Investing in Growth: Why Your Agency's Budget Should Match Your Future Vision
00:00:04 - Determining Your Marketing Budget
00:00:25 - Planning for Future Growth
00:00:37 - Allocating Sales Budget
00:00:58 - Incorporating Sales Manager Costs
00:01:09 - Balancing Business Expenses
00:01:30 - Profit Considerations and Business Valuation
00:01:52 - Creating a Profitable Agency
00:02:13 - Reinvesting Profits into Your Business
00:02:34 - Prioritizing Business Growth Over Retirement Savings
00:02:55 - Building an Asset-Driven Business
Is your marketing budget holding your agency back? Could a strategic marketing investment be the key to unlocking your full potential? The approach you take to budgeting and investment can significantly influence the trajectory of growth and success.
An agency's marketing budget should be aligned with its growth aspirations. Instead of merely allocating a percentage of current revenue—often around 10%— agency owners should be considering their future goals. If you aim to double your agency’s revenue from one million to two million dollars in the coming year, then your marketing budget should reflect that ambition by making your budget 10% of the of THAT value. This forward-thinking approach not only sets a clear path for growth but also instills a mindset that embraces larger ambitions.
When it comes to sales, agency owners should allocate 20% of their current revenue to encompass all sales-related expenses. This includes not only salaries for a salesperson but also investments in customer relationship management (CRM) software, travel for networking at conferences, and sponsorships. By consolidating these expenses into a comprehensive sales budget, agency owners can better understand the true cost of driving revenue and ensure that they are not overly reliant on individual salespeople. Instead, the focus should be on building a scalable sales operation that can support the agency's growth objectives.
Next, allocate 30-40% of revenue s to operations to create systems that enhance service delivery without burdening the owner with day-to-day responsibilities.
This will leave 20-30% on profits. However, you shouldn’t worry too much about profit unless you’re planning to sell next year. If you are planning to sell and your net profit or EBITDA is under a million, then just be aware that it’s not a lot of money by today’s standards. The focus should be on creating an asset that is not only profitable but also scalable and sustainable.
The ultimate goal, however, should be that you have a profitable agency and have the option to sell but don’t because you already have the money and predictability so why sell it? After all, that’s your best asset. By reinvesting profits into the agency, owners can build a business that offers predictability and freedom, ultimately positioning themselves for long-term success.
