Time for your midyear checkup
Chip Griffin
Helping agency owners build businesses they want to own | Agency growth coach & consultant | Podcaster | Photographer
Today is the last day of the first?half of 2024. Next week is a holiday week in the U.S. and many of you will be slowing down or shutting off to recharge.
As you gear up for the second half of the year, it's useful to spend a little time looking in the rearview mirror to see how things have gone over the past six months.
With this knowledge, you can make any needed adjustments to get the best results by the end of the year.
Later in this week's newsletter, I'll talk more about a few key things to look at, but first let's look at what Jen rounded up for us this week.
— Chip Griffin, SAGA Founder
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Time for your midyear checkup
As you close the books on the second quarter, we are now halfway through 2024. In addition to enjoying a bit of a break next week (if you are here in the U.S.), you can start to take stock of the past six months.
Naturally, you will want to look at your financial results. And you should certainly look at your first half P&L, but there are other things to include in your midyear checkup.
Start with you.?Anytime we're thinking about goals and planning, I encourage owners to be selfish. That's why my AIM-GET Framework starts with Ambition -- what do?you?want from the business.
So how has that gone since January? Are you getting more of what you set out to obtain? Have you succeeded in making any planned changes to your own workload or compensation?
As important, has anything changed for you since January in terms of what your own ambition and goals might be? Do you need to update your plans to reflect new realities or dreams?
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Now consider your team.?Once you understand what you want and how the first half has treated you, it's valuable to think about the team around you. Whether you have contractors or employees (or a mix), how are they working out for you on the whole?
Every agency claims to have the best team and says that it is the differentiator for clients, and even though that isn't exactly true they are vital to our success.
Start with asking how your team is doing in helping you to fulfill your own workload goals -- both in terms of amount and type of work you do.
Now start asking if your team is helping to achieve the goals you set for yourself and the business in January. Are there organizational changes that should be made? Do you need to add or remove any team members for any reason (workload, performance, business needs, etc.)
Then think about your team needs for the second half. There's a lot of excellent talent available right now -- especially at mid to senior levels -- so if you have the need and the resources, you may want to take some time this summer to plan that growth.
On the other hand, if you have struggled in the first half, don't continue to carry a high labor cost in the hope that things will change. Many agencies are having a tough year, and the sooner you recognize you are overstaffed and shed costs, the more of a cushion you give yourself to rebound. Hanging on to people too long actually does them a disservice because you usually can't give them as much notice or severance when you finally accept the reality of the need to shrink your cost base.
Finally, remember that you should always have an eye on recruiting and the talent pool. Team members always seem to leave at the worst possible moment, so think about the second half and what needs you might have so you can be building relationships now.
Reflect on your clients.?Have the needs of your own clients changed in the past six months? How are you doing executing against the plans you set at the start of the year?
Midyear isn't just a time to look at our own businesses, we should be working with our account teams to reassess each client and their results and needs.
This is an opportunity to reset relationships and chart new paths that will help to get clients what they want and improve retention. It may even present opportunities to grow existing accounts if we're thinking carefully about their evolving needs.
You should also be looking at the relationship side of things and ask if there have been staff changes on the client side that call for you to strengthen your own bonds with new faces or make other adjustments so you are well-positioned for their own annual planning processes that will start in the fall.
Fine, go look at your P&L.?Now that you have looked at the big picture, feel free to look at that well-crafted P&L provided by your bookkeeper or accountant (and if you don't have one, make that a priority for the second half).
Don't fixate on the popular metrics that you see thrown out as "benchmarks." Things like Revenue per FTE vary wildly from one agency to another and rarely serve as proper indicators of success.?
And, frankly, what you want and need from the business may not be what someone else has as priorities. If the business is helping you to achieve your goals, it doesn't matter how you compare to someone else on paper.
What matters most in your P&L are trendlines.?
Are profits growing or shrinking? Are specific expense categories trending up or down? If so, what does that tell you??
Pay particular attention to labor as a percentage of revenue. I care less about how it compares to what some industry expert tells you to target and more whether it is changing materially for your business.
Finally, look at changes in revenue and understand the reasons behind it. Why are clients leaving? What is bringing new clients in the door? Does this tell you anything about your agency's positioning, pricing, or structure?
Plan your next steps.?Now that you have taken stock, you can plot your needed adjustments for the second half. Don't do anything dramatic unless it is absolutely necessary. You should be thinking about course corrections and not new destinations unless something significant has changed for you.
Be sure to include your team in these conversations. They can be helpful in identifying challenges and opportunities -- as well as suggesting solutions.
Of course, if you need help, I'm always here for you, too, so feel free to book a?free consultation?if it might help get you unblocked.
Now go enjoy your holiday break and come back tanned, rested, and ready for the last six months of 2024!
Upcoming webinar: Agency financial basics for owners
In this webinar, Chip Griffin will help to demystify agency finances. He will explain fundamental items like a Profit & Loss (P&L) Statement, the Balance Sheet, and Cash vs Accrual Accounting.
Chip will share the key metrics that you should be tracking as an agency owner and help you to improve your forecasting and decision-making.
This event will be on Thursday July 11 from 2-3 PM ET, and you can register here.