7 Mistakes To AVOID When Starting Your Agency w/Tim Brown
Chris Do and Hook Agency's Tim Brown break down the seven critical mistakes freelancers make when scaling into a full-fledged agency.
Chris Do
Founder, The Futur™ · November 20, 2020
The Freelancer's Dilemma
The transition from freelancer to agency owner is a well-trod path paved with good intentions and disastrous mistakes. It begins with the desire for more: more impact, more income, more freedom. But that path often leads directly to a cage of your own making, where you become a prisoner of the very business you built to set you free.
Most freelancers make the leap driven by ambition, only to find themselves drowning in responsibilities they never anticipated. They become the lead designer, the head of sales, the bookkeeper, the project manager, and the janitor. The result is burnout, not breakthrough.
In a conversation with The Futur’s Chris Do, Tim Brown, founder of the Minneapolis-based Hook Agency, unpacks the seven critical errors he made scaling his business from a solo operation to a 15-person team. His journey provides a playbook for avoiding the most common and costly traps.
“I'm most qualified to talk about mistakes,” Brown admits. “You learn a lot from mistakes, and I've made a lot of them.”
These aren't theoretical missteps. They are hard-won lessons from the front lines of entrepreneurship, offering a clear-eyed view of what it truly takes to build a sustainable agency, not just a high-stress job.
Mistake 1: Quitting Your Day Job Too Soon
The first and most fatal error is depending entirely on freelance income before you have robust systems for client acquisition. The romantic notion of quitting a soul-crushing job in a dramatic huff is a Hollywood fantasy. In the real world, it is a recipe for desperation.
Brown learned this the hard way. His first attempt at launching his business came after quitting a restaurant job with just one client. “It was scary,” he recalls. That fear creates a climate of neediness. Desperate freelancers take on bad clients, accept low-ball offers, and say “yes” to work they should refuse. This desperation becomes a toxic cloud that hangs over every client interaction.
The alternative is not to wait for a magical moment of perfect safety. That moment never comes. The alternative is a strategic transition.
Brown points to the work of Sean McCabe, an author and entrepreneur who champions the Overlap Method. The concept is simple: build your freelance business on the side while you still have the security of a full-time salary. The goal is to grow your side income until it consistently overlaps and then exceeds your primary income.
For Brown, this meant working as a marketing director at an agency while building his client list. He successfully grew his freelance revenue to surpass his $70,000 salary. “I was able to exceed my income at the agency with my freelance income,” he says. This strategy provides two critical advantages:
- Financial Runway: Having a salary means you can be selective. You can turn down bad-fit clients without worrying about paying rent. Brown built a $20,000 runway before he left his job. While others told him it wasn't enough, his low expenses and consistent client flow made it viable.
- System Development: The security of a paycheck gives you the mental space to build and test your business development systems without the pressure of imminent financial collapse. You can experiment with marketing, refine your sales process, and build a repeatable model for getting new business.
“If you're too desperate, that's you get bad clients,” Brown warns. “You've got this vibe that like you'll take anything.” A salary is the antidote to that desperation. It allows you to build from a position of strength, not fear. This is one of the key lessons for anyone looking to make a similar leap, a concept explored in depth in The Futur's episode on how to go from freelancing to a 7-figure agency.
Mistake 2: The Tyranny of the Billable Hour
The second mistake is clinging to the billable hour, a relic of an industrial mindset that has no place in a value-driven creative business. Brown’s former agency operated this way, and it always felt fundamentally flawed. “I always felt dishonest, to be honest,” he confesses. “I hate tracking time.”
The problem with charging by the hour is that it incentivizes inefficiency. It punishes expertise. The better you get at your job, the faster you work, and the less you earn. It creates a perverse dynamic where you are either taking longer than necessary to hit quoted hours or finishing early and feeling like you are cheating the client or the company.
The solution is to stop selling your time and start selling outcomes. Chris Do outlines three primary pricing models:
- Time and Materials: The classic billable hour.
- Deliverables: Charging a flat fee for specific outputs (e.g., a logo, a website, a brand guide).
- Value: Basing your price on the economic impact your work will have on the client's business.
Brown advocates for a deliverable-based model. “I like having very clear deliverables and pricing for those,” he says. This shifts the conversation from effort to output. The client knows exactly what they are getting, and you know exactly what you need to produce. It decouples your income from the clock.
Do agrees, noting that this is often the most practical and effective model for many agencies. “For very, very, very many years, like decades here, we did really well, we made four or five million dollars a year basically charging on deliverables,” Do explains. “Nothing wrong with that.”
While value-based pricing is the ultimate goal for many, Do cautions that it is not for everyone. “Value-based pricing is hard. It's not for everybody,” he warns. “You have to have a certain level of experience... you have to have a particular set of skills.” For those without that specific skill set, trying to implement it can lead to confusion and lost sales. A deliverable-based model provides a solid, professional middle ground, a topic Do and pricing expert Ron Baker explore in their value pricing masterclass.
The mindset shift is crucial. You are not a temp worker renting out your brain by the hour. You are a strategic partner providing a defined solution. Price yourself accordingly.
Mistake 3: Failing to Filter Your Clients
As you grow, the temptation to take on any paying work is immense. This is a trap. The third mistake is failing to filter clients to ensure you can not only meet but exceed their expectations. Not every client is a good client, and learning to say “no” is one of the most important skills an agency owner can develop.
Brown’s initial mistake was taking on clients he felt he was “helping.” Small businesses, startups, friends, and family often come with the smallest budgets and the biggest headaches. “You're basically doing what you feel like is a little bit of charity,” he explains. “And it really leads to problems with your expectations about their behavior too.”
This leads to disappointment on both sides. The client has unrealistic expectations for their small investment, and you become resentful of the time suck. Do offers a stark rule of thumb: “If you work with friends and family, do it for free with zero expectations. Otherwise somebody's gonna have their heart broken.”
To avoid this, Brown implemented a rigorous filtering process. His agency, Hook, now has a bottom-line revenue requirement for new clients, typically around $1.5 million. This isn't about being elitist; it's about ensuring the client is large enough to get a clear return on their investment in marketing. A 25% increase in business for a company making $500,000 is simply not large enough to justify a significant agency retainer.
The core of this mistake, as Do points out, is a failure to manage client expectations. “You have to have that conversation,” Do insists. This involves being upfront about your process, availability, and what they can realistically achieve.
Brown uses several tools to manage this:
- The Questionnaire: A simple form to gather initial information. Brown includes questions like, “What is the biggest problem you're trying to solve right now?” and “What does success look like one year from now?” He also asks about their relationship with previous designers or agencies, a key indicator of their behavior as a client.
- The Education and Expectations Meeting: Before a proposal is even sent, Brown’s team holds a meeting to educate the prospect on their process and set clear benchmarks. “Here's the types of the result that you can expect over this six to twelve month period. And if that's not in line with what you're hoping to pay for, then we're probably not the greatest fit.”
- The Vibe Check: Brown filters for what he calls “calm versus agitated” clients. If a prospect is angry about their last three vendors, the pattern is clear. “What makes you think that you're so much different?” he asks.
Ultimately, the goal is to find clients you can turn into evangelists. Brown’s ultimate filter is, “Is this the type of person that's going to refer us business? Is this the type of person that we're going to be able to get them to a five-star review?” It is a high bar, but it is the only way to build a business on a foundation of stellar results and happy partners. To get these ideal clients, you need a system, as outlined in this guide on proven strategies to attract ideal clients.
Mistake 4: Taking Your Foot Off the Gas
The freelancer-to-agency-owner journey is littered with the carcasses of businesses that fell victim to the feast-or-famine cycle. This happens for one reason: they stop marketing when they get busy. This is the fourth, and perhaps most common, mistake.
When you have two or three big projects, you feel like you are swimming in business. The last thing on your mind is prospecting for more. “Any business development stuff or anything like that was just gone,” Brown says of his early days. “I was like, I'm swimming in business with my two or three clients.”
An older agency owner gave him a crucial piece of advice: “It doesn't matter if you're stressed out with the amount of work you have. If you don't keep those systems in place… you have those big roller coaster moments.”
Client acquisition is not a faucet you can turn on and off. It is a well you must constantly prime. If you stop pumping, the water will dry up. By the time you need it again, it will take weeks or months to get the flow started, creating a panic-inducing cash flow gap.
Do frames it perfectly: “Just because you get busy, don't take your foot off the gas.”
The key is to build durable, diversified systems for lead generation. Relying on a single source is fragile. Brown argues you need at least three solid systems in place. For Hook Agency, those systems are:
- Referrals: The lifeblood of many service businesses, amplified by a strong brand and client delight.
- Google (SEO): Brown’s agency specializes in aggressive SEO, so they practice what they preach. They create content that ranks for valuable keywords, generating a steady stream of inbound leads.
- LinkedIn/Outbound: Proactive outreach, particularly on platforms like LinkedIn, targeted at their ideal client profile.
The time to work on these systems is precisely when you feel too busy to do so. Brown suggests a mindset trigger: “I'm super busy with work. Oh, Tim and Chris said not to forget to go push on business development.”
This means you cannot book 40 hours of client work a week. You must build in time to work on the business, not just in it. That 20-30% of your time dedicated to marketing and sales is what an agency provides for its employees. If you are going it alone, you have to do it yourself. This is the non-negotiable work of an owner.
Mistake 5: Ignoring Mission and Significance
As you hire your first employees, the nature of your business changes fundamentally. It is no longer just about you. The fifth mistake is failing to build a highly motivating work environment grounded in a shared mission and a sense of significance.
Brown’s first employee left, and it was a painful wake-up call. “It hurt my heart,” he says. During his time in Seth Godin's altMBA program, he was confronted with hard questions about the purpose of his company. “What's the real mission of the business?”
To an owner, the significance can feel obvious. You see the direct impact on clients and feel the satisfaction of building something. But for an employee toiling away on a small piece of a project, that meaning can be lost. They are trading their time for a paycheck, and if that is the only transaction, they will eventually leave for a better one.
“You have this problem where it's not meaningful to them,” Brown explains. “I didn't filter my employees correctly.”
The solution is to build a culture that is about more than just money. It is about creating a worldview that unites the team. As Chris Do notes, you spend more time with coworkers than with almost anyone else in your life. That team should be selected with the same care as your closest friends.
Brown took this to heart and defined a clear mission for Hook Agency: “To change our clients' lives, to save them time, to get them more leads, and to make a positive impact on our community.” This is not just corporate fluff on a plaque. It is an active principle that guides their actions, from a rallying cry of “Champion the Underdog” to community volunteering and donations.
The goal is to provide a sense of significance. In his quarterly check-ins, Brown asks employees a direct and sometimes uncomfortable question: “Do you feel like your work is significant here?”
This is the work of creating a vibrant, thriving culture. It's about aligning everyone around a common idea, a worldview that transcends tasks and projects. Building a successful personal brand is one way to communicate this mission externally, as discussed in this masterclass on personal and business branding.
Mistake 6: Becoming the Linchpin
Many creative entrepreneurs start a business built around their unique talent. They are the star performer, the genius designer, the mastermind strategist. This is the sixth mistake: becoming the linchpin of your own company.
The term, popularized by Seth Godin's book Linchpin, describes someone who is indispensable. While being a linchpin as an employee is a path to job security, being the linchpin as a business owner is a path to exhaustion.
“As an employee, I wanted to be the linchpin,” Brown says. “As a business owner, I want to not be the linchpin.”
When the entire business revolves around you, you have not built a business. You have built a job with more steps and higher stakes. You are stuck. Every client call, every major decision, every piece of creative feedback must go through you. You can't take a vacation. You can't get sick. The business cannot survive without you.
This is what investors call the key man problem. A business that is wholly dependent on one individual is a fragile and high-risk asset. Even if you never plan to sell, thinking like an investor forces you to build a more resilient company.
Do puts it bluntly: “What happens if you get hit by a car tomorrow and you're bedridden?” If the answer is “the business collapses,” you have failed in your duty as a leader.
The alternative is to systematically work yourself out of a job. This means:
- Hiring people smarter than you: Overcome the ego-driven fear of hiring talent that might outshine you. You need their expertise to grow.
- Delegating crucial tasks: This includes sales kickoffs, presentations, and even design work. Let your team members develop their skills by doing the work.
- Building systems for quality: Instead of pitching your personal genius, pitch your agency's proven process that ensures quality regardless of who is performing the task.
This is the fundamental shift from working in the business to working on the business. It is a transition that many founders struggle with. “I wish I could design more,” Brown admits, “but I know that I need to get out of some of these crucial areas before I can have a little bit more freedom. Otherwise, you're just building a cage for your time.”
Mistake 7: Depending on a Single Lead Source
This final mistake is a close cousin of mistake number four, but it focuses on diversity rather than consistency. Relying on only one or two avenues for new business is a strategic vulnerability. When that one channel dries up, so does your agency.
Brown’s early business relied heavily on referrals and organic Google traffic. While effective, this two-pronged approach was still too fragile. To build a truly resilient business, he knew he needed to diversify.
The first step was identifying a profitable niche. For Hook Agency, that became construction and home services companies. This decision was not random; it was data-driven. “I had like three clients that were in home services... and I liked them,” he says. “I felt like we were giving them what they wanted and they were willing to pay for it.”
Niching down makes your marketing exponentially more effective. It allows you to tailor your messaging and focus your outbound efforts. A tightly defined niche is a prerequisite for building scalable lead generation systems like the ones discussed in this overview of how to grow a creative agency.
With a niche in place, Brown began layering in new client acquisition channels:
- Strategic Partnerships: He started forming relationships with other businesses that serve his ideal client. For example, collaborating on content with a CRM provider for roofers. “We're talking to a roofing CRM later today and like doing some content with them,” he mentions.
- Outbound Sales: With a clear target audience, proactive outbound sales on platforms like LinkedIn become much more manageable and effective.
- Paid Ads & Remarketing: Brown uses paid ads, particularly Google Ads and Facebook remarketing, to stay top-of-mind with prospects who have already visited his website. “If somebody comes to our website, they're going to see us for the rest of their life,” he laughs.
This multi-channel approach creates a resilient, anti-fragile business. If one channel slows down, the others can compensate. It transforms client acquisition from a hopeful activity into a predictable machine.
The journey from freelancer to agency owner is a test of mindset. It requires a fundamental shift from being a doer to being a builder. It demands that you stop thinking like a technician and start thinking like an architect, designing systems and structures that can operate and thrive without your constant intervention.
Avoid these seven mistakes, and you will not just build a business. You will build a legacy.
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“You're building a cage for your time.”
— Chris Do
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