How to improve agency efficiency

How to improve agency efficiency

In this article, we’re going to look at how to improve agency efficiency with TIM WOODS. You would be forgiven for thinking TIM WOODS is a new member of the Beyond Noise team. Things are not always what they seem.

Every agency owner wants to increase the profitability of their business. The easiest way they think they can do this is to increase revenue.

Did I say easy? As we all know winning new business is the lifeblood of all agencies, but it’s far from easy and far from predictable. Improving profitability can be delivered not only through incremental business but improving your agency efficiency.

When my agency clients ask me how to improve agency efficiency, I introduce them to TIM WOODS. 

Sadly TIM WOODS is not a colleague of mine. Neither is he the good-looking guy pictured at the top of this article (that’s a stock image). TIM WOODS represents the 8 wastes of Lean.


My own agency was a big operation. We employed 175 people across 2 offices. Although we grew it to that size, the business was established well before I was involved. We acquired the agency in a MBO in 2002. Despite being a creative agency, it was a business that thrived on process. It had to, as the volume of work my team produced in a year was quite staggering. The small number of errors that were made was equally impressive.

Having lots of processes in a business brings lots of benefits. However, it can also create some challenges (particularly where processes evolve, develop and are added over time).

My business was a successful agency and we ran a very effective and efficient operation. Nevertheless we were always thinking about how to improve agency efficiency.

We wanted to become more profitable of course, but we also wanted to be faster and more responsive for our clients> W wanted to make things simpler and easier for our people. In order to achieve this, we invested in deploying the principles of Lean.

Lean process thinking is a systematic approach to improving efficiency developed in the Japanese manufacturing industry. Lean is a huge topic in its own right. A key concept in Lean is the pursuit of reducing or removing waste – or Muda as the Japanese call it – in the process. 

Who is TIM WOODS then?

Lean is a large and multi-faceted subject. As a concept developed for the manufacturing industry, some of the principles and applications are not totally suited to marketing agencies.

However, I found the focus on identifying and removing waste in an organisation to be extremely useful when we were considering how to improve agency efficiency.

As you may have already gathered TIM WOODS is not a person but an acronym. TIM WOODS represents the 8 elements of waste:

Transportation, Inventory, Motion

Waiting, Over-Processing, Over-Production, Defects, Skills

When I utilised Lean in my own business, there were only 7 wastes, but the eighth  (Skills) has been added since. It’s a good one and particularly relevant for people based businesses like agencies.


How can TIM WOODS help agencies?

You might be forgiven for thinking waste is the preserve of manufacturing businesses or companies that work with raw materials, but waste has many forms.

Reducing waste in an agency improves efficiency. It increases the speed of delivery, productivity and profitability.

TIM WOODS helps to identify – often hidden – wastes in an agency and can be used as a principle to explore how to improve agency efficiency.

The biggest impact TIM WOODS has for me is how it can help to change our mindsets as agency owners.

When looking at how to improve agency efficiency, it’s common for agency people to want to add things. Additional reporting and adopting – more – software products are usually the first thing people think about.

The key to improving efficiency though is not to add, but to take things away. To reduce complexity not to add more layers. Complexity is the enemy of efficiency and wasted effort, resources, time etc all contribute to complexity.

Please don’t implement a new productivity app in your agency without first looking at the processes. Adding new software without looking at the process behind it may at best paper over the cracks, At worst it can add more complexity and added tasks to an already bloated system.  

Let’s have a look at what each waste means… 



This refers to the unnecessary movement of materials or information. In an agency, this could mean transferring information between productivity software, databases and or documents.


Most agencies don’t produce physical products. We do have inventory though in the form of tasks, projects, briefs etc. Work stuck in queues, inboxes or backlogs that are “in-progress” but not finished and delivered to the client can be considered as waste.


In a manufacturing business, this usually refers to the needless movement of people. This can apply in an agency setting (unnecessary travel to meetings for example), but it can also involve navigating numerous programs, databases and performing multiple clicks or actions to get to the desired result. Too much motion is bad for effiicency.


Often a source of waste in an agency. Waiting for information to start or finish a task. Waiting for approval from other people in the agency or waiting for the client can be a huge source of inefficiency.


Over-processing can be a result of too many processes in an agency. Often agencies accumulate processes over time. People may be doing things that are unnecessary because they are told: “that’s how it’s done here”. It might have been required once, but maybe not now?

Other forms or over-processing include producing elaborate and detailed reports when raw data would suffice, or producing numerous options or polishing creative work to a high standard (when simple concepts would be acceptable for now).


Producing work or completing tasks that the client either hasn’t requested or doesn’t value are often examples of where an agency can be creating over-production. On many occasions, this is unintentional or done in the mistaken belief that the client appreciates it.


Perhaps the biggest source of waste in most agencies. Amends, rework, iterations, revisions are all ways we use to rectify defects. They directly cost the agency both time and money as well as being a huge opportunity cost.


At some point, the 7 wastes of Lean became 8. Wasted talent is a vital one for agencies though. You may have people doing tasks or work that they are not suited to. Other people could be performing and producing for you to a much higher standard of quality or output in a different area, if only they were given the opportunity to do so.

Lean in…

You don’t have to be a certified Lean process Black Belt (yes that is a thing), to apply some of the principles of Lean. Just take a deep dive into your processes and ask questions. Lots of questions.

How can we do this simpler? Do we really need to do that at all? Why do you do it that way?

We talk a lot about code bloat in agencies. When you’re looking at how to improve agency efficiency, think about process bloat. How can you reduce waste and friction in the system to make your people, clients and accountant happier?


Gareth Healey
Gareth is the founder of Beyond Noise. He has 25 years experience in the agency sector. A business coach and mentor, he works exclusively with ambitious owner-directors of established independent marketing agencies.

Growing or Scaling – which one is right for your agency?

Growing or Scaling your agency

Growing or Scaling?

It seems to be the current trend to talk about how to scale businesses rather than grow them. Are you growing or scaling your agency? Many people, myself included, use the terms grow and scale interchangeably, but are they the same thing?

In short, the answer is no.

I spoke at a conference for 80 digital agency leaders this week. Part of my talk included a section on the difference between growing and scaling an agency. From the feedback afterwards, this seemed to strike a chord with many people in the audience.

My point on this was that growing and scaling are different things. They might exist to achieve the same goal (a bigger agency), but they require a different approach and growth plan.

Growing an agency is difficult. Scaling an agency is not only harder, but it is a different strategy that will certainly need more investment, and may even require a different business model entirely.

What defines growth?

According to the OECD, high growth companies are businesses that grow revenue by 20% or more for 3 consecutive years. Doing this in a business, in any sector, is a significant achievement.

However, even growth in revenue over this timeframe, whilst enviable, does not necessarily qualify a business as scaling (or more importantly, a business that is scalable). Despite the frequent commentary around scaling, I’ve found it difficult to find a definition.  So are you meant to be growing or scaling your agency? Here’s what I think…

Is there a difference between growing or scaling your agency?

Revenue growth is usually a good thing for any business, but for many firms top line growth often comes with additional baggage; a comparable increase in costs. 

This is particularly true for marketing agencies, where securing additional clients generates more revenue, but the costs of the business also usually increase. Being a people-based business model, agencies require more human resources to service the additional clients. In short, growth is achieved, but as costs can grow at a similar pace to revenue, profit only increases proportionally.

Scaling on the other hand, is where revenue increases at a much faster rate than costs. Incremental customers and revenue are acquired. The business does not need to increase costs to service or satisfy this growth. Economies of scale are realised. The gap between revenue and costs widens and, in theory, profit grows exponentially.

Growing any business is a challenge and agencies are not different. Scaling a business however requires more than just hard work, planning and rigorous execution; it requires a certain type of business model.

The traditional marketing agency business model, or any service business for that matter, relies on the quality and number of the people that it employs. The same applies for any professional knowledge firm including accountancy firms and legal practices.

In their traditional format (leaving aside the rise of online legal services platforms etc) for these types of businesses, growth in top line revenue fuelled by more clients, requires additional people resources to service the growth 

Growth in revenue therefore, is usually accompanied by a corresponding growth in business costs. Of course, action can be taken to control the rise in costs and it will rarely be as linear as the example shown in Fig. 1. Some economies of scale may well be realised, but broadly more clients means more revenue, means more people, means higher costs.

Growing or Scaling

Of course, growth in both revenue and costs can translate into growth in profits, but the profit figure may well be larger based purely on size not on efficiency. In this situation, profits grow but profit margins are likely to stay the same.


On the other hand, scaling a business can result in bigger profits derived through increases to both revenue and margin.  If revenue grows but costs increase at a lesser rate, the gap between them widens (Fig. 2).  Improvement in profit margins, as well as profit overall, are the result.


In either the case of growth or scale, the speed with which they are delivered and the timeframe over which they are maintained is significant, but it is not a determinant of whether a business can be said to be scaling.


Growing or Scaling

Different Business Models

It is not that marketing agencies can’t scale, it is just that some business models are more suited to scale than others. As a people-based service firm, the business model of a marketing agency has many advantages:

  1. It is easy to set up – few barriers to entry exist
  2.  Low investment is required
  3.  It is a relatively low risk business model
  4. Break-even can be achieved quickly
  5. Successful agencies can produce healthy profits for their shareholders

These advantages are in stark contrast to the tech firms that are so prevalent at the moment. Tech firms are higher risk. They usually require higher levels of investment and funding at the early stage of their development. Failure rate is high and the break even for the majority of these firms is much later in their evolution than a service business.

That said, they say where there is risk there is reward.  Tech companies have much more potential for larger upside than service firms like marketing agencies. Whilst risk is high, the upside in terms of profitability, sustainability and saleability can be much greater than a service firm.

The difference is in the business model. You can grow businesses that rely on people for the delivery of your service (particularly if the people are adding or creating value not just delivering a process), but they’re difficult to scale.

Tech based businesses have the edge when it comes to scaling. In order to scale, a business needs to serve many customers, frequently. Reach and distribution is vital. If technology can facilitate this then economies of scale are more accessible and realisable. 

Accepting the heavy initial investment, once a tech firm has passed break-even point and gained traction in recruiting new customers scaling is underway. This is demonstrated in the classic “J curve” (or “hockey stick”) trajectory (Fig. 3).

A service firm usually has a flatter growth trajectory, whilst a tech firm (or similar) is more of a rollercoaster. That said for a lucky few Tech founders at least, the potential for a much steeper scaling phase is more easily accessible.

Scaling your agency

Different Businesses

To illustrate my point further, let’s take a look at 3 separate companies.

 1. Marks and Spencer is a British retailer established over 135 years ago in Leeds. It currently has 85,000 employees, with revenue per person standing at around £122,000.

2. WPP started life as a manufacturer of teapots and baskets, but after Sir Martin Sorrell took a controlling stake in 1985, he built it into a global advertising and marketing services group. Today it employs 130,000 people and has revenue of £130,000 per person.

 3. Facebook needs no further introduction. At less than 16 years old, the company employs – only – 40,000 people. They currently run a business that achieves revenues of £1.16M per person.

Three very different businesses built on 3 very different business models.  The difference in revenue per person between Facebook and the other 2 is remarkable (N.B. the profit per person figures are even more astounding) 

Clearly, Facebook is a tech platform and whilst there are several reasons for its phenomenal success, the scalability of its platform, and therefore its entire business is certainly paramount.

Scaling an agency

Growing an agency is not an easy task. Scaling an agency, whilst not impossible, is even more difficult and requires a different strategy.

Fundamentally, to truly scale an agency you need to embrace a different business model. The knowledge firm providing expertise/creativity through people is not scalable.

The scalable agency model must-have technology as a facilitator at its core.  It must be able to serve an increasing number of customers without a corresponding increase in costs.

It must be able to use technology to deliver reach. Today’s tech puts agencies in a unique position, the ability to more easily access clients and distribute value to a much wider audience.

Crucially I believe that to scale an agency, you need to have much more of a productised and systemised business. Consultancies are usually, by nature, small boutique operations.  To scale an agency you need to break away from the traditional agency consultancy model.

Is growth right for everybody?

I’m a believer in continuous growth and having a growth mindset. The maxim “if you’re not growing you’re dying” has always resonated with me.

However, I also believe that size, in itself, is not a strategy.

As an agency owner, you don’t have to be obsessed by size or scale. Neither do you need to be fixated with scaling. 

There is a great deal to be said for being small in today’s agency market. Small is agile and nimble. Small is personal and service focussed. Small is expert and artisan.

If you do want to grow your agency, make sure you have a vision for what that size needs to be and why the size is important.  Are you aiming for growth or do you want to scale the business?

If you do choose to scale then assess whether your business model is capable of achieving it. What needs to be changed, improved or adapted to give you the platform to be able to add more clients, more revenue but not increase your costs at the same rate?

12 ways to maximise the value of your agency

sell my agency

How do you maximise value when selling your agency?

I’ve spoken to many owners of independent marketing agencies over my 24 year career, and proportionally far more in the last 2 years since I exited my own agency. One of the most frequent topics of discussion is exit planning and how to get maximum value when selling your agency.

Whether they run a small lifestyle business or a larger growth agency, most agency owners want to realise the value in their businesses at some point. Nothing wrong in this of course,  I’m a big advocate of forward planning. Although, I have to admit it does annoy me when I speak to people who have yet to even register at Companies House when they start talking about “being out of this in 5 years time”!

It is difficult to sell a marketing agency.  Whilst there are thousands of great businesses out there, the market is saturated. Agencies are hard to value as they generally have a low asset value.  When selling your agency, its ability to generate cash will be the major driver of value and key to its attractiveness to a potential buyer.

There are a number of options you might consider when selling your agency. You may pursue a trade sale or aim to sell the business on to your management team. In any event, here’s my 12 key drivers – in no particular order – that will bring you a higher valuation and consequently a higher return when the day comes.

12 key drivers that will maximise the value of your agency

1. SPECIALITY – With so much competition, focussed expertise is more highly prized than ever. A specialist is far more attractive and valuable to potential acquirers than a generalist. There is a saying “the sharper the knife, the deeper the cut”. Try and make sure your agency has deep expertise in a particular area or client segment (ideally both!)

2. QUANTITY – To command a premium when selling your agency, you’ll need to reach a level of critical mass. Unless you’re in a particularly specialist channel, or have gained rapid traction in an emerging tech niche, make sure you grow your business to a size that will be attractive to larger acquirers with deeper pockets.

3. SYMMETRY – A major part of the value of an agency is its client list.  The  more relationships you have with bigger brands the better. Easy to say of course, but the value of larger clients is not just in their revenue potential. Acquirers may well view buying your agency as a stepping stone to access large clients they would like to work with. Crucially, a balanced portfolio of clients is vital.  Most agencies have a large key client, but no single client should represent more than 25% of your turnover (ideally less).

4. SENIORITY – Businesses looking to buy your agency will usually want to realise some cost savings (your own employment costs included!) This is ideal for you as the exiting party, so having a senior team already in place and running the agency is vital. Moreover, the better the senior team, the better the opportunity you have of selling your agency to them!

5. LIBERTY – Earn outs are an inevitable part of most transactions and are perhaps one of the most emotive issues for exiting agency owners. Buyers will want you to commit to an earn out in order to hand over key client relationships etc. Be prepared to fulfil your earn out obligations. If you want a quick exit, it will be reflected in the lower price you will ultimately receive.

6. SUSTAINABILITY – Agency revenue is increasingly moving to project work and recurring revenue streams for many agencies are difficult to achieve. Acquirers of cash generative businesses are looking to ensure the revenue has longevity. The more exclusive contracts you have in place and/or subscription based revenue you enjoy, may not just influence the price, but whether your agency is attractive to a buyer in the first place.

7. GEOGRAPHY – Where your business is based is not something you can easily change, but it will be an important factor for acquiring businesses when you’re looking to sell your agency. Naturally, circumstances will differ widely here, but in general agency major city centre locations are preferable and a footprint in London highly prized (as long as it operates client business and is not just a managed office location).

8. PROFITABILITY – The higher the profitability of the agency, the more valuable it will be. Agencies are usually valued using the profit multiplier. The multiplier side of the equation can be highly subjective (and influenced by the other drivers in this list) but the profit figure is more factual and controllable. Aim for at least 20% EBIT. Of course, if you’re running a very profitable agency, you might not want to sell at all.

9. TRAJECTORY – Agency life is often full of ups and downs. For many, looking at the agency’s performance over several years of annual accounts can often mirror the volatile nature of the sector. Buyers on the other hand, want stability and a smooth growth curve (the steeper the better of course). If you can demonstrate consistent year on year growth and profitability, it will be more attractive to a buyer looking to add your agency their business. If you can’t, be ready with a solid reason(s) why a certain year (or years) showed a temporary dip in your agency’s fortunes.

10. TANGIBILITY – The key assets in an agency are generally its talent pool and its client relationships.  Both require constant management and both can leave the agency if they wish.  Tangible assets and IP can dramatically increase the value of an agency (in addition to locking in client relationships).

11. TRANSPARENCY – Some ex-agency owners have pointed out that a “clear track record” helps to increase the value of an agency (or any business for that matter). What they mean by this is the agency has nothing that the due diligence process will highlight as a potential negotiation point for the buyer to reduce the value. Legal disputes that may still feasibly carry a risk of further action, employment law transgressions, financial issues such as the participation in tax schemes to minimise tax liabilities etc. We’re not talking skeletons in cupboards necessarily here, but anything that is not completely straightforward and transparent that might set alarm bells ringing for a buyer. You can’t necessarily sort these things out retrospectively of course, so the best advice is to avoid them in the first place.

12. PREDICTABILITY – An important omission from the original list. The ability of the agency to demonstrate a clear sales process that is predictable and systemised. The agency understands its sales funnel, and deploys an established sales model that creates revenue and business growth based on a formulaic process. Sales do not depend 100% on the exiting owner!


As much as these drivers are value creators, they can also be value detractors. If you excel in one area this will increase the value when selling your agency. On the other hand, if you have an issue or underperform in one or more of the factors, this could have the opposite effect. Indeed, this could negatively impact the value you achieve becoming a tool for a buyer to use to try and discount the price.

Finally, of course you don’t have to be thinking of selling your agency to utilise these drivers. Indeed, the earlier you address the factors, the better foundations you put in place and the more attractive and valuable your agency will become.

3 lessons for agencies from Gordon Ramsay

sell my agency

What can an agency learn from a TV chef? 

I like Gordon Ramsay. He’s a very intense guy, and although he shouts and swears a lot, I love his energy and passion. I admire his high standards and drive for perfection. He clearly wants to be the best at whatever he does. But what has this got to do with agencies I hear you say? Whilst I don’t think Gordon’s management style (essentially standing an inch from somebody’s face and bellowing swear words at them), would be effective in an agency environment. I do think Gordon has a few lessons for agencies in other areas.

For starters… 

Some years ago, Gordon made a TV series called Ramsay’s Kitchen Nightmare’s. It basically involved him walking into failing restaurants and turning them around within a matter of days.  I used to like watching these shows, but the format became tired quite quickly, probably because it was so formulaic. Essentially, Gordon turned up at a restaurant unannounced, tasted the food and spat most of it out, before proceeding to chastise and antagonise the owner. He then set about telling them what to do. Every other word he uttered generally began with F (and I’m not talking “Food”).

I’d long forgotten about this series until earlier this week when, whilst channel hopping late one evening, I came across a re-run of the USA version. It’s basically the same format,  but Gordon turns up in a poor quality disguise and for some reason everybody calls him “Chef Ramsay” at every opportunity.

The main course… 

Kitchen Nightmare’s followed the same format every episode.  Once Gordon had ruffled everybody’s feathers and got a few people crying, he set to work. 

His recipe for success was very simple and consisted of 3 main dishes. Each contain delicious lessons for agencies in my opinion:

1. REDUCE THE CHOICE – In every single instance, Gordon believed the menu in the restaurant was far too extensive. In EVERY episode he cut down the amount of dishes on offer. Not only that, he introduced a Signature Dish.  A speciality of the house. Something that the restaurant could promote and become famous for.

This approach brought MANY benefits. It made it easier for the customers to buy. It made it easier for the business operationally. It brought more CLARITY to the restaurant proposition. They were clearer on what they stood for and who they were trying to appeal to. Quality improved as they became better at preparing the reduced number of dishes they served. Costs reduced as waste reduced (not as many ingredients were needed and wasted). Supplier relationships and terms improved as the restaurants needed to buy fewer things but in larger quantities more regularly.  I could go on.

2. GET THE MOJO BACK & RALLY THE TROOPS – Gordon ALWAYS had a harsh word or two for at least one member of staff (usually more). Sometimes these people were the owners, sometimes they were employees. In any event they were all UNDERPERFORMING.  Standards were poor. They had often fallen out of love with the job. Confidence was low and it was having a detrimental effect on the whole team.  Gordon did 2 things. Firstly he confronted the individual(s) and gave them some – brutally – honest feedback. After lots of emotional outbursts from both sides (which makes great TV of course), the people either left the business or responded to Gordon’s “tough love” and rediscovered their mojo.  He built their confidence back up by re-lighting the fire in them and praising their efforts. He inspired the rest of the staff by cooking his new menu and getting them to taste it and be proud of it.

3. GIVE THE PLACE A FACELIFT – Most of these restaurants looked unloved and tired. The decor was out of date, branding was poor or non-existent, and the standards of cleanliness were not great. There was very little marketing going on. The production company paid for a complete facelift and overnight the restaurants transformed into a brighter, cleaner, more modern and inviting environments. Regular and lapsed customers were invited to experience the new menu and invariably everybody was impressed with the food, service and decor.  The restaurants were back on their feet again.

To Finish…

I sincerely hope your agency is not failing. I’m sure it’s not a nightmare (although like every business, I bet it has its moments).
However, regardless of the current performance of your agency, there are lessons for agencies in these TV shows that are now mostly consigned to the lower reaches of tertiary Sky TV channels late at night.
There are things we agency owners can take out of this and even take action on next week in our own businesses.
I’m sure you’re already ahead of me, but let me summarise the key lessons for agencies here:
1. ARE YOU DOING TOO MANY THINGS OR TRYING TO APPEAL TO TOO MANY PEOPLE? – Could your agency benefit from a more refined and focussed “menu”.? Could you develop a greater depth of expertise rather supply a breadth of services?  Could this make you more attractive to CERTAIN clients and even allow you to charge more? In short, should you niche your proposition?
2. ARE YOU OR YOUR STAFF UNDERPERFORMING?  – Have an honest look at yourself and your agency. Are standards as high as they were? Are there any weak links in your team? Who has lost their mojo?
I’m not advocating shouting and upsetting people here, but I am urging you to consider whether standards have dropped and every member of your team are at the top of their game. If not, they either need to be coached or, for the good of the rest of the business, maybe it’s time for them to move on?
 3. DOES YOUR AGENCY NEED A FACELIFT? – Have a look around your office, your website, your social media channels.  In fact, why not review your whole client experience at every touch point? Is everything as good as it was or could be? How do your compare to your competitors?  Have you grown complacent in any areas?
I’m not pushing for rebranding here, but I am suggesting that Chef Ramsay has some lessons for agencies in both his TV show and his approach to business. The restaurant sector is highly competitive. Choice abounds and customers can be very fickle. Like the agency sector, you need to continually assess whether you are operating to the highest standards in order to stay relevant and profitable.
Why not gather your partners or senior team together on Monday morning and ask them what improvements they would make?
PS – No shouting or swearing allowed!



Scroll to top