There’s data, data everywhere and not a drop to drink.’
That may be a misquote but I think it captures perfectly the challenge of surfacing the right data in an organisation. Especially one as inherently straightforward as an agency.
But then there is also a truth in the fact that nothing is as simple as it seems and the need for data, and the right data also varies wildly depending upon stage.
Exactly what you should be measuring is one of the most common questions that come up during agency strategic planning workshops and so in this post, we want to go some way at least into covering what you be focusing on to best steer your growing agency through the various glass ceilings to bigger and better.
The best way then to look at this is through the lens of headcount so let’s look at what a ‘base case’ looks like and then how you add layers as you grow to ensure you stay on top of the moving parts best and enable truly data-informed decision making.
One – 12 people
In the initial stages of growth, it is important to establish good financial discipline and ensure you generally have financial reporting software in place (such as Xero/QuickBooks/Freeagent) to ensure you have visibility of a monthly profit and loss. This will give you a basic view of what you are earning (what you invoice if you are an agency) and what you spend to deliver that income in any given month.
It’s NEVER too late to do this well and alongside it, you should set targets for:
I would also start to add in a measure of client happiness and staff happiness here too – to do the former you can run an anonymous survey on something like Google Forms and the latter via a quarterly phone call meeting.
13 – 25 people
At this stage, you start to become a little more distant from some of the client work and communication. You can’t be everywhere, and neither should you be. You also have more people and the beginnings of organisational structures that create specialist teams. This means you should start to think about adding such things as:
- New business targets
- Retention targets (starting to record the reality of this)
- OKRs – cascading down the top-level ‘company targets’ into teams and individuals rather than a structured process.
- Capacity planning – how many hours do you have to sell each month.
- Salary and related costs as a percentage of revenue
25-40 people
By this point, you are likely closing in on £3m a year in billable hours revenue so it pays to start getting more detailed with your target setting and management information (MI) and Business Intelligence (BI).
By this point, you should also be tracking:
- Utilisation.
- Revenue per head
- Upsell and cross sell growth and targets.
- Employee retention
41 – 99 people
As you scale further you should start to build a more detailed picture of the moving parts. Your overheads will also be more substantial by this point, so it is your duty to ensure that you understand the flow of cash much better. For this reason, you should be adding:
- Cashflow forecasting
- Reforecasting session as part of budgeting every quarter.
- Sales pipe details such as Marketing and Sales Qualified lead levels, pipeline value, sales velocity etc.
- How probability adjusted pipe plays into your wider forecasting.
- Net Dollar Retention.
99+ people
By now you’ll have valuable enterprise and internal resources across financial, operations and sales to oversee a much more resilient and predictable approach to reporting BI and MI and so you can now think about adding such things as:
- CAC
- Client CLV
- Proposals sent and win rate and therefore model true forecast pipeline value.
- Scoping accuracy
- Profitability by team and by client
Is there anything else you’d add or have found useful on your own growth journey?
