mr_t_forhireā¢This week
Started a content marketing agency 6 years ago - $0 to $5,974,324 (2023 update)
Hey friends,
My name is Tyler and for the past 6 years, Iāve been documenting my experience building a content marketing agency called Optimist.
Year 1 -Ā 0 to $500k ARR
Year 2 -Ā $500k to $1MM ARR
Year 3 -Ā $1MM ARR to $1.5MM(ish) ARR
Year 4 -Ā $3,333,686 Revenue
Year 5 - $4,539,659 Revenue
How Optimist Works
First, an overview/recap of the Optimist business model:
We operate as a ācollectiveā of full time/professional freelancers
Everyone aside from me is a contractor
Entirely remote/distributed team
Each freelancer earns $65-85/hour
Clients pay us a flat monthly fee for full-service content marketing (research, strategy, writing, editing, design/photography, reporting and analytics, targeted linkbuilding, and more)
We recently introduced hourly engagements for clients who fit our model but have some existing in-house support
Packages range in price from $10-20k/mo
We offer profit share to everyone on our core team as a way to give everyone ownership in the company
In 2022, we posted $1,434,665 in revenue.
It was our highest revenue year to date and brings our lifetime total to $5,974,324.
Hereās our monthly revenue from January 2017 to December of 2022.
But, like every year, it was a mix of ups and downs.
Hereās my dispatch for 2023.
ā
Running a business is like spilling a drink.
It starts as a small and simple thing. But, if you donāt clean it up, the spill will spread and grow ā taking up more space, seeping into every crack.
Thereās always something you could be doing.
Marketing you could be working on.
Pitches you could be making.
Networking you could be doing.
Client work you could help with.
It can be all-consuming. And it will be ā if you donāt clean up the spill.
I realized this year that I had no containment for the spill that I created. Running an agency was spilling over into nearly every moment of my life. When I wasnāt working, I was thinking about work. When I wasnāt thinking about work, I was dreaming about it.
Over the years, Iāve shared about a lot of my personal feelings and experience as an entrepreneur.
And I also discussed my reckoning with the limitations of running the business weāve built. My acceptance that it was an airplane but not a rocket. And my plan to try to compartmentalize the agency to make room in my life for other things ā new business ideas, new revenue streams, and maybe some non-income-producing activity. š¤·
What I found in 2022 was that the business wasnāt quite ready for me to make that move.
It was still sucking up too much of my time and attention. There were still too many gaps to fill and I was the one who was often filling them.
So what do you do?
Ultimately you have two choices on the table anytime you run a business and itās not going the way you want it:
Walk away
Turn the ship ā slowly
For a huge number of reasons (personal, professional, financial, etc), walking away from Optimist was not really even an option or the right move for me.
But it did feel like things needed to change.
I needed to keep turning the ship to get it to the place where it fit into my life ā instead of my life fitting around the business.
This means 2022 was a year of transition for the agency. (Again?)
Refocusing on Profit
Some money is better than no money.
Right?
Oddly, this was one of the questions I found myself asking in 2022.
Over the years, weāve been fortunate to have many clients who have stuck with us a long time. In some cases, weāve had clients work with us for 2, 3, or even 4 years. (Thatās over half of our existence!)
But, things have gotten more expensive ā weāve all felt it.
Weāve had to increase pay to remain competitive for top talent. Software costs have gone up.
Itās eaten into our margin.
Because of our increasing costs and evolving scope, many of our best, most loyal clients were our least profitable. In fact, many were barely profitable ā if at all.
Weāve tried to combat that by increasing rates on new, incoming clients to reflect our new costs and try to make up for shrinking margin on long-term clients.
But we didnāt have a good strategy in place for updating pricing for current clients.
And it bit us in the ass.
Subsidizing lower-profit, long-term clients with new, higher-margin clients ultimately didnāt work out. Our margins continued to dwindle and some months we were barely breaking even while posting six-figures of monthly revenue.
2022 was our highest revenue year but one of our least profitable.
It only left one option.
We had to raise rates on some of our long-term clients.
But, of course, raising rates on a great, long-term client can be delicate.
Youāve built a relationship with these people over the years and youāre setting yourself up for an ultimatum ā are you more valuable to the client or is the client more valuable to you?
Who will blink first?
We offered all of these clients the opportunity to move to updated pricing.
Unfortunately, some of them werenāt on board.
Again, we had 2 options:
Keep them at a low/no profit rate
Let them churn
It seems intuitive that having a low-profit client is better than having no client.
But weāve learned an important lesson many times over the years.
Our business doesnāt scale infinitely and we can only handle so many clients at a time. That means that low-profit clients are actually costing us money in some cases.
Say our average client generates $2,500 per month in profit ā $30,000 per year.
If one of our clients is only generating $500/mo in profit, working with them means missing out on bringing on a more profitable client (assuming our team is currently at capacity). Instead of $30,000/year, weāre only making $6,000.
Keeping that client costs us $24,000.
Thatās called opportunity cost.
So itās clear: We had to let these clients churn.
We decided to churn about 25% of our existing clients.
On paper, the math made sense. And we had a pretty consistent flow of new opportunities coming our way. At the time, it felt like a no-brainer decision. And I felt confident that we could quickly replace these low-profit clients with higher-margin ones.
I was wrong.
Eating Shit
Right after we initiated proactively churning some of our clients, other clients ā ones we planned to keep ā gave us notice that they were planning to end the engagement.
Ouch.
Fuck.
We went from a 25% planned drop in revenue to a nearly 40% cliff staring us right in the face.
Then things got even worse.
Around Q3 of this year, talk of recession and layoffs really started to intensify.
We work primarily with tech companies and startups. And these were the areas most heavily impacted by the economic news. Venture funding was drying up. Our leads started to slow down.
This put us in a tough position.
Looking back now, I think itās clear that I made the wrong decision.
We went about this process in the wrong way.
The reality sinks in when you consider the imbalance between losing a client and gaining a client.
It takes 30 days for someone to fire us. Itās a light switch.
But it could take 1-3 months to qualify, close, and onboard a new client.
We have lots of upfront work, research, and planning that goes into the process. We have to learn a new brand voice, tone, and style.
Itās a marathon.
So, for every client we ātradeā, thereās a lapse in revenue and work.
This means that, in retrospect, I would probably have made this transition using some kind of staggered schedule rather than a cut-and-dry approach.
We could have gradually off-boarded clients when we had more definitive work to replace them.
I was too confident.
But thatās a lesson I had to learn the hard way.
Rebuilding & Resetting
Most of the voluntary and involuntary churn happened toward the end of 2022.
So weāre still dealing with the fall out.
Right now, it feels like a period of rebuilding. We didnāt quite lose 50% of our revenue, but we definitely saw a big hit heading into 2023.
To be transparent: It sucks.
It feels like a gigantic mistake that I made which set us back significantly from our previous high point. I acted rashly and it cost us a lot of money ā at least on the surface.
But I remind myself of the situation we were in previously. Nearly twice the revenue but struggling to maintain profitability.
Would it have been better to try to slowly fix that situation and battle through months of loss or barely-break-even profits?
Or was ripping off the bandaid the right move after all?
Iām an optimist. (Heh, heh)
Plus, I know that spiraling over past decisions wonāt change them or help me move forward.
So Iām choosing to look at this as an opportunity ā to rebuild, reset, and refocus the company.
I get to take all of the tough lessons Iāve learned over the last 6 years and apply them to build the company in a way that better aligns with our new and current goals.
Itās not quite a fresh, clean start, but by parting ways with some of our oldest clients, weāve eliminated some of the ādebtā thatās accumulated over the years.
We get a chance to fully realize the new positioning that we rolled out last year.
Many of those long-term clients who churned had a scope of work or engagement structure that didnāt fit with our new positioning and focus. So, by losing them, weāre able to completely close up shop on the SOWs that no longer align with the future version of Optimist.
Our smaller roster of clients is a better fit for that future.
My job is to protect that positioning by ensuring that while weāre rebuilding our new roster of clients we donāt get desperate. We maintain the qualifications we set out for future clients and only take on work that fits.
Howās that for seeing the upside?
Some other upside from the situation is that we got an opportunity to ask for candid feedback from clients who were leaving.
We asked for insight about their decision, what factors they considered, how they perceived us, and the value of our work.
Some of the reasons clients left were obvious and possibly unavoidable.
Things like budget cuts, insourcing, and uncertainty about the economy all played at least some part of these decisions.
But, reading between the lines, where was one key insight that really struck me.
Itās one of those, āoh, yeah ā duh ā I already knew that,ā things that can be difficult to learn and easy to forgetā¦.
Weāre in the Relationship Business (Plan Accordingly)
For all of our focus on things like rankings, keywords, content, conversions, and a buffet of relevant metrics, it can be easy to lose the forest for the trees.
Yes, the work itself matters.
Yes, the outcomes ā the metrics ā matter.
But sometimes the relationship matters more.
When youāre running an agency, you can live or die by someone just liking you.
Admittedly, this feels totally unfair. It opens up all kinds of dilemmas, frustration, opportunity for bias and prejudice, and other general messiness.
But itās the real world.
If a client doesnāt enjoy working with us ā even if for purely personal reasons ā they could easily have the power to end of engagement, regardless of how well we did our actual job.
We found some evidence of this in the offboarding conversations we had with clients.
In some cases, we had clients who we had driven triple- and quadruple-digital growth. Our work was clearly moving the needle and generating positive ROI and we had the data to prove it. But they decided to ātake things in another directionā regardless. And when we asked about why they made the decision, it was clear that it was more about the working relationship than anything we could have improved about the service itself.
The inverse is also often true.
Our best clients have lasting relationships with our team.
The work is important ā and they want results. But even if things arenāt quite going according to plan, theyāre patient and quick to forgive.
Those relationships feel solid ā unshakeable.
Many of these folks move onto new roles or new companies and quickly look for an opportunity to work with us again.
On both sides, relationships are often more important than the work itself.
Weāve already established that weāre not building a business that will scale in a massive way. Optimist will always be a small, boutique service firm.
We donāt need 100 new leads per month
We need a small, steady roster of clients who are a great fit for the work we do and the value we create.
We want them to stick around.
We want to be their long-term partner.
Iām not built for churn-and-burn agency life. And neither is the business.
When I look at things through this lens, I realize how much I can cut from our overall business strategy. We donāt need an ultra-sophisticated, multi-channel marketing strategy.
We just need strong relationships ā enough of them to make our business work.
There are a few key things we can take away from this as a matter of business strategy:
Put most of our effort into building and strengthening relationships with our existing clients
Be intentional about establishing a strong relationship with new clients as part of onboarding
Focus on relationships as the main driver of future business development
Embracing Reality: Theory vs Practice
Okay, so with the big learnings out the way, I want to pivot into another key lesson from 2022.
Itās the importance of understanding theory vs practice ā specifically when it comes to thinking about time, work, and life.
It all started when I was considering how to best structure my days and weeks around running Optimist, my other ventures, and my life goals outside of work.
Over the years, Iāve dabbled in many different ways to block time and find focus ā to compartmentalize all of the things that are spinning and need my attention.
As I mapped this out, I realized that I often tried to spread myself too thin throughout the week. Not just that I was trying to do too much but that I was spreading that work into too many small chunks rather than carving out time for focus.
In theory, 5 hours is 5 hours.
If you have 5 hours of work to get done, you just fit into your schedule whenever you have an open time slot.
In reality, a single 5-hour block of work is 10x more productive and satisfying than 10, 30-minute blocks of work spread out across the week.
In part, this is because of context switching.
Turning your focus from one thing to another thing takes time. Achieving flow and focus takes time. And the more you jump from one project to another, the more time you āloseā to switching.
This is insightful for me both in the context of work and planning my day, but also thinking about my life outside of Optimist.
One of my personal goals is to put a finite limit on my work time and give myself more freedom.
I can structure that in many different ways.
Is it better to work 5 days a week but log off 1 hour early each day?
Or should I try to fit more hours into each workday so I can take a full day off?
Of course, itās the latter.
Both because of the cost of context switching and spreading work into more, smaller chunks ā but also because of the remainder that I end up with when Iām done working.
A single extra hour in my day probably means nothing. Maybe I can binge-watch one more episode of a new show or do a few extra chores around the house. But it doesnāt significantly improve my life or help me find greater balance. Most things I want to do outside of work canāt fit into a single extra hour.
A full day off from work unlocks many more options.
I can take the day to go hiking or biking. I can spend the day with my wife, planning or playing a game. Or I can push it up against the weekend and take a 3-day trip.
It gives me more of the freedom and balance that I ultimately want.
So this has become a guiding principle for how I structure my schedule.
I want to:
Minimize context switching
Maximize focused time for work and for non-work
The idea of embracing reality also bleeds into some of the shifts in business strategy that I mentioned above.
In theory, any time spent on marketing will have a positive impact on the company.
In reality, focusing more on relationships than blasting tweets into the ether is much more likely to drive the kind of growth and stability that weāre seeking.
As I think about 2023, I think this is a recurring theme.
It manifests in many ways. Companies are making budget cuts and tough decisions about focus and strategy. Most of us are looking for ways to rein in the excess and have greater impact with a bit less time and money.
We canāt do everything. We canāt even do most things.
So our #1 priority should be to understand the reality of our time and our effort to make the most of every moment (in both work and leisure).
That means thinking deeply about our strengths and our limitations.
Being practical, even if it feels like sacrifice.
Update on Other Businesses
Finally, I want to close up by sharing a bit about my ventures outside of Optimist.
I shared last year how I planned to shift some of my (finite) time and attention to new ventures and opportunities.
And, while I didnāt get to devote as much as I hoped to these new pursuits, they werenāt totally in vain. I made progress across the board on all of the items I laid out in my post.
Hereās what happened:
Juice: The first Optimist spin-out agency
At the end of 2021, we launched our first new service business based on demand from Optimist clients.
Focused entirely on building links for SEO, we called the agency Juice.
Overall, we made strong progress toward turning this into a legitimate standalone business in 2022.
Relying mostly on existing Optimist clients and a few word-of-mouth opportunities (no other marketing), we built a team and set up a decent workflow and operations. Thereās still many kinks and challenges that weāre working through on this front.
All told, Juice posted almost $100,000 in revenue in our first full year.
Monetizing the community
I started 2022 with a focus on figuring out how to monetize our free community, Top of the Funnel.
Originally, my plan was to sell sponsorships as the main revenue driver. And that option is still on the table.
But, this year, I pivoted to selling paid content and subscriptions.
We launched a paid tier for content and SEO entrepreneurs where I share more of my lessons, workflows, and ideas for building and running a freelance or agency business.
Itās gained some initial traction ā we reached \~$1,000 MRR from paid subscriptions.
In total, our community revenue for 2022 was about $2,500.
In 2023, Iām hoping to turn this into a $30,000 - $50,000 revenue opportunity. Right now, weāre on track for \~$15,000.
Agency partnerships and referrals
In 2022, we also got more serious about referring leads to other agencies.
Any opportunity that was not a fit for Optimist or we didnāt have capacity to take on, weād try to connect with another partner.
Transparently, we struggled to operationalize this as effectively as I would have liked. In part, this was driven by my lack of focus here. With the other challenges throughout the year, I wasnāt able to dedicate as much time as Iād like to setting goals and putting workflows into place.
But it wasnāt a total bust.
We referred out several dozen potential clients to partner agencies.
Of those, a handful ended up converting into sales ā and referral commission.
In total, we generated about $10,000 in revenue from referrals.
I still see this as a huge opportunity for us to unlock in 2023.
Affiliate websites
Lastly, I mentioned spending some time on my new and existing affiliate sites as another big business opportunity in 2022.
This ultimately fell to the bottom of my list and didnāt get nearly the attention I wanted.
But I did get a chance to spend a few weeks throughout the year building this income stream.
For 2022, I generated just under $2,000 in revenue from affiliate content.
My wife has graciously agreed to dedicate some of her time and talent to these projects. So, for 2023, I think this will become a bit of a family venture. Iām hoping to build a solid and consistent workflow, expand the team, and develop a more solid business strategy.
Postscript ā AI, SEO, OMG
As Iām writing this, much of my world is in upheaval.
If youāre not in this space (and/or have possibly been living under a rock), the release of ChatGPT in late 2022 has sparked an arms race between Google, Bing, OpenAI, and many other players.
The short overview: AI is likely to fundamentally change the way internet search works.
This has huge impact on almost all of the work that I do and the businesses that I run. Much of our focus is on SEO and understanding the current Google algorithm, how to generate traffic for clients, and how to drive traffic to our sites and projects.
That may all change ā very rapidly.
This means weāre standing at a very interesting point in time.
On the one hand, itās scary as hell.
Thereās a non-zero chance that this will fundamentally shift ā possibly upturn ā our core business model at Optimist. It could dramatically change how we work and/or reduce demand for our core services.
No bueno.
But itās also an opportunity (thereās the optimist in me, again).
I certainly see a world where we can become leaders in this new frontier. We can pivot, adjust, and capitalize on a now-unknown version of SEO thatās focused on understanding and optimizing for AI-as-search.
With that, we may also be able to help others ā say, those in our community? ā also navigate this tumultuous time.
See? Itās an opportunity.
I wish I had the answers right now. But, itās still a time of uncertainty. I just know that thereās a lot of change happening and I want to be in front of it rather than trying to play catch up.
Wish me luck.
ā
Alright friends ā that's my update for 2023!
Iāve always appreciated sharing these updates with the Reddit community, getting feedback, being asked tough questions, and even battling it out with some of my haters (hey!! š)
As usual, Iām going to pop in throughout the next few days to respond to comments or answer questions.
Feel free to share thoughts, ideas, and brutal takedowns in the comments.
If you're interested in following the Optimist journey and the other projects I'm working on in 2023,Ā you can follow me on Twitter.
Cheers,
Tyler
P.S. - If you're running or launching a freelance or agency business and looking for help figuring it out, please DM me. Our subscription community, Middle of the Funnel, was created to provide feedback, lessons, and resources for other entrepreneurs in this space.
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