The 3 Key Financial Metrics for Agency Success, With Jon Morris

Points of Interest0:00 – 1:14 – Introduction & Context Setting: Marcel introduces Carson Pierce, Parakeeto's Head Consultant, to discuss project management tools in the agency space and the fundamentals that remain relevant despite ever-changing software options.1:14 – 4:01 – Common Tools Used by Agencies: Carson outlines the most frequently used project management tools among Parakeeto clients, highlighting Asana, ClickUp, and Teamwork, and noting the emergence of all-in-one solutions like Scoro.4:01 – 6:02 – Complexity of the Tool Landscape: Marcel emphasizes the oversaturated, overlapping software market and categorizes tools by function—core PM, all-in-one, and emerging database-like tools like Notion and Airtable.6:02 – 8:20 – Evolution & Blurring Tool Categories: Discussion on how tool capabilities are converging, with time tracking and resource planning platforms increasingly offering PM features, making distinctions between categories less clear.8:20 – 13:01 – Prioritizing Workflow over Tool Choice: They argue that enabling smooth team workflow is more important than picking the “right” tool, especially since tools change often but foundational processes must endure.13:01 – 17:03 – Why Tools Fail to Deliver Reporting: Marcel explains that no platform offers fully automated, reliable reporting due to inconsistent data inputs, evolving structures, and platform limitations in data visualization.17:03 – 20:57 – ETL Framework for Reliable Reporting: They introduce the Extract-Transform-Load (ETL) approach as a best practice, outlining how agencies can clean and structure messy data outside their tools for accurate reporting.20:57 – 24:02 – Structuring Data for Better Insights: Carson and Marcel explore how to align time tracking, estimates, and project categorization by writing logical rules that map inconsistent inputs into standardized outputs.24:02 – 27:20 – Ensuring Trustworthy Data: Emphasis on creating repeatable logic statements and reducing manual input to increase data reliability, and avoid costly decision-making based on inaccurate data.27:20 – 30:05 – When & How to Choose a New Tool: They outline a responsible selection process—start with workflow mapping, validate with team input, and avoid changing tools unless truly necessary to avoid unnecessary disruption.30:05 – 32:11 – Cautions Against Overengineering Implementations: Marcel advises keeping implementations simple and avoiding overly rigid structures that fail when team behavior inevitably deviates from ideal input patterns.32:11 – End – All-in-One vs. Best-of-Breed Tools: Final thoughts on the cyclical industry shift between all-in-one and specialized tools, noting the decision should hinge on agency maturity, flexibility needs, and workflow alignment.Show NotesConnect with Carson via LinkedInGet access to this model tool in the toolkitParakeeto Foundations CourseFree access to our Model PlatformBook: Software as a ScienceLove the PodcastLeave us a review here.

Points of Interest0:00 – 1:00 – Opening: Marcel introduces the episode’s focus on financial visibility and growth, and welcomes returning guest Jon Morris, CEO of Fiscal Advocate and creator of EngineBI.1:00 – 2:55 – Jon’s Background: Jon shares his journey from founding Rise Interactive to launching Fiscal Advocate, emphasizing the value of financial insights in scaling agencies.3:00 – 4:30 – Overview of Fiscal Advocate & EngineBI: Jon explains the core services of Fiscal Advocate—bookkeeping and FP&A—and how EngineBI enables forward-looking budgeting, forecasting, and business intelligence.4:30 – 6:45 – Clarifying the Relationship Between Fiscal Advocate & Parakeeto: Marcel and Jon outline how their services complement each other—Fiscal Advocate focuses on company-wide financial health, while Parakeeto dives deep into project-level delivery profitability.6:45 – 8:25 – The Profitability Venn Diagram: The duo discusses the intersection of finance and operations in agency profitability, stressing that complete visibility requires both financial structure and operational clarity.8:25 – 12:00 – The Three Key Financial Metrics: Jon presents his core framework: cash relative to monthly overhead, profitability (target 20% EBITDA), and year-over-year revenue growth (target 20%).12:00 – 15:10 – Managing Cash with Discipline: Jon details a best-practice approach to managing cash through segmented bank accounts—operating, accrual, savings, and (if applicable) media accounts—with clear reserve targets.15:10 – 17:20 – Strategic Use of Excess Cash: They explore scenarios where excess cash should be reinvested or removed from the business, with an emphasis on growth-minded planning or lifestyle-business clarity.17:20 – 22:35 – Accrual Accounting & Forecasting Pitfalls: Jon explains how deferred revenue and mismanaged payment terms can create false security in cash flow and emphasizes the need for accrual-based accounting and detailed forecasting.22:35 – 24:45 – Spending Benchmarks by Function: The episode outlines ideal spending allocations—50% on delivery, 30% across admin/ops/marketing, and 5% on R&D—to balance growth and margin targets.24:45 – 27:55 – Growth vs. Profitability Tradeoffs: Jon advocates for disciplined reinvestment of margin into scalable functions rather than focusing solely on profit extraction, aligning with the “Rule of 40” growth philosophy.27:55 – 33:59 – Importance of Gross Margin Visibility: Marcel and Jon stress the necessity of management accounting to accurately track delivery margin, revealing it as the single most powerful lever for scaling profitably.Show NotesConnect with Jon via LinkedInFiscal AdvocateE-Book: Decision-Making Science For AgenciesEmail: [email protected] the PodcastLeave us a review here.

Points of Interest1:08 – 2:17 – Why Time Tracking Still Matters: Kristen and Marcel introduce the episode’s goal—to reframe time tracking from a frustrating chore into a strategic advantage for agencies.2:28 – 4:59 – Debunking Common Misconceptions: Marcel breaks down the three common arguments against time tracking, particularly the mistaken belief that it's only relevant for time-and-materials billing.5:04 – 6:19 – Understanding the Agency Business Model: Marcel explains why all service businesses, regardless of pricing model, must measure time to truly understand costs and profit margins.6:33 – 8:39 – When Time Tracking Becomes Non-Negotiable: The hosts argue that the ideal conditions for skipping time tracking rarely exist—most agencies operate in too much uncertainty.8:45 – 10:47 – The Cultural Problem with Time Sheets: Beyond logistics, the core issue is lack of transparency—teams don't understand how time data is used or how it benefits them.10:53 – 13:12 – Misuse of Metrics and the Consequences: Marcel describes how overexposing metrics like utilization or budget variance skews behavior, leading to inaccurate and untrustworthy data.14:20 – 16:38 – Time Tracking and Cost Visibility: Even with fixed pricing models, agencies must know how much time goes into work to assess whether it's profitable or sustainable.16:44 – 18:58 – Key Metrics Affected by Time Tracking: Delivery margin, utilization, and average billable rate are highlighted as critical performance indicators that depend on time data.19:04 – 21:58 – The Profitability Flywheel Explained: Kristen and Marcel introduce Parakeeto’s four-step framework for building a feedback loop that drives clarity and continuous improvement.24:22 – 27:33 – Modern Alternatives to Time Sheets: They outline a spectrum of options—from traditional time sheets to resource planning and AI-assisted tools—offering flexibility based on agency complexity.28:06 – 32:25 – Sequencing Time Tracking for Success: Marcel shares Parakeeto’s phased approach: start with modeling and forecasting before implementing time tracking to ensure team alignment and data utility.Show NotesBoost Agency Profits: Calculate your Profitability TargetsMaximize Project Profit Margins: Boost Returns TodayEssential Agency Metrics & KPIs for Boosting ProfitabilityMaster Agency Time Tracking: Optimize Without TimesheetsRequest demo videos of our reporting platformLove the PodcastLeave us a review here.

Points of Interest1:09 – 2:28 – Meet Rich Brett: Rich shares his background in agency finance and how he now serves 12–15 agencies monthly by bridging gaps between finance, operations, and strategy.2:29 – 4:03 – The FinOps Mindset: Rich defines FinOps as the intersection of finance and operations—connecting financial data with the reality of agency delivery for more meaningful insights.4:04 – 6:02 – Rate Cards and Data Integrity: The duo explores how operational metrics like utilization and recovery must align with financial planning, especially when building rate cards.6:03 – 9:03 – Revenue Recognition Fundamentals: Rich explains revenue recognition as booking revenue based on delivery progress rather than invoice or payment dates, providing a more accurate financial view.9:04 – 12:08 – Cash vs. Accrual Accounting: Marcel and Rich outline the critical distinction between accrual accounting for tax, GAAP, and management purposes—and why methodology matters for insight.12:09 – 15:17 – Common RevRec Mistakes: Many agencies overcomplicate revenue recognition or fail to track only fee-earned income, leading to distorted financials and misaligned reporting.15:18 – 17:55 – Building a Methodology: Rich outlines a practical approach using project forecasts, resourcing, and delivery inputs to estimate monthly revenue earned from projects.17:56 – 21:08 – Percent Complete Frameworks: The episode covers five models for calculating project completion—from time vs. timeline to project manager estimates—each with pros and cons.21:09 – 24:47 – Operational Insights from Finance: They highlight how mismatches between recognized revenue and time tracking reveal performance issues and inform staffing decisions.24:48 – 27:37 – Working with Accountants: Rich emphasizes keeping revenue recognition simple and ensuring bookkeepers support your methodology with appropriate journal entries.27:38 – 36:00 – Scope Clarity and Internal Truth: The conversation turns to separating internal planning from client-facing documents and how poor internal assumptions lead to inaccurate reporting.Show NotesRich’s LinkedInMy FrameworkTime vs. TimelineHours vs. BudgetBurndown Chart/ Task Checked OffInitial Project Shape/ Resource Plan- Based Forecasting% CompleteLove the PodcastLeave us a review here.

Points of Interest0:00 – 1:00 – Introduction to Forecasting Challenges: Marcel and Kristen set the stage by identifying forecasting as a critical but often misunderstood aspect of agency operations, particularly in scaling businesses.1:06 – 2:30 – Defining Forecasting’s Importance: They explain how forecasting provides the necessary visibility to manage capacity, revenue, and key metrics, forming the foundation for informed decision-making.2:47 – 3:48 – Forecasting as a Management Function: Marcel discusses how balancing workload and staffing is a core leadership task, becoming more complex and high-stakes as agencies grow in size.5:05 – 6:17 – Bottom-Up Forecasting Explained: Marcel describes the traditional method of forecasting via detailed task-level planning, often used by project managers to allocate resources with precision.6:32 – 7:52 – Limitations of Bottom-Up Approaches: Kristen and Marcel highlight how bottom-up forecasting becomes difficult to scale due to its complexity and sensitivity to frequent changes in scope or staffing.7:59 – 9:39 – Top-Down Forecasting Defined: The conversation shifts to top-down forecasting, which simplifies inputs by modeling at the role or department level, enabling faster, strategic scenario planning.11:00 – 12:20 – Embracing Uncertainty in Leadership Planning: Marcel explains how top-down methods are better suited to leadership conversations, which often require evaluating multiple uncertain scenarios quickly.13:04 – 14:27 – Statistical Logic Behind Simplicity: Marcel introduces the concept of reliability block diagrams, illustrating why less granular systems can actually offer more consistent accuracy over time.17:00 – 17:45 – Precision vs. Accuracy in Uncertain Contexts: The hosts explore how broader, less precise estimates (e.g., ranges) are often more accurate and actionable when future outcomes are unknown.20:31 – 23:01 – Keeping Systems Separate for Efficiency: Marcel warns against tightly coupling bottom-up and top-down systems, advocating for independent but aligned processes to avoid maintenance burdens.26:15 – 27:02 – Material Discrepancies and Process Discipline: They stress that small mismatches between forecasting systems aren’t necessarily problems and underscore the importance of scope-driven planning.30:57 – 34:20 – Getting Started with Top-Down Forecasting: The episode closes with advice on how agencies can start building simple top-down models using team capacity and project estimates to guide executive decisions.Show NotesBook a call and learn more about our Forecasting systemLinkedIn Post on Bottom-Up vs Top-Down MathRequest demo videos of our reporting platform

Points of Interest0:00 – 1:18 – The Real Growth Blocker: Mandi kicks off by addressing how many agency owners avoid growth-driving actions not due to lack of knowledge, but due to fear and discomfort. Commitment to transformation must outweigh resistance.2:22 – 3:53 – Mandi’s Mission at Hands-Off CEO: Mandi shares her focus on helping service-based agencies scale sustainably and profitably by building systems that allow businesses to grow without the owner being in the weeds.4:00 – 5:15 – Understanding Delivery Margin: Marcel introduces delivery margin as a core profitability metric—the portion of revenue left after delivering services, which can fund growth, overhead, and profit.5:23 – 7:23 – Charging More for the Same Work: They discuss the first profitability lever: increasing your average billable rate. Mandi explains why agencies should price for outcomes, not deliverables, and how a value-focused approach earns higher fees.7:29 – 9:09 – Pricing Confidence is a Mindset Shift: Many owners struggle to raise prices because they lack confidence. Mandi emphasizes becoming the type of person who can confidently sell high-value offers before they’re “ready.”10:03 – 12:26 – Real Case: From $30K to $120K Projects: Mandi shares a client success story where reframing services as long-term transformational engagements led to a 600% price increase and more stable profitability.13:25 – 15:27 – Efficiency vs. People-Pleasing: The second lever—efficiency—is often blocked by the urge to keep clients happy. Mandi explains how this mindset causes scope creep and prevents outcomes-driven work.16:00 – 17:59 – Leadership Over Likeability: Mandi makes the case that effective client leadership, not compliance, drives results. You must be more committed to their transformation than to being liked.18:48 – 20:22 – Right-Sizing the Team (The Hard Way): As utilization drops, hard decisions arise. Mandi discusses the emotional difficulty of letting go of team members—even those who’ve been with you a long time—but insists it’s necessary for long-term vision.23:17 – 25:39 – Create Revenue Before Cutting: Instead of jumping to layoffs, Mandi encourages tapping past and current clients to unlock fast revenue with strategic conversations and new vision-based offers.30:05 – 32:59 – Rebalancing Workloads and Internal Focus: When utilization rises, teams often feel overworked. Mandi and Marcel recommend reprioritizing or pausing internal projects to ensure capacity goes toward revenue-generating work.34:07 – 36:46 – Reducing Average Cost per Hour: The final lever involves delegation. Mandi outlines a “$5 to $5,000/hour” time audit to move low-value tasks off senior team members and improve margin through better team leverage.Show NotesDownload the Scalability ChecklistThe Hands-Off CEO BookMandi’s PodcastMandi’s LinkedInBuy back your TimeLove the PodcastLeave us a review here.

Points of Interest2:14 – 3:18 – Founding Insight: Parakeeto was created to help agencies easily answer crucial financial questions by replacing guesswork with structured systems.3:23 – 4:39 – How Agencies Make Profit: Strong delivery margin is key. Parakeeto targets a 50%+ delivery margin and 20–30% net profit as benchmarks.5:45 – 6:58 – Why Profitability is Hard to Measure: Profitability requires collecting and aligning fragmented data across leadership, ops, and finance functions.6:59 – 8:33 – Framework Misalignment: Agencies struggle with inconsistent definitions and relationships between key metrics like utilization and capacity.9:10 – 10:10 – Messy & Incomplete Data: Most agencies collect data in tools but struggle with consistency, structure, and hygiene—making optimization difficult.10:41 – 12:14 – Need for Operational Bookkeeping: Like accounting, operational data needs regular cleanup, maintenance, and review to support decisions.13:05 – 14:27 – Improved Visibility = Better Focus: Parakeeto’s framework simplifies agency metrics and identifies gaps to improve ROI tracking and alignment.16:02 – 17:30 – Modeling & Benchmarking: Agencies get clarity by comparing their performance against industry standards and their own financial goals.18:15 – 20:49 – Pricing Tools that Drive Profit: Parakeeto’s estimator helps standardize pricing, reduce guesswork, and align prices with profitability targets.25:02 – 27:15 – Forecasting Made Simple: “Top-down forecasting” lets agencies simulate staffing and revenue scenarios with minimal setup—great for scaling.29:39 – 31:58 – Actionable Reports Drive Change: With consistent reporting cadences, teams align around data to reduce scope creep and focus on what matters.Additional ResourcesCalculatorsAgency Profitability Target CalculatorAgency Fee Calculator: How Much Should You Charge?Agency Rate Calculator: Determine Your Hourly RateHow to Calculate Your Billable Employee Cost-Per-Hour (ACPH)Blog PostMeasuring and Improving your Agency’s Profitability – The 2023 Guide3 Key Profitability Drivers Agencies Need to Prioritize8 Vital Agency Metrics & KPIs to Improve ProfitabilityMaximizing Project Profit Margin: A Guide to Increasing ReturnsLove the PodcastLeave us a review here.

Points of Interest1:14 – 2:53 – Introduction: Marcel introduces Tiffany, who explains her firm’s mission to help agencies use contracts as strategic tools rather than just legal formalities.3:06 – 4:08 – Why Contracts Get a Bad Rap: Many agencies view contracts purely as legal protection, missing their potential to strengthen client relationships and reduce future conflicts.4:38 – 6:02 – Misguided Legal Focus: Agencies often waste time on low-risk legal scenarios instead of focusing on practical issues that more commonly disrupt projects, like miscommunication.7:01 – 8:56 – Real Risks Are Operational: Most issues arise not from lawsuits, but from unclear responsibilities and client misunderstandings about what’s required to get good results.9:02 – 11:07 – Contracts Should Reflect Reality: A "Goldilocks" contract—just right for the business context—is more effective than copying generic templates that don't fit the agency’s operations.11:13 – 13:13 – Understand Common Failure Points: Agencies need to identify real-world issues (like IP problems or client-supplied content) and structure contracts to prevent and address them clearly.15:31 – 17:00 – Matching Pricing Models to Scope: Marcel introduces the Pricing Model Quadrant to explore how pricing (time-based, deliverables, outcomes) should guide how scope is documented.18:01 – 20:21 – Miscommunication in Scope Documents: Flexible contracts often fail when salespeople write scopes conversationally, leading to misinterpretation by delivery teams or clients.21:11 – 22:47 – Internal Clarity is Just as Vital: Clear scopes benefit internal teams too—so account and project managers can make aligned decisions without relying on secondhand info.23:00 – 24:49 – Scope Creep and Change Requests: Knowing the pricing model helps teams respond consistently to client requests—whether that means upselling time or renegotiating scope.26:27 – 29:30 – Trust Reduces Contracting Pain: Tiffany shares that as client trust grows, they move from demanding rigid scopes to preferring flexible, time-based arrangements, simplifying collaboration.Show NotesDevant WebsiteBook:Deal MakersEssential Contract Drafting Skills: A Practical GuideYouTubeEmail: [email protected] the PodcastLeave us a review here.

Points of Interest0:00 – 0:14 – Introduction to Pricing Framework: Marcel introduces a universal pricing formula that applies across all billing models, setting the stage for simplifying agency profitability assessments.0:54 – 1:38 – Solo Episode Overview: Marcel explains that the episode will draw from his All Agency Summit presentation, covering how to price profitably and choose optimal pricing models.1:50 – 3:08 – The Best Pricing Model: Marcel emphasizes that the "best" pricing model is the one that consistently delivers the best margin, not a specific method like value-based or hourly billing.5:22 – 6:59 – Differentiating Pricing and Scoping: He defines pricing as determining what the client will pay and scoping as calculating what the service will cost the agency, advocating for separating the two.8:00 – 10:03 – Introduction to Delivery Margin: Marcel presents delivery margin as the cornerstone metric for agency profitability, explaining how to calculate it using agency gross income and delivery costs.11:02 – 12:34 – Setting Delivery Margin Targets: He recommends targeting a minimum 70% delivery margin to achieve healthy profitability after accounting for overhead and utilization inefficiencies.13:15 – 15:14 – Finding the Minimum Price: Marcel shares a formula to calculate minimum pricing: dividing delivery cost by (1 - margin target) and adding any pass-through expenses.16:39 – 17:16 – Introducing the Pricing Model Quadrant: The two vectors—client-perceived value and delivery risk—are introduced as key factors for determining the appropriate pricing model.17:49 – 19:17 – Understanding Value in Positioning: Marcel explains how niche positioning increases perceived value, affecting the pricing strategy and client comparisons.20:08 – 22:02 – Accounting for Delivery Risk: He discusses how accurately agencies can predict project costs and why risk significantly impacts pricing model selection.23:00 – 24:55 – Matching Pricing Models to Risk and Value: Marcel outlines when to use models like time-and-materials, abstracted time billing, flat fees, or value-based pricing depending on project risk and value.Show NotesAll-in Agency SummitChris Dubois & Dynamic Agency OSFree Agency Profit ToolkitFree access to our Model PlatformParakeeto Foundations CourseLove the PodcastLeave us a review here.

Points of Interest0:30 – 1:31 – Meet the Guest: Marcel introduces Mike as a prolific author and entrepreneur, best known for Profit First, and previews their deep dive into simplifying profitability for service businesses.2:00 – 3:36 – From Struggle to Simplification: Mike shares how his own entrepreneurial failures led him to journal his learnings, become an author, and dedicate his work to simplifying business for fellow entrepreneurs.4:00 – 4:58 – A Framework for Entrepreneurs: Mike explains the core business needs he addresses in his books—sales, profit, order, impact, and legacy—and how each book offers practical tools to tackle one of these pillars.5:06 – 6:31 – Rethinking Growth: Mike critiques the glorification of VC-funded hypergrowth, advocating instead for right-sized, owner-aligned businesses that are profitable and purpose-driven.6:38 – 11:02 – VC Realities vs. Bootstrapping: The conversation explores the downsides of venture capital—loss of control, high pressure, low founder pay—and makes the case for customer-funded, bootstrapped growth.11:18 – 12:11 – Constraints Drive Innovation: Mike explains how constraints, like taking profit first, can push businesses to become more creative and disciplined, leading to stronger, more sustainable operations.13:01 – 14:18 – Profit First in Practice: Through his investment work, Mike mandates implementation of Profit First in struggling businesses, using profit constraints to expose inefficiencies and force needed changes.16:00 – 18:23 – The Envelope System: Profit First functions like an envelope budgeting system for businesses, with multiple bank accounts directing funds to specific purposes—profit, taxes, owner’s pay, and operations.21:03 – 27:59 – Customizing for Agencies: Marcel and Mike discuss how to adapt Profit First for agencies, reverse engineering spending from lifestyle goals and avoiding industry average benchmarks.31:26 – 34:57 – Smoothing Lumpy Revenue: Mike recommends “drip accounts” to normalize cash flow for businesses with irregular income, ensuring income is recognized and allocated over time.35:03 – 37:35 – Tools and Support: The episode closes with a preview of the new Profit First app and a global network of certified professionals to support business owners in applying the framework effectively.Show NotesNew Profit First AppProfit First ProfessionalsMike’s new ImprintLove the PodcastLeave us a review here.