Anyone started a service business successfully?
Has anyone started a services business like AdWords agency, Sales agency etc? Not taking about solopreneurs but proper businesses with employees that run without you.
Curious to know what the margins are, how did you come up with the idea, what are the moats.
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I am transitioning from a 1 person agency to a full team (so that it can run without me).
The larger the team, the thinner your margins. And in this model, the business becomes 70% about sales.
It's a difficult balance between scale and quality projects.
Just my experience of running this for over 5 years.
What's your take on till how many no's you can grow team size effectively well before affecting margin majorly
Also can you share some eg of
Team size - margins
Depends on a lot of things.
- How many resources can you manage on your own: I don't want my work to become a project and people management job, so I will keep the team small till it starts impact work delivery and quality.
But after a certain number, 5 for me, I need either higher quality hires (more expensive) who can self manage, initiative taking - or I hire a project manager to manage these resources (again expensive). Hiring a project manager will impact culture and experience of employees which again will make me invest more in catering to these challenges.
Margins will keep moving in this process, but I look at it as managing between my own time vs margins. Either one has to suffer to gain in the other.
Over the years I have come to value my time more than margins.
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