Case study of an unscalable business

This is a case study of a web design agency that was fundamentally unscalable. Despite being in business for seven years, the agency was never able to grow profitably. This was due to a number of factors that were baked into the business model from the beginning.

The Business Model

The agency provided custom web design and development services to local businesses. The projects were complex, requiring a team of writers, designers, coders, and project managers. The founder was also heavily involved in the day-to-day work of the business.

Why it Couldn't Grow

1. Unscalable lead generation: The agency relied on face-to-face meetings and content marketing to generate leads. This was a time-consuming process that was difficult to scale. Hiring a salesperson or a content creator would have been too expensive.
2. Competitive pricing: The agency operated in a highly competitive market, which made it difficult to raise prices. Higher prices would have likely resulted in fewer sales.
3. High-touch service: The agency's clients were accustomed to a high level of personal service from the founder. This made it difficult to delegate work to other team members.
4. Complex work: The complexity of the work made it difficult to standardize processes and to hire affordable contractors. This meant that the agency had to rely on expensive local staff, which killed the profit margins.

The Result

The agency was stuck in a cycle of low profitability and stagnant growth. When revenues went up, so did the costs and the stress, but the profits remained the same. The founder eventually had to sell the business and start over with a more scalable business model.

This case study is a powerful reminder that not all businesses are created equal. It's crucial to design your business for growth from the very beginning.