About this Episode
In this episode of the Agency Profit Podcast, Marcel sits down with long-time Parakeeto consultant Carson Pierce to pull back the curtain on a real (anonymized) client assessment and show exactly how agencies can diagnose stubborn profit issues. Drawing on insights from 100+ assessments, Carson walks through the step-by-step process—starting with a simple benchmark “agency model,” then layering in messy P&L and time data, stakeholder interviews, and practical adjustments (like recognizing PM/account management as delivery, fixing time-tracking compliance, and correcting for prepaid revenue). Together, he and Marcel unpack the real culprits behind weak margins—top-heavy teams, bottlenecked delivery (hello, overworked design), and underpriced work—and why the right solution isn’t always “cut”; sometimes it’s “grow out of the constraint” (e.g., hire to relieve a bottleneck and raise utilization). Expect a clear roadmap you can reuse: focus on leading indicators first (model utilization, ABR/pricing, forecast vs. plan), then install cadence and coaching to turn clarity into action—and predictable profit.
Watch this Episode
Points of Interest
- 00:00 – Introduction: Marcel welcomes recurring guest Carson Pierce to the Agency Profit Podcast and introduces a new format—walking through a real, anonymized client assessment to show how Parakeeto diagnoses and solves profitability challenges.
- 02:00 – Every Agency’s Problems Are Unique but Familiar: Carson explains that while every agency’s situation feels unique, most share a few core underlying problems that manifest differently based on team structure, services, and culture.
- 03:40 – Client Background: The featured firm had around 12 staff, close to $1M in revenue, but was losing roughly $80K per year. Despite solid demand, they couldn’t pinpoint the source of their declining profit.
- 05:00 – Early Misdiagnoses and Attempts: The leadership team suspected overhead costs like health insurance and software were to blame and tried tightening internal processes, but those adjustments didn’t solve the deeper financial issues.
- 06:30 – Leadership Misalignment: With multiple co-founders holding different perspectives, the agency struggled to align on the root cause of its issues, each assuming the problem lay outside their area of expertise.
- 10:00 – Starting the Assessment: Carson outlines Parakeeto’s assessment process—benchmarking against a healthy “agency model,” ingesting financial and time data, and identifying gaps between planned and actual performance.
- 11:50 – Payroll Red Flag: Analysis revealed that 98% of all revenue was going directly to payroll, leaving no margin for overhead or profit—a clear signal of structural imbalance.
- 13:30 – Data Gaps and Adjustments: The team had poor time-tracking compliance and a prepaid revenue entry on the P&L that skewed results. Parakeeto corrected these to reveal a more accurate financial picture.
- 16:30 – Root Causes Identified: The agency was top-heavy with overhead roles, under-utilized due to a bottlenecked design team, and priced below the level their delivery costs required.
- 20:30 – Building the Roadmap: Quick wins included improving time-tracking compliance and reclassifying project management and account management as billable delivery hours. Longer-term actions included hiring a designer, raising prices 10–15%, and training PMs in scope management.
- 25:50 – Strategic Choice: Grow, Don’t Cut: Instead of downsizing, the founders chose to grow out of the constraint—adding delivery capacity to balance the team and improve utilization since demand existed.
- 28:40 – Coaching and Next Steps: Carson explains the ongoing coaching plan—educating on data hygiene, improving utilization, then progressing to deeper ABR and project-level analysis—focusing first on leading indicators before tracking lagging outcomes.
Show Notes
- Connect with Carson via LinkedIn
- Free Agency Toolkit
- Parakeeto Foundations Course
- Free access to our Model Platform
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