Most agency owners I know start their own business to create their own destiny aka freedom. They go it alone to do work that they want to do. Or they want to ‘stick it to the man’ because they quite frankly, want to do it better. I totally get that. I started my own agency way back in 2008 because I didn’t like being told what to do, how to work and I wanted to create a place people actually liked coming to work.
Whatever your reasons you have for starting your own agency are perfectly valid and good for you. Here’s the kicker. You can’t achieve any of those things you set out to if your agency isn’t making bank.
And I get that many creative entrepreneurs aren’t always motivated by money. I’ve heard every limiting belief about money you can imagine from ‘people who make money aren’t good people’ to ‘selling feels like selling my soul’ and ‘you have to suffer and work really hard to make real money.’
Bull crap. There’s no shame in making money and making a good living is not a sin. You do creative work, creativity solves problems for business owners and adds value. Why shouldn’t you be rewarded for that? I could go down all manner of rabbit holes right now but I want to stay on task and talk about the money-mangling mistakes that are hurting your agency.
I am an agency veteran and now I work with agencies of all sorts of sizes and shapes, and from my experience, these are four common mistakes costing you money.
You don’t have a path to profit mapped out
What the fork am I talking about? Most of the time and most businesses I meet, not just agencies, are winging it. They rely on referrals and word of mouth for sales, they’re not entirely sure where the next client is coming from and living on a prayer. That needs to change before it changes you.
Mapping out a path to profit means having a well-laid-out planned journey from finding your pool of prospects and walking them on the path to becoming an ideal client. Having a proven process from end to end that you can tweak and refine will set you up for success. That path to profit includes your services, knowing what is aligned with your clients’ needs, and what is profitable.
There are many ways to map this out, start simple with one thing, and here’s another article that digs deeper into your path to profit with examples that will get you going.
Warning: this is going to make you more strategic, more competitive, create more loyal clients, and more profitable to name a few.
You’re not measuring what matters
What’s your break-even hourly or day rate?
What does it cost you to acquire a new client?
What’s the lifetime value of an ideal client?
What’s your revenue per FT employee?
I could ask a dozen more questions like this that you might not know the answer to. I’m not going to fluff around this topic. It’s simple, you can’t manage what you don’t measure. And if you can’t read the instruments you’re going to crash the plane.
If you’re trying to do a turnaround of your agency, trying to grow, go to the next level, you won’t achieve any of your goals if you don’t track the numbers. Scared, worried, anxious? You should be. If you don’t know where to start, send me a message and I’ll share the 5 KPIs you should start tracking immediately.
You’re not fluent in financials
I remember the doom I felt when I had completely lost a grip of my numbers, I didn’t have cash for payroll. There was this restaurant client who hadn’t paid us for the branding, menu design, print and new website. And in my darkest hour, I went to that restaurant, parked my car so customers couldn’t leave and I held the restaurant hostage. Seriously, I did that.
I don’t want you to get that desperate so it’s time to get fluent in financials and create a system around money. You don’t have to eat last if you have a system for cash flow.
How badly you want to change living from month to month and eating last will determine what action you take. Here’s a post with a playbook on creating a financial system for your agency.
Spoiler alert: it’s super simple to get started and you don’t need a degree in accounting.
The agency is running you (and not the other way around)
So you set out to be your own boss and now this roller coaster is the boss of you. It’s time to upgrade your agency operating system and create a business that loves you back. If you’ve got no idea which part of your agency operating system is glitching, I’ve got a nifty little diagnostic tool that’ll show you in less than 10 minutes.
Take the agency gap quiz now and start tackling the bottlenecks keeping you from creating the consistent, sustainable growth and results you deserve. Go to https://www.agencygapquiz.com/ and get the free diagnostic tool now.
The things I’ve talked about aren’t rocket science and it’s by no means an exhaustive list of money-mangling mistakes. But, they’re not expensive to start addressing, it will take a little time and effort though. If you took care of one of these things each week or each month to start course-correcting your mothership, imagine how far along you’ll be in a quarter, six months, or a year from now! It’s yours for the taking.
So are you going to change by design or disaster?