How do you engineer profitability and scalability into your agency? In this episode, I break down the Agency Profitability Flywheel – the same model we’ve been using with our consulting clients – to rapidly improve their profitability.

Since The Agency Profit Podcast launched 39 episodes ago – I have been increasingly asked to speak on other people’s shows about agency profitability.

And yet, it’s something I never does our own show (apart from this one time…) This, dear reader, is a lost opportunity, both for myself and for all who come here for insights on how to scale a business.


About Me:

I am co-founder and CEO of Parakeeto and fractional COO at Gold Front.

In addition to being an agency profitability consultant – specializing in helping agencies get a handle on their gains – I’m also a respected keynote/virtual speaker and podcaster.

Expect to see more from me over the coming weeks, as I share important insights for agency owners who want to earn more while working less.

Points of Interest…

There’s more information regarding each point in our blog notes beneath the video.

  • Identifying high ROI processes 2:12
  • Four-step Flywheel Framework 3:20
  • The Benefits of Tracking Tools 7:57


Identifying High ROI Processes

Most agencies struggle at some point with going over budget on projects, and potentially working evenings and weekends due to a looming deadline.

Unfortunately, things can take longer than expected. Since the deadline isn’t moving, you and your team inevitably find yourselves trying to make up time by working late or weekends. Obviously, this isn’t sustainable.

There are processes to help deal with such situations, ones you could be building and optimizing, but you never seem to have time to define and implement them – or identify which ones are going to generate the highest return on investment.

Well, all that is about to change!

Four-Step Flywheel Framework

I want to share with you our tried and tested Flywheel Framework which will help you identify the highest ROI investments. Its implementation will, in turn, help you protect your time – and your team’s time – as well and your profits.

Then, I’m going to show you how you can embed this in your business. Over time, your team will learn how to run this process and tune your business for you – essentially making your agency self-optimizing, because it’s a feedback loop.

Our four-step Flywheel Framework consists of…

  • Capturing Assumptions
  • Measuring Reality 
  • Running Meetings
  • Investing in Your Process

Assumption > Measure > Meetings > Process = Profit + Predictability


Capturing Assumptions

Irrespective of what your agency does, assumptions will be made pre-project. From ‘time and materials’ projects, to ‘flat rate’ projects; from how much time a project is going to take, to prospective external costs – blind assumption-making can seem part and parcel of a project, but it doesn’t have to be.

You need to analyze IF those assumptions were correct or not. By capturing these assumptions, and ensuring there’s a consistent format to how they’re tracked, you can compare how your pre-project presumptions stack up against reality over time – horizontally.

Measuring the Reality of Assumptions

Whether it’s a spreadsheet or a tool like Parakeeto, define a consistent format and methodology by which you can estimate – or capture – the assumptions about your projects.

Now that you have a reference point, measure the accuracy of those assumptions. By way of example; compare your assumed costs to your actual costs; compare the time logged in your estimate against the true time spent; and so on. Then you can ascertain if there is a mismatch between your initial assumptions and the actual data. This process is simpler than it sounds – especially if you use an accounting tool, or a time tracking tool.

Make sure, when tracking your time, that it’s mapping back to the original assumption because that’s the purpose of the exercise!

Run Team Meetings

The goal of these meetings is to sit down with your team to measure quantitative data. Discuss what matched up to your initial assumptions and, more importantly, what didn’t match. That’s where we’re going to surface qualitative data.

For example, you might ascertain that you went over budget on design hours. Why was that? Did you assign too many designers to that task, resulting in duplicated work?

In short, the objective of these meetings is to identify what is going well, what is going poorly, and what is taking a different path to what was expected!

Invest in Your Process

The result of these captured insights include ideas on how you can overcome those things, then how best to implement them in your process backlog.

This will inform you what needs to be done in order to solve these problems that we’re seeing in our data and in our meetings that will help us make more accurate assumptions over time. Over time, if you continue using the Flywheel process, you’re going to have more profit and increased predictability.

In our business, profit and predictability are the holy grail of goals! While profit obviously means there’s more money in the bank for you, for your team, and for potential investments, predictability denotes less time spent working on weekends and evenings, better resource planning, more accurate timelines, etc. Simply put, predictability gives you better visibility into your business.

Key Takeaway: The Benefit of Tracking Tools

Time Tracking and Cost Tracking are two of the most important pieces of data for you as a service business owner – or as an agency owner – to optimize your business.

It’s about shifting your mindset regarding Time Tracking. Tell yourself it’s not just something you do for a client. Applying time tracking to your team will, in the long run, lead to an enhanced work/life balance.

If you want to dig deeper into this stuff and get some free resources to help you implement this flywheel in your business, download our Agency Profitability Tool Kit – it’s loaded with free resources to help you do everything described in this video!

Want to see more from yours truly? You’re in the right place! Follow me @…

Did you learn anything new from this episode? If so, let us know in the comments below – we value your feedback! Our next installment of #APP, on August 19th, will see us chat with Jeremy Jackson. To view our previous blog with Rachel Gertz, make your way here


Agency Profitability Tool Kit

If you’re looking for more resources to help you improve your agency’s profitability, then check out the Agency Profitability Tool Kit – it’s full of the same templates and checklists we’ve used with consulting clients to help them improve their profitability by over 100% in under 60 days.