Agency: the new four letter word
Nobody seems to want to run an agency anymore. Many see it simply as a means to an end: running a software company.
"Do what you can to do what you love."
Many point to 37signals as a successful example of a company who has managed to transcend the traditional agency model of client work and been able to sustain themselves off the revenue generated from the services they offer.
I, too, have often looked at the agency model as being an ineffective way of running a business. "It doesn't scale." It's a constant cycle of getting projects, working on projects, finishing projects and starting all over again. Want more money? Work on more projects! But to work on more projects, you need more staff. With more staff, you have the overhead of having to add in a management layer to the process.
Working on a web application seems like utopia. Build once, and have the revenue stream in continually without ever having to lift a finger. While it's not quite that easy, many have managed to build million dollar companies out of building a web application and only left with some weekly maintenance.
But is there something inherently wrong in the agency model? Is it worth it and can it sustain itself?
Agencies actually make a lot of sense, especially when they specialize within a specific niche. Few organizations have enough know-how on staff to solve all their problems. As a result, they rely on agencies to fill a specific need, often a particular project that has a definitive start and end date.
And agencies have the opportunity to scale somewhat, mostly through reputation. The better you get and more well known you get, the more you can charge for the same amount of work using the same number of staff. Certainly there's a limit to how much one can charge but look no further than companies like Happy Cog who have the clout to charge top dollar for what they do.
In the end, the commitment to running a succesful agency relies on establishing a small and effective team. It's not about getting 100 people on staff. It's about providing a quality service to clients you want to work with. Running an agency and wanting to do it for years to come doesn't have to be a bad thing.