If you are an agency owner, a director or a group leader, you’ll know how to manage costs against income for a client programme, a team or the whole firm. You will be familiar with the financial vocabulary that clients use, so you can talk to them in their own language. If you’re not so senior, this could be new territory.
You may think ‘I’m here to write good copy, have great ideas and keep our clients happy! Why do I need to know anything about earnings, OPEX and HR Ratios?’
There are two good reasons why it’s worth knowing the basics.
First: most agencies’ biggest financial problem is over-servicing. It can be as high as 20 per cent of income. Senior managers do all they can to minimize over-servicing, but every member of a client service team has a role to play. If you know how to handle a ‘could you just’ request from a client – based on financial understanding – you can help protect your agency’s profit margin.
Second: clients are (as a rule) good at managing budgets – it’s a high priority. They think (as a rule) in numbers and they use financial terminology day-in, day-out. They often think of us as their creative resource – and we are. But we can forge much stronger bonds with them if we show we also understand their vocabulary – if we think about our work and its purpose the same way they do.
The essentials of agency finances are simple. There are a few new terms, concepts and rules. You don’t need to be an accountant! Knowing the basics is a useful skill whatever your speciality, whatever your particular talents and whatever your age.