Profitable Growth in Any Market Situation

Order Volume and Resources Should Work Together Consistently

The agency business is volatile. Growth is one of the major hurdles for traditional agencies. Order volume and resources should work together consistently. Planning ahead should not be a guessing game but backed by numbers.

Of course, agencies depend on unpredictable order volumes. Long-term projects and follow-up contracts stabilize the financial situation, as does the conclusion of maintenance agreements. But it is important to react promptly to changing market conditions and keep the financial cash flow in sight. The best approach is to be prepared for various scenarios.

The Usual Questions

• When can I hire new employees to handle the increased workload?
• When do I expand existing office space to accommodate new staff?
• When is the right time to invest in marketing and sales to support growth?
• When do I invest in new software and hardware?
• When do I invest in knowledge, training, or new technology to adapt to constantly changing market conditions?

Standards and Processes

Quality does not necessarily come with higher costs — in fact, it often means lower recall and warranty costs, and fewer revision cycles. Standards and processes allow you to work more efficiently and deliver faster.

Many Clients, Equal Success?

Every agency does things a little differently. Some focus on large accounts with specialized teams, others concentrate on public funds, and still others prefer working with the private sector. What they all have in common is that they depend on project business and clients.

And not every client is a good fit for the agency. Some clients are demanding and loud but tie up resources unnecessarily without contributing significantly to revenue. Other clients are quiet and reserved but contribute to the company's success. Identifying these clients is not that difficult. Learn more in the section: Customer Portfolio Analysis.

Know Your Numbers

Knowing your company's numbers is essential. Every entrepreneur should have the following figures at hand:

• How are revenues developing in the short-term and long-term trend? Is growth on track?

• Variable costs and variable cost ratio: How are variable costs developing relative to revenue? Is the share of variable costs rising or falling?

• Gross profit and gross profit margin: How high is the margin, and is it growing faster or slower than revenue? Was revenue growth perhaps purchased too expensively?

• Fixed costs and fixed cost ratio: The higher the share of fixed costs, the lower the entrepreneur's flexibility. Are fixed costs growing faster than revenue, or is it possible to reduce the fixed cost ratio?

• Operating result and return on sales: What remains after subtracting variable and fixed costs? Is the margin rising or falling?

You should be able to retrieve all these figures. If not, ask your tax or financial advisor. Or finban 🤓

Plan with Scenarios

Project business is volatile. Some projects get postponed, others you've been waiting for months despite confirmation, payments are not released or arrive late. On top of that, you're planning to implement new software with monthly payments and expand office space or hire a new employee. How are you supposed to keep track of everything?

This is where scenario planning comes in. The approaches are varied. Simply find a variant that works for you. In the past, we used Excel, now finban.

What's Next?

All this data should be available to you. Grab a spreadsheet or your financial or tax advisor and take action: make better business decisions. Or: Try finban — 14 days free 👋🏼

In any case, it is important to keep a close eye on your finances — you simply make better decisions.