Payroll ratios what’s too low

In the realm of business payroll management, it's crucial to maintain a payroll ratio of around 55%. However, we often come across marketing agencies with a payroll ratio as low as 45% or 50%, sounding an alarm for potential operational issues. This situation indicates a risk of either underpaying key personnel, putting the agency at risk of losing valuable staff, or operating with inadequate staffing levels. In the competitive landscape, especially in the US or North America, sustaining an adjusted gross income (AGI) allocation of less than 55% to your team poses significant challenges. While managing expenses is a valid concern, striving to keep payroll below 55% may inadvertently strain your team. It could signify a shortage of personnel or, more concerning, an underpayment issue. Despite improvements in the job market for employers, the reality remains that highly skilled employees are in demand and susceptible to recruitment efforts from headhunters, other agencies, and even clients. To foster a thriving marketing agency, maintaining an appropriate payroll ratio is not just about managing costs but also about ensuring the well-being and satisfaction of your team, which is crucial in retaining top talent amid the constant recruitment pressures. Watch »

Is your boat at risk of sinking?

When our agencies are going through rough waters, agency owners have difficult decisions to make. Without a doubt, the most difficult is letting go of team members because your boat cannot carry everyone's weight any longer. But we have to remember our most important role as the captain of the boat....getting the boat to calm waters. Watch »

What’s Your Agency Worth?

Oh the conversations I have had with agency owners about valuations and what their agency is worth. If you're serious about buying or selling an agency, you need to work with a specialist who understands both M&A and agencies (Happy to make a referral if you'd like) but there's a poor man's way of getting a ball park figure. For more information about Drew McLellan or Agency Management Institute – visit http://www.agencymanagementinstitute.com or check out the podcast – Build A Better Agency available at all the usual podcast host locations. Watch »

Factoring in Attrition

As agency owners work on new business projections, they often forget to include any attrition -- which immediately renders their target goals inaccurate at best. So how should you handle the attrition factor when doing projections? For more information about Drew McLellan or Agency Management Institute – visit http://www.agencymanagementinstitute.com or check out the podcast – Build A Better Agency available at all the usual podcast host locations. Watch »

What Are You Leaving On the Table?

What has the greatest impact on your profitability? It's not your lack of new clients. It's how much money you leave on the table when serving your existing clients. It's money that should be yours but you give it away. Watch »

Agency annual planning

Most agencies are about to walk into 2019 without a plan. Your business plan doesn't have to be the Mona Lisa of plans -- we've designed a simple, one-page business plan that will have you heading to an amazing 2019. It's yours for the taking -- so don't go in blind. Go in with an actionable, manageable plan! Watch »

A better way to handle agency bonuses

Drew McLellan from Agency Management Institute talks about eliminating bonuses that are viewed as entitlements by your staff and instituting an AGI based bonus program. Watch »

Agency metric — AGI per FTE

Drew McLellan from Agency Management Institute explains the relationship between AGI and headcount in your agency. Watch »

The most important metric for agency profitability (55-25-20)

AMI's Drew McLellan talks about a financial metric that is an instant health check for your marketing agency. Watch »