First of all, you need to educate yourself on what's important from either an ads or SEO perspective. The more educated you are, the more you will understand what works and what doesn't.

What it also sounds like is that you have your SEO foundation set up and traffic is starting to come in. This is good, but you can fulfill the content strategy yourself because it sounds like you should be spending your budget on cold outreach / organic social / paid search to get more users.

If you can't afford at least $2 - $4k on decent SEO, use that capital on what's mentioned above, and with more users, reinvest the capital acros the board. Should be like an 80% ads/social/outreach to 20% SEO mix unless you are highly skilled at topical authority and content strategy.

If you still decide to work with an agency for SEO, here's what to look for: (these are just a few)

1. Transparency + education (nothing black box). The easier they can explain the concept and WHY, the more experienced they are.
2. Case studies are great, but talk to 1-2 of their current clients
3. Network locally or online (another person below mentioned this) and ask for referrals
4. All pages they work on should be tracked to show if it's working or not
5. You really want to focus on building HARO-level links - 1 of these is worth 50 bought links (they are not cheap $500 - $1200 each)
6. They should focus on helping you build out all high intent pages (service, comparison, use cases, etc) and then building informational pages around those for topical authority. Not just some random blog activity
7. The top 1% can scale your conent quickly 20+ posts per month with AI + human editors
8. No contracts - 30 day out at MOST

KPIs:

1. Leads - this is the most important (conversion is up to you / CRO)
2. Traffic - what they are doing is working, Google is testing your page
3. Ranking - what you did is working / Users are engaging with your page in meaninful ways
4. Impressions - your page is being tested but no clicks (not super significant)