If you're only focusing on growing revenue, you're missing a huge opportunity by increasing the gross margin, which is gross profit divided by revenue.
In this example, growing your margin from 60% to 70% allows for a 56% increase in profit that goes straight to the bottom line.
If one of your primary objectives running the agency is not to continually look for ways to increase the margin, I highly encourage you to make it one.
There is a huge opportunity for agencies to take advantage of R&D tax credits with the newest tax law changes for 2025 into the new year. These credits go on your personal tax return and because they're credits, even if you don't owe, you can still get money back!
@hito_llc was gracious enough to discuss how these can benefit agencies in a significant way đ
If your agency collects sizable deposits from clients, you might want to move your taxes to being on accrual.
More great insights to come from our discussion with Yuko Tsuchida from @hito_llc about agency tax strategy for 2025 and beyond!
If you're looking to exit your agency in the next 3-5 years, it's absolutely critical that you have good, clean financials going into due diligence. If you don't, then you're asking for Pandora's Box to open, and when it does, your valuation will get slashed significantly.
Revenue recognition is one of the most complex parts of the closing an agency's books - correctly.
Don't be fooled into celebrating that big project deposit you just brought in. Now you need to deliver on that work. Do you know what profit you're actually generating off of it? If you're not doing proper accrual, the answer is no.
DM "AURA" and let's schedule a free 30-minute call to discuss why this process is so important to scaling your agency successfully.
After hundreds of conversations with seven figure agency owners, consistent themes emerge. Don't fall into one of these common agency owner traps:
1. Chasing revenue, not profit
2. Running on cash-basis instead of accrual
3. Not time tracking or, if you are time tracking, not analyzing the data
4. Full-service focus without profit to show for it.
5. Undervaluing your replacement cost within the agency.
If you'd like to chat about any of these in greater detail, slide into our DMs and let's schedule a call.
Youâre leaving money on the table, and you donât even know it.
If youâre still billing time and materials, youâre punishing yourself for being efficient. This is because the faster you work, the less you earn. But with value-based pricing, efficiency is a game.
Got questions? DMs are open.
Many small businesses think positive cash flow means they're doing well, but that isnât always the case. While cash flow shows whatâs in the bank today, your financial controller and accounting controllers should rely on accrual-based financials to assess long-term growth. The smartest ideas for small business always involve both bookkeeping services and a clear understanding of performance. Thatâs where financial strategy consulting and operational strategy consulting come in because growth starts with the numbers you canât see in your bank account.
Sales and use tax can vary depending on where a business operates, making it an important consideration for agencies, accountants, and anyone exploring ideas for small business growth. From digital marketing agencies to financial controllers, understanding local tax obligations is key to shaping both financial and operational strategy.
Running an agency is hard. But building a business is even harder. It takes vision and data.
Whenâs the right time to reinvest?
Well, cash-based accounting wonât tell you. Thatâs just checking your bank balance and hoping for the best. This is a risky move for any digital marketing agency or small business owner.
AURA uses accrual-based systems so you actually see your margins, plan ahead, and grow with intention.
Because real financial strategy consulting and operational strategy consulting donât come from vibes. They come from accurate numbers, and the right accountant to interpret them.
#hopecore
