What is an agency business?
Think of an agency as the evolution of a freelance business.
As an agency you would still have clients, but instead of doing all the work yourself you’d build and manage a team to do the work.
Agency is one of 19 types of online business and considered a Level 3 online business, according to our framework.
6 Levels and 19 Types of Online Business
Level 1 = Novice
Okay for side income or beer money, but hard to earn a living.
Level 2 = Intermediate
Best for earning a living online when you’re starting out, but hard to scale.
Level 3 = Advanced
Easier to scale and higher income potential, but you usually need significant investment of time and/or money upfront.
Level 4 = Superior
Even more scalable and even higher income potential, but also more complex / difficult / expensive.
Level 5 = Distinguished
Most complex / difficult / expensive, but the rewards here can be massive.
Level X = Wildcard
These are the misfits. Many aren’t even considered businesses in the traditional sense, but they are all ways to make money online. You typically need a lot of time, money, or luck to succeed with anything here.
How can you make money online with an agency?
Here are the legit ways I’ve found to make money online with an agency business…
Grow a Freelance Business into an Agency
This is how most agencies begin.
Joel Young started off doing freelance video and voiceover gigs for $5 a pop, and gradually evolved his business into a video content agency…
- Founder of JumpStart Video
- $60,000 monthly agency revenue
Similar story with Pamela Grossman, who left her day job to start freelancing and grew the business into a marketing agency…
- Founder of In The Present
- $165,000 monthly agency revenue
Dive straight into the Agency model
This is likely a less viable path – freelance first seems to be the norm – but it is doable.
Sam Ovens started out this way, finding paying clients for website and digital marketing services then outsourcing the work to contractors…
- Founder of Consulting.com
- $10k – $15k estimated monthly agency revenue
Sam now teaches others how to emulate his success.
Pros and Cons of Agency Businesses
- You do less of the day-to-day work, so more potential to scale than a freelance business.
- Can be much more fun and social than operating as a lone freelancer.
- Passive income potential if you can put a great team in place to run everything.
- Still a limit on how much you can scale. It’s rare to see an online agency business doing more than $1m in annual revenue.
- The bigger your agency gets, the more you’ll have to manage people, or hire someone to do that.
Is an agency business a good way to earn a living online?
I believe this largely depends on your personality. If you enjoy being part of a team and managing people, the agency model could be a good option for you.
It seems many successful agencies start off as freelance businesses and evolve into the agency model as the demand for their service grows.