Everyone wants to have a successful agency, but just how do you go about maximising your profitability and Building A Super Profitable Creative Agency? I was lucky enough to be invited by my accountancy firm to attend a talk on how to Build Creative Agency by someone who has been there, done it and bought the t-shirt.
- Ensure you have good processes for delivery. Avoid over-servicing and the dreaded scope creep at all costs.
- Be efficient at micro-managing schedules & resource. Check your schedules several times a day.
- Charge out all of your billable resource, including account management and project management.
- Don’t compromise or discount day rates to win business.
- Promise what you are going to deliver, and deliver what you promise. (It’s far more profitable to say no that to hedge your bets, just like in poker).
- Set out SLAs and any retainers before starting a project; it can be very awkward to approach this subject retrospectively.
- Have the correct systems in place to record and report where time is spent.
- Make sure you have the right team doing the right job.
- Aim to hit 58-63% wage cost to GP.
- Each billable resource should be pushing through between £5k-10K per month.
- Top agencies will bill £100K per person on average, across the whole business. Good agencies at £65-75K.
- Use freelancers on a project basis; don’t have them sitting around the office doing nothing while they bill you on a daily basis.
- Directors. Too many cooks spoil the broth.
- Spaghetti & Sales consistency.
- Take on the right deals at the right time by having a killer pipeline and strict qualification for clients and projects.
- Ensure your pitch to win even if you don’t think you will get the work.
- Keep the team motivated.
- Know your worth and have the confidence to sell higher day rates.
- Minimise/manage the time spent on non-billable activities. Are you spending too much unrecoverable time pitching, focusing on too much in-house work not budgeted for, and pro-bono or speculative work?
- Get your cash flow in check. Recurring revenue can help greatly with services such as WordPress Support Retainers.
- Have an office that is fit for purpose. If you have 10 people you don’t need a 10,000 sqft office.
Image – Ken Teegardin