The six key actions that will make your agency more profitable in 2025

If you’re looking to drive growth in your agency this year – and who isn’t? – then maximising profitability is probably high on your to-do list.

But proceed with caution.

Simply chasing after revenue often doesn’t lead to increased profits. You could just be pursuing top-line ‘vanity figures’. 

To effectively drive profit, you need to increase your margins. In this article, we’ll highlight six key actions to help you do this and drive your agency forward in 2025:

1. Stop overservicing

Overservicing, or delivering more work than you’re paid for, can have a significant impact on your margins before you’ve even realised. 

Small amounts can add up quickly— overservicing by just 10% means you’re effectively working for free for five weeks of the year, while 25% could cost you an entire quarter.

Three of the most common causes of overservicing to beware of are:

• Scope creep: Clients often expand or change project scopes. To prevent this, project managers need to evaluate whether these changes fit within the original budget or if they require additional resources and keep a regular check on any additional tasks that appear.
• Using the wrong team members: Allocating tasks to people without the right skills can lead to inefficiencies. Make sure you’re assigning the right expertise to the right job.
• Not tracking time: It can be easy for everyone to get so immersed in a job they forget to keep track of time, but failure to track time accurately can really mess with your budgets and, in turn, profits.

2. Charge correctly

Lack of confidence in pricing can be a major problem for some agencies. And undervaluing the worth their services bring to clients can stop profitability in its tracks.

You can avoid undercharging by: 

• Clearly defining the job scope and what will affect the time spent
• Looking at similar past projects to establish the time and expertise needed
• Estimating costs to deliver different project scopes
• Setting cost and pricing, depending on your expertise and experience. For example, if you offer a niche service you can charge more for the value the client receives.
• Tracking recovery to make sure you’ve set your pricing at a profitable level

3. Understand where you’re making (and losing) money

If you want to increase your profitability, you need to know what’s making you money. And, perhaps more importantly, what’s not. This can help you decide which work to take on or reject. 

To find which clients, projects and services are the most profitable, you need to calculate the gross profit by client, project or service. To do this, you need to analyse the revenue by client/project/service vs the cost (time and expenses) spent on the client/project/service. 

First, work out the cost of each chargeable member of your team.

The easiest method is:
Cost per hour = (Salary + Employer NIC + Employer pension + Share of overheads) divided by workable hours per year

Then, you need to look at where their time has been spent, tracking time against clients, projects, and type of work. You can do simple analysis by department without timesheets but for more detailed understanding you will need accurate timesheets. You can then calculate the gross profit (revenue - direct expenses - cost to deliver) by client, project, service, etc. 

4. Stop wasting time

Whether you’re a new business or a veteran agency, there’s always room for operational improvement. By fine-tuning your processes, you can help your agency run more smoothly while boosting its profitability. 

Here are three of the top time-savers:

• Make sure you have a clear brief before starting a project: Ambiguous briefs lead to missed work, delays, and misalignment. A clear brief saves time and sets expectations.
• Use a single management system: Avoid using multiple platforms to manage quotes, costs, timesheets, and schedules. A single system can streamline operations.
• Devise standard operating procedures: Develop templates, guidelines, and post-project reviews to reduce the need for repetitive tasks and avoid starting from scratch with each project.

Small operational improvements—like recovering just 15 minutes per day per employee—can add up to significant savings. In an agency of 20 people, based on £90 per hour, this could increase profitability by £190K.

5. Sell the right hours

It’s easy – and incredibly tempting – to say yes to every job that comes your way. But overloading your team simply leads to overworked staff who can’t deliver the quality you need. Likewise, being too choosy could mean people sitting around with nothing to do or stretching jobs out to fill their time. 

To optimise capacity:

• Calculate capacity by department: Assess the total number of chargeable hours available per week for each team (e.g., design or digital). Ensure these match your sales targets.
• Set weekly revenue targets: For instance, if your design team has 300 chargeable hours available at £100 per hour, you need to sell £30,000 worth of design work each week.
• Review regularly: Month-end reports are not enough. Weekly capacity reviews allow you to spot over- or under-utilisation early, ensuring that you can adjust and sell the right amount of work.

6. Retain and develop great people

Your team are your most valuable asset, but the reality is that lifespan in an agency is usually short – two to four years on average.

Here are our top tips for helping people stick around:

• Upskill regularly: Don’t wait for someone to leave before developing their skills. Create a growth chart and offer training to keep people improving.
• Provide clear career paths: Let employees know what they need to do to advance in their careers, and the opportunities available to them.
• Competitive compensation: Regular salary reviews and transparent pay structures help retain top talent.

Investing in staff development not only strengthens your team but also improves your bottom line by reducing the need for expensive recruitment.

There are plenty of hurdles for agencies to navigate on their profitability journey, but the six steps we’ve outlined are a great way to build and grow your business. Download our full guide to boosting profitability

Ultimately, clear visibility of all areas, well-defined processes, happy staff, and regular check-ins of what’s profitable and what’s not will be the biggest assets to you as you look to grow. If you don’t have this yet, it could be time to invest in an integrated agency management system like Synergist, which brings together everything you need to manage your profits, people, clients and finances. Book a demo to find out more.