Protect your profits

A lot of money leaks out of your agency (EVERY agency!) somewhere between the potential for a project, and actually landing in your account for you to use.

Now is the time to find and fix these margin leaks to avoid wasting more of the money you’ve worked so hard to earn.

This was a key mission of the most recent Transformational Quarter I ran with agency founders (the next one starts next week!)

I developed an approach for the members to use to seek out all the ways profit was leaking out of their business.

Here’s a an early rough diagram I did:

The biggest leaks, on the left, are strategic. These are bigger, but take much more work and time to fix.

On the right are dozens of small leaks in four main groups.

These are tactical, and can be addressed quickly in your current work. This is where to focus at first.

If in doubt start in the ‘under-selling’ area, to fix work you’re about to pitch for. This contains all the possible ways you don’t do quite enough in the sales and marketing process to protect your margin, and includes things like the way you price the work, handle negotiations, shape the work, and so on.

This simple diagram can provide a useful starting point for you to use in your agency.

But there’s a much more detailed full model, breaking down each of these areas into dozens of specific things to look for and work on.

If you’re a Convivio member, you can access this diagnostic tool in the Agency Leaders Playbook on the Find and Fix Margin Leaks page. (And if you’re not yet a member, join !)

After using that, you can delve into fixing the leaks. For example, there’s a whole section on Pricing Work Usefully.

Task your management team with identifying one source of leaks a month and plugging it.

That way the quest to constantly improve margins gets designed into the way your agency works, and you’ll keep growing your profitability.

I promise you, it’s so much more enjoyable to run an agency that is very profitable, because that makes everything else possible — so growing and protecting your margins will be the best thing you ever do as a founder.