Jason Neale, MD, The Agency Works presents the key challenges found across agencies surveyed in our recent Agency Food survey.

1. Agency Food: The Cost of New Business
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2. We spoke to…
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3. When it comes to financial challenges,
at present there are not only
operational hurdles to overcome such
as over-servicing, but also ambitions to
increase profitability and forecast more
accurately.
Agency challenges
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4. Planning Stage
• Accurate cost forecasting
• Plan for the profit that is required by the agency
• True understanding of target billable hours in the agency
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Example: Profile 10 man agency
Cost forecast = £720k
Profit required = 20% (£144k)
Income required = £864k
True utilisation rates = 60%
Hours available in the year = 10,125 hrs
Average hourly rate = £90p/h
Income capacity = £911,250
Written off income = £607,500
*Calculations based on 45 weeks in a year

5. What measures or processes can be put in place to support this vital revenue stream?
The top 5 new business challenges for agencies are:
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6. Winning New Business
• Agencies reporting 1 in 3 success rate
• Decreasing client budgets less of an issue in
the first quarter of 2015 (16%) compared to
the last quarter of 2014 (23%)
• 43% have reduced their rates by up to 20%
Is money really the object? Could lack of time to prepare mean agencies aren’t giving
themselves a fair shot at success?
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7. Focus on new business fixes
• Monitor spend
• Stick to calculated rates & value the
agency’s worth
• Use a resource management tool
*37% in 2014
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8. New business resource
• 62% of agencies have a dedicated new business resource
• The remaining 38% rely on whoever has the right experience
for the client enquiry
• 53% said they sometimes, but not accurately, will earmark
funding to new business
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9. Agency Food
Search ‘Agency Food’ on LinkedIn to
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jneale@taw.co.uk
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Road, Lutterworth, Leicestershire, LE17 4AP
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