From Zero to a Million: 20 Lessons for Starting an Internet Marketing Agency

Mike's disclaimer: This is not a post about how awesome I am, or how there is only one way to build an internet marketing agency. It's a combination of stories and thoughts about what I have gone through building Nifty Marketing.

When I started in 2009 there was very little information online about starting, running, or growing an Internet Marketing Agency. The ones that did exist were from superstars that charged a billion dollars an hour. I am not a superstar. My company started in Burley, Idaho. Here's a rap about my town I wrote.

My hope with this post is that a few of you who are out there hustling will benefit from doing some of the things that I did, and most of the things that I didn't.

Start smart

I was in my final semester at BYU-Idaho and had accepted a job to be the chief marketing officer of Rove Pest Control after spending my summers during college as a door-to-door salesman for them. I thought my future was set. But, due to some changes at Rove I knew that I was going to have to have to find a different career. My wife was pregnant, we had just started building a house in Burley, and I had a full load of credits. My two favorite classes were a basic HTML class (that used Don't Make Me Think as the textbook) and a web business class for which we had to start an online business and make/lose money. Naturally, as any true Idahoan would do, I started HugeIdahoPotato.com and sold potatoes bigger than heads to people across the country. The website sucks; I'm pretty sure I got it penalized within a year of creating it. But I fell in love with internet marketing in the process of building that site, and I keep it up as a remembrance of where I started.

Lesson 1: Start with a reason that's more than money

After making around $100 on the site I knew that I had found my career choice. I also knew that I was going to live in Burley, Idaho, and that I wanted to bring non-agricultural jobs to the town. I can't tell you how sad it is for many of my friends who grew up in a town they knew they couldn't move back to if they wanted to make a decent living. I wanted to change that. I still do. It's one of the main driving points for me. Of course you need to make money, but if that is the only thing you are looking for as a business owner then eventually you will fail. You will make decisions that aren't for your clients, or for your staff, or for the community; you will get short-term gains and create a long term failure.

Lesson 2: Start by interning/working at an agency

This is possibly my biggest regret of my career. I started Nifty Marketing with literally no experience at all. I had no friends in the industry, I had no idea what I was doing, how SEO companies were structured, or even how to do anything beyond what I had learned in college. I dove into blogs, but at that time I didn't know who to trust and read some really awful advice. I was not a good SEO. I was not a good PPC advertiser. I could have saved myself at least two years if I had worked for someone who could have pointed me in the right direction first.

Lesson 3: Focus on something specific

Business wasn't going very well. I had a few clients, and I decided I needed some help, so I signed up for SEOBook. There was a feedback forum, so I posted my super-awful website for Nifty Marketing. I didn't even own the domain at the time. (I had TheNiftyWay.com, and it wasn't until later—by some good grace of the heavens—that the person who owned NiftyMarketing.com let it go, and I bought it for $7.99 with a GoDaddy code.) When I posted my site on SEOBook, I got brutal feedback. People told me it sucked. But someone in the forum said something that changed my life forever.

He said something like:

"You offer SEO, Web Design, and PPC. That is exactly the same as 100,000s of companies around the world, who by the looks of things are better than you at it. What can you be the best at? What can you become known for?"

The comment hit me like a ton of bricks. The few clients I had at the time were really small businesses in Idaho, and I had been spending a lot of time in Google Maps. I realized that I enjoyed that aspect of marketing, and was getting clients ranked. So, I redesigned my site, changed my messaging, and decided to focus. I became a local SEO.

Lesson 4: Start with networking, not cold calls

I remember quite vividly trying to use my door-to-door sales skills to try and cold call businesses to get work. I grabbed a phone book and called people with big ads and no websites because I figured that they had budget. What I found was that I was caller #5 for that week offering the same thing as everyone else. Worst of all, everyone "knew a guy who knows a guy who could do it" for them. So, I put away the phonebook and started talking to my friends and asking if they knew people who needed websites and marketing. That's when leads started coming in. Then, I wrote an email to David Mihm on August 7, 2009, and asked him how I could become an expert in the local search field. This was his response:

The best advice I can give you is to optimize the local listings of a bunch of clients. The more you "play" in the space, the better you'll get at teasing out the parts of the algorithm that really matter.

Beyond that, subscribe to these blogs:

http://www.blumenthals.com/blog
http://www.localsearchnews.net [Editor's note: This site isn't around anymore.]
http://gesterling.wordpress.com
http://www.searchinfluence.com/blog
http://solaswebdesign.net/wordpress
http://www.smallbusinesssem.com
http://www.hyperlocalblogger.com
http://www.sixthmanmarketing.com/blog
http://www.expand2web.com/blog
http://www.devbasu.com
http://www.martijnbeijk.com
http://www.seoverflow.com/blog

I immediately dove into every one of these sites and learned everything I possibly could about local search. I took notes, and then I started testing and haven't ever stopped.

While doing that, I realized the most valuable networking lesson I ever learned was to simply share. I started blogging, which led to guest posts on SEJ, and I attended a few small conferences, one of which was the first ever LocalU. I offered to help any way that I could. Fast forward to 2013, and I am a LocalU Faculty Member and speak at conferences year-round. It isn't because I am special. It's because I am passionate about the space and I am willing to share information and help as much as I can. Almost every client we have at Nifty Marketing comes as a referral from clients, friends, blog posts, webinars, and conferences. Not one client came from a cold call. I will forever be in debt to David Mihm and the rest of the local search community for teaching me such a valuable lesson.

Lesson 5: It's good to have funding, it's better to have partners, and it's best to bootstrap alone

From the first year of my business until now I have had opportunities to get funding and take on partners. I have never done it. I am not saying that it's bad to do either of these things, but if you take a close look at our industry you will see that a lot of funded companies and partnerships don't make it.

I remember very clearly going to dinner with some guys from Blueglass in my first year and thinking, "Man, I wish I could be part of that company." And while I respect the founders a great deal they took a massive risk and it didn't workout. Many of them had successful businesses before then, and while the idea of a Mega Company that can make tens or hundreds of millions is alluring, the chance of you being successful and earning more on your own is better. Sure, extremely fast growth and funding means you come to market quicker. But by growing at the slow rate of 2x per year (which isn't that slow), I have been able to continually innovate and offer better services without taking do-or-die risks.

I am very glad I bootstrapped. I own 100% of my company. I can make 100% of the decisions about its future. I don't have to pay a silent partner a large chunk that makes cash flow an issue. I don't have to make short-term decisions for a board that hurts the long-term vision I have. And I make enough that I stopped caring about the money around year three; slow and steady wins the prize.

I know that there are many successful companies that haven't gone the way of solo bootstrapping. At the top of the partnership list for me is Avalaunch Media. But in order to do what they have done you have get big enough to support multiple owners and find amazing partners that can all pull in the same direction. With around 50% of marriages failing, how many partnerships in business actually work out? They are definitely not the norm, and I respect them immensely for it.

Grow smarter

Lesson 6: You are in the business of providing a service, not SEO

I remember becoming a good SEO. I also remember getting amazing results for clients and still getting complaints from them. I thought they were the problem. Then I realized I was. I thought back to the days of pest control and remember the company training techs to take their time at customers' houses. You see, you could service a house in 15 minutes or even less if you hustled. But if you did that, customers would complain that the work was sloppy and it shouldn't cost so much. Instead, you should take your time, get down on your hands and knees, and look around. Take notes and pace yourself. Then, customers felt like the service was worth it. They weren't paying for the product. They could buy the product at Home Depot. They were paying for the service.

Comparing this to Internet marketing, I knew I had done a great job gaining more traffic, but the clients had no idea what was being done. They didn't understand what they were paying for and subsequently thought that I was unnecessary. Most small businesses don't care or understand what a title tag, meta description, an exact match, a naked URL, duplicate content, etc is. So telling them you changed/created these in a report without actually showing them physical pictures is pointless.

We started creating custom reports with tons of arrows and screenshots explaining the work that we were doing. We starting giving them a complete list of the links and citations we were building. We stopped sending over a raw list of traffic counts and started providing analysis of the traffic that websites were getting, and our clients stopped complaining that they didn't know what we were doing. Clear communication is what the business of service is all about.

Lesson 7: Read The E-myth

I was doing everything myself. Everything. Then, I tried to have some people on oDesk help me. My wife even did some of the citation work. The only problem was all the information was in my head. I had very little of the processes and information organized, and I didn't have time to focus on organization when I had so much client work, sales, and bookkeeping to do. That is what The E-myth is about. It talks about the difference between being a technician and being a business owner. It talks about the need to build your business like a franchise with training manuals, easy to follow processes, and the need to not burn yourself or your first few employees out.

When I read this book, I changed my business, and I have never looked back. We were able to start hiring people locally instead of having contractors on oDesk, and we centralized information and grew. While we aren't perfect at systems and delegation, we could have never grown without improvement in those areas. It's still the case.

Lesson 8: Raise your prices; raise your minimums

When I was the only employee in my company, doing everything myself, I could still make good margins and be the lowest price around. I took clients at $200-$500 per month, built some websites, and put tons of hours in, and as long as I could get to where I had $40-50k per year in revenue, I had a decent wage for Burley. That was my first goal. I could be flexible with what I made and could literally have no cost other than a couple of tools and my personal time. Employees, though, cost more than time. Employees cost money. And regardless of how much money you bring in, an employee's wage is constant. If I wanted employees that were good, there way no way I could maintain my pricing and minimums, providing the level of service that was needed. We had to raise prices. We changed our minimum to $1,500 and determined that we would do work for no less than $100 per hour. The types of clients got better, and we had enough revenue to bring in talented people who increased the quality of our work. I know that many SEO firms/companies can charge a lot more than $100 per hour, and we do as well, depending on the type of project—but for the average small/medium business this is a price that they can afford and you can do good work for.

Lesson 9: Learn when to pass on bad clients

When I was hungry I took whatever client walked through the door. I took abuse. Emails that called me names, clients who would not listen to my advice and would then blame me when things went wrong. Clients that paid three or four months late but would complain when I didn't answer my phone on the first ring.

I kept them because I felt like I had to have the revenue. What I didn't realize is that if I had taken the time I was putting into their project and put it elsewhere, I could have replaced the revenue plus a lot more and had a much better quality of life.

If you are not happy, then no amount of money will make up for it, so fire your bad clients, pass on the red flags, and figure something else out. Remember Lesson 1.

Retain

Lesson 10: Be trustworthy

The fastest way to lose clients and employees is to lie to them. If you want both to stick with you through thick and thin, then there has to be 100% trust. I personally think that the more transparent you can be all around the more you will be trusted.

One of our core values at Nifty is to be "willingly naked." Not literally, but figuratively. We have to be willing to share what we learn, take feedback, tell our clients the brutal truth even if we know they don't want to hear it. But you have to be willing to take feedback yourself.

Lesson 11: Reward your team

I am not going to pretend to be good at this. I know I should say "thank you" about a thousand times more than I do. Instead, I find myself more apt to criticize when things go poorly. It's something I am hoping to constantly get better at. The team at Nifty is amazing and they take a ton of stress, responsibility, and problems on themselves and do an awesome job.

Here's a few things that I have done at times:

• Thank-you gift cards
• Revenue sharing
• Company lunches
• Pop-Tarts (long story)
• Big Christmas parties
• The best office in Burley, Idaho (complete with a moose, a monster, bricks, and staked firewood)

Lesson 12: Auto-renew your contracts

When it comes to smaller businesses, I have found that month-to-month contracts that auto-renew and are paid by automatic credit card last longer than contracts that are 3, 6, or 12 months with renegotiations required. Bottom line, people don't like re-signing up for a committed amount of time. Especially small business owners who believe the word "contract" is a cuss word.

Change

Lesson 13: Never stop learning new things

There are many search companies that fall behind. It's because they don't change. They keep blasting away at the same spammy links, the same old school designs, and the same tactics from 5-10 years ago, and they wonder why a massive amount of their client portfolio drops in rankings.

I personally start every morning by reading blogs, and I have for years. The staff spends the first part of every day doing the same thing, and we pass around articles that make an impression. It keeps us constantly thinking about innovation and learning from our great community. Another way to keep up is to constantly pitch to speak at conferences. You have deadlines around which you can build tests and case studies, and you will do everything you possibly can to be up on the latest news in the industry because you never know what questions the attendees might ask you.

Lesson 14: Request feedback

The best way to find issues in your organization is to request feedback from your staff and clients. The other day, we had a client that paused his account. This is usually a soft way to end the relationship. But, upon asking for his feedback, he said he loved working with his project manager and the work we had done, saying he would be back on track in 2 months. Then he mentioned he was hoping for faster results on a side project we were doing for him. Whose fault was it that he felt that way? It was ours. I took the opportunity to clear up the miscommunication and he was very grateful for it. If we hadn't asked for the feedback, we might not have ever heard from him again and he definitely would have had the issue on his mind.

Lesson 15: Be pleased, but never satisfied

Nobody is perfect. Which means there is always room for improvement. There is always more than can be done, and there is always a better way. The day you stop growing and say that "it's good enough" is the day that a competitor is going to come in and do more that you are willing to.

We have redone our proposal process multiple times. We haven't ever been bad at it, but every time we go back to the drawing boards there is something more that we find that helps to bring in better clients. Right now we are testing out a live walk-through of the proposal, as compared to just sending over a PDF and asking for questions.

SAVE

Lesson 16: Content isn't king, cash is

If you want to run a successful business of any type, then ensure that you aren't running cash-poor. I have followed Dave Ramsey's personal financial guidelines for my business and find that it's very conservative. While it might limit the speed at which we grow, it eliminates a massive amount of risk.

Dave recommends having a personal emergency fund (and in this case business fund) of 3-6 months of expenses on hand at all times. That means that if you are going to pay yourself (your only start-up expense) $3,000 per month, then you should have between $9,000-$18,000 in cash before starting up. At $65,000 per month of expenses, you should have between $195,000-$390,000 in reserves. That's a lot of cash on hand for a small business, but if clients unexpectedly drop, or major industry changes necessitate a completely new model, you will have the cash to make good decisions and not desperate ones. I started out around the six-month reserve when I was smaller, and as time has gone by and we have a more diversified revenue stream, I am comfortable between 3-4 months of cash on hand.

Lesson 17: Pay yourself modestly, and get out of personal debt

I pay myself $4,000 per month. The rest goes to growing the business, savings, and other ventures. Now, you need to realize that I live in Burley, Idaho, and it's literally hard to spend money here. I could pay myself $2,000 if it wasn't for Amazon Prime. But, at a very young age, my wife and I decided that we would have no personal debt and worked really hard to pay off our house and buy cars with cash.

I know many financial experts will tell you that leveraging your home is the best financing you have but let me tell you that the freedom of owning your house outright means that you can make better business decisions over the course of your life. You wont have the "what if I lose my family's home" question circling around in the back of your mind and you can actually take bigger risks, and never make business financial decisions based off of your personal financial needs.

Lesson 18: Don't sign up for every Internet marketing tool under the sun

Tool subscriptions are reoccurring costs. It's very easy to spend thousands of dollars a month on different tools you don't have the cash to do that when you start up. When I first started, I only used Raven Tools, but quickly added a list of 10 to 15 tools like Moz. Occasionally, we have to go through the list of tools and find out what we are actually using and get rid of the rest. I'm not going to pretend there is one tool to rule them all, because everyone has very different needs. The key is to quickly identify which tools work for you and which don't, and to stop paying monthly for the ones that don't.

Lesson 19: Diversify

If you get to where you own a successful guest-blogging company, or a successful SEO company, or a successful content-marketing company, or whatever niche you decide to work in, then realize the problem with a niche is that you are putting all of your eggs in one basket. If that basket disappears, you're screwed.

Try going after more than one niche. We opened a division focused on SEO and website development for lawyers called NiftyLaw.com. I also owned a newspaper in my home town, and am working on some new projects so that I am not 100% reliant on Internet marketing revenue.

Lesson 20: Find a few things to help save yourself

Owning a business is hard work. It's mentally draining, and it's very hard to shut down your mind after constantly thinking. There will be times where you need to save yourself from burning out, so ensure that you have hobbies that can get your mind completely off of work. I golf, mountain bike, and travel with my family. I also don't do any work on Sundays at all.

Overall

I have loved starting an Internet marketing company. It's been hard; I'm going gray and I'm only 29.

I know that you might not agree with certain things I think are important, and that's fine. The best part about business is that it's a "choose your own adventure" storybook with no "right" answers.

Please add your own questions and advice in the comments. I hope that this is a post that can have more insight in the comments than the article itself, and I look forward to learning from all of you!