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5 Common Mistakes Made by Digital Agency Businesses which Drain Profits (Part 1)

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In the fast-paced world of a digital agency, avoiding common mistakes can make all the difference between success and failure. In this blog, we explore five common mistakes that agencies often make, and the negative impact they can have on profitability, as well as project delivery.

Digital agencies can come in a huge variety of configurations, specialising in different areas such as marketing, strategic delivery and creative project outsourcing. These agencies can focus on a variety of different areas of digital offering such as: user experience, mobile, social media, data gathering and analytics.

While there are many different types of digital agencies, they often have lots in common. One of these is having lean margins. This means, just a few small mistakes can cause profits to drain and an agency to go bankrupt. 

In order to get a better insight into these common mistakes, we spoke to Giorgia Spencer and Lucy Judd, two of Deazy’s Senior Client Services Managers. To our agency clients, Giorgia and Lucy will be familiar faces, working alongside them every day to ensure they find the right tech talent fast. 

By understanding these pitfalls and learning how to navigate around them, agency directors can optimise their operations and ensure smoother project deliveries.

Common Mistake 1: Too many devs on bench

Arguably the most important part of any business is ensuring that it is profitable. That is why the first area we asked our delivery experts about was good margins. 

“I think one of the biggest drains on resources that we see at agencies over and over again, is having developers on the bench, without anything to do.” Shares Lucy Judd, who worked within the agency space for 9 years, working at Head of Accounts at her last role before joining Team Deazy. 

Lucy continues: “It is understandable how agencies end up in a situation where they have a bench of devs draining their resources. It’s difficult to predict tech trends and future client demands.” 

Stack Overflow's 2022 report on technology stacks gave a list of 38 tech stacks, which developers indicated as the most popular tech stacks. Aside from these there are also dozens of other tech stacks, languages and platforms. Therefore it is no wonder why digital agencies, specialised in a technical offering, often find themselves having to hire extra devs to meet the technology demands of clients. 

However, for an agency working on lean margins, having idle developers can be a problem. If they are not utilised effectively, ​​these team members will quickly become a financial burden on agencies. 

Having too many developers on the bench can also indicate a misalignment between resource allocation and client demands. Digital agencies tend to hire additional developers as a precautionary measure, aiming to have a diverse skill set readily available. While this may seem like a proactive approach, it can lead to an excessive number of idle developers when client demands do not align with the skills and expertise of the bench.


Common Mistake 2: Relying too heavily on hiring junior devs and training them

Today, hiring tech experts is more difficult than ever. With an ever increasing demand for developers and a technical talent shortage, businesses often struggle to find the right developers for their team. 

One of the ways in which businesses are combating this issue is by hiring junior developers and allowing them to learn of the job. This is a great tactic for businesses looking to invest in people and build long-term relationships with their in-house team. 

However, when agency businesses find themselves struggling to meet tight deadlines, working with inexperienced devs can cause severe project delays. 

“I have seen time and time again, agencies struggling to meet deadlines due to developers being inexperienced.” shares Giorgia Spencer, who has had first-hand experience with how difficult it can be to find the right developers, from her previous role as a Head of Marketing. “Working in an agency allows developers to gain a wide variety of experience, and therefore it is a great place for junior developers to gain experience.” 

“However, when it comes to making sure a project is finished on time, having a ‘heavy-hitting’, expert dev on the team, who can pick up last minute tasks, is important.”

Aside from hiring difficulties, cost is another key reason why agencies might choose to stay away from hiring senior, expert developers. However, in the long term, paying someone to perform repeated tasks and learn on the job will eat into margins and drag projects out. 

An article published in The Startup suggests that it takes junior developers twice as long to become productive, compared to their senior counterparts. On average, senior developers begin working to full capacity within 3 - 6 months of joining a team, while junior developers will take anywhere from 6 - 12 months. What’s more, working as a junior developer can increase the risk of bugs being added to code bases, leading to more work for all other team members. 

While this risk can be mitigated to some extent, through testing infrastructure - for agency teams looking to move fast, and deliver effectively, junior developers are often a hindrance.


Common mistake No 3: Over extending in-house team

Having a competent in-house team who can pick up and deliver tasks quickly, when needed, is crucial for agency success. However, one of the most common mistakes made by digital agencies is over extending their dev team, in order to meet a set deadline.  

From the mistakes mentioned above it’s clear why agency managers might fall into this pattern. Since having too many devs on the bench causes a drain on resources - teams often attempt to do more with less.

“When agency clients first approach us, we often have conversations with their in-house team about workflows, ways of working and their project preferences.” Shares Lucy, on the topic of agency devs. “Dealing with developers who are overstretched is a very common occurrence.”

“Unfortunately, the continuous overstretching of dev teams can lead to inefficiencies and an increased number of mistakes.”

Studies show that an increased level of stress correlates directly with a decrease in productivity - which is why in the long term, overstretching a small team can be disastrous.  

A team dealing with too many projects at once, will quickly find themselves in an overstretching 'vicious circle’. Teams dealing with too many projects at once will quickly begin to lack headspace to effectively deliver projects, without making small or large mistakes along the way. This will lead to missing deadlines, having to delay upcoming projects, and an increasing number of team reshuffles to meet new client demands. 

In the long term, these symptoms of a burned and stressed out in-house dev team, may even risk not winning projects due to a reputation of ineffective project management. 

For agencies looking to tackle this problem, finding an outsourcing partner who can manage and oversee entire project deliveries, or offer appropriate QA and project management resources is a great option.

You can learn more about the most common mistakes made by agencies and the new resourcing model helping them avoid these pit-falls in Part 2 of this blog.

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