How top creative agencies use financial planning to drive performance
For all the innovation, creative genius and daring design that underpins your creative agency, financial planning is every bit as crucial to your business success.
After all, it’s notoriously difficult to turn creative talent into cold hard cash.
To get your agency moving towards higher productivity and bigger profits, here is a brief guide to some fundamentals of creative agency financial planning - focusing on some of the reports and processes that high-performing agencies use to drive exceptional business performance.
Key to creative agency financial planning, profit analysis reports identify the money you’re really making on a project-by-project basis.
By using real-life data to discover exactly how much projects cost you to deliver, you can make sure your future estimates are accurate enough to bring about a greater profit.
As well as running profit analysis by project, you can also break the information down by client to gain valuable insight. Which of your clients make you the most money? Are some clients consistently costing you money? Could losing a client or two still see you making more profit?
Profit analysis will help you make the big decisions that boost your bottom line.
Optimising the performance of your creative agency means monitoring every cog in the wheel - so you need to know how your staff are performing individually as well as collectively.
Efficiency reports put this information at your fingertips, showing the number of billable and non-billable hours each team member works (and the money that work effectively brings in) and comparing it against the salary cost of the individual.
You can’t put a price on creativity, but if your lead designers are taking too much time to come up with that big idea, they may not be paying their way as much as you think.
Another common habit among high-performing creative agencies is the production of management accounts. These are monthly or quarterly financial statements, typically combining profit and loss statements, balance sheet, cash flow forecast and a brief report.
The data contained within management accounts is ideal for setting KPIs (key performance indicators) for your agency, and allows you to monitor your business performance on a regular basis.
Finding the time
If all of the above sounds like a hassle you could do without, don’t panic - creative agency financial planning doesn’t have to be a huge drain on your time.
Smart online accounting brings a host of other benefits to your agency too, so if you’d like to discuss the possibilities or any of the topics covered above, feel free to drop us a line.