5 Money Hacks to Stop Your Business From Losing Money

Strong start, stronger finish. It can be tempting to want to ease into the new year, but as a business owner, there’s a lot to be said about starting the year “on the right foot” to set you up for success.

For agencies in particular, there’s no doubt that the past year was tough due to several factors, including economic and geopolitical uncertainty and changing client and consumer behavior.

New research from The State of Agency Operations report found that agencies are even more vulnerable at the beginning of the year. 75% of agencies lost clients, and about a quarter of them lost more than 10% of their staff — all in the first half of 2023. Losses are always tough but are especially challenging when they happen in Q1. If challenges aren’t addressed immediately, you risk continuing with bad patterns and practices for yet another year.

So, how can you avoid the losses and set your team up for success in the new year? Start with these five things:

1. Invest in your team

The profitability of your business depends on your ability to retain customers and your team. You might be surprised to learn that investing in your team is one of the best ways to combat both. The most successful leaders I work with think of investing in their team like they would any other part of their business – and measure success! Conduct quarterly employee surveys and zero in on the gaps.

It could be ensuring your team has access to ongoing education, competitive salaries, growth opportunities, and a work-life balance. Studies show that businesses who invest in their team’s well-being see happier, more productive employees who produce higher quality work – plus happier clients and an improved bottom line. Why? Because clients are less likely to churn and more likely to sign on for more work and recommend you.

Related: The 5 Fastest, Surest Ways to Lose Money

2. Stop overservicing

Overserving is a serious risk to short-term profits and long-term stability (read: burnt-out staff), yet too many agency leaders continue to let it slide year after year. 1 in 10 agency leaders say their projects never or rarely come in over budget. This means most agencies are losing money at the end of projects. To put things into perspective, overservicing even by as little as 10% can translate to working an entire month for free – it adds up!

With the new year ahead, take time to reassess and build a process around how your team proactively manages client expectations. Be clear about the scope of work in contracts and fees for work outside of scope. This, paired with clear and consistent documented communication during milestone check-ins like onboarding mid and end-of-campaign check-ins, can save you and your clients from a ton of surprises down the road.

3. Clear-cut time tracking

We all know the old saying: “Time is money,” and if your team isn’t tracking time, it’s time to start! Time tracking software like Harvest, Timely or a project management tool with time tracking built in, like Teamwork.com, will make tracking a whole lot easier for your team. If your team already tracks hours, tracking accurately is another story.

It might not seem like a deal breaker. Still, inaccurate data can lead to under-budgeted proposals, unrealistic timelines, insufficient resourcing, and overestimated profitability, which can result in overworked teams, unhappy customers, and unprofitable projects. From working closely with hundreds of agencies every year, I’ve seen that everyone tracks time differently, but what really matters is setting clear expectations for how often your team should track time, how much detail to add to submissions, and what other metadata should be included.

Related: Time Is Money, So You Don’t Have the Time to Lose Things

4. Adopt a billable hours first mindset

The billable vs. non-billable debate is nothing new for anyone who does client work. Yet too many agencies struggle to stay profitable because of it: 1 in 2 agencies don’t achieve billable utilization benchmarks over 50%. Agencies are struggling to manage their billable hours, and it comes down to a number of issues, like poor processes and communication breakdowns between managers and team members.

The best rule of thumb is to aim for a ratio of 70:30 billable vs. non-billable hours and 1:5 for non-billable and billable employees. This will ensure that the billable staff cover the costs of those who are non-billable and give you a safeguard to stay on track through the ups and downs of agency life. A big part of this is creating a “billable hours first” culture with your team. Train them to prioritize this work, track their time, and set expectations with this in mind, i.e., “We can only spend 8 hours creating this report for X client.”

5. Balance leader burnout

Employee burnout is a hot topic, but not nearly enough is said about leaders being burnt out. 71% of agency leaders struggle with burnout, and operational challenges are the worst culprit. If you’re running on fumes, you can’t show up and be your best self for your employees and customers, plain and simple.

Some of the best advice for this comes from Tim Ferris’ book The 4-Hour Workweek: “Never automate something that can be eliminated, and never delegate something that can be automated or streamlined.” Following this process is a great way to boost productivity and prevent burnout. Start by creating a list of tasks and ask yourself which can be eliminated, automated, and delegated. This will free you up to focus on work that fulfills you and gets you closer to your goals…like making 2024 your best yet!