#142 – How to build a web development agency – Adam Grim from Sparrow Websites

Show notes from Episode #142 of the Sweaty Startup Podcast.

Adam Grim took over Sparrow Websites with four kids, two months of cash reserves, one week of training from the previous owner, and two customers lined up. In just a few years, this seemingly crazy decision has turned into one of the top web development agencies for service-based entrepreneurs, with revenue nearing $700k annually.

Two Sides of Sales

Web development is a glamorous, sought-after industry, and a passion project for many entrepreneurs. In fact, it made the list of businesses Nick hates, but Adam was still able to find success by focusing equally on direct sales and relationship development.

• Relationship sales
  • A key success driver from the start has been connections and referrals, and Adam is quick to note that constantly chasing the end consumer for sales is a well that can run dry. 
  • He makes sure that he builds relationships with businesses that have an adjacent mission, but aren’t direct competitors. 
    • To build this, Adam identifies local content agencies, PR firms, etc. who may have clients asking about building a website.
    • He also offers educational sessions and resources to local entrepreneurs, which can build trust and generate leads while keeping the business involved with the community. 
    • Ask yourself, if you were looking for the service you offer, who would you ask for a recommendation? Start building relationships with those people.
• Direct selling
  • When direct selling, Adam focuses on adding value first.
    • By reaching out to cold leads with a list of 5 things they can do to improve their website, Adam proves that his service offers real value to the lead while betting on getting their business, noting that his close rates have been strong.

Keys to Partnerships

Starting to plan partners early on is typically a risky move, but it’s been successful at Sparrow for a couple key reasons:

• Shared values
  • Beyond wanting to build a business together, Adam made sure he and his partner had similar values on everything from margin and revenue to spending time with family and connecting with the community.
    • This was Adam’s biggest focus for a partnership, and has helped maintain healthy operations as the business has grown and changed.
• Personality and skills
  • While their personalities are similar, the skillsets of the two partners are extremely different.
  • Adam is technical and detail-oriented, while his partner handles sales and creative work.
    • This creates a sense of trust between the two to own their respective wheelhouses, while preventing conflict over who owns what work.

Transforming Your Business

While growth had doubled every year for Sparrow, Adam realized that constant project transition was stressful and inefficient. The business had almost no recurring revenue, and each customer had a low lifetime value. In 2019 they began to help customers build out their website over time, with a pricing model of $200-500 per month. This has completely changed the business, with recurring revenue making up 80% of the top line now.

The key message is that your business may need to change in unpredictable ways down the road. When Sparrow began to identify their niche of early stage service businesses, they realized that even $3k for a website is a massive amount of money if your customer is strapped for cash flows. With launch kits now available, businesses can leverage frameworks that have worked over and over, allowing affordability and simplicity.

Hiring

With most employees joining in the past year and a half, Sparrow has had to do a lot of hiring along the way. Some choices were great, some turned out to be a poor fit for the company, and one even misrepresented their skills in the interview process.

Adam has found great benefit in leverage free SCORE mentoring from former executives. They were able to get insight into skill development, creating employee manuals, and process standardization. He highly recommends getting a good mentor to walk you through the processes of vetting and hiring employees.

Entrepreneurial Opportunity

Like Nick, Adam sees service-based entrepreneurship as a huge growth area right now. He knows that there’s high demand for these services, but that some people have been in it for too long, are jaded, and haven’t updated their process. New businesses are making huge leaps just by utilizing technology like Google reviews and Jobber.

Highlights

Adam’s story of Sparrow Websites [0:50]

Establishing partners [5:55]

Sales [9:05]

Building a network [14:20]

Finding your niche [16:55]

Transforming your business [18:45]

Hiring [27:30]

Key takeaways [35:50]