The 12 Biggest Mistakes Our Web Agency Made and How We Fixed Them

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Peter Coppinger discusses the days before Teamwork.com when he and co-founder Daniel Mackey built a thriving web design business by fixing 12 of their biggest mistakes.


You may not know this, but before founding Teamwork.com and scaling it to become a successful SaaS company with over 2.8 million users, my co-founder Dan and I ran a small web design agency called Digital Crew. When one of the founding members of our web design agency made the decision to leave the company, Dan and I found ourselves in a position where we had to take a brutally honest look at the business.

Unfortunately, what we found left us feeling dejected. Refusing to throw in the towel, we decided to give it one more year or get “real” jobs.

Thankfully, after making some changes, we pulled ourselves through the storm and emerged much wiser. While we do have some great stories about our big wins from that time, truthfully, the most valuable and long-lasting lessons came from repairing our mistakes.

With many web agencies using Teamwork Projects, I decided to share the mistakes we made and the most valuable lessons we learned during the process of taking our web design agency from struggling to successful.

Mistake #1: Working without an agency-client contract

Believe it or not, we didn’t ask for contracts for years, probably because we started Digital Crew straight out of college without any real-world experience. We trusted every client on their word and a handshake. However, after getting burned a few times without a contract to save us, we knew we had to start protecting ourselves.

The fix: Make contracts a requirement for every project and every client — every time. Writing contracts can be a time-consuming task, so create a strong contract template that you can reuse and customize. Make sure to include a schedule of work within the contract to eliminate confusion surrounding what you are delivering for the agreed-upon price.

Mistake #2: Billing in full at project completion

For many years we didn’t take stage payments. It was only when the job was 120% done that we finally sent an invoice. This destroyed our cash flow and put our business at risk. One particular incident that stands out in my mind was losing a €20,000 payment after months of hard work. We hadn’t asked for an initial payment, so when the IT manager who initiated the project was fired, and his boss said she didn’t want to use what we produced, so we never saw a cent. Ouch.

The fix: Put your agency in a better position to plan cash flow and resources by using date-based milestone agreements for payment. Ask clients for 50% up front for smaller projects. For bigger projects, ask for 33% up front, 33% midway and 34% at the end. For massive projects, break them into mini-projects. Breaking large projects up into smaller steps will also have a positive impact on team productivity since deadlines will become more frequent.

Mistake #3: Allowing scope creep

The problem with scope creep is that it’s not always obvious. It might happen very innocently during a casual conversation between a valued client and an agency owner who’s willing to go above and beyond to keep them happy.

Client: “Hey, Peter! Can you add this thingamajig to the home page? It’s urgent. I know I could do it myself with the CMS, but I’m very busy, and this is important.”

Me: “No problem. I’ll drop everything and do that right away. Tell you what, while I’m at it, I’ll update the doohickey also.”

Client: “Great, how much for this work?”

Me: “Ah, it won’t take long, there’s no charge.”

Client: “That’s great. You’re the best!”

This sort of thing happened at Digital Crew all the time and resulted in our agency doing lots of extra work, including rush work, for free. When these additional feature or function requests start cropping up, your agency needs a strategy to curtail scope creep and prevent it from derailing your other projects.

The fix: The key to effectively managing scope creep is communication and transparency. We introduced charges for completing tasks that were outside of the original project scope and ensured that clients were aware of these charges from the get-go. We brought transparency to our process by using an early version of Teamwork Projects to track every request, log the time taken to do the work and generate regular invoices for all clients.

Because we had every effort documented, clients had no problem paying. We also created a rule that all “rush work” was charged at 2x our normal rate; so when a client said “I need this today!” and the task interrupted our other work, it was highly profitable to do it — making overtime worth the extra effort.

Mistake #4: Undercharging for our work

We had more work than we could handle and a great reputation, but it took us a long time to realize that we weren’t charging enough. The penny finally dropped when we recognized that we were providing clients with one of the most powerful tools for growing their business — and we needed to adjust our pricing to match the value we were creating.

The Fix: With nothing to lose, and recognizing that we had an abundance of work and an excellent reputation, we emailed our regular customers and explained that we were dramatically increasing our prices. I remember one customer laughing on the phone when called to say he was surprised at how long we had been selling ourselves short.

Changing our pricing allowed us to turn down projects that weren’t a good match for us or that we found too risky. Soon we found that we were working fewer hours but attracting more profitable jobs. We were working less, doing better work and making more money: win, win, win.

Mistake #5: Allowing Design by Committee

When working on large projects with many stakeholders we frequently found ourselves in a position where we were trying to satisfy them all. I remember one meeting with a large pharmaceutical where I listened to 12 people arguing about the colors of their respective sections of the site for 2 hours.

The fix: We started telling clients that we wanted to deal exclusively with one delegate from their side. They could do all their arguing behind closed doors without us and just present the results. With a similar policy, you will encourage your clients to self-organize, which streamlines your process.

Mistake #6: Treating tax as an afterthought

In the early days, when we received a payment from a client, it included the government tax (VAT) of about 20%. Because we managed our cash flow so badly at the time, we often spent this extra 20% and then when the time came to file our taxes, we often fell short and panicked, which created a boatload of stress.

The fix: We opened a separate bank account for this tax, and as soon as a client paid us, we transferred the VAT amount straight into this account. We were never tempted to dip into this account because as soon as the money was transferred, we treated it as if it simply didn’t exist. This led to better cash flow management all around and put an end to those stressful situations.

Mistake #7: Poor invoice management

We used to host a lot of client websites and had hundreds of invoices due in various different months throughout any given year. Our invoicing process was haphazard, to say the least, and our follow-up on unpaid invoices was even worse. We would never even consider pulling the rug out from delinquent accounts, and this lack of discipline around billing really hurt our cash flow.

The fix: We hired someone whose sole job was to manage our invoicing and accounts receivable (part-time initially and then full time). She was an ace at her job: sent invoices immediately when due, followed up with fervour when invoices went overdue and also had the authority to take websites offline for non-payment if required (which very rarely happened). The result was our cash flow was excellent and we could concentrate on our work.

Mistake #8: Prioritizing projects based on who was “screaming the loudest”

When our web design agency was in its early years, we used to have a whiteboard in the office with all of our active projects scribbled on it. We set project priorities based on which clients were putting us under the most pressure. We called it the “Who’s screaming the loudest” approach. It was chaotic and unsustainable.

The fix: After trying the leading web-based project management system and finding it sucked, we built an early version of Teamwork Projects to help us stay organized (and sane) while juggling multiple client projects. We entered the milestones for our various projects and were able to schedule our projects on the calendar. This gave us a visual representation of how much work we anticipated, what resources we had and when we needed to hire. Robust project management software is essential to staying on top of your clients’ projects, so make sure that your chosen tool helps your team excel.

Mistake #9: Neglecting our own website

We were so busy with client work that our own website hadn’t been updated or redesigned in years. Despite pumping out hundreds of beautiful websites for our clients, our own looked dated and static. We probably lost out on several major contracts because we weren’t putting our best foot forward.

The fix: Every January, we budgeted some time to redesign our website. We gave it a fresh new look that showcased all of our more current work. We also established the rule that a project wasn’t finished until its case study was on our site; this kept the site fresh and featured our best work, leading to us winning more and larger contracts.

Mistake #10: Not measuring profitability

Building websites was a long, slow process. After analyzing every aspect of how we built sites, we realized that we were rebuilding the same type of code over and over on different projects, and we had no idea how profitable our projects were.

The fix: We constantly reviewed our website creation process to see where we were losing time and how we could reclaim it. For example, when we started a new project, we asked the client to find 5 websites they loved so we could quickly understand their style and design preferences in order to save time in the design stage.

We found that building web forms for projects was a painful time sink, so we started scouting for ways to copy blocks of useful code. Our development team started building reusable components and “engines” that we could keep improving and plug into most of our websites, which saved a lot of time.

We also found that designers invested the same amount of time on every website regardless of its budget. To overcome this issue we worked harder at helping them become more conscious of financial expectations and discussed strategically allocating their time at beginning of every project.

When we finally had a tight, streamlined process for building websites, we started measuring our effort vs. reward ratio. Our analysis led us to pinpoint additional problem areas, refine our process, select better projects and improve profitability.

Mistake #11: Taking any work that came our way

For years we did any sort of web-based programming and design work regardless of the size of the client. Then we stumbled on a few web application projects for bigger clients and quickly found that not only did we prefer doing application development work, but it was also highly profitable. It took us a long time to realize that you can charge more when your agency specializes in one area of work where you excel.

The fix: When we officially made the switch from web design, we changed up our website and positioned ourselves as “Web Application Developers,” highlighting our best application development work, and we started turning down smaller web design contracts. Your agency’s speciality might be B2C or B2B sites or you might even specialize vertically. In any case, once your agency gets off its feet, look to specialization to maximize your profits.

Mistake #12: Not offering extras

After correcting the mistakes that dragged our business into the red (#1 to #11), our margins began looking a lot healthier. We realized that we needed to start thinking about maximizing our financial turnover without significantly increasing our workload.

The fix: We realized that some small, easy-to-add services were creating huge value for our customers, so we began adding a menu of these items to each proposal. Clients could choose features like forums, news feeds, image galleries and more to their sites just by checking a box. Later, we added more substantial services to the menu, like an annual SEO audit and email management. Discovering this low-effort, high-payoff work improved our bottom line, and clients were thrilled to be getting extras they hadn’t considered.  

Mistakes Made Us Who We Are Today

Building and scaling our web agency taught us a lot of valuable lessons and also led to Dan and I building the early version of Teamwork Projects which became the foundation of Teamwork.com.

While the 12 biggest mistakes we made weren’t obvious at first, my hope is that discussing how we turned things around will help you bypass the struggle and fast track your way to building a sustainable and highly profitable web design agency.

If you found this post valuable, we’d really appreciate a tweet about it or just leave us a note in the comments below.

Thanks for reading–

Peter


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66 Comments

Charlie

Thanks for sharing these insights. Glad to know I am not crazy, validating my experiences by the past or present experiences of others. Before reading this article I was already in the process of making some of these changes for my agency, but there were still a couple of nuggets to take away. Some of them being made urgent. Best wishes for further success.

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Peter Coppinger

You’re welcome Charlie, it’s great to hear you got something from it. 😀 Thanks.

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Rod Solar

We’ve been designing websites since the bad ol’ days of 1997 (and have the grey hair to prove it). Sadly, we made 9 out of these 12 mistakes since we started developing websites. Making mistakes suck, but we’ve learned from every single one, and it’s nice to see that we’re not the only ones that made them!

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Peter Coppinger

We started in 1999 ourselves Rod. I’m curious which 3 you didn’t make. Making mistakes does indeed suck but so long as we learn from them it’s ok.

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Rod Solar

The three things we never got wrong were

2 Billing in full at project completion – I don’t think we ever didn’t get a deposit (usually 1/2, sometimes 1/3)
7 Poor invoice management – We’ve been good at chasing outstanding payments and have had a reasonably good historical payment rate of 30-45 days.
10 Not measuring profitability – We tracked time from the beginning, and adjusted our pricing when we were more into cost-based pricing. And, we’ve consistently added efficiencies in repeatable components of projects.

Interestingly, they all have to do with the money side.

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Richard Aronson

Really great tips. I can implement several of these right away. Thanks for sharing.

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Peter Coppinger

That’s great to hear Richard. I’m glad this article is resonating with people. We might share more of agency days in the future. Thanks for the comment.

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Mary Lynn Bradshaw

Good post! As a small virtual digital agency, we have come up against these hurdles too. One question: as you expanded what organizational structure did you develop? We are currently working on the most effective way to grow and debating whether to create individual departments for website development and ongoing marketing projects or to create client individual teams with all development/marketing resources in a single team. Thanks for sharing all your insights!

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Tracie Scyrus

Thank you for this article! I definitely see areas I need to improve on to grow and be profitable. I think more web design firms make these mistakes. What a great read!

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Peter Coppinger

I appreciate you taking the time to write that comment – your comment makes the effort worthwhile and encourages me to write more. Cheers Tracie. 😀

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Kayla E

This was a great read! While a lot of those specific mistakes are not applicable to my current position, the underlying principles seem relevant to most industries. Thanks for sharing!

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Peter Coppinger

Yeah I think a lot of the common sense like “don’t spend the taxes” is relevant everywhere. Good to know it’s not just web agencies enjoying the article. Thanks Kayla.

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Chris

Great article 2 of these points I can use right away — I kind of knew them but forgot them. Thanks fellas!

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Ray Hurley

Great article Peter. My company is going through some of the same issues in Cork! Going to implement some of these tips first thing tomorrow morning 🙂 Thanks for sharing!

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Peter Coppinger

Thanks for the comment Ray. Good to hear somebody in Cork got something out of it. We do an open coffee at the end of the month if you ever want to swing out and see the office – email me, you can guess the email 😉

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Colin Cartwright

This is one of the best articles I’ve read on web agency best practices for a long time. I think a lot of us struggle with many of the scenarios you’ve mentioned. Thanks very much for sharing your agency experiences and what you did to fix things.

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Peter Coppinger

That’s fantastic to hear – Cheers Colin. Thanks for taking the time to comment.

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Sam Shah

Hi Guys – Well written article! We started our boutique software development company in 2011, and I can absolutely relate to many of the points mentioned here.

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Josh Boorman

Thanks for the insight Peter! I see a lot of similarities here for what we have been through. We have a team of 23 and have recently moved across to teamwork.com > I am wondering about how you managed resourcing your projects & tasks against each staff member in teamwork.com to allow your business to scale?

We are currently looking at building a resourcing management tool to give us a better view as to what is going on… It would be great to hear how you have worked around the current limitations!

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Peter Coppinger

Hi Josh,

You’re welcome.

Regarding resource management; it’s something that’s on the cards here. We are still in planning phase and would welcome your input; if you are interested shoot an email to support@teamwork.com and the guys will put you in touch with Julie, our Teamwork Projects Customer Champion.

But there are some tools in Teamwork Projects already that we used – start and end dates on projects… which brings up the project chart http://support.teamwork.com/projects/overview2/project-chart
– so you can schedule your projects effectively.

You can also use the workload report along with task estimates – https://support.teamwork.com/projects/overview2/everything-workload – to see how overloaded/available staff are.

If you could share with us what you are planning to build that would be great.

Cheers,
Peter

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Mark D. O'Dwyer

An excellent and very honest article. Too often successful people / teams are reluctant to divulge the pitfalls, the mistakes, the paths wrongly travelled. Yet, your article is refreshingly honest and provides guidance to many others along their entrepreneurial journey.

Thanks for your humble candor and the fantastic software of Teamwork.com!!!

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Peter Coppinger

Cheers for that Mark. We have no problem admitting to all the mistakes we made. As I said already, mistakes are ok so long as you learn from them.

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Christian Fenner

Dear Peter, great article, thanks for sharing!
As a growing digital agency with around 30 employers, we love using teamwork.com very much! However what we think its lacking is resource management – one thing, that is a big deal when dealing with growth as you will know 🙂
There might be an easy fix though: If I could assign a certain amount of time to an employer – say 140 hours per month and them assign him to tasks in one or multiple projects including estimated times, I should be able to view her/his overall availability. And If I had a view with this of my whole team, I´d instantly knew who is booked where and how long.
Is this something you guys are interested in looking into or are there any API´s we can do this with externally?

Cheers from Berlin!
Christian

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Peter Coppinger

Hi Christian, cheers. it’s definitely on the card – see my reply to Josh above. We’re currently in the planning stage and any insight into what would work for you would be appreciated. If you could email support@teamwork.com, the guys will connect you with Julie, the Customer Champion who will gather your notes.
In the meantime, yes the entire product is API driven so you have full control.
Cheers right back at you. Must get to Berlin some day soon.

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James Kennedy

This is a hot topic.

A lot of this comes down to money and the weird and wonderful ways it plays on our emotions. Had you thought about separating the “creative” and “account handling” roles?

Actors do this all the time. They have and agent who tells them when and where to show up while someone else takes care of the green. This works well because it can be tempting to confuse the money we get paid with our worth as individuals. As the eager to please bags of flesh that we are, the creative can easily succumb to discounting or throwing in extras to an effort to make our clients love us.

Having someone else handle the money from start to finish takes this out of the equation.

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Peter Coppinger

Howdy James, thanks for the comment bud. Yeah that makes sense – have at least one person take control of the hard nosed business end of the operation.

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Gráinne Forde

Martin,

I’m just going to jump in on behalf of Peter and thank you for letting us know you enjoyed the post.

It’s always great to hear positive feedback 🙂

Gráinne

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Jun P. Velasco

Our experiences mirrors yours… in a lot of ways. And some are really painful learnings and some are bitter pills we had to swallow. We are in the middle of transition ourselves, after going through some tough months and seeing our situation in the red, we realized that change was not only necessary but truly a matter of survival.

Sharing your experiences and how you corrected them validated the direction we are now taking.

Thank you and more power!

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Gráinne Forde

Jun,

It’s been great reading the comments you’ve left on Peter’s posts over the last couple of weeks and hearing how they are helping with the direction your company is taking.

Wishing you and your team all the best.

Gráinne

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Gráinne Forde

Reinhild,

It’s great to hear you enjoyed Peter’s latest post. Make sure to stay tuned for more like this!

All the best,
Gráinne

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Dominika

Great article, I am surprised how many small business owners are guilty of this (I thought it was only me!). Thanks for practical advice, I am currently working on all 12 (well no, except no.6!).

May I suggest you write series of blog articles on how to get clients excited on using Teamwork for projects? I was planning to use the app not for internal teams but rather for communication with clients/keeping everything in one place. I tried using Teamwork for 3 projects so far and it was a disaster – there was a huge resistance to my suggestion of introducing an app for PM. I realised most clients did not not have any previous experience with structured PM and were intimidated by the idea of using a software for this purpose (even though I feel Teamwork app is super intuitive and easy to use). These who were familiar with the idea of PM preferred email/telephone/other communication, Dropbox/Google Drive to store and share files, Excel for tasks/milestones setting and monitoring. I would love to use Teamwork app for all this instead. Any advice on this please? If you covered this topic already, posting a few links here would be helpful! Thanks

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Gráinne Forde

Dominika,

I’m just going to jump in on behalf of Peter to say thank you for taking the time to let us know you enjoyed the post!

Some content that we’ve published that might help with the onboarding process includes 3 Steps to Successful Client Onboarding.

Our Customer Success Stories are another resource which contain tips on using Teamwork Projects with clients. One case study in particular that has some valuable tips on getting clients onboard is Using Teamwork Projects to Manage Web Development Projects and Improve Client Communication.

With regards to your suggestion on writing a blog series on how to get clients excited about using Teamwork Projects that’s actually something that’s high on our list of content creation priorities at the moment.

I would love to hear more about what sort of things you would find valuable to include in the series if you want to shoot a mail marked for my attention to marketing@teamwork.com or alternatively just hit reply to my comment.

All the best,
Gráinne

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Dominika

Hi Grainne,

thanks very much for sharing the links! I am going to read the blog articles you suggested here first, and then send you an email if I need more help or have any other ideas for the blog content.
Regards,
Dominika

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Gráinne Forde

No problem! Hopefully, you find some useful info in those—and if not make sure to reach out.

All the best,
Gráinne

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Wily Kauluma

This is absolutely amazing. A lot of mistakes happened to me though on different industry.
Thank you very much in deed.

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Gráinne Forde

Wily,

Just spotted your comment and decided to jump in on behalf of Peter to say it’s great to hear you enjoyed the post and thank you for taking the time to leave a comment 🙂

All the best,
Gráinne

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Alec Kinnear

This list is a great reminder of the pitfalls of running a digital agency. The one consistent theme in all of Peter’s points is process. Process is essential to growing and making more efficient any business. Understanding process is what made Henry Ford one of the great business minds of the last century and adopting process into Kazan is what made the Japanese electronics companies great.

To reinforce what Peter said about billing….

Process for billing and process for collecting the bills is one of the hardest parts of running an agency as a creative person (coding can also be creative). Hire someone who lives in the real world to take care of most of that side. Sooner rather than later. Like Digital Crew, we waited far too long on this one but thank heavens we did make it finally.

Process is a key to innovation. Some years ago we figured out a special process called use Observer Status which Dan implemented in Teamwork which allowed us to triple the amount of projects our agency can handle (thanks Dan!).

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Irene

What a great list. So often, we allow ourselves to slip into the mistakes that you listed because we just really want to do a good job to help the client succeed and forget that if we haven’t got our business sorted out, we will not be able to continue for very long. But that said for businesses that are just starting out, they have to just take what’s out there and start implementing as much of the process in as possible and slip right into it before it all goes out of control. Thank you

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Ronald

Awesome article Peter! Thanks for sharing these wonderful tips. From what I have seen throughout the years, Mistake #2 is what many digital agencies does. You should never bill at a completion of a project, instead, it is important to match your payment schedules to your delivery schedules for better ROI.

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Vincent

That’s an awesome article ! Like Ronal, I think the mistake #2 is a big one. Like others I made this mistakes… and fix it quickly !

I’m thinking about another mistake: Not updating process. Internal Process is a key point to make better quality. I’m consistently trying to industrialize our processes with 3 goals: better quality, smarter work and easy delivery.

The other mistake I made at the beginning was about technology. I was arguing a lot about how our technologies was awesome… Most of the time, they don’t care.

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Peter Coppinger

Good point Vincent, we made and fixed that mistake too, but it’s more an ongoing improvement; thinking about the business in terms of processes is critial.

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Mike Haydon

This was so helpful for me. A few in there were “yup that’s me”. No matter how long we’ve been at this, there are always a few things that can make a huge difference.

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Keen

Great and very useful article for freelancers and small digital agencies who have just started. The real mistakes that happen on a day to day work have been clearly outlined.

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Shivam Sahu

Amazing piece of content. I would like to share one such mistake. I started using an ad monetization network, which showed pop up ads to the visitors. But, it was an incentive-based monetization network, so basically, you get paid for app installs or user sign-ups. Revenue Hits to be precise.

A few days later, I got a message from Google Webmasters that my rankings have slipped up because they detected social engineering on my website. Had to remove those ads instantly. But luckily, I get to know about what mistake I made and learnt from it for not making it again.

I’m glad that you shared this article.

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Ridwan

Great tips!
Number 3 and 8 happen at almost all the agencies, your tips on them are really good. And of course #9!
Thank you!

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Nicola Yap

I love this!! When you described “scope creep” I had lights flashing around in my head, that’s totally the perfect word to describe one of the biggest issues I encounter. We want to please our clients but it’s easy to forget the cost of being TOO responsive – especially when it starts to creep into the cost of our services and what we’re charging. P.S. My company uses Teamwork heavily, so thank you for all that you do!

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Peter Coppinger

Hey Nicola, yeah, being too nice cost us dearly for years. I’m grad that resonated with you. And thank you for being a customer! 😀

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Peter Coppinger

Agreed Rob. But it’s easily forgotten about with all the other todos and deadlines.

Great to hear that you have a look of gratitude on your face. 😀

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Nirav Dave

Hey Peter,

Thanks for sharing your success story. Learning from mistakes is the best way to building a successful business. There are some great takeaways here for those just starting their online business as well as professionals like me. Great read! Keep up the good work!

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Katriona O'Mahony

Thanks for your positive feedback Nirav! 🙂 Great to hear you found the post useful!

Katriona

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