In theory, running a project profitably should be simple. You make more on a project than you spend.
But as anyone in the agency world knows, things can be far from simple. Extra demands from a client, a change in direction, another set or two of amends... it’s easy for things to slip.
While the end of a project might feel like a brilliant creative achievement, you do also need to look carefully from a commercial perspective.
Here are six key areas you can focus on to keep each project on a profitable track.
How much time you think the job will take is key. But notoriously difficult, especially if it’s a new project type or new client.
The first thing to consider is who needs to be involved and get an idea from each team member how much time they think they’ll need.
Then you need to consider extra time, over and above the amount you need to produce the work. For example, how many sets of amends are included? Will there be lots of meetings along the way? Are you being asked to present the work at various stages? Add all this together and you have your estimate.
Essentially, an estimate is both your internal time and other expected costs. You need the hours estimated to be an accurate assessment of how long you and the team think it will take to complete the job, as this also helps you accurately plan your agency's capacity.
If it’s a new project for an existing client, you might have some idea of how they work — from those that love a good two-hour meeting to discuss progress or gauge opinion, to those that are happy to brief and let you get on with it.
If it’s a new client then you need to make sure that what you’re quoting for manages their expectations in terms of input and delivery.
Then you need to consider how to build your quote. You may know that a job will likely take 20 hours. But perhaps this is a special situation and you decide to offer some discount. Your quote is therefore a commercial decision. But using the estimate, it's based on a solid understanding of the likely costs and therefore profit.
Top tip: if you’ve done a similar project in the past, you can use this as a guide.
Learn more: How to improve agency estimating and job costing
Clarity is everything in terms of profitability. And this means in every aspect of the job.
The brief, the scope, the deadlines. Don’t be afraid to ask and double check. If a client has asked for a few options, for example, how much are they expecting to see? Design concepts and headline ideas or fully written, designed and artworked options? If they’ve given a deadline, is this for the final, signed-off version, or for them to give initial feedback and amends?
Scope out absolutely every aspect of the project with the client, then you can produce your brief and proposed schedule.
Ask the client to okay this before you brief the project into your teams. Being overzealous at this point is better than missing out a vital step which the client still expects to be included... but that you haven’t quoted for.
Top tip: carrying out regular reviews can help make sure everyone’s on track.
Every agency member’s least favourite thing to do, but one of the most critical parts of keeping a project profitable.
If you’ve estimated five hours for design, but you've spent more time — by how much, and why? Timesheets quickly show you what they’re spending this time on, helping you dig into the why. Did you underestimate? Did the client make lots of amends? Is there a training gap?
Having accurate data helps you keep a grasp on what’s happening. If you log your timesheets in an agency management system, you can set alerts to let you know if a job’s nearing budget, and take proactive measures.
Top tip: make sure everyone understands that tracking time isn’t about spying on them... but about keeping profits coming in, which will ultimately benefit everyone.
Even the most well-researched and meticulously prepared brief can be at the mercy of a fickle client. One who decides they need just an extra page, a few more heading options, to input some ideas from a colleague.
And this is where careful project management comes into play. If it’s a valued client who tends to give you a lot of profitable work, you might decide you can absorb a few extra requests. If they’re essentially rebriefing or adding a whole pile of extra work, you might not be able to incorporate this without extra charge.
Here, you need to be upfront with the client and let them know what extra costs they’ll incur for any more work, and they can take the decision whether to go ahead.
Importantly, you need to update your estimate on your systems, so the right amount of time is allocated to team members. And, if you are absorbing the extra work into the initial quote, don’t be afraid to explain this to your client.
It can strengthen your relationship and could lead to more projects down the line. Just make sure they aren’t expecting too much for nothing... every now and then is okay, more often becomes a bad — and unprofitable — habit.
Top tip: carry out regular reviews throughout the project, to identify where scope creep might be building.
Want to avoid overservicing? Check out the 5 reasons agencies over-service
Capacity planning is important as a strategic part of agency management. To make sure you’re taking on the right projects for your available teams. So in theory, if this is being done correctly then you know you’ll have the right team ready to work on your project.
On a project level, using the right team members is helpful for profitability. Is this something a junior can easily handle? Or is it a more complex task that needs someone with experience? If a team member is in over their head, the project is more likely to come back needing more work and attention... at the cost of profits. Equally, giving a simple task to a more experienced colleague means they’re not free to do the work they’re most suited to.
Top tip: look to your resource planning and capacity forecasting to make sure the right people, not just the right team, will be available for your project.
A debrief won’t miraculously turn an unprofitable project into a profitable one. But it could help your next one be more profitable.
Did everyone have enough time? Was the project delivered within budget? Was there much in the way of scope creep? Were you and the client happy with the final outcome?
Using past projects to guide future ones is a good way of determining time allocation and who works best on what type of project. A quick analysis at the end of each means they can help you work more efficiently – and more profitably – next time.
Top tip: ask for input from everyone involved and make sure you keep notes. There’s no point getting feedback without using it.
Thinking about profitability probably isn’t the first thing on everyone’s mind at the start of a project. It’s the usual balance with an agency of keeping the creative juices flowing while at the same time giving the commercial aspects the attention they need. Getting the behind-the-scenes elements of a project pitch perfect doesn’t need to be arduous... but can take you from muddling through to making profits. Every time.