Rise & Fall – The Challenge of Scaling an SEO Business

by • July 27, 2016 • Featured, SEO 101Comments (2)2097

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Search engine optimization is a truly complex endeavor. Every website has its own needs, goals, and technical challenges. From the platform upon which a website is built, to the keywords a client wishes to target, to the existing content, inbound link profile, and other digital assets belonging to a client site, no two projects are ever the same.

In a field such as search marketing, where in order to truly be successful, one must customize every client’s project to a certain degree, scalability is a huge challenge. The added volatility experienced through organic algorithm changes and changes to the layout of search engine result pages themselves, makes operating an SEO downright perilous.

KickStart Search was founded in June of 2009 on a mix of blind ambition, long hours, naiveté, and credit card debt. Working out of a San Francisco apartment, we conducted monthly webinars, ran email marketing campaigns, and slowly built a client base and operating revenues.

A year and a half later, the company had sufficient revenues to open up a 500 sq. ft. office in Downtown S.F. Not long after came our first summer interns from a local college, who later became full-time employees. By 2012, we had moved into a larger suite in the building, and grew to a team of eight full-time employees.

Much of our “link development” work at the time was outsourced to partners in India and China. Our on-page work was rather simplistic and easy to apply to almost any new client. Contracts were based on deliverables such as “number of social bookmarks created” or “number of client web pages optimized.” Most importantly, our clients were almost all seeing phenomenal results. Scalability has been shockingly trouble-free.

With the advent of Google Penguin in April of 2012, our business model was suddenly no longer scalable. Though the first iteration of Penguin did not impact our clients too drastically, it was a wakeup call that the company business model had to fundamentally change. The subsequent restructuring was painful but necessary. Some of the many changes included:

• No more outsourcing of link development work
• The hiring of a full-time in-house content writer
• Deeper dives into on-page and technical SEO to identify page load speed issues, canonical issues, and indexation issues
• A (gradual) shift from deliverable-based contracts to hourly-based contracts
• A much greater degree of customization for every client project

Many would (fairly) say that we finally started actually doing quality SEO work at that time. Soon we were writing client white papers, designing and promoting original infographics, conducting deep dives into the technical makeup of sites and making coding changes. All of these activities required significant time, money, or a combination of both.

For the established SEO company fortunate enough to work with Fortune 500 companies and well-established enterprises, allocating these kinds of necessary resources is easily attainable in the scope of a normal project. But for the thousands of smaller search agencies and independents working with small businesses, the challenge is enormous.

Business owners accustomed to spending just a few hundred dollars a month for SEO or paid search management require a lot of education and persuasion to get on board with really investing what is needed to be competitive in search marketing.

Furthermore, creating great content, meaning content that is likely to be organically shared, offers value to the reader, and will be categorized as such by search engines, takes research and time to develop. Without prior experience working with a similar business, it can take weeks or months to really understand a new client’s industry to the point that one is writing even marginally good content.

Lastly, results in organic search do not happen overnight. Business owners can be extremely hostile to the idea of continuing to invest funds into an endeavor that they don’t fully understand and that does not appear to be making an immediate impact.

In light of these many challenges, here are seven suggested keys for operating a SEO business that can effectively scale:

  1. Minimize overhead. From personal experience, I can tell you that Downtown San Francisco is a terribly expensive place to try and run a start-up business. Beyond location, keep close tabs on software subscription costs and other recurring fees that may jump significantly once trial periods expire.
  1. Use contractors, and always be on the lookout for new ones. While I would never advocate outsourcing large portions of client work as we once did, there is still tremendous value to be found in contractors.

For example, content writers often have vast expertise in specific verticals, and it’s risky (and probably just lazy) to assume that one content writer will have the capacity to write knowledgably and effectively on every subject. Furthermore, having a trusted coder or graphic designer available when the need arises is invaluable.

Perhaps most importantly, contractors do not require nearly the same level of commitment and long-term financial investment (and liability) that employees do.

  1. Get prospects to opt in. This advice is not just SEO-specific, as it really applies to any startup business or agency. A regular newsletter keeps you top of mind when someone in your circle is ready to switch SEO providers or hire a consultant for the first time.
  1. Virtual workspaces are your friend. While a brick-and-mortar office location or a growing staff of full-time employees might sound more impressive at cocktail parties, don’t fall for that trap. Tools such as Webex, GoTo Meeting, and Skype, make real-time audio/visual communications and collaboration with clients and co-workers easier than ever.

The cost of office space is so much more than just rent. Liability insurance, worker’s compensation insurance, furniture, internet and phone costs, computer and equipment costs… the list goes on and on. If anything, opt for a shared workspace first before committing to a long-term lease of your own.

  1. Carefully consider how you charge clients. When pricing your services, take time to consider exactly what your costs and margins are. While it may not work for everyone, charging based on time (i.e. by the hour) rather than on deliverables (i.e. “number of pages optimized”) helps ensure that clients are paying for work actually done on their projects, and that consultants and agencies are getting paid for their time.

A critical component of charging on an hourly basis is transparency. Clients will only buy in to such a system if they can see exactly how time has been and will be spent on their project on a regular basis.

  1. Concentrate on a small number of verticals. If possible, establish a niche as an SEO expert for a specific industry or vertical. Over time, your understanding of the key influencers for the industry, who the relevant authoritative bloggers or trade directories are, what the key pain points of business owners and executives might be, and which types of content are likely to best resonate with your clients will improve dramatically.

Rather than starting from scratch with every client, staying in a single vertical enables SEOs to better set expectations, make faster progress, and more effectively price their services as they attract new clients.

  1. Client satisfaction is always #1. While it’s impossible to please everyone all the time, that must always be a goal in SEO. Developing a reputation for honesty, follow through, and accountability means everything in an industry where guaranteeing results is simply not realistic.

For KickStart, the challenge of scalability ultimately became too great to overcome. Though our standard of work improved dramatically, our profit margins continually shrank. Office space became increasingly unaffordable as commercial rent rates in the San Francisco Bay Area skyrocketed. Longer hours and diminishing returns turned a labor of love into an absolute grind.

Ultimately in the spring of 2015, KickStart Search entered a partnership with a large (and very capable) digital agency based in Los Angeles to whom the majority of our clients were transferred. I retained the business entity, the website, and a small portfolio of clients for whom I do hourly consulting on a monthly retainer basis.

Today the company is much smaller, but also is on much more solid financial ground.  Additionally, the freedom of no longer having multiple employees and a litany of business administration responsibilities has allowed me to actually spend the majority of my working days focusing on SEO once again.

Launching and running one’s own search marketing business is a simultaneously liberating and terrifying experience. Through my own failures and lessons learned over the last seven years, I would advise search marketing professional looking to grow their businesses to scale slowly. Greater staff size and revenue do not necessarily equate to greater profits and personal satisfaction. Though growing a search marketing business from an idea into a large agency is certainly not impossible, doing so successfully requires meticulous planning and execution.

 

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2 Responses to Rise & Fall – The Challenge of Scaling an SEO Business

  1. Scalability means trying to expand a business model and grow its revenues significantly without equally increasing its cost base. This article is very good indeed, and I agree in a lot of the statements developed in the article.

    I agree most in the tip 6 (Concentrate on a small number of verticals), but I still miss one tip in the article:
    growt your SEO business by building and fostering critical relationships. This is, in my opinion, essential.

  2. I really appreciate the insight here in this post and confident it’s going to be helpful to me and many others. Thanks

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