So often the things I teach my clients about growing a successful agency come from the challenges I’ve myself had, and the mistakes I’ve made while growing de Jong Phillips into award-winning agency-focused accountancy.

One of these mistakes is one I see agencies making all the time: 

Believing that more clients = more success. 

Well, actually that’s not necessarily true. And this is one big misconception that keeps a lot of agencies stuck and unable to scale.

The truth is, there are clients and then there are clients…

Yes, we do need clients to grow our businesses. But if you’re taking on the wrong kinds of clients, it can actually hold you back and stop you from reaching your business goals. 

This is something I talk about a lot in my book The Prosperous Agency: How to scale your agency business profitably and sustainably because not every client is going to help you grow. In fact, this was such an important lesson for me in the early days of de Jong Phillips.

The client that taught me a huge lesson about business…

Even when I first started de Jong Phillips I had a pretty defined niche; we only worked with agencies. In other words, we only worked with businesses that sold their services. We did not work with retail. 

So what did I do when a well-known handbag designer approached us to be their accountants?

I took them on, of course. I mean, What harm could it do?

Well, quite a lot actually. And after a very tricky year, I decided we had to walk away. The client was shocked. After all, we’d done a great service for them and they couldn’t understand how a small business like mine would not want to work with such a prestigious brand!

But for me, it was a massive relief. Yes, we’d made money on the job, but the time we spent on it had also held us back. For example:

• We weren’t familiar with their business or their systems, so it took four times as long as expected to manage their account.
• And because they weren’t an ideal client, working with them wasn’t helping us to develop our experience and expertise in our niche – it was dead time.
• Plus we weren’t learning anything new to help us better serve our existing clients and win new ones. 

The right work for the right people

The same principles apply when you’re trying to scale an agency. No matter how tempting it is, you’ve got to know who you work with and who you don’t so that you can avoid the shiny object clients (transactional clients), and focus on your core clients (relationship clients) that are actually going to grow your business.

So how do you tell the difference?

Transactional clients make you money now but ultimately keep you treading water.

Relationship clients are the best fit for the work you do and help you to grow towards your business and financial goals.  

It’s hard to sack a client or turn business away, particularly when you’re just starting out, but once we had given notice to the luxury handbag brand, we returned our focus to our core business (relationship clients), and not only quickly filled the hole in our revenue but began making huge strides forward in our business, simply because we were doing the right work, for the right people.

So to sum up, here are 5 of my favourite reasons you should get clear on your relationship with clients and niche today:

You establish yourself as an expert in your field

You build trust with prospective clients

You’re able to charge more

You save more money

You can say yes and no to prospective clients with confidence.

How to work out your most profitable niche is something I talk about in much greater detail in my book The Prosperous Agency.