Agencies, how can you enjoy stable growth?
Not wanting to roll out the cliché about unprecedented times, I think it's fair to say that the world has gone a little bonkers financially. January 2022 boasted messages about the biggest marketing budgets to date, whetting agency appetites about the opportunities for growth.
So what now, do we abandon all hope or are those opportunities still within grasp? Or perhaps, your agency has enjoyed growth in 2022, but it’s happened so quickly that you now want to get a grip and build on your success in a considered and sustainable way. No matter where your agency's at if you're hoping to grow you need to do it safely and sustainably. Are you ready?
In this article, we offer hard-earned advice from working with 100s of growing agencies, on the key things you need to consider and the business intelligence you need, if you’re gearing up for growth.
Use business intelligence to prepare for growth
As you know, or may have learned from experience, aiming for growth is a different mode to the day-to-day. When an agency is stable size-wise, it’s about keeping things running as efficiently as possible, with no real gear or directional change. When an agency is actively going for growth, it’s more about pushing things forwards. It’s not just about making processes leaner and implementing efficiencies, but driving the agency’s entire position in the market. Where are you now, where do you want to be and what is your plan to get there?
You can’t answer these questions without data so you have to prepare for growth. Stable and continual growth won’t just happen with a couple of big client wins. It’s about your agency’s direction and long-term ambition. You need solid business intelligence to put a growth strategy together and continually evaluate success.
We cover more on the type of data you need to look at below, but first and foremost it’s important to consider the important role visibility of your agency’s data plays.
Understand where you're making money
Before you plan for growth you need to know what you’re currently doing that’s working. Growth doesn’t just come from more work. If you want to grow your profits and not just your headcount, you need to have clarity on which project and client types are currently delivering a profit - not the ones that give you the most work, but the ones that give you the most return.
If you just get more work and this work turns out to be less profitable, then you could find you grow your resource bill and your turnover, but not your profit. And you’ll create a bigger agency with more resources to manage, more projects to juggle, and more risk but with no more profits.
Set financial targets and a resource plan
Next in your plan, you need to map out what growth looks like to your agency. What do you want to be turning over, and what should this look like profit-wise?
Once you know the project and client types you’re after, and you have some realistic financial targets you can ask yourself what you need resource-wise to get there. Rather than hiring every bright spark that you come across, you can carefully consider your resource mix. To win these types of projects and bill X million, how many more developers do you need, how many designers?
Using data to drive these decisions and mapping it out is the only way you’ll grow in a sustainable way. Without this plan, you could end up churning through really great employees and never have the right skill mix to fulfil your profitable project types. You’ll end up chasing work that helps keep everyone utilised, rather than going after work that you’ve identified has the biggest return.
Get the right system, as soon as possible
If you’re serious about growth and have imminent timescales to start, then it’s beneficial to you need to start collecting data get the right system now, rather than when you’ve grown. Many agencies wait until they’ve grown to get the right agency management system in place. But of course, if you’ve already grown, have you had access to the data and business intelligence needed to produce your growth plan? Do you know which projects, clients and skills are profitable and what a realistic target is?
Real-time intelligence from a unified system brings a massive boost to productivity, speed, error-reduction and client service. The right system can have a transformative impact on your agency.
If you already have a system, ask yourself whether it can scale with you and show you what you need to see. A complete agency management system will help you steer your agency and grow with you. You will have black and white facts on what’s working and what’s not and you’ll get visibility on crucial metrics in core areas including:
- Staff utilisation
- Project health
- Improving efficiencies
- Resource management
- Forecasted profit and loss
- Pipeline and billing
All this will be illuminating data when it comes to plotting and managing your growth. And as you bring in more work and grow the team, the right system will highlight issues such as underestimating and over-servicing.
Gain control of financials
Of course, now you’ve set yourself targets, you need to be able to track these so you need financial visibility within your agency. It sounds a little obvious, but knowing you need visibility and getting visibility on what you need are different things. Set out what you need to see financially and make sure you can see it.
Our partners, The Agency Works, tell us that when they’re consulting, they find that agencies often report on things because that’s the way it’s always been done and because the data is available, rather than because it’s what they really need to see.
So what do you need to see and how can you access this data? Does it require a sit-down meeting once a month, or do you have continual access to the financial information you need? Having live visibility of project and agency financial information ensures you have more control over what is going on, including forecasted profit, billing plans and actuals vs budget.
Get visibility on project progress
If you’re serious about growing profits, you can’t just win work and cross your fingers that the project is running according to plan. Managers need to constantly assess progress. This is the case when you’ve plateaued size-wise but when you’re growing, this is more even crucial because as you take on more projects there are more plates to juggle. Maybe so far, you’ve managed to get by with manual project updates, but as you grow, you need to have an ironclad process for getting project visibility, one that doesn’t rely on ad-hoc manual updates.
Make sure you can see, preferably in real-time, whether projects are on track budget and timescales-wise. Without this visibility overserving can spiral out of control and hiccups evolve into big issues. You can also lose your grip on calendar bookings as work runs over, causing delays on other tasks and stopping you from effectively managing resource capacity.
Get on top of your pipeline and capacity
You need to have visibility of your pipeline. Ideally with the opportunity to tentatively schedule work, along with visibility based on how likely it is to land and how it will impact your capacity. To grow, you need more work and you need to know when it’s landing so you can plan your resource accordingly. Using expensive freelancers, or having under-utilised employees will eat into your profit, so planning around your pipeline and keeping your pipeline stuffed is key.
Having a grip on your pipeline also helps you manage client expectations. If you wait until a project go-ahead to consider the resource required and schedule the work, then your clients will find they’re waiting a long time for delivery, or you have to use costly freelancers when you have the skills in-house but they’re booked up. This problem intensifies the more projects you run and the busier your calendar bookings become. Plan ahead and keep the relevant people informed about what’s coming up.
Hopefully this article has given you valuable advice about how you can use data to plan, reduce risk and increase your chances of enjoying lasting growth.
If you would like to know more about how Synergist agency management system can give you the visibility and data you need to support your growth, why not check out our Project Profitability feature tour.