How to increase creative agency profits
Today’s guest is my good friend Lisa Sabin-Wilson.
She shares her blueprint for increasing profits and client buy-in at WebDevStudios. This is a “lost” episode from a pre-recorded Season 6 of the Matt Report that I was producing during the summer of 2017.
Lots of great lessons here for anyone running a 1 or 40 person agency. Let me know what you think in the comments below!
Listen to the episode:
Watch the episode:
Transcript of the show:
Matt: 00:00 Hey everybody, welcome back to the channel in this episode, I’m unearthing some of the last episodes of Matt report season six and turning them into maybe a small season seven, many months ago. I sat down and record it almost a dozen episodes, six agency folks, five Seo folks, and I was really trying to combine a two story pass or two career paths into an entire season. So those folks who might be running an agency or a small agency or consultancy and the, the information and feedback and experience of Seo wars for folks who are doing that, people are doing seo content marketing or maybe even marketing in general. And I was combining a small sort of conversation interview style and the first half of the show and then moving into a presentation by the guest speaker. So each guest speaker had an individual topic that he or she was going to teach us.
Matt: 00:52 Um, and it just became a techno technological disaster for me. I’ve been doing this for a long time and you would think that I would have this stuff down. But every time you introduce something new to the mix, you’re trying to push the envelope, um, you know, speed bumps happen. And in my case, I lost some audio, I lost some video, um, but luckily I’m able to salvage a few good lessons out of those episodes and I’m happy to bring those to you. Now, kicking things off. I would like to start with my good friend Lisa Sabin-Wilson, who talks about making profit. Should you make profit, what is the most profit you can make in running an agency or maybe even a consultancy? This is packed full of great information. And in the upcoming video she will present this in her slides that she created for the Matt report way back when.
Matt: 01:36 Uh, so I do apologize. There will be some bumps in this video, but the, the lesson here is a must for anybody who’s thinking, I am an agency. Even if you’re one person, it doesn’t matter if you consider yourself an agency, you’re one person. Maybe you outsource some of the other work with friends and other colleagues to whatever. You are a digital agency. You’re trying to represent yourself beyond just the solo consultant. This is a great episode for you. It’s Matt report.com/subscribe to join the email newsletter, which I really have to email out sometime soon if you like. Videos like this. Go ahead. And like this video, if you enjoy and love and want more videos like this, please subscribe to the channel so you don’t miss an episode. Sit back and get ready for Lisa Sabin-Wilson.
Lisa: 02:21 Gotcha.
Lisa: 02:25 So yeah, the topic of my presentation here is, revenue doesns’t mean shit. And that might be a surprise for anybody who wants to do just to
Lisa: 02:34 make money or it is making money on wordpress currently to understand that revenue doesn’t mean shit. But what I mean to say when I’m saying that is you can, you can make revenue all day long, but if you’re not profitable with that revenue then it really is not going to mean shit to you or to your employees. Um, so unless you systems that are in place, uh, to really help pull that revenue over into, um, you know, actual profit, then you know, you’re not gonna succeed. So a full pipeline is not all you need to succeed and grow. If you’ve got a full pipeline that’s great and that’s wonderful, but you also need to have the right systems in place to support it. And that is as chief operating officer at Webdev is my primary focus. Um, and I feel very strongly that new business, I mean, it’s great to get new business, but it really doesn’t mean a thing without those systems that are in place to really support it and making sure that you’re profitable with that.
Lisa: 03:41 So since I joined a in the projects that we do, which are very, very sometimes very large enterprise projects, um, we really needed to get and be smart about the systems we have in place to make sure that we’re staying on time, on budget. Um, you know, that everything that we’re doing with every project that comes in makes sense. Um, so my focus is primarily project operations and I work a lot with the project teams. So the developers front end developers, the project managers to really craft these operations around our projects. And we look at the entire project lifecycle. These are the systems that we put in place to make sure that we are profitable, that the revenue that’s coming in for each project is bringing its profit into the company. So we look at things like requirements gathering and we do a needs analysis with the client to make sure that we are communicating and that they’re communicating what they need and that we’re turning it around and architecting a project that meets those needs.
Lisa: 04:45 We also do cost mapping to make sure that we’re going through each of the features and items, whether it’s design or custom development or API integrations or you know, hosting support. We’re going through and mapping each of the costs so we’re making an estimate of the hours that our team is going to expend towards this particular feature and mapping out the costs which is how we come to a price with the clients. You know, kind of getting to that project budget, but also understanding for us where we need to control the cost and call. We need to budget for this project into a statement of work for the client and for our teams. We develop a project plan which really becomes a roadmap of how a project is going to be built from day one until what we call day done. I’m getting all of the requirements in there.
Lisa: 05:47 We’re building out this project plan that has all of the different elements that encompass their website, whether it’s the design, the front end development of the theme, and a custom development custom plug-ins that need to be developed. Any content migration that needs to be done, a certain API integrations that need to be done. It’s all detailed out into the statement of work. And that statement of work has two purposes. One is to become a roadmap for developers to follow on how they need to build the project, but it also becomes an agreement between us and the client because the client signs off on that statement of work and it makes those discussions of scope a lot easier than they, than they would be without a document like that. Um, because from our standpoint, if it’s not listed out, are discussed in the statement of work document, then it’s a new request.
Lisa: 06:38 Um, and you know, at that quite a scope change and it can go through our change management. So statement of work is important. Um, and it also encompasses, you know, like the design and development cycle. I’m quality assurance, user acceptance, testing, launch of that. The other things that we look at the project life cycle is code review, um, because we have lead developers, senior developers, they go through code review cycles as part of our a um, and we also do time and cost tracking. So all of our team members track time against the tasks on a project so that we have an understanding of where they’re spending the most time, what they’re struggling the most with, what things are most successful. And along with that time comes cons tracking. So we’ve got costs assigned to each team member, um, on our web Dev teams and we outlined those costs not only by their, you know, hourly, what we’re paying them hourly, but also, you know, what, what does this particular employee cost us from salary to benefits and time off all of that kind of stuff.
Lisa: 07:43 We work that into it. And then the change management is very important as well when I go back to the statement of work and making sure that we’re managing scope and managing change, um, you know, every once in a while it’s really nice to be able to throw some freebies in there and to do some nice things for the client in order to help them get through their project. But some feature requests are a lot larger than others. So we always make sure that those new feature requests get scoped out and that we can account for them on the billing side. Um, and then any upselling that can be done during the project as well, um, from maintenance to support any ongoing retainer that can happen after the fact, um, those are all, all the things that I just listed are really part and parcel of the operations and policies and processes that we have in place in order to make sure that our projects are successful and that I’m the revenue we brought in for that is bringing us a profit and not a deficit.
Lisa: 08:42 At the end of every project. We put a process in place called the project retrospective. Um, we actually first started calling them project post-mortems, but we thought that that was such a negative term, been so depressing. We went with breakfast perspective. Basically what we do is at the end of every project, once it’s launched, um, we gather the entire team and we sit down with an intro meeting and we’d go through everything, the ups and downs from the project from day one until day done. What worked, what didn’t work, where were the roadblocks or challenges did we meet? What challenges do we overcome? Everybody on the project at that point Lens. Really valuable lessons, both good and bad. Um, I’ve learned some very valuable lessons on those retrospectives because I’m primarily involved with I’m scoping projects and architecting projects. So sometimes project plans don’t meet reality. Um, and I’ve learned those lessons and apply those lessons to each new project that comes along.
Lisa: 09:43 And I think everybody does apply those lessons in hopes of being more efficient and becoming better at what we do. And we also do a cost analysis to understand where every project dollars spent. So we’ve got a project for $10,000 for exactly, for example, we need to know where that $10,000 is being spent. Is it being spent in project management? Is it being spent in development, front end development, um, launch or support. So we have our team members track time against tasks. We get pretty granular in terms of the tasks that they track time against because we do a weekly cost per view during the active project. We go through and we look to see where time is being tracked, where we need to be more efficient if we’re finding that we scoped 20 hours for a particular feature and we come into the cost review this week and see that there’s 50 hours track to it.
Lisa: 10:34 That makes me think either my team is tracking time to the wrong place or um, I scoped it wrong or incorrectly. Maybe I should’ve added more time to it. Or maybe there’s something that the team is particularly struggling with that particular feature and we can target it during the project and you know, just kind of stop and have a call with those developers to find out what’s going on and hopefully we can nip it in the bud and, and, you know, move forward. And then we do a cost retrospective with the project retrospective to learn, be over in the, under. Um, mostly the over is what we want to know. We’re over budget, where did we go over time and how can we learn from that? So I mean, a full, a full pipeline is terrific and if you’ve got a full pipeline, congratulations, but make sure you’ve got the systems that are in place because revenue doesn’t mean you should if you’re not profitable.