Four Tips to Position Your Agency for Profitability & Growth

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According to a recent Society of Digital Agencies report, 86% of agency executives said they were optimistic about their business's future growth and health. However, rapid growth without proper planning can set your agency back instead of propelling you forward. The most successful agency leaders take the time to think through their company focus, structure, and workflows - identifying inefficiencies up front and implementing a framework for profitability. With that in mind, here are four tips to help position your agency for future growth and success, developed with help from The Agency Operations Roadmap and our friends at The Winterberry Group.

Four Tips to Position Your Agency for Growth and Profitability

1. Use the 20/20/20 rule as a growth target goal

In the first half of 2022, 44% of agency leaders reported that their margins had improved from an already strong baseline in 2021. Agencies that achieved such success, more often than not following the 20/20/20 rule, which sets the goal for your agency to achieve 20% revenue growth, 20% EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), and $20MM in revenue. Bruce Biegel, Senior Managing Partner of the Winterberry Group strongly advises agencies to use this rule as a framework to position themselves for growth in this market.

2. Avoid scope creep

As a business whose value is judged on the quality of service you deliver, it is all too easy for agencies to want to go the extra mile for clients. Unfortunately, this can lead to several pitfalls: clients may begin to expect an increasing amount of work, consuming too many of your resources – for free. In addition, project scope may become difficult to manage, milestones can be missed, and staff may feel overworked, stressed, and demotivated. Agencies that use project management and resource management tools to monitor projects and capacity, consistently deliver better business results, achieve higher margins, and have higher employee satisfaction rates.

3. Utilize freelancers to meet increased demand

Finding the right talent has been particularly difficult for agencies (and many other small businesses) over the last few years. Finding freelancers to fill in the gaps has become a common strategy. In fact, 22% of agencies* cited an increased use of freelancers as a reason for margin gains this year. It’s important to know when and how to manage any form of freelancing. Freelancers are a vital part of the agency business. However, it can become costly if you don’t control their usage. Set up a process so resource managers are notified before a freelancer purchase process is initiated so they can help you make the best decision for the project and the budget.

4. Positioning: fill a niche

Correct positioning should set your agency apart from the competition while remaining focused on the work you do best. The most profitable firms prioritize expertise and serving their clients well, which means having a niche or specific focus that is differentiated and repeatable. Don’t be so narrowly focused that you leave yourself with too small of a pool of potential clients. At the same time you may not want to position on yourself as a one-stop shop. Focus on core offerings and great service, and the growth will come from there.

Want to learn more tips on how to drive growth for your agency?

Join us for our on-demand webinar with industry expert Bruce Biegel, Senior Managing Partner at The Winterberry Group, as he shares how agencies can transform their business by structuring themselves for growth and profitability. Also, to learn more ways to level up your agency to find long-term resilience and success, download our guide: Accelerate Agency Operations: The Definitive Roadmap for Long-Term Success. This roadmap will guide you in the right direction to build impressive project delivery, retain the best talent, maximize efficiency and profitability, and a plan for future growth for your agency.