How to run a profitable agency

Aaron Green

Pleasure and Pain. Love the Pain. Get the Pleasure.

Let’s start with some honesty. Not all creative people are good with detail.

There I said it.

We try and suggest we could be, if we had the time, but really we have never prioritised detail above the creative process. It doesn’t rate as important – or at least, not important enough for us to devote any serious time towards.

We are trying to run a creative business. Our clients are demanding creative thinking. We can’t be thinking about whether the timesheets are being filled in. Well, not just yet… surely…

This presents us with a dilemma. All companies, creative or not, need detail to make them run smoothly & profitably.
They also need to run on schedule, because all companies have deadlines to meet – none more so, than a creative business – who have newspaper and magazine deadlines, campaigns to roll out and printing deadlines to meet. And that is often all in a day in the life of a busy creative business.

We want to spend the time on the things we love. But we also need to ensure all the other parts of the process are not overlooked. We need to accurately bill the client, we need to liaise with the myriad of printers & suppliers, photographers & media people before, during and after the project – firstly to quote, secondly to project manage the supply chain, thirdly to receive, pay and invoice all orders and finally report on that project, both for external reasons (client need) and internal reasons (our own need for greater business understanding).

To put it simply – a company needs to focus on their creative product, but also their service and the delivery of that product. Obvious? Of course…

You may be the best creative in the city. But if you are late, your invoicing confusing or your scheduling inefficient, you are losing money.

Do you care?

Do you mind losing a few hours a day? A few hours a day in a busy studio can be the difference between treading water and a good profit.

Here’s a quick example:
A studio management product like Streamtime can save an hour a day per person – proven.
Let’s say your agency’s rate is $100 an hour
(most are usually far higher).
Let’s also say your agency has 10 staff.
But for this example, let’s just count 8 of them, and let’s only count 30 minutes of time lost per person:
• In this example – a day equates to $400 lost billings
(8 x 30 mins = 4 hours x $100 per hour = $400)
• Per week, this equates to $2000 (5 x $400 a day = $2000)
• Allowing for one month worth of holidays (4 weeks)
gives you $2000 per week x 48 weeks = $96,000

If you are fine with losing $96,000 straight off your bottom line, then you probably aren’t reading this anyway. From eight staff members saving 30 mins a day, you have $96,000 at the end of the year. This all sounds exciting, but we know that the pleasure of extra profit and more efficiency seems too far off – people often stay with the pain of old or bad habits.

In my case, my agency was losing approximately $240,000 a year – which I didn’t even know about. We were profitable, but sloppy. We were creative, but that was about all we had to offer. Our clients loved our work – but put up with our service. They never said anything at the time, but many clients left. Too many surprises at invoice time, too many deadlines only “just” made and no ability to report on any major project – were just some of their complaints when asked.

Because we were successful, and constantly won new business, we had a big front door – but we also had a big back door. We just assumed this was par for the course. We assumed that clients were always destined to come and go – until we got Streamtime.

It sounds cliché – but Streamtime saved us. It added another string to our bow. We started getting known for our service and attention to detail – not just our creative. We were also able to work out who the profitable clients were, and who the real stars of the company were.

All the slippage that we had never calculated showed up in Streamtime and the results were staggering. They were all small amounts, but their collective amount was in the thousands per month. Embarrassing.

The pain of change and all that initial input was worth it. We finally had the pleasure of real time reports and monthly stats showing us some surprising facts. We learnt how we really made our money and the clients that were the most profitable – many of which were a surprise to us. It also highlighted which staff were actually coasting versus which staff deserved an immediate pay increase.

Every creative business knows they need a good system – in the same way that everyone knows they should attend a fitness club to keep fit. And just like getting fit, there is some initial pain to go through before you see the real results. All I can do is encourage you to get your company financially fit and push through the pain until you start to see real results – because they do come and they are often quite profound.

Nothing like the pleasure of profit to ease a weary mind…

Phillip Sunderland
Former founder of Q.
Director of Streamtime.

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How to run a profitable agency