Scaling a Bespoke Agency & Transitioning Into Products, With Brennan Dunn
Oct 2, 2023
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Brennan Dunn, the founder of DYF, discusses his journey from employed developer to scaling a bespoke agency to $2M/yr. He shares insights on running a 7-figure agency, transitioning to SaaS and education products, personalized marketing, the shift from hourly billing to a team-based approach, financial aspects of running an agency, and the emotional impact of feedback. The podcast also explores the transition from agency work to product development, the approach of Right Message and service, suitability for the bespoke agency route, and the challenges in starting outreach and promoting a business.
Building a strong network through intentional connections and referrals is crucial for a bespoke agency's success.
Transitioning from hourly billing to a package approach with set fees allows for flexibility and a team-based service.
Focus on building relationships and expanding your network at networking events to generate a steady flow of qualified leads.
Operating a bespoke agency offers immediate cash flow, lower startup costs, and the ability to secure higher-paying clients.
Running a product-based business provides scalability, lower operating costs, and the opportunity for passive income.
Deep dives
Building a network for referrals
Brennan Dunn and his agency focused on building a network that led to referrals from their intentional connections. They attended local networking events, organized their own events, and built relationships with individuals in their industry. Referrals from this network became a key source of clients.
Services and revenue breakdown
The agency primarily offered custom software development services, ranging from building custom workflow solutions to MVP development. They transitioned from hourly billing to a package approach where clients paid a set fee for a team-based service, including full-time developers, a designer, and project management. Their average annual revenue was around $2 million, with approximately 25 clients, and their pricing model allowed for flexibility depending on the scope of the project.
Client leads primarily from referrals and network
Most of the agency's client leads came from referrals within their network of intentional connections. They focused on building relationships at networking events and created their own events to expand their network. This network of referral partners provided a steady flow of qualified leads for the agency's services.
Profitability and scalability in operating expenses
The agency experienced strong profitability, with annual revenue reaching approximately $2 million. While operating expenses, which included payroll, rent, and other costs, amounted to around $1 million. The agency maintained healthy profit margins despite occasional expenses like travel for roadmapping and purchasing equipment. However, Brennan eventually sought to explore other business opportunities and transition away from running the scaled agency.
The Benefits of a Bespoke Agency
Operating a bespoke agency offers advantages such as immediate cash flow, lower startup costs, and a quicker path to revenue. With a bespoke agency, you can easily secure higher-paying clients and generate substantial income sooner. The sales skills developed through direct interactions with clients are invaluable, allowing you to understand their needs and overcome objections effectively.
Advantages of a Product-Based Business
Running a product-based business provides benefits such as scalability, lower operating costs over time, and the potential for passive income. With a product-based business, the trajectory of revenue growth can surpass that of a bespoke agency due to the ability to sell lower-priced products to a larger customer base. Additionally, building products allows for more focused R&D efforts and the opportunity to create recurring revenue streams.
The Value of Direct Sales and Interactions
Engaging in direct sales and having one-on-one interactions with potential customers is a valuable experience. These interactions allow you to understand customer objections, address their specific needs, and gather firsthand insights to shape your offerings. The skills developed through direct sales can be applied across different business models and play a crucial role in building customer relationships, refining your offerings, and achieving long-term success.
Owning lead flow is crucial for a successful agency
To ensure a successful agency, owning lead flow is crucial. Implementing a recurring model can make lead generation more predictable and sustainable. By having a consistent stream of clients, it becomes easier to plan and scale the business. Rather than relying on one-time projects, finding ways to offer ongoing services or maintenance can help create a more recurring revenue model.
Adapting and evolving is key in the agency world
In the agency world, it is important to be adaptable and open to change. Over time, a business owner may discover different aspects of agency work that they resonate with more or less. It is not necessary to stick to one path indefinitely. Trying different approaches, such as productizing services or exploring new business models, can lead to growth and fulfillment. The key is to continually push oneself outside of their comfort zone and embrace new challenges.
If you somehow don’t know who Brennan Dunn is, he’s the dude who started this whole DYF thing. 😅
He started as an employed developer…
Then side hustled as a freelancer…
Until it was doing enough revenue that he quit to go full-time freelance…
And then, through many twists and turns, went on to scale a bespoke-work agency to $2,000,000/yr in revenue with 11 staff…
And later sold his stake in the business to his business partner and successfully made the transition into products, while still taking on occasional high-ticket consulting gigs.
…But you already probably know all this.
After all, he’s Brennan freakin’ Dunn!
In this interview, Zach picks Brennan’s brain about a “day in the life” of running a scaled bespoke agency, and did some comparisons about the different lifestyle consequences of his 4 different paths of experience:
- Running a 7-figure bespoke agency
- Running a SaaS business (aka Rightmessage, Palladio)
- Running an education product business (aka DYF, Create & Sell)
- Running a highly-leveraged solo consultancy (i.e. his email personalization + funnel consulting engagements for SPI et al)
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