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Agency Food: The Cost of New Business www.theagencyworks. co.uk

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Agency Food: The Cost of New Business

www.theagencyworks.co.uk

We spoke to…

www.theagencyworks.co.uk

When it comes to financial challenges, at present there are not only operational hurdles to overcome such as over-servicing, but also ambitions to increase profitability and forecast more accurately.

Agency challenges

www.theagencyworks.co.uk

Planning Stage

• Accurate cost forecasting• Plan for the profit that is required by the agency• True understanding of target billable hours in the agency

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Example: Profile 10 man agency

Cost forecast = £720kProfit required = 20% (£144k)Income required = £864kTrue utilisation rates = 60%Hours available in the year = 10,125 hrsAverage hourly rate = £90p/hIncome capacity = £911,250

Written off income = £607,500

*Calculations based on 45 weeks in a year

What measures or processes can be put in place to support this vital revenue stream?

The top 5 new business challenges for agencies are:

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Winning New Business

• Agencies reporting 1 in 3 success rate• Decreasing client budgets less of an issue in

the first quarter of 2015 (16%) compared to the last quarter of 2014 (23%)

• 43% have reduced their rates by up to 20%

Is money really the object? Could lack of time to prepare mean agencies aren’t giving themselves a fair shot at success?

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Focus on new business fixes

• Monitor spend• Stick to calculated rates & value the

agency’s worth• Use a resource management tool

*37% in 2014

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New business resource

• 62% of agencies have a dedicated new business resource• The remaining 38% rely on whoever has the right experience

for the client enquiry• 53% said they sometimes, but not accurately, will earmark

funding to new business

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Agency Food

Search ‘Agency Food’ on LinkedIn to join the discussion group

[email protected]

The Agency Works, The Cottage, 37a Station Road, Lutterworth, Leicestershire, LE17 4AP

www.theagencyworks.co.uk

01455 553 246