Achieving Better Productivity and Profitability in Creative Agencies
Read time: 4 minutes
There is no doubt there is a correlation between productivity and profitability in business. It’s apparent that no matter what type of organization you work for, or who you are, the need for greater productivity will always be there.
Being productive is not just a “thing”; it’s a state of mind. In a creative agency setting, there is never a company too large, or too small that can benefit from greater productivity (Mitchell, 2013). With the comprehensive, all-in-one agency software at Function Point, you can be sure that you will be maximizing your company’s overall productivity level, leading to greater profits in the long run. The end goal of being productive is to make your business more profitable. Without profit, there is no successful business. Staying on top of your day-to-day operations of your business allows you more time to focus on being profitable; or rather, surviving in business.
The act of time tracking, for example, is in and of itself is not a productive activity. It doesn’t generate you more revenue in the small amount of time you take to accomplish your timesheets; however making sure your business is on top of it allows you to be more profitable in the long run. Distinguishing between the activity itself and reaping that activity’s benefits are two completely different things.
Know this: there is no connection between industry wages and industry productivity in Canada (Bruce, 2007); you simply cannot just expect to pay your workers more and expect better results. One of the keys to increasing productivity is asking yourself how you can get the best work out of your employees, but more so, how to manage your business and have all of your bases covered, in order to ensure that your money is flowing in the right direction. Over budget jobs, task management concerns, hitting key performance targets and keeping track of what your employees are actually doing can be a little daunting, no matter the size of your company.
Having a good management system like Function Point provides you with an outlet to stay on top of your business. You don’t have any real timesheet tracking going on at your creative agency? How do you know that the project you’ve been working on for the last 3 months will be profitable? No effective task management tool?
Let’s hope you’re not surprised a month later, when what you think was to be finished was never even started. Higher productivity does not mean lower direct costs; your cost of materials, labor and expenses for your product should remain about the same, and, depending on your company’s activity, your variable costs may go up, or they may go down. Profit, on the other hand, rises considerably (Mitchell, 2013).
A large part of any creative agency is your client base. Why? According to the “five ways formula”:
1. Leads x Sales conversion rate = Customers
2. Customers x Average dollar sales x Average number of transactions = Revenue
3. Revenue x Profit Margins = Profit.
It’s important to understand then, that your clients are always of utmost importance: by being productive, you’ll have more time to focus on where you are making the most profits; some parts of your business may be more profitable than others. Focus on what aspects of your business bring in the most revenue. You may have clients that bring a lot more value to you. Having time to focus on these clients will allow you to expand the products and services that you sell to them; you’ll have more time to look at your competitors and analyze whether or not your product is fully competitive, and whether or not your product is of the highest quality it can be in your current market.
Let’s face it: a happy company is a productive company; a productive company is a profitable company. By being on top of every aspect of your business, you’ll have your bases covered. As a result, you’ll have more time to go after those leads, improve your referral program, provide adequate marketing around your business, and a whole slew of other things to make your agency more profitable, both in the short, and long term. Without profit, you cannot succeed.
Oh, and you’ll have extra money to spend on treat day, too.
Productivity = Happiness + Profitability = Treat day at fp.
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