Everyone wants to have a successful agency, but just how do you go about maximising your profitability? I was lucky enough to be invited by The Wow Company to attend Building A Super Profitable Creative Agency by Spencer Gallagher, who has been there, done it and bought the t-shirt.

Building A Super Profitable Web Agency

  1. Ensure you have good processes for delivery. Avoid over-servicing and the dreaded scope creep at all costs.
  2. Be efficient at micro-managing schedules & resource. Check your schedules several times a day.
  3. Charge out all of your billable resource, including account management and project management.
  4. Don’t compromise or discount day rates to win business.
  5. 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).
  6. Set out SLAs and any retainers before starting a project; it can be very awkward to approach this subject retrospectively.
  7. Have the correct systems in place to record and report where time is spent.
  8. Make sure you have the right team doing the right job.
  9. Aim to hit hit 58-63% wage cost to GP.
  10. Each billable resource should be pushing through between £5k-10K per month.
  11. Top agencies will bill £100K per person on average, across the whole business. Good agencies at £65-75K.
  12. Use freelancers on a project basis; don’t have them sitting around the office doing nothing while they bill you on a daily basis.
  13. Directors . Too many cooks spoil the broth.
  14. Spaghetti & Sales consistency.
  15. Take on the right deals at the right time by having a killer pipeline and strict qualification for clients and projects.
  16. Ensure you pitch to win even if you don’t think you will get the work.
  17. Keep the team motivated.
  18. Know your worth and have the confidence to sell higher day rates.
  19. 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?
  20. Get your cash flow in check.
  21. Have an office that is fit for purpose. If you have 10 people you dont need a 10,000 sqft office.

Image – Ken Teegardin