Whether you’re just starting out or have been in business for a while, we know that your agency is your pride and joy. But as you juggle everyday demands to keep the wheels turning, it’s common to lose sight of some key areas that are crucial to your finances – and, in turn, the future of your agency.
Making mistakes is all part of the journey, especially when it comes to dealing with the numbers. The important thing is to recognise them and take the necessary steps to move forward. Here, we take a look at the five biggest mistakes agency owners make when managing their finances, so you can get ahead and make any tweaks you need to succeed.
1. Not managing their cash flow
It sounds like common sense, but make sure you have enough money in the bank. Keep a close eye on your cash flow and try to maintain a balance of around three to four times that of your running costs. This way, you’re ready for any unexpected financial demands – which are inevitable when running your agency.
2. Failing to forecast
Without looking ahead, your here and now could soon become problematic. Get wise with the future by foreseeing any and all eventualities, such as wage increases, new office equipment and growth plans. These costs are much easier to manage when forecasted, and less likely to negatively impact your cash flow when the time comes.
3. Ignoring good debtor management
With many different clients to invoice on a rolling basis, you’ll be all too familiar with outstanding debts. But do you have a robust process in place to chase the debtors in a timely manner? Without one, you might find it hard to stay on top of who owes what and maintain a steady stream of income. This can make it harder to overcome the first two mistakes, and accurately assess cash flow so that you can plan ahead.
4. Taking a scattershot project management approach
Many agencies fall foul of a scattershot project management approach, mixing up processes as they go and not making use of purpose-driven tools that allow for cross-department collaboration. Investing in a proven method will help you deliver projects on time and under budget – two essentials when it comes to protecting your profit margin.
5. Pricing too low
Starting out cheap may win you business in the short term, but as you grow, so will your overheads. This will lead to the inevitable raising of your prices, which can surprise your existing customers. Cultivate a service worthy of a higher price as early as possible in your journey so that you can more easily justify your costs and enhance your brand.
From budgeting and forecasting to management accounts, we instil a vision for growth in everything we do here at Nabarro Poole – with forward-thinking accounting services focussed on the future of your business. To see how our team could go above and beyond for your agency, simply contact us today.