What A Lean Agency Is and Why It’s a Bad Idea for Most Freelancers

In this post I’ll give you a rundown of what a lean agency is, why some freelancers go this direction, and why it’s a bad idea for most.

A lean agency, also called a micro or boutique agency, is a freelancer or consultant with a team of subcontractors. These other freelancers and consultants augment the founder’s capabilities and make it possible for her to sell and deliver bigger projects without hiring full-time staff.

For example, a writer might subcontract a designer so that he can give clients not just the copywriting but a finished, ready-to-use sales deck. A web designer might hire her developer friend so that she can offer complete website packages rather than just the page designs.

This isn’t a new strategy by any means, and you might be wondering why clients don’t just hire a “regular” agency instead.

A quick detour will help you understand the value proposition of a regular agency and how it creates an opportunity for ambitious freelancers.

From the client’s perspective a regular agency can seem less risky than working with a freelancer. This is especially true for a high-stakes projects. What if the client were to hire a freelancer who got sick or couldn’t deliver on time for whatever reason? What if the freelancer goes AWOL?

Regular agencies promise stability in the form of leadership, established processes, and a reputation to protect. Many have redundancy in individual roles, for example, two designers on the team, not one.

“I’m getting a complete team,” the CMO thinks. “I’m getting a single point of contact for all the capabilities we need.”

Agencies with offices, physical addresses, and phone numbers are easy to understand. They seem like legitimate companies, and that is reassuring.

I look at the work some agencies put out and think, “Dang, that’s amazing. It would be fun to collaborate with that insanely talented team.”

When clients see a certain cool kid agency’s portfolio, they have a similar thought: “I want that!”

Of course, once you’ve worked at an agency or in the creative industry for more than thirty-seven seconds, you see the problems that agencies have.

You learn that the promise of high-quality work delivered on time and on budget, net-positive results, and an overall satisfying experience for clients is the exception, not the rule.

You learn that the average freelancer working solo delivers more value than the average agency because the freelancer does not have the staff, office, and various trappings and doesn’t pass the cost of the overhead to the client.

Even so, some clients don’t want to work with freelancers.

However, if they have enough bad experiences with regular agencies, they will explore a third option: the lean agency.

They’ll take a chance on a creative or consultant who’s effectively a freelancer but seems capable of shepherding a bigger project that involves multiple freelancers.

That’s the lean agency opportunity: charge premium prices, sell other people’s availability and capabilities alongside your own, and keep whatever’s left over after you pay them (that is, profit).

If you can win more work than you can handle, keep operating costs low, and make your clients and subcontractors happy, then a lean agency can generate more revenue than you can bring in by continuing to work solo.

Notice I said, “If you can sell more work.”

The lean agency opportunity is only an opportunity if you’re good at marketing, sales, project management, communication, and client experience.

That's precisely why I don’t recommend that most freelancers go the lean agency route. Changing your revenue model won’t fix a fundamental not-enough-leads problem.

On the other hand, if you’re good at the lead generation and growth side of the equation, then a lean agency can be an exciting unlock. When you work solo, you have only your personal time inventory to sell, and that’s true even if you don’t charge hourly. When you run out of hours, you have nothing left to sell unless you sell other people’s time and talent.

More inventory means more revenue potential.

I’ll use a real example that a coaching client shared with me. She scaled up into a lean agency, in part because she’s excellent at pricing, sales, and SOPs. Her agency charged $2,500 for a project. The freelancer she put on the project got to set his own rate. He earned $525, leaving my client with $1,975 in profit.

The client was happy. The freelancer was happy. The lean agency founder was happy.

Make no mistake, the founder of the lean agency had and has plenty of challenges to overcome to get $1,975 in profit. She must manage the client. She must handle marketing, sales, and onboarding, or pay to delegate it. She must oversee the project management and quality control, or pay to delegate it.

As the owner, she must personally handle the damage control if something goes wrong. She assumes the legal risks, and her reputation, not the subcontractor’s, is on the line.

Clients sometimes act the fool, and subcontractors turn in mediocre work, miss deadlines despite assurances that everything’s on track, and renege on their commitments in big and small ways.

Whether you’re working solo or functioning as a lean agency, you’ll always have problems.

When I coach freelancers who are considering a lean agency as a growth strategy, the timing and prudence of the decision comes down to this question:

Are you in a position, because of your experience in the industry, accumulated expertise, reputation and relationships, soft skills and business acumen, to sell more work than you personally can deliver?

If the answer is yes, give the lean agency thing a try:

• Outsell your capacity.
• Assemble a bench of freelancers.
• Give them systems and processes to follow.
• Protect client experience and maintain a high level of quality.
• Keep everyone more or less happy: clients, subcontractors, and yourself.

The decision is reversible. If you try it and don’t like it, you can go back to working solo.

Fair warning: You may be hardest person to keep happy because you may feel guilty.

Various coaching clients have spent years learning how to price aggressively, win big projects, and iron out effective processes. They do excellent work, deliver excellent value, and deserve excellent compensation.

Meanwhile, they remember what it feels like to undercharge and be taken advantage of. They don’t want to be the problem, someone else’s client from hell, so they’ll go sell a project and give a subcontractor what they think the sub ought to charge, which is more than the person would have asked for.

The result is skinny profits, and if the founder makes a regular habit of this, she’ll take home less income than her freelancers some months.

Put together enough high-effort, low-reward months, and any of us starts to question the model—and life choices.

What’s the simplest, most elegant solution I’ve found?

I ask freelancers what they want to make. If my budget can accommodate that, plus a 20-40% profit margin, then I give them exactly what they asked for. Maybe 10% more even because Fair+ has been a good rule of thumb for me.

If my budget can’t accommodate their quote, then I tell them that. I don’t ask them to come down on price. I don’t negotiate. I say, “Too bad. Maybe next time.” It’s up to the freelancers to propose a compromise at that point.

I treat them the way I always wanted to be treated while recognizing that giving away too much of my profit margin makes my business unstable and unsustainable. And how do I win, how do my freelancers win, and how do my clients win if my business folds?

Guilt and overpaying freelancers—they aren’t a solution. They’re a pair of flashlights that reveal competing values, a value for fairness and respect to freelancers and a value for the founder’s own stability, prosperity, and freedom.

As strange and disorienting as being on the other side of capitalism is for founders, they can reconcile fairness and profit. It’s possible to create a win-win-win for clients, subcontractors, and ourselves.

If you treat people fairly, they reward you with loyalty. Their loyalty becomes your stability.

The model works, no guilt required, when lean agency founders master pricing.

Success with a lean agency hinges on the margin you create when you sell beyond your own time and capabilities and build a team and processes that support a high effective hourly rate for the agency.

Don’t be surprised if the first projects are bumpy as you communicate with clients (”I’m working with subcontractors now”), train subcontractors (”Please do it my way or convince me that yours is better”), and adjust to being less of an individual contributor and more of a orchestra conductor.

Don’t be surprised if you develop a taste for profit. For most of us, that profit is only possible after many years of painful growth.

A lean agency won’t fix all your problems, but it will fix your no-more-time-or-talent-to-sell problem.

When you’re ready, here are ways I can help you:

1. Free Money. A pricing and money mindset guide for freelance creatives. If you’re unsure about your freelance pricing, this is the book for you.
2. Morning Marketing Habit. This course will help you build an “always be marketing” practice, become less dependent on referrals, and proactively build the business you want with the clients you want. My own morning marketing habit has enabled me to consistently make 6 figures as a freelancer.
3. 1:1 Coaching. Gain clarity, confidence, and momentum in your freelance or consulting business.
4. Freelance Cake Community. Build the business you really want with people who really get it.
5. Clarity Session. It’s hard to read the label when you’re inside the bottle. I've done well over 100 of these 1:1 sessions with founders, solopreneurs, and freelancers who wanted guidance, a second opinion, or help creating a plan.