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A simple prescription for creative agencies
by Paul Shaw

Running a successful project-based agency can be challenging. Sometimes you can be so caught up in winning and delivering client work that you forget to look at the bigger picture. As well as being effective for your clients, the work that your agency does must be profitable. The best way to ensure this profitability is to manage your projects with a commercial mind using 5 guiding principles:

1) Ensure that you quote properly. It’s amazing how often figures can be plucked out of thin air, this can destroy any chance of profitability before the project has even started. Ask yourself 1) What do we need to do? 2) What kind of people do we need to do it? 3) How long will they need?

2) Be accurate about what is included. For example how many rounds of changes are included in the design element of the job? Being upfront will enable you to push back to the client when they ask for more and charge them for it rather than doing the work for free.

3) Brief your team properly so they know how long they have to work on the project. Ask them to focus on the doing the best job they can within the time given. Once they go over the time they have been allocated, they should be mindful that their hours are no longer chargeable. They are effectively working, from your point of view, for free!

4) Use timesheets to track your time against budget. Compare the progress on your project with the percentage of the budget used and this will allow you to take action before it is too late. It will also allow you to predict your recovery rate. One client we worked with spent £80,000 of time on a job and yet could only bill the client the agreed £20,000 so their recovery rate was 25%; they were only paid for one quarter of the time they spent on the project.

5) Review profitability at the end of each project. Simply ask how much time did you get you paid for and how much time did you spend? If the job was less than profitable what went wrong? Did the client move the goal posts or did your team make mistakes? Did you underquote? Were your team so caught up in their creativity that they over delivered? Whatever the reason, learning what went wrong can help you make changes to improve profitability next time.

Agencies quite often fall into the trap of measuring the success of a project almost solely on how well it is received by their clients and of course we all want our clients to be happy. However, agencies should also gauge every project on its profitability. The good news is that effective project management based on the 5 guiding principles above isn’t complicated at all. Keeping a commercial, not just a creative, eye on all your projects will help your business grow and thrive.

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