How misaligned finances and your psychology are "killing" your agency.

Co-authored by ??Valentin Kuznetcov and Romans Ivanovs .

No matter the strategies, if you haven't fixed the foundations and you haven't fixed yourself, you're in an uphill battle. And I don’t say that in a condescending way…

There are way too many agencies that think growth is about pushing for more. For more clients, bigger teams, fancier tools. But in business, growth follows financial clarity. And financial clarity follows psychology.

I recently had deep dive with our Financial Consultant to agencies ??Valentin Kuznetcov into:

• Running a business based on gut feeling
• Hidden link between psychology and finances
• Optimisation vs. Growth: Which stage are you in?
• What should you do with profit?
• The role of a CFO in your agency (And when to get one)

Also you can watch the entire conversation here if you want.

The Danger of Running a Business Based on Gut Feeling Instead of Data

There’s a dangerous habit I see all the time with agency founders – running their business based purely on gut instinct.

They open their bank app, check how much cash is sitting there, and make financial decisions on the spot. No structured forecasting, no planned allocation, just vibes and prayers.

As Valentin put it:

“A lot of the decisions are made on an ad hoc basis. The problem? That’s not financial management. That’s gambling."

• Hiring because you “feel” like you need more people? Bad idea.
• Pricing based on what competitors charge? Weak strategy.
• Investing in tools because they “seem” helpful? Costly mistake.

Instead, agencies need to run their finances using Root Cause Analysis (RCA).

What is RCA?

It’s the process of identifying what’s actually causing your financial challenges, not just reacting to symptoms. It's also about comparing what was planned with what actually happened and then figuring out why the discrepancy occurred.

Successful agencies don’t JUST look at their accounting reports like a history book. They treat them like a PERFORMANCE dashboard.

Numbers don’t lie. But they only tell you the truth if you’re willing to look at them objectively.

This shift from reactive accounting to proactive finance management is what separates high-growth agencies from those stuck in the same cycle year after year. Instead of making decisions based on gut feeling, you’re operating with data-backed clarity, knowing exactly what levers to pull to improve performance.

Now, let's do a little exercise.

1. Look at the image below and ask yourself: what agency are you? A? B? C or D?

2. If you're not Agency A, what do you need to do (be) to become one?

The Hidden Link Between Psychology and Finances: Your Business Reflects Your Mindset

Are your business and finance problems purely numbers-driven? Not enough revenue, too high expenses, unpredictable cash flow, etc.

Working with founders and their teams our experience shows that finances are a direct reflection of your psychology. And we know you know it. But the question is why do you still overlook the problem?

Agencies assume that once they hit a certain revenue number, all their problems will go away. But if your internal state is chaotic, your finances will follow suit. If you’re reactive, indecisive, or avoid hard financial decisions, your numbers will expose it.

Where this shows up in business:

• Scaling too fast without structure comes from pressure, not strategy.
• Social media pushes rapid growth, pressuring you to scale or chase an exit.
• When founders tie self-worth to business, financial decisions suffer.
• A client leaving feels personal, but it’s just part of business.

So how to fix this?

At its core, building a financially stable agency requires emotional resilience. You need to DETACH from emotions when making financial decisions and approach business like an investor, not just a founder:

• Regularly review expenses and cut what doesn’t serve the business.
• Set financial goals that align with what YOU want, not what social media says.
• Take ownership of every decision. If something isn’t working, it’s on you to fix it.
• Train yourself to see clients, hiring, and investments as strategic moves, not personal ones.
• Ask yourself: Do you actually want a $10M agency, or do you just want a high-profit, lower-stress $2M business?

As Valentin put it:

“Your finances will always follow your inner state. 100% guaranteed.”

If you want a more profitable agency, start by optimising your mindset first. Also, the moment you accept what kind of agency you actually want, you make better decisions. And better financial decisions = smoother, more predictable growth.

Optimisation vs. Growth: Which Stage Are You In?

Agencies operate in two key phases:

1. Optimisation Stage:
2. Growth Stage:

Most agencies think they should be in the Growth Stage, but their internal chaos keeps them stuck in permanent optimisation mode.

How do you know which stage you’re in?

• Are clients churning quickly? You’re in optimisation mode, whether you like it or not.
• Do you lack financial clarity? You can’t scale if you don’t know your numbers.
• Are you stretching your team thin? Growing without operational stability will break you.

If you scale too early, your agency won’t grow it’ll implode.

Watch Valentin elaborating ton these points:

What Should You Do With Profit?

When agencies hit 30–40% profit margins, the big question is: What now?

Do you:

• Keep piling cash into your bank account?
• Reinvest in hiring and marketing?
• Prepare for an exit?

Here’s how to decide:

1. If you’re planning an exit: maximise profitability and keep margins high (30%+). Buyers love healthy financials.
2. If you’re building for long-term stability: allocate profits into an emergency fund, team development, and strategic hires.
3. If you want aggressive growth: reinvest heavily into marketing, sales, and infrastructure (but track ROI ruthlessly).

The key?

Don’t make emotional decisions. Use financial modelling to determine the best move.

How to Reduce Operating Expenses Without Sacrificing Service Quality

Want to improve profitability without sacrificing quality? This what we use at Big Growth Group and we call it the Portfolio Management Mindset.

Here’s how to apply this practically:

1. Categorise your expenses into three buckets:

• Delivery costs (variable costs tied to servicing clients)
• Sales and Marketing (growth-focused spending)
• General Admin/Operating Expenses (fixed costs like software, tools, and office expenses)

2. Rank all expenses from highest to lowest and challenge their necessity.

• Are you paying for tools that don’t get used?
• Do you have bloated software subscriptions because of fear of missing out (FOMO)?
• Are certain team roles redundant?

3. Eliminate first, then optimise:

A great example from the transcript: “Some agencies spend $900 a month on BI tools and don’t even use them properly. But because they’ve seen B2B influencers talk about them, they keep paying. That’s $10K+ a year wasted on vanity.”

When cutting costs, detach from emotion and make decisions based on actual utility and ROI.

The Role of a CFO in Your Agency (And When to Get One)

A big question agency founders ask is when to bring in financial expertise. Many think they need a full-time CFO, but the reality is most agencies under ￡10M don’t.

So when should you consider a fractional financial help?

1. If you’re below ￡1M:

• A full time CFO isn't obviously necessary.
• You do need is a structured financial model and regular check-ins (e.g., a consultant who can set things up for you). A financial consultant brings:

• Financial modelling (know exactly when to scale, hire or cut costs)
• Profitability optimisation (ensure every dollar is working for you)
• Exit planning (maximise valuation and smooth the sale process)

If you’re feeling financial overwhelm, now is the time to bring in an expert.

2. Between ￡1M-￡5M:

• At this stage, financial complexity increases.
• A fractional CFO (a part-time financial consultant) can help with profitability, forecasting, and scenario planning.

3. Above ￡5M:

• Financial management needs to be formalised.
• A fractional CFO or in-house finance manager should be a non-negotiable part of the team.
• Preparing for an exit or aggressive scaling makes CFO-level strategy invaluable.

Final Thoughts

Agencies that master financial clarity are the ones that scale successfully and exit profitably. Those that don’t? They stay stuck in the same cycle of chasing revenue, ignoring profit, and burning out.

? Track planned vs. actual numbers – don’t just look at past performance.

? Make financial decisions based on data, not gut feeling.

? Invest in growth only when you have the right infrastructure in place.

? Cut operating expenses smartly – use the 80/20 rule.

? Hire financial expertise at the right time – not too early, not too late.

Get these right, and your agency becomes not just bigger – but smarter, leaner, and far more profitable.

About what we do

At?Big Growth Group?we help agency owners build high-profit and self-sufficient agency businesses so they can step away from daily operations and focus on strategic growth.

We’re not just consultants who leave you with a list of ideas. We’re also Growth Operators who get in the trenches and work alongside you to deliver real, measurable results.

Are you an agency founder? Want to break free from operations and scale past $1M more easily and strategically?

Apply for Strategy Consultation here.

Case studies: https://www.biggrowthgroup.com/case-studies

Testimonials: https://www.biggrowthgroup.com/testimonials

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