracting more of that value in your pricing. This brings cash flow, and more margin, resulting in being able to circumvent this capacity to cash flow cycle. Once you’ve achieved that, what’s the next step for agency owners/CEOs?

“Get away from managing clients, and overseeing projects, this will save an enormous amount of time for the CEO. They will now have the bandwidth, the extra time and space to generate more growth via profitable sales. That’s the first exit.”

As for that second exit? This brings us to Operations Management, which Mandi touched on when recounting her case study at 7:31 minutes. In order to free up the CEO’s time, a proficient Operations Manager needs to be onboarded who can run the company. What does that entail exactly?

  • Building out and fulfilling effective processes
  • Team management oversight, staffing needs, hiring/firing
  • Optimum results to nurture client satisfaction leading to client retention
  • Overall foresight projection, planning, and development
  • Be a leader that is creating other leaders with a high-level of follow through

Anyone who’s had to trawl through a slew of candidate resumes knows the heartbreak of trying to whittle it down to three candidates hiring new employees. An effective, clued-in operations manager will do that for you. It will free up so much time whereby the company can run effectively in your absence for 2-3 weeks at a time. Now, to making it grow.

The simplest way to model capacity is often to create a “payroll grid”. This means listing all of your delivery and partial delivery employees, along with their weekly capacity and then multiplying that by the number of weeks in a given period.

Want to set benchmarks for your team and agency around utilization? You’d then add delivery/billable expectations and time off / holidays to that grid and model out your capacity and utilization targets for the team.


Gross capacity

Want this exact payroll grid template? It’s included for free in our Agency Profitability Toolkit:

Utilizing Sales to Scale Your Marketing Agency

Once the day-to-day operations/project management is taken care of, now you can focus on a far trickier beast – sales. This third step in Mandi’s 5 exits to help scale your agency is the easiest for agencies to mess up. How? By thinking you can box it off in quick time.

“I’ve seen the mistake that a lot of people will try jump into sales to delegate that out before they fine tune that process. And what they do is they just take wads of money and flush it down the toilet.”

How can you avoid this scenario? By effectively documenting your processes. You can’t just hire a super-charming sales person and expect them to figure it out on the fly, they need a roadmap.

Scaling sales is where the real magic happens. Oftentimes an agency owners will repeat the adage; ‘I need to be working on my business, not in the business. Doing sales is working in the business.’ While that is true, sales is $10,000 an hour type of work, and therefore the best place to be working in your business – until you can effectively delegate it.

And remember, it’s OK to have imperfections and even quite a bit of mess while you scale. That’s to be expected. Embrace your processes breaking every 12 months because that means your business is growing and needs new processes! You still can be remarkably profitable and still generate really amazing results for your clients. To find out how, pay Handsoffceo.com/briefing a visit.

Client Strategy When Scaling Your Agency

In Mandi’s experience, client strategy may come earlier depending on your company and whether you have the means to train a strategist internally to replace the CEO as the main strategist.

Alternatively, you could hire really high-level strategists who can come in and build out programs to be able to train your internal strategists to replace them down the line. This allows your company to scale via exceptional strategists but at a really effective price.

Potentially Exiting the Company

When you manage to fulfill Exits one through to four, you will have (in Mandi’s words) a “pretty killer company.” This is the objective for most CEOs, but for others, they want to take it next level – where you can actually be in a position to sell the company and completely exit it – if you wish.

“You’re putting in place executive leadership. We’ve had other clients who’ve been able to go and sell their company – internally to their team or externally to investors. Point is, this is the stage where you can maximize the valuation for your company because you’ve done those earlier steps. And if you don’t do those earlier steps, your company is worth very little.”

If you put these things in place, you can increase your multiple and also increase the likelihood that an investor will actually want to acquire your company. This potentially means millions of dollars more at your exit. And, like we’ve said many times before, you should always be preparing for your exit…

Key Takeaway… 5 Exits to Help Scale Your Agency

Employing a Wait List will do WONDERS for your agency. Not only will it motivate more people to want to work with you, it also brings in the required cash flow/profit to enable you to hire the superstars that can provide your company’s exceptional service.

Those five exits you need to address to scale your marketing agency can be summarized thusly…

  • 1: Client Management
  • 2: Day-To-Day Management
  • 3: Sales
  • 4: Client Strategy
  • 5: Sell the Company / Complete Exit / CEO Hire

To learn more about these 5 Exits, follow Mandi and her team via the below links!

See more from Mandi…


Did you learn anything new from this episode? Let us know in the comments below! We have helpful blogs designed to bolster your agency profitability, such as How To Calculate Your Billable Employee Cost-Per-Hour.

Our next installment of #APP, on July 27th, will see Marcel chat with Brad Smith. Our previous blog – Episode 90 with Tyler Gillespie – can be viewed here…

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Agency Profitability Tool Kit

If you’re looking for more resources to help you improve your agency’s profitability, check out the Agency Profitability Tool Kit. It’s full of templates and checklists used when consulting clients. This helps them improve profitability by over 100% in under 60 days.

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