Time is Money: The Agency Owner’s Guide to Maximizing ROI
In many of my coaching sessions, I hear a recurring dilemma: the struggle to determine where to invest your precious time. One moment, you’re on a Zoom call, nailing down a deal; the next, you’re nurturing existing clients, coaching your team, and ensuring your processes don’t crumble without your constant oversight. Sound familiar? While your juggling act is impressive, it’s also a recipe for burnout. Trust me, I’ve been there. So, here’s the question that has been keeping me awake at night: Where should you focus your time for maximum ROI?
I did a lot of research. I went deep into the world of project valuation — think discounted cash flow models, net present value (NPV), and regression models.
And you know what I discovered?
First, the existing models fall short. They do a better job of putting me to sleep than my Calm app.
Second, there’s a major gap in the discussion about how agency owners should allocate their time for optimal ROI.
A New ROI Model
So, what’s the answer to this question that keeps me awake? I’ve developed a model and can’t wait for you to pressure test it by using it in your own shops.
Allow me to paint a picture. Let’s assume you have a project invoice totaling $100K.
Allow me to paint a picture. You’ve got a project invoice totaling $100K.
Deduct Pass-Through Costs. These are costs often incurred by third-party firms that you mark up, such as media buying or specialized contract work (usually expertise that you don’t have in-house). Let’s ballpark this at $50K for our example.
Subtract Team Member Costs. Assume a blended rate of $150/hr and around 200 team hours spent on this project. This shaves off $30K in this example.
Calculate Project Margin. Simply take your total revenue ($100K) and subtract your total costs ($80K), leaving you with a project margin of $20K.
Account for your time. Divide the project margin by the time you plan to personally invest in the project. Let’s say you charge $200 per hour and anticipate putting in about 20 hours, which amounts to a $4K time investment.
Calculate your ROI. In this scenario, you’ve invested $4K worth of your time to potentially earn $20K. Whether that’s a good investment is up to you to decide.
Key Takeaway
Once you’ve applied this model across your range of services, the fog lifts. You’ll see exactly where your time is best invested. Just think of how you could scale your business once you’ve zeroed in on these insights.