Show Notes
Most agency owners didn’t start a business because they wanted to look at spreadsheets – they started it to do the creative work. But the agencies coming through a hard year are almost always the ones whose owner is closest to the numbers. In this episode, Callum puts Gareth in the hot seat on why your accountant is not watching your numbers for you, the three numbers that belong on every agency dashboard, why the net profit figure agencies quote is usually not the real one, what utilisation actually tells you about capacity, and why the Monday morning version of this job starts with a piece of paper rather than a dashboard.
In this episode
- Why the pattern is so consistent – the agencies that are well run are invariably the ones whose owner is close to the numbers, and where an agency is struggling the finances tend to be the thing being avoided, because they are painful viewing
- The mentality Gareth sees across UK small agencies: the belief that your accountant is keeping an eye on the numbers for you – and why that is fundamentally not true. Accountants are scorekeepers, they are not running the finances of your business for you
- The first number, cash in the bank – what operating cash actually means, why you need a floor you never let it drop below, what big outgoings to build in before you read the figure, and why two months of operating costs is the minimum before the runway gets risky
- The second number, profit – and why the net profit figure agencies report is so often clouded. If the directors are paying themselves in dividends, a reported 30-35% is an accounting margin rather than a true commercial one. 10% is the floor, 20 plus is better, and the 30s if you can get there
- The third number, utilisation – time is the agency’s currency, 70-75% chargeable is what to aim at, and why 100% is not the goal. Plus how embedding AI lifts utilisation for free, because every hour saved on unbillable work goes straight to margin
- What separates the agencies that are good at this from the ones that aren’t – awareness is only half of it. Nothing changes if nothing changes, and the owners doing this well are the ones acting on what the numbers show, including the difficult decisions on people costs
- Why almost every other priority is downstream of the numbers – you can only build a strategy once you know where you actually sit, and knowing which service is the biggest is not the same as knowing which one is the most profitable
- Where to start on Monday morning – make the commitment, start with those three numbers, and don’t make building the dashboard the job. Start with a piece of paper, not with AI
