Agency Project Management - How to Scope and Measure More Profitable Agency Projects
The Ultimate Agency Profitability Guide
Right now, you’re trying to identify reasons why your agency isn’t as profitable as it should be. It feels like your team’s working at maximum capacity and you’re slowly growing your project load. However, you’re not seeing the profit you expect from this increasing workload. So, you tell yourself the solution to your profitability problem is that you need to make more sales. More clients means more money coming in, and that means higher profits…right?
Many agencies just like yours have this problem, and it’s true that there is a connection between sales and profitability, but what is often missing from the equation is sales budgeting and the right balance of Agency Project Management.
2 Profitability Pitfalls
Sales budgeting and proposal development for a client project is so incredibly important when it comes to your actual sales process. But what often happens is, proposals are prepared essentially in a vacuum, and this results in 2 common sales process pitfalls that have detrimental impact on your success:
You have your sales or BD team prepping your sales budget and/or the proposal to the client without understanding the amount of work and time that it is going to take to prepare and complete the deliverables within the project scoped by your client.
Said proposal is created and delivered to your client without your operations or creative teams validating the amount of time that it will take to actually perform the work for your client.
Understanding these two pitfalls can help maintain clarity and alignment throughout your sales process.
Once you’ve identified and defined these gaps in your sales process, what’s next is analyzing data from prior projects to validate that a budgeted project performed the way you had planned (ideally under budget)! TIP: an easy and efficient way to gather this data is to conduct a quick post-mortem during a project close; just make sure you involve your finance, operations and sales teams so they have access to this information for future projects and proposals.
This seems like a menial task, so why is it so important? Well, if you're not consistently learning and continuing to improve your budgeting process and your prospecting process, you may actually be offering a service that is no longer profitable or was never profitable. By glossing over this reflection, you’re not only prohibiting your agency’s profitability, but actually damaging your agency overall. So, at the start of a project, it's important to create a sales process with realistic budgets and scope to ensure profitability. And the end of the project, reviewing the accuracy of that project’s profitability.
Integrating Innovative Tools
The great news is, scoping and measuring more profitable projects doesn’t have to be manual! There are some great tools out there that are very beneficial. Between augmenting your sales process and implementing a bit of tech, you’ll be leaps and bounds ahead of other agencies in their prospecting processes.
One such tool is Parakeeto. It analyzes time and revenue data from prior projects and allows you to compare average profitability between real projects your agency has completed. So, let's say you have a new project that is very similar to three other projects that were recently completed. With Parakeeto, you can pull the data directly from your time tracking tool (currently only compatible with Harvest, They’ll be integrating with more tools soon, you can request an integration and get notified when your time tracking tool is supported), view your estimated hours for each task or service, stack them up to past projects in real-time and then review and share forecasts on profitability and margin to accurately scope rates, budgets, hours and costs.
If you don't know how a project's performing, there's no way for you to truly improve or become profitable. Having a regimented budgeting process for your proposals and a tool like Parakeeto allows you to leverage existing data to make the best decisions possible. The combination is one of the most instrumental initiatives to running a profitable agency to ensure you're offering the right types of services and offering them efficiently.