The costs of running an agency can fluctuate a lot more compared to other businesses. That’s because your variables are often dependent on the projects you take on. For some clients, you may have all the in-house resources you need; for others, you may outsource freelancers or purchase software and services that help you build the content you’ve promised to create. While there may always be surprises, and some months are going to be better than others, if you’d like to stay on target, you should have a clear overview of what your expenditure looks like. By doing this, you can charge what you’re worth and keep an eye on those sneaky little added costs.
Where are your hidden costs?
A little investigation into your outgoings could help you uncover the hidden costs that are totted up on your bill every month. You may think you know how you’re spending your budget, but have a look at this list and see if you could make some significant savings.
1) Punching above your real estate weight: There’s no shame in utilising modest office space while you grow your business. Don’t sign up for the long lease on the expensive commercial building in the trendy part of town if you can’t afford it yet. The lean years are all part of the hustle, so embrace it and don’t move into a location if it’s not yet financially sustainable.
If, however, your current location has gone up in price or you’re struggling to justify the spend, it may be worth having a conversation with your landlord and seeing whether you can get a discount. You never know until you ask.
2) Review your full-time hiring structure: Sure, you want to build the dream team. But, in the line of work you do, you may be encountering that the conventional employment contracts no longer apply as much. Designers, developers, and content creators are quite happy to freelance for the right rate. So before you offer a salary package complete with all the other expenses that you have to take on for a permanent hire, evaluate whether it may be more lucrative to get someone part-time or on a freelance basis.
Another way to trim the human resource cost is to outsource tasks that don’t need a permanent in-house employee. This could be your accounting, HR, or admin staff. If it’s cheaper to have a third party oversee those tasks, then be sure to make use of that service.
3) Obsolete tech and equipment: Do you really need that bulky printer in the office? The one that requires maintenance on the rare occasion that it’s secretly used by Glenda from marketing to print out her daughter’s birthday invitations? If you have kit that is no longer serving a purpose, it’s time to liquidate it.
4) The price of misquoting: Understandably, as your business grows, competitive pricing will be at the forefront of your quoting process. But, sometimes, you may be compromising yourself financially by not managing your customer’s expectations. It’s important to align your deliverables with what is actually feasible for you to produce in a specific timeframe.
If you’re going to outsource extra help or the client is requesting amendments repeatedly, then other tasks will have to be put on a back burner while you prioritise that one project that simply refuses to budge out the door.
To avoid this scenario, you should consider putting processes in place that outline how you’re going to provide the agreed service and what extras are chargeable. Have a checklist of questions that ensures you get all the accurate data from the client before commencing any work. By understanding what success means to them, you will avoid wasting time and money on backtracking to fix errors as a result of omissions or miscommunication.
Are there opportunities to make more money?
Agencies have a lot to contend with these days. As clients try to curb their own expenditure, they can often look to your services as negotiable or flexible. For this reason, you must be able to confidently show the value you add to your customer’s business, but you shouldn’t leave yourself exposed by only relying on your core offering as a means for income. If your monthly workload is primarily project-based, you could hugely benefit from bolstering your profits by adding additional revenue streams such as:
- reselling hosting If you’re building websites, you’re almost certainly dealing with hosting in one aspect or another, through maintaining the relationship with the hosting provider on behalf of the client, it allows them to offload many of the menial tasks they have. It may also be in your interest to find out if your favourite hosting provider offers a referral reward scheme; it only makes sense if you’re funnelling customers to them that there should be something in it for you. At Nimbus, we have great partnerships where we offer a percentage of the profits for every ten clients you refer to us.
- know when to offer a retainer Project work is excellent, but it can be fleeting. If you find that a customer is repeatedly coming back to you for extras, propose to sign them up on a retainer. Show how much time you are dedicating to them every month and demonstrate how paying a monthly fee for your services might be more beneficial for them. It will also help you to project your incomings better and get more impactful results for your client as you can apply more of a longterm strategy to the work you do for them.
- website Maintenance It’s essential for your client to understand that designing their website and making it live is a complete service. Once you’ve done this, any additional changes, troubleshooting assistance, amendments, improvements, and plugin updates are chargeable. Yes, it’s good customer service to offer support after you’ve completed the design, but you also don’t want to be taken advantage of. Offer a reasonable maintenance plan that your customer can agree to in exchange for your continued assistance. This ensures that their website is always in tip-top shape, and you’re not overstretching yourself.
Let’s be honest, balancing the books is not the most enjoyable part of running an agency or at least, it’s not something you want to stress about every month. For your business to grow and move forward, you need to establish a steady income flow, a loyal customer base, and effective processes that can be templated and customised for each new client. Cutting out any excess expenditure and finding ways to supplement your income should be one of the first things you address as this can put you in a comfortable position from which to plan for the future and focus on acquisition and retention.