Jan 8, 2019
Do you keep bringing in revenue, but barely breaking even? It might boil down to a net profit an issue. In this video, I'll tell you two ways to improve your agency's bottom line.
I was coaching one of my private clients, the owner of a
multi-million dollar agency. He said he just landed a $40,000 per
month retainer client, but his Operations Director says they're
barely breaking even....
After asking some questions, I told him the problem is two-fold. Their delivery and pricing are off and both those are affecting net profit. Here's why:
1. Delivery -- the team is doing way too much. They have good relationships with their clients and want to do an amazing job. However, they're OVER-delivering and that is eating into the profit margin.
To fix this issue they need better processes and systems. Explain to the team the need to be efficient and even incentivize them to do so. Develop and implement Standard Operating Procedures (SOP's) that aid in efficiency and curb over-delivery.
2. Pricing -- The owner is developing pricing and that's a mistake. You need someone who's hands-on with operations and understands all that goes into each project and client relationship.
To fix this, assign someone else to create pricing based on past projects based on the margins on those projects. Pricing should not be just based on what the client is willing to pay. Instead, learn from past projects and bake in the proper margins so you're more profitable.
Two ways to get more profitable: charge more or get more efficient. It's easy to get distracted by a big project or a big retainer. You're so excited by the paycheck and you want to keep the client happy, so you end up doing too much. It's not efficient and it's crushing your profits, sometimes over-delivery can even make you lose money.
Please comment below and let me know what challenges and struggles you're facing. Maybe we'll feature your questions on one of our shows.
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JASON SWENK IS AN AGENCY ADVISOR THAT GUIDES MARKETING AGENCIES THROUGH A PROVEN FRAMEWORK FOR GROWING THEIR AGENCY FASTER & EASIER.
Fresh out of college Jason was off to work for Arthur Anderson, one of the big 5 consulting firms. He quickly realized that he could never work for anyone other than himself. He decided to change direction, launch a digital agency that quickly grew to a multi-million dollar operation working with brands such as AT&T, Hitachi and Lotus Cars. After 12 years of steady growth, the agency caught the attention of bigger agencies and Jason sold it in 2012.
Now, Jason leads http://JasonSwenk.com, a unique media
company & consultancy helping marketing agencies grow &
scale their agencies faster by applying the framework that he used
to grow, scale and eventually sell his agency. Jason has helped
over 10,000 agencies in 23 countries meet or exceed their business
Jason currently hosts two shows that are available for download…
The Smart Agency Master Class Podcast, dedicated to providing tactics and strategies to agency owners and decision makers that cut through the BS, focus on exactly what works and what doesn’t; and
SwenkToday a daily VLOG that documents the entrepreneur journey of building another multimillion dollar business, where he share the latest strategies, and answers the most burning questions entrepreneurs have.
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