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How you can save costs to increase your agency's bottom line numbers

Writer's picture: Kubilay OzpalasKubilay Ozpalas

Updated: Jun 24, 2020


As an owner of an agency, this is likely to be your first time running a business. You probably was a great employee in an agency, saw an opportunity in the market and decided to set up your own agency.


It probably felt great to see cash coming into the bank account in the early days but as you started to grow you realised that you need more revenue to cover the increased costs of running your agency.


So although you are growing, taking on new projects, hiring new staff, your profit is still the same as when you just started off. This is what we call growing for the sake of growing. Your agency size is growing (turnover, costs, staff etc.) but your take home money is not a penny more that it previously was.


What's going wrong?


There is no cost control. The number one reason for agency profit margins decreasing as they scale is because there is no audit of the costs being incurred. Yes, costs do increase as you scale, but you could also take advantage of economies of scale . You could in fact be making better margins by implementing a few cost controlling strategies.


Analyse your costs quarterly or at a minimum yearly to identify any cost saving opportunities.


To give you a kick start, here are a few things you should be looking for:


  • Are all your subscriptions relevant and being used? We have seen so many agencies paying for subscriptions they no longer need or use. Have you looked at your software stack and searched for alternatives that offer the services of two providers in one package?

  • Do you have a travel policy in place? By having a strict travel policy, you’ll make sure you’re always on budget for travel costs which promotes no overspending.

  • Can you outsource any back office, non-client facing jobs to another company? This doesn't have to be another country as you can still find cost efficient outsource companies in the same city/country

  • Can you go one step further and outsource your designers, marketers etc? Once you have the correct processes in place many agencies have benefited from outsourcing junior work or less complex projects.

  • Have you tried negotiating on certain subscriptions? You’ll often find that, if nudged, suppliers are willing to give discounts if subscriptions are over a certain number of users. Top tip: suppliers are usually more willing to negotiate when your contract is coming to an end so make sure you use these windows wisely.#

  • Have you researched other potential suppliers before signing up to a contract?

  • Do you have an approval and spending policy in place. For example spending over £1k requires X Director and X Director sign off. This prevents unnecessary overspending

  • Can you go completely remote? We have all been working from home lately and for most agencies it’s worked really well, if you haven’t got a long term lease why not continue working from home and save on expensive rent costs.


At SKO, we can help you analyse and audit your costs to see where you are overspending and can save money. Even small amounts add up and before you know it, you could be saving thousands over years.


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