Challenge
Inefficient operations can reduce profitability. Our inevitable focus on top-line growth often puts into shade the levers we can pull to improve profitability. When working with the 260 plus agencies we have over the past years, we’ve been surprised at how easily profit can be improved with specific direct action on a small number of key elements of the business.
It’s not rocket science, but it needs the right mix of persistent action, focussing the levers that matter over time, to drive more upside to the profit line.
How to self diagnose:
| Question | Why it’s important |
|---|---|
| Are your operations delivering the profit you expect? | Ensuring that operations are efficient and profitable is crucial for the financial health of the business. In a people led professional service style business, double digit EBITDA margins are realistic and >20% is seen as doing well. Several factors drain the profit pool, but mainly people cost, wastage and overhead are the culprits. |
| What key metrics are you tracking and improving? | Tracking and improving key metrics helps in identifying areas of inefficiency and making data-driven decisions. Some sharp focus on billability and utilisation, combined with great project scoping and pricing, are levers to pull to get you in that profit territory. |
| Where’s the wastage and can you remove it? | Identifying the services that actually make money for you, and the ones that don’t, is critical. If you know where the good is, you can also identify the bad and waste can be found and removed. We’ve found that there is often more than 5% wastage in agency delivery models that can be removed when focussed upon. |
| What are the drivers? | Identifying profit drivers helps in focusing efforts on the most impactful areas, ensuring sustained profitability. What are yours? What could they be with the right action? Where is the low hanging fruit? |
Solution
Conduct a thorough but swift review of your operations and delivery model to identify areas of inefficiency and wastage. Implement prioritised operational improvements to streamline processes and enhance profitability. Track key metrics to measure progress and make data-driven decisions that improve the numbers.
Why it’s essential
Improving operational efficiency directly impacts profitability. By identifying and eliminating inefficiencies, agencies can increase their profit margins and ensure long-term financial health.
Waypoint can help you
Waypoint have helped hundreds of business optimise their operational processes, we have tried and tested ways to quickly diagnose and help you fix your processes to improve your efficiency and drive more profit.
