Looking to increase profits for your agency business? This article, the second in our two part in depth analysis of agency profitability brings you expert advice from Paul Barnes, Managing Director of My Accountancy Place, a business focused solely on helping agencies grow their businesses. We also bring you expert insight from notable agency leaders, Ben Quigley, CEO of Everything Different, and Jon Woodall, CEO of ecommerce specialists, Space 48.
Missed Part 1? Read it here.
Yes Please to More Billable Time
Hiring people with specialist skillsets and failing to use them is like buying a designer outfit and only wearing it in Asda.
Profitable agencies ensure their team spends around 75% of their time doing billable work. One of the major items that eats into this time is admin. Ask employees to identify the top five most time-consuming administrative tasks they have to do each week, then look for smarter solutions. A modern, easy-to-use expenses system can be a worthwhile investment or, for general administrative tasks, hiring an administrator could pay dividends.
Once you’ve eliminated inefficiencies, set suitable targets for billable time. There’s a range of time-tracking software available; these tools can help you identify any other time-eating challenges as well as being able to provide on-demand reporting for clients.
Plan Recruitment for Perfect Performance
You can only deliver outstanding work through exceptional people. However, recruitment planning often falls to the bottom of the to-do list resulting in a last-minute, scattergun approach to hiring. Instead, be more sniper by planning your recruitment strategically in line with your business plans.
At Everything Different, Quigley operates an annual plan for recruitment and retention based on a three-year business strategy. This allows the agency to identify which areas it needs to strengthen, either through recruitment or by upskilling the existing workforce, to meet the needs of the business and clients:
“By anticipating the skills and disciplines that will set us apart from the competition we can spend our recruitment budgets more wisely and avoid potentially costly spontaneous hiring decisions.”
Of course, hiring new employees carries an inherent risk and there’s no argument that recruitment is costly. There’s the time spent recruiting and the expense of getting new hires up to speed which research shows costs an average of £30,000. These risks can be mitigated by working with a specialist recruitment agency that places people with a long-term view, but there are other things you can do to protect your bottom line.
Reduce Churn
One approach is to ensure your fees generate sufficient revenue to cover the risk of hiring new employees. However, unless you can charge a very high salary, there’s still a period when your business will lose money if the employee leaves. The longer you can keep hold of employees, the more money you’ll generate.
Quigley knows the importance of retention not only to ensure his agency secures the right skills to service clients’ needs but to ensure profitability:
“We invest in developing the skills of our people so that they become more useful to our clients. This means we can service different business and charge out for higher levels of skill. Retaining employees is key to this because it’s only at a certain point that the initial hiring outlay is outweighed by the extra value they add.”
Investing in skills is just one way Everything Different aims to reduce turnover. Quarterly 360-degree appraisals and a requirement to complete 37 hours of professional development annually mean employees continuously focus on improving. This allows the business to develop in the right ways to continue to provide top service to clients and to ensure they can continue to charge sufficient fees.
Adopt Tactics That Help Your Team Respond
In the fast-paced agency world, it can be difficult to ensure everyone knows exactly what they should be doing, let alone enabling teams to generate creative responses to client briefs. One answer to this challenge has been to adopt agile working practices, an approach that has proven to be popular with marketing agencies.
By bringing together a team of people with different specialisms, businesses create cross-discipline teams and a melting pot for ideas and knowledge. In diverse teams, it can be challenging to bring together individuals with a range of skillsets. At Everything Different, not only do they employ a variety of experts (like psychologists, researchers and designers) but each of these specialists has different ways of working.
Quigley has found agile working to be helpful in co-ordinating teams to work efficiently together and deliver results across a range of projects:
“By planning meticulously, we get the right skills in place and include all the right people in the initial briefing and campaign planning. Everyone is given everything they need to work to their optimum, whether that be information, technology or skills.”
Not only does the approach help the agency react to client projects quickly but it takes people out of silos and helps them to work more effectively. By delivering greater efficiencies, the agency is able to provide better results more quickly which enables the team to work on more projects and drive more profit.
What Should You Do First?
Deciding which of these tactics to prioritise will depend on how busy your agency is. Are you rushed off your feet? Then you can afford to look at increasing your prices and freeing up time to deliver more work using some of the approaches outlined above.
If you’re quiet, it’s time to consider how to drive in new business and think about whether you need to reduce your headcount. This handy graphic from My Accountancy Place gives you a roadmap to take you through the different options available to take your agency forward more profitably.
Running an agency is hard work. And you don’t do it for nothing. If making some of these changes sounds too difficult, here’s a timely reminder from Barnes as to why you do what you do:
“As an agency owner you have costs to cover, a lifestyle to maintain, a future to plan for, a family to look after. Profitability is paramount to make sure the agency works for you.”
For more guides, tools and resources on agency profitability, visit the My Accountancy Place website. If you would like further advice on building your agency teams, contact We Are Adam on, or download our guide to Employer Branding here.
If you’re interested in working with Adam – please call us on 0207 871 7665 or 0161 359 3789 or alternatively get in touch
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