How I built a 20 employee agency at 20
Hi, my name is Pavel Tseluyko. I am the CEO and founder of the design agency Merge Development. We have grown from one to twenty employees in a little over two years. Everyone has been working remotely since day one.
Merge Development is a team of UX / UI designers and front-end developers focusing on creating web applications for startups that raised Seed, Series A, and Series B rounds. We’ve been a bootstrap startup from the beginning and are still growing in terms of revenue.
For more than two years, I have gained a lot of experience making accurate decisions and many mistakes, the value of the latter I did not immediately understand. This post will be about those mistakes and how to avoid them while starting a new business like ours.
The beginning: selecting a specialization
The first piece of advice when opening your agency is to decide on a specialization. In the beginning, it can be broad, but over time, you will understand in which direction you want to develop your company. This way, you can focus on improving customer experience and quality of work while increasing your average paycheck.
If we are talking about a design agency, you can focus on Web Design, Web App Design, Mobile App Design, Branding, building UX teams for outstaffing, etc. For us, the choice was UI/UX Design for Web and Mobile Apps.
Our first customer
Before starting my agency, I already had a good portfolio, three years of experience with UI/UX design, and several completed projects for different industries. Still, they had one thing in common — they were web applications. At that time, the SaaS market began to develop rapidly. The business model was becoming more understandable for entrepreneurs, and the demand for product development and design only grew over time (and continues to grow at an incredible pace).
It took me a month to find my first client. The strategy that worked for me was to respond to small companies looking for a middle-level designer. Among these employers, there will be someone who will agree to start working with you not as an internal employee but as a contractor or sub-contractor.
You can search for initial small projects on Upwork, Fiver, and Facebook groups or even among friends. Introduce yourself as the team lead of the design team, show your portfolio, tell about your partner or a team and make a valuable and thoughtful offer.
Our first employee
Immediately after I got my first project, I began to work on it with my first employee Elisabeth. She was my friend and a junior UI/UX designer. We constantly worked in pairs, but I also was managing and mentoring her. Elisabeth is currently Head of Design at Merge and leads our design team.
When there is no budget for experienced employees at the beginning of your journey, focus on hiring young, inexperienced talent with a lot of motivation and ability to grow as a professional. Be ready to guide and teach them. This way, your salary budget will be less with fewer risks, but your employees will grow professionally after some time, and you will be confident with their skills and abilities.
Focus on customer satisfaction
Our first client introduced us to a company within the same industry. So we took on several more projects, expanded our team by hiring a front-end developer and another designer.
The key to running a successful B2B service company is customer satisfaction. Do your job much better than the client expects from you. It is an investment in a long-term partnership and possible future hirings. Because the better you do your job, the better the chances are that some of your clients will recommend you to another company.
First winter crisis
Our young agency met the first winter crisis without preparation: a complete stillness, no new clients, projects were on pause. We sat with zero revenue, and it continued like that until March.
I paid the salaries from our financial cushion, which I had accumulated in advance from our clients’ payments. As you can see, it was one of those good decisions.
Back then, I didn’t know that this was a typical situation for the industry. All other agencies were preparing for winter from either August or September. It’s an excellent practice to accumulate workload in advance, so there is always something to do during a silent winter period.
Have a money cushion. It would be best to be ready for situations when there are no new clients or projects; or simply seasonal changes in the industry or market you work with.
How we built lead generation and sales from scratch
The first revenue after the crisis we invested in finding new clients. In March, I decided to hire a lead generation specialist, and we started to look for new leads through LinkedIn.
At first, I paid for every sales pitch call that lead generation manager had assigned with a potential client. After we established our revenue streams, we switched to full-time employment with a salary and a small percent of every project’s revenue.
We used my LinkedIn profile, set it up focusing on web and mobile fintech applications, and started reaching out to potential clients through LinkedHelper. By April-May, we had a steady flow of potential projects through LinkedIn.
During the COVID-19 pandemic, we spent some time enhancing our sales process. We learned how to work with Pipedrive to track all activities and sales stages with the clients. Also, we created a sales deck with a focus on design processes. It helped us to look more professional in the eyes of the client at the sales stage. Thanks to this presentation, we have increased the contract conversion rate up to 30%.
Strategic tips after two years of working with LinkedIn:
- Your LinkedIn profile (CEO or Growth Manager) should be top-notch;
- Create an Ideal Customer Profile. It will help you to understand your potential clients and their pains better.
- Do very narrow cold mailing, collect lists of potential leads yourself, do not buy it off the Internet.
- Have a CRM with all leads in it. It will make your work much more manageable.
- Prepare a pitch sales call plan: intro, talk about how you do projects, show a demo, explain the next steps. Have a list of frequently asked questions. Your demo should be as high quality as possible. Before a sales pitch call, always pick suitable and relatable business case studies and demos that resonate with your client’s industry.
- High-quality proposal template
- Templates of legal documents with quick access to them
Our sales toolkit
A set of applications that we use for lead generation and other sales activities
- Sales Navigator
- Expandi — sending chain letters and connection requests. (We used LinkedHelper in the beginning)
- Crunchbase — search companies by ICP
- Calendly — the most convenient calendar booking for calls
- PipeDrive — a CRM
- LinkMatch — parsing data about a lead from LinkedIn to PipeDrive
- Pandadoc — online document signing
- Integromat — manual sales automation
- Phuntombuster — prepared sales automation
Expanding the team and delegating your work to others
After hiring ten employees, of which six were designers, we formed a design department with two design leads, which focused on project management, quality control, and mentoring new employees. Since I didn’t need to worry about those things, I had more time for attracting new clients and hiring new employees.
With the hiring process, I started to develop our values and benefits for new employees:
- Exciting projects in which one can feel that he or she is important
- Only loyal clients. We cut off toxic ones. Your employees and their mental health are ten times more valuable than clients who bring a lot of stress
- Ability to work from anywhere in the world
- Flexible work schedule
- Good salary, constant incentives in the form of bonuses or promotions
It is crucial for me that the employee is passionate about what he or she does. We, in turn, do our best to create conditions and an atmosphere in which it is comfortable to work and grow as a person and professional.
COVID-19. Growth to 20 employees
The pandemic has changed our perception of remote work a lot. At first, all clients froze their plans and developments. Nobody understood how to proceed. But after some time, companies realized that the work should be done and started to look out for companies to do it. Since most people now work remotely, it helped us a lot to expand our market reach. In the end, it doesn’t matter if you are in the US or another country as long as the job gets done.
Before quarantine, we had five employees in our team. Now we have grown to twenty. All this time, we’ve been profitable.
Here are some final tips that might help you run your business
- Establish processes within your team as soon as possible. You can’t lose money.
- There are two ways to grow: You can either expand your team and get more projects or create additional value for the current clients.
- Grow your team, share the experience with them. Then proceed with hiring the best talent.
- Find your specialization and complete relevant case studies for your portfolio. Don’t be shy and demonstrate your expertise.
- Customer-first is the most crucial thing in project management and value delivery. But if the client is toxic and gives you headaches, leave them.
- You’ll make a lot of mistakes. Don’t be afraid as you’ll learn from them.
This year, I plan to continue growing Merge Development in terms of team members count and making it an even better company to work at. Recently, we launched an educational program, which gives every employee at Merge a $1,000 grant for a course of their liking.
By the end of the year, we plan to triple our revenue and hire even more people. But most importantly: to make more and more clients happy and satisfied with our work.