How to Increase Your Profits in 2022

How to Increase Your Profits in 2022

This Newsletter is intended to help you reduce your stress, increase your profits and pave a path to exit your agency operations in 2022.?And we can help you achieve that.

Effective planning + effective execution = more productive days, less stress, and a clear path to reducing your involvement in your operations

The odds are that you are not strong in one of the areas above (planning or execution).?

Below are some key elements to preparing agencies for the future, and hopefully, your exit from all operations.

Effective Planning: “If you don’t have a destination, you’ll never get there.”?

Planning and forecasting for your agency’s future is crucial for success. Most owners struggle with effective planning. There are several different models you can use to forecast. But most, in my opinion, don’t do the job well for agency owners in 2022.

We use three models to prepare agencies for the future. Our models can help you predict where you will be and how to plan for the following areas: operations/fulfillment, hiring, spending, and profitability, all of which influence the income (and stress) of a Founder.

The three models I’ll be going over with you below are simple and highly effective. We use the Organizational Chart, the Capacity Equation, and Profit and Loss to determine operational planning. These models are built in both the present and future state to display a clear bridge between where you are and where you are going.

You probably have a few of these models built for your agency (if you don’t, you should). But you need to reformat these models for the future; what your agency will look like 3 months, 6 months and even 12 months from now. Formatting these models for the future is how the best Founders forecast and plan for their business to cross the 7-figure, and eventually 8-figure threshold.

Let’s look at these three models and determine what you need to build them out for the future.

The Organizational Chart?

The typical Organizational Chart shows every current role in your agency-from you as the Founder, the CEO, all the way down to your Admins. Unfortunately, most Founders complete this chart once and never look at it again.

An effective Organizational Chart details each person’s role and responsibilities, from the CEO’s vision and leadership responsibilities to your Sales Director’s revenue generation responsibilities, all the way down to the administrative task that your admins cover. Using the Organizational Chart effectively creates accountability in your team. A proper Organizational Chart should be the foundation for standard operating procedures and for managing expectations.

The Organizational Chart can be a highly effective tool for today, but an even better one to forecast the future. In order to help with your forecast, you need to predict how your team will change as you grow and bring on more clients. When forecasting, it’s critical to consider the capacity of each role as you scale.

?For example, if your two Account Managers can only effectively handle 10 accounts each, and you currently have 18 accounts, with a forecast of total 30 accounts in the next 60 days, then you need to hire another Account Manager soon.

Alternatively, you can change some part-time employees to full time, or restructure the responsibilities for your executive team. You get the picture. Creating a future state Organizational Chart will help you see what your organizational needs will be and will help you scale effectively, without any surprises

To view an example org chart, click here.

The Capacity Equation

The Capacity Equation, the second forecasting model, will help you see your agency’s current capacity and what that will look like as you grow. This goes back to the Account Manager example above. How many accounts can an Account Manager handle effectively?

You want to forecast your capacity so you know what your agency looks like at 100% capacity – when you are completely maxed out. And what 80% capacity looks like – where there is room to grow, but not much. You need to know where the capacity threshold is that will require hiring a new team member. This is the threshold where you can serve your clients with quality work.?Above this threshold, you may see a decrease in quality.

You want to have a capacity threshold for each role in your Organizational Chart. Knowing this now will help you prepare for a hiring process of 30, 60 or even 90 days so you can bring on the right people before you cross your capacity threshold and quality starts to decline.

Profit and Loss

Your P&L statement is traditionally a lagging indicator. But it can also be a future indicator of what your agency will spend and earn. This is a logical model that can show you how much profit you will make at each milestone and what it will cost to get there.

As a Founder, it’s up to you to dictate your compensation.?Using your P&L forecasting model will help you predict what you can expect to make as the Founder.

The P&L forecasting model will also help you manage compensation for your team and forecast payroll expenses as your agency grows.

The goal is simple, increase your profits. By forecasting your future P&L, you can begin to model different compensation rates, expenses and other variables to ensure you are running the most profitable company possible.

Transparency

Here’s one last piece of advice – be transparent with your Team. Tell them your growth goals, the roles and the types of people you plan on hiring, and yes, even your P&L. Transparency earns you both respect and buy-in from your Team and it will help you grow your agency. You need your Team’s respect and buy-in if you hope to make it to the 8-figure mark.

Ready to See 8 Figures?

These forecasting models are essential building blocks as you plan your agency’s growth. But if you want to see 8 Figures in your future, you will need help. And we are just the help you need. We work exclusively with Founders of high-growth, high-revenue agencies to bring them through the 6, 7, and 8 figure revenue mark, and we can help you too. Check out our website to learn more today