Digital agencies are great at understanding analytics. However, many creatives neglect their own data. Determined to deliver for their client’s, they often overlook working on their own business. Therefore missing the opportunity to achieve improved results through better financial data.
Step 1 – Take action
How can you improve what you already have? Most agencies will have some method of measuring performance. These should be the building blocks for improving results.
To achieve momentum you must take action. Identify the right person to drive this internal project. This person needs to be a senior figure. Has unrestricted access to company financial data and has the drive to implement positive change.
As Michael Gerber wrote in his book The E-Myth Revisited ‘work on the business, not just in it’. Many businesses go wrong by not taking enough massive action to break the status quo.
Step 2 – Crank things up
As a minimum agency owners should be meeting monthly for a management meeting Where the previous month’s financials which include, the profit and loss account and balance sheet are reviewed.
How to turbo charge your data
Start with a profit and loss forecast. Review your p&l report and project the next quarters income and expenses. At the end of the month, you can review the actual results vs forecast. Now you can answer questions such as what has worked well? What hasn’t worked well? Why have we over or underachieved against target?
Excel or software?
Excel still seems to be a hugely powerful and popular tool when it comes to data analytics. Businesses often don’t utilise the full power of accounting software such as Xero.
Xero has over 700 apps in its marketplace which can turbocharge the product and provide even better financial data. Budgets and forecasts can be input directly into the platform. This means reports and insights can be prepared at the click of a button. Therefore not having to spend hours preparing manual reports.
Reporting apps such as Futrli, Fluidly, Fathom and Float can provide more powerful bespoke reporting. With an improved User Experience.
The devil’s in the detail
Effectively managing the micro analytics will bring improved performance. Agencies review Google Analytics, or social media engagement for client campaigns. Agencies must bring this level of detail to their own business.
The cash flow forecast
Turnover is vanity, profit is sanity, but cash is king for your business. You’ll likely be familiar with this phrase. We recommend having a cash flow forecast which is constantly reviewed and amended.
The good news is that software such a Float integrates with Xero and can provide intelligent reporting. This means you don’t have to key data manually into Excel.
The forecast will help you micro-manage cash flows, providing better financial data. Allowing agencies to predict gaps in future cash flow. Then take necessary action before problems arise.
How profitable are your projects? How efficent is your team?
The top agencies will constantly be reviewing this data. Then making the improvements which will, therefore, have a positive impact on the business. These changes may include:
- Increasing price or minimum project value
- Removing unnecessary expenses
- Staff training
- System improvements
- New technology
Having a structured agenda at the management meeting. Reviewing the key reports, then taking action to implement positive change will bring better results.
Take action today
If your agency could do with a boost? Please come and have a chat with Accounting Inc.
We offer a free business health check. So join us for a virtual tea or coffee. We’ll discuss where you are at now, what you want to achieve and how we can help you get there.