Increasing Agency Profitability — Without Burning Out

Most agencies chase the wrong metric, and usually, that metric has some form of growth tied to it.  But what kind of growth are we chasing - remember not all growth is good - you may want your biceps to grow, but certainly not a tumor. 

In the race, it’s easy to obsess over revenue, top-line growth, and headcount.  But in the process, they miss the one metric that actually determines if their business is healthy or if it’s bleeding out:

Profitability.

In this talk we unpack how to Uncover Hidden Profit & Scalability In Your Agency... And No, It's Not From Sales Or Your Clients!

At this years Web Agency Summit 5, Robert Jacobi and I dove into actionable insight, not theories or fancy hype talking points. It’s not about 10Xing your hustle or manifesting your next milestone. It’s about the very real and practical shifts we made at Never Settle that radically improved our profitability — without working more hours, without sacrificing our team’s wellbeing, and without burning out.

We’re going to talk about profit and scaling, but let’s first talk about why? Who cares, and isn’t making more money a bit vain? Well it depends...

It depends on you why and if you have a strong why, knowing how to scale is really important, and to scale you need a foundation that’s scalable and resources/profit to do it. 

Our why - is to create a culture where our people can thrive inside and outside work -  Living a bigger story as individuals so that we can partner with purpose-driven brands to build a bigger story through technology, design, and marketing.  For us it’s all about our people and making an impact, so profit becomes really important if we want to take care of our people and we want to make a real impact in the world. 

One of the problems with chasing revenue is at best your looking at 50% of the picture, it’s the easiest thing to track but it’s a lagging metric and not really the most helpful.  

Also lets say you run 10M business with 10% margin, that means ... and to recreate that means EVERY year you have sell another 10M - that’s hard work... what if you had a 2M business with 50% margin??? Which would you prefer?
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Revenue Is Not the Goal. Profitability Is.

It’s easy to get distracted by revenue milestones. They sound exciting. They impress people at networking events. They make for good social proof on your website. And, let’s be honest... they make you feel good.

But the truth is, revenue without margin is just expensive overhead. You can double your revenue and still lose money if your systems are inefficient, your team is overworked, and your operations are leaking profit.

That’s why profitability is the North Star.

And the most powerful way to increase it isn’t by selling more — it’s by improving your margin.

That shift alone forces you to build a healthier business.
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AI Isn’t Coming. It’s Here.

It would be absurd not to mention how AI is impacting profits so I’ll start there.

• Your technical skills and technical advantages are all perishable and unfortunately with AI they all just went bad
• In many cases AI can do the technical skills you have better, faster, and more accurately - and now people just entering the market now have that same advantage. So to be profitable and healthy... your technical skillset is not what’s going to create that for you
• However, there are still many things you can do better than AI, but technical expertise isnt the place to compete
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Knowing when and more importantly, when NOT to use AI will be a factor of leverage for your company.

I believe that the parts of business that thrive on human connection are the areas you can differentiate from AI and your competition to truly stand apart and gain market share

Many experts claim you need to invest in your brand as that’s your unique image - while I agree it’s extremely important, the problem is that AI is taking / scraping everyones digital identity and converting it into training data without your consent that can be leveraged to create better brands and images that you have.

Connection is where you gain value - even looking at infants and attachment theory, to thrive they must have attachment to the parent physically, spiritually, and emotionally. You’ll need to find your unique sauce to create connection and attachment with your team and your clients if you want to make it through this change in history.

More importantly don’t overuse AI (machines) for creating human connection. Machines are great at programing, designing, analyzing, etc. and even curating information and providing it to you in a meaningful way ... think of talking to an AI to get advice on how to deal with stress.

However, if you use AI to speak for you and to try and communicate for you it will fail to create connection and more importantly you’re unique identity will be replaced by a machine....

When connection is needed - invest in the time and energy to do it yourself using your unique identity and voice. Remember as well that 93% of what we communicate isnt done through words, so when they aren’t your words you’re really losing the opportunity to connect.

Remember as you start to use AI use it for the right reasons, it’s not about replacing people. It’s about multiplying their output. And doing it in a way that supports deep work, reduces burnout, and keeps your margins intact.
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Healthy Margin Comes from Healthy Systems

You can’t outwork a broken system. You can't scale chaos. Profit comes from margin. Margin comes from focus. Focus comes from systems. Lots of times when people think of profit they think of sales and how to increase sales ... how to increase inbound leads, closure rates, client lifetime value and upsells. 

However those are all symptoms of a well run machine. Here are six actionable, low-hanging-fruit changes you can make now:

1. Let asynchronous communication stay asynchronous

Stop hijacking people’s focus with real-time interruptions for things that don’t require it. Every Slack message or unnecessary meeting kills deep work — and deep work is where real value is created.

2. Create space for actual deep work

Defend maker time. Protect creative blocks. Don’t just “allow” it — design for it. Profitability rises when your team isn’t context-switching all day.

3. Own your identity

Stop trying to be everything to everyone. Own what you’re great at, and build systems around that. Clarity reduces waste. Niche = profit.

4. Stop making exceptions

Exceptions kill margin. Every “just this once” becomes a process drain. Say no more often. Set constraints. Build repeatability. There’s always a good excuse for this one time, and that excuse will always cost you 5X more in the long run. Great leaders see the horizon, not the bump on the path 5 feet in front of them.

5. Build consistent processes

If a task happens repeatedly, it needs a process. Don’t rely on memory. Don’t assume people “just know.” Consistency is scalable.

6. Document everything

If it’s not written down, it doesn’t exist. Documentation turns tribal knowledge into team leverage. SOPs aren't bureaucracy — they’re profit accelerators. SOPs become more valuable the more distilled they are, without missing critical details that would allow someone who’s never done the process to do so like a checklist, without failing.
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Task Management: Your Biggest Profit Lever

In most Agencies, 90 %+ of your agency’s expenses are tied to people. And 90% of what those people do are tasks.

It goes without saying, that the place of greatest leverage is the place of greatest time spent, and place of greatest cost.

As an agency, you ARE a services business, which means that the majority of your expenses are people's salaries and contractor payments, it also means that the majority of your businesses time is spent on solving tasks...

THUS it goes without saying that how tasks are done ... WILL HAVE THE GREATEST IMPACT ON YOUR PROFITABILITY AS A SERVICES BUSINESS‍

• Are they done well
• Are they done correctly the first time
• Are they circling
• Are they clear
• Are they moving through efficiently
• Or are they not...

If people spend the majority of their time working on tasks, the system you use, and more importantly, the process you implement in that system, will be your greatest factor of leverage, either creating a profit engine or loss engine for your agency business.

If your team doesn’t have visibility into what they’re supposed to be working on, in what priority, with only the things that matter today, in ONE central place, under ONE process — then your margin is eroding by the hour.

Choose one system and tool and stick with it - with a constant, never settle attitude of refinement.

No system will be perfect, so stop searching for unicorns. Instead, invest in continual improvement, and pretty soon your show pony will start to look like a real unicorn.

It’s been said in rowing that a team rowing in the same direction at the same pace will outbeat any team that’s not, no matter how strong or fast that other team is.

Stop letting people pick and choose what system or process they want to use when it comes to task management. Not because they are not brilliant, but unique systems:

• Are not scalable
• Provide no transparency
• Lack of centralized visibility for leadership and anyone managing a pipeline
• Make the knowledge transfer almost impossible - vs having anyone on the team at any moment available to help empower, model, and train up new team members
• Create lots of duplicate data, which then in turn takes more time and usually results in inaccurate data in one of those systems

Low-hanging fruit you can implement today:

• Every project needs a task system. No more managing work out of email and memory
• Use a single source of truth. Don’t scatter to-dos across tools. One system, clearly owned.
• Make tasks stupid simple. A vague “Redesign homepage” isn’t a task — it’s a black hole. Break it down until you can estimate it.
• Everything must be estimated. Time = money. Estimation reveals scope, bottlenecks, and risk.
• Track actual time spent. Not for micromanagement — for insight. So you can learn, optimize, and improve.
• Use a task management system that reduces the clutter. One example is having an inbox that actually works - it should ONLY show the things that have changed that you’re responsible for. Not a notification for every single task in the system - that’s no different than having an inbox full of every task in the system - it’s pointless.

If you just fix this — task clarity, accountability, and visibility — you’ll unlock more profit than any new marketing campaign could ever produce.

For us, that meant we built our own PM tool to manage our tasks. We’ve found over almost 2 decades that the big tools were not built for agencies and certainly not for us. The investment was massive - and 90% of our expenses go to people doing tasks; each improvement there creates a magnitude of profit for us that made this more than worth it! Who knows, maybe someday we’ll build it to release to the public.
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Summary > if you want Profit in your agency

Going back to the beginning of this post, there are many things that Ai will be able to do to help systematize and automate many things in your business - but if you don’t define and standardize HOW, and when to use and not use AI - instead of helping it will slow you down.

Technology is a value accelerator not value creator (at least not yet ha).

When you refine the thing that costs you the most, that your team spends the most time on, that your clients interact with you the most on... the value and gains outweigh almost every other metric simply from a mathematical basis.

The best part is you take the thing that your team and clients spend the most time on and change it from being a pain the ass, to something they actually enjoy.

Remember no technology or process will be the best one - but you’re not looking for the best, there are no silver bullets - you’re looking for 80%, then sticking to it. A team rowing in the same direction at the same pace (consistent systematized process) will always beat a team that’s got a superior technology or process but not doing it consistently and uniformly - EVERY TIME.

We’ve done all of this at Never Settle, but it didn’t happen overnight. But the result?

• Higher margin without more sales
• A team that’s less stressed, more focused, and more fulfilled
• Systems that scale — even when we’re not pushing harder

It’s not just possible — it’s necessary.

Because what’s the point of growth if it’s not profitable?

You don’t need more chaos. You need clarity.

Clarity leads to margin.

Margin leads to freedom.

Start there.