Many agency owners want their agency to be more stable, more profitable and more predictable. The truth is — you can have all of that but it doesn’t happen by accident. You’ve heard the expression “if you want it to matter, measure it” and that’s absolutely true.
Here are some metrics you should consider tracking on a consistent basis as you grow your agency.
- Timesheets completed (all time, billable and non-billable): Your goal should be 95% or better. This means yours too, agency owner.
- Gross billings: No specific metric but measure it against your annual goals.
- AGI: No specific metric but measure it against your annual goals.
- AGI ratios: Your AGI should be spent in this approximate ratio
- 55-60% People (all expenses tied to your staff. Salaries, benefits, payroll taxes etc.)
- 20-25% Overhead (Day to day operating expenses like rent, travel, professional fees, etc.)
- 20% Profit (EBITA)
- Profitability by client (It’s reasonable to shoot for a 10% minimum)
- AGI/FTE (your goal is $150K in AGI for every FTE)
- Write up/offs (are you adding profit to jobs or writing off time. Track both)
- Billable % (Overall staff billability should be 75% or higher)
- Utilization – what you actually billed (Overall staff utilization should be 60% or higher)
- Employee Satisfaction (On a scale of 1-10, how likely are you to recommend working at the agency to a friend?)
- New revenue ratios (70% of new revenue should come from current clients)
- New clients/sales: No specific metric but measure it against your annual goals.
- Average spend per client (you should set a minimum acceptable quarterly spend)
- Client retention (Goal should be 80% or higher)
- Employee retention (Goal should be 75% or higher)
Is growth that simple? All you have to do is measure what matters? Absolutely not. But if you don’t track your metrics and adjust your plan accordingly — growth is that much harder.
Savvy agency owners run their shops proactively, as opposed to reactively. It’s almost impossible to do that without the facts. It’s a little bit of a pain to set up the reporting up front but once you do that, it’s incredibly easy and quick to check those metrics on a consistent basis and make calls based on data, rather than gut.
Want 2017 to be better/different? Start by measuring what matters.