Tracking your financial metrics helps give you a clearer picture of where your agency currently stands and how it can improve in the future. It also helps you point out any areas of your business operations in which you are not performing up to par.
You should stay on top of your financial metrics, measuring them on a daily, weekly or monthly basis, depending on how quickly each measure progresses and how relevant it is to certain business operations.
But which metrics should your agency focus on tracking? Here are a few examples.
Cash flow: Cash flow is crucial to any type of project-based business, including creative agencies. Cash flow isn’t just limited to how efficiently each of your clients is paying their bills, but also where and when you’re getting your revenue from (investments, clients, sales and more) and when and where that money is going to (your expenses). This gives you a better sense of how much money your agency has on hand to work with and how you can feasibly expand your business.
Client income: How much revenue per client are you getting on average? Client income answers this question, as well as how much your clients are billed per month versus the amount you’d predicted they would be billed. You can also consider how and where you’re getting your clients and whether your clientele has shifted at all over the course of time. By tracking this metric, you can determine if there are any clients it’s not worth holding on to because they’re not paying their bills or meeting expectations.
Job summary reporting: You should keep an updated list of every single ongoing task or job at any given time in your agency, with the ability to sort by project, client, account manager and team. This helps you stay more organized and up-to-date about what all you have going on in real time. The information to track here also includes estimated hours it takes to complete a given project (versus actual hours), budget versus expenses and who you have assigned to which tasks.
Turnover: Turnover can include how often you have employees leave your company, how frequently products sit on the shelves at stores and the total amount of money you get coming in within a certain time frame. In addition, while having these numbers is important, it’s also crucial to gain an understanding of the cause of that turnover. This will help you better shape the future of your company. Ask questions about who it is that’s leaving your company, how long they’ve been around, whether your employees are getting good initial training, whether they’re retaining the information gained in the training process and what you can do to make your agency a better place to work.
These are just four of the most important metrics related to your finances that you should track within your agency. For more information about how to keep up with tracking these metrics, contact us at Patin and Associates.