Sharing my insights on these two popular business models (Agency vs SAAS) that are the best options for making money online. I use both models together which decreases churn and increases client stickiness for the long term.

Digital agencies provide services to other businesses. Sell offers like SEO, advertising, copywriting, and more. You can start an agency to leverage your expertise or have other experts fulfill the tasks for you. As your client base grows, you can hire contractors or employees to help with delivery.

SaaS (Software as a Service) businesses sell subscription access to software products. Examples include Slack, Zoom, GoHighLevel, Hubspot, SmartLead, SearchAtlas, and more. SaaS has become very appealing due to high sale multiples – some SaaS companies sell for 10-50x annual revenue. The product itself handles service delivery, which can free up your time.

Key Takeaways

Both agency and SaaS models have low barriers to entry but require different skills
Agencies can be time-consuming due to client service needs
SaaS businesses often have higher sale multiples and more automation potential

Getting to Know the Basics:

What’s a Marketing Agency?

A marketing agency is a business that helps other companies with their marketing needs. I started one myself and grew it to six figures. These agencies offer various services like social media management, SEO, or ad campaigns. The great thing about starting an agency is that you only need a skill to get going. Once you have clients, you can hire people to help with the work.

What Does SaaS Mean?

SaaS stands for Software as a Service. It’s a way to sell software through subscriptions. Think of apps like Netflix or Slack – you pay monthly or yearly to use them. I’ve built a SaaS product that now serves over 500 businesses. SaaS is becoming more popular because it’s easier than ever to create these products, even without coding skills. Plus, SaaS companies often sell for much higher prices compared to other types of businesses.

Comparing Business Models:

Agency Model Pluses and Minuses

Starting an agency is easy. You just need an offer to sell to other businesses. It can be Local SEO, ads, websites, chatbots, and more. Once you get clients, you can bring on contractors or employees to help with the work.

Agencies offer good leverage. You can use software or build a team to save time. This lets you focus on growing the business or doing other things you enjoy.

But agencies have drawbacks too. Providing services is time-consuming, even with a team. To make real money, you need many high-paying clients. These clients expect a lot, which means complex and time-consuming work.

The agency space is very crowded now. Everyone’s talking about how to scale a marketing agency. This makes it harder to stand out and win clients. However, its easier when you focus on a niche and 1-3 services.

SaaS Model Pluses and Minuses

SaaS (Software as a Service) has some big advantages. The product itself does the work, so you don’t have to deliver services yourself. This saves time and lets you focus on other areas.

SaaS businesses can sell for much more than agencies. It’s not rare to see SaaS companies sell for 10-50 times their yearly revenue. An agency might only get 1-2 times its revenue.

Starting a SaaS business is easier than ever. There are many AI tools and platforms that let you create software without coding knowledge.

But SaaS isn’t all easy. Building a good product takes time and effort. You need to keep improving it to stay competitive. However, you can white label SAAS to resell but getting customers can be hard, especially in crowded markets.

SaaS often requires more upfront investment so you might need to spend money on development before you start making sales, unless you white label which makes the costs way less.

Agency Model Insights: A Closer Look

Starting an Agency: Easier Than You Think

I’ve found that starting an agency is pretty simple. All you need is a skill you can offer to businesses. It could be marketing, lead generation, SEO, or ads management. Once you have that skill, you can start selling it to clients. As your business grows, you can bring on contractors or full-time employees to help with the work.

The Real Deal: Delivering Services

Providing services to clients can be tough. If you want to make good money, you’ll need to sign up high-paying clients. These clients often expect a lot for their money. This means you’ll have to deliver complex, time-consuming services. Even with a team, I still spend about 40 hours a week on client work, sales, and operations. It’s a lot of work, but I enjoy it.

Outsourcing and Team Building in Agencies

Building a team in an agency can be pretty straightforward. You can hire people to do the work, which frees up your time. Some agency owners even hire contractors to handle all the service delivery. This lets them focus on growing the business or other interests. I believe you should know how to do the work before you outsource it, though. Still, it’s nice to have the option to build a team quickly.

A Deep Look: SaaS Business Model Insights

SaaS Products Stand on Their Own

SaaS products are unique. They do the work by themselves. Once set up, the software handles service delivery. This lets me focus on other parts of the business. It’s different from agencies, where I’d spend a lot of time doing the work for clients. With SaaS, I can step back and let the product do its job.

SaaS Businesses Can Sell for High Prices

SaaS companies often sell for much more than other types of businesses. It’s not rare to see them go for 10, 20, or even 50 times their yearly income. This means a SaaS business making $100,000 a year might sell for $1 million or more. Agency businesses usually sell for much less – maybe 1 or 2 times their yearly income. This big difference makes SaaS very attractive for those looking to build and sell a business.

Starting a SaaS Business is Easier Than Ever

The world of SaaS has changed a lot. It used to be hard to start a SaaS business. You needed to know how to code and have lots of technical skills. But now, it’s easier than ever. There are many tools and platforms that let me start a SaaS business without knowing how to code. This low barrier to entry means more people can try their hand at building a SaaS product. It’s a big shift from the past, when only tech experts could enter this field.

Strategies for Boosting Income and Expansion:

Landing Big-Ticket Clients for Your Agency

To grow an agency, I focus on securing high-paying clients. This means targeting businesses willing to invest $5,000 to $10,000 monthly or more. These clients expect top-notch results, so I make sure to deliver complex, high-value services.

I’ve found that landing these premium clients requires:

A unique selling proposition
Proven track record of results
Strong networking and relationship-building skills
Tailored, high-impact pitches

Remember, with big budgets come big expectations. I always ensure my team can deliver before taking on new clients.

Growing and Exiting a SaaS Company:

SaaS businesses offer exciting growth potential. Here’s what I’ve learned about scaling and selling a SaaS:

Product-led growth: The software should sell itself through its value.
Leverage no-code tools: Start quickly without deep tech skills.
Focus on recurring revenue: Aim for stable, predictable income.
Build for exit: SaaS companies can sell for 10-50x annual revenue.

Key metrics for a valuable SaaS:

Metric	Target
Churn rate	<5% annually
CAC payback	<12 months
Gross margin	>80%

To maximize exit value, I concentrate on steady growth, low churn, and high margins. This approach has helped me build a SaaS used by over 500 businesses.

Making the Most of Different Models:

Getting the Best from Agency Setups

I’ve found that agency models can be great for quick starts. All you need is a skill to sell to businesses. This could be marketing, lead generation, SEO, or ads. Once you get clients, you can bring on contractors or employees to help with the work.

One big plus is how easy it is to build a team. You can hire people to do the actual service delivery, freeing you up to focus on growing the business or other interests. But I think it’s important to know how to do the work yourself before outsourcing.

Maximizing Software Service Benefits

With software as a service (SaaS), the product itself does most of the work. This means less hands-on time for you once things are set up. You can focus on other parts of the business or even make it run mostly on its own.

SaaS businesses can also be worth a lot more when sold. It’s not rare to see them go for 10 to 50 times yearly revenue. This makes them very attractive if you want to build and sell a company.

Starting a SaaS business is easier than ever now. There are tons of tools and platforms that let you create software without coding skills. This low barrier to entry means more people can try their hand at building valuable SaaS companies.

Keys to Success in Both Models

I’ve learned a lot from growing both agency and SAAS. Each model has its strengths and challenges. To make the most of either path, focus on these key points:

Develop unique skills or products
Build strong client relationships
Invest in systems and automation
Stay adaptable to market changes
Continuously improve your offerings

Remember, success often comes from blending the best of both worlds. Don’t be afraid to mix agency services with SaaS products. This combo can create a powerful business that leverages your skills while building long-term value.

So when it comes to agency vs SAAS. Just keep staying flexible and open to new ideas, you’ll be well-positioned to thrive in today’s fast-paced business landscape. Keep learning, stay focused, and always look for ways to add value for your clients or customers.

By Darius Gaynor

Agency Vs SaaS Reselling – What You Need To Know