OPERATIONS IS WHERE VALUE IS CAPTURED
The Operations System
The system that produces great work, again and again, at a profit.
Operations sits downstream of growth. Growth creates demand and wins clients. Operations determines whether you can deliver on what growth promises, at a margin that holds, without depending on late nights from the same few people. It converts talent and client trust into repeatable, measurable, transferable value. Get it right and you build a business that scales, retains and compounds. Get it wrong and you build a treadmill, one that runs faster the more successful you become.
The system runs as a continuous loop through four stages. Each stage shapes and constrains the next.
Where margin is won or lost before work begins
Revenue quality
Every margin problem, every delivery headache, every discount a buyer applies traces back to decisions made before the work started. Four dimensions set the constraints everything else operates within: client concentration, income security, services portfolio, and commercial framework. Client concentration is the primary revenue risk in agency M&A. Time and materials is the most common commercial model and the least valuable: it commoditises your time and hands every efficiency gain to the client.
What good looks like
No single client above 12% of net revenue. Income that is specific in scope, contractual in commitment, and outcome-oriented by design. A focused portfolio you chose, not one that accumulated. Pricing that reflects the value delivered, applied consistently across the team, held without escalation to the founder.
The production system
Delivery
Delivery is where the economics set in Stage 1 are preserved or destroyed. Most agencies deliver good work most of the time. The question is whether the quality holds when the person who usually runs it is on holiday. Five dimensions decide it: playbooks and documented process, capacity and utilisation, scope discipline, key-person dependency, and AI in delivery. That last one is reshaping agency economics right now: AI-enabled delivery produces better margin on the same revenue, and its absence is increasingly visible to clients in pitches.
What good looks like
Someone competent but unfamiliar with your agency could pick up a playbook and deliver to standard. Capacity is visible eight weeks ahead. Scope changes trigger a commercial conversation, not a free weekend. No client relationship or core capability sits with one person. AI is embedded in delivery workflows with shared standards, and its impact is measured.
Seeing the business clearly
Performance
Measurement is the most underdeveloped operational stage in agencies. Leaders who can't see their performance mid-month find out about margin problems at period end, when the options have narrowed. Six core metrics, tracked weekly, show problems forming early enough to act: gross income per head, utilisation, revenue concentration, income model mix, scope variance, and client success attribution. The stack matters too: a well-implemented CRM, a financial platform that produces timely information, and a PSA tool connecting the two are quality markers buyers read directly.
What good looks like
The leadership team can answer hard questions about the business quickly, with numbers they trust. Outcome measurement is built into client contracts and quarterly reviews, so you can prove the work is working in the client's commercial language. Client health is read from the activity trail, not from vanity scores.
Holding under pressure, at scale, under scrutiny
Sustainability
This is the stage most agencies plan to deal with later. By the time it's urgent, the options are narrow and the cost is high. Four constraints set the structural limits of the operating model: founder dependency, structural margin, revenue defensibility, and scalability. Founder dependency is the most common and the hardest to fix, because it feels like strength from the inside. From the outside, it's the risk. Every buyer calculates what happens when the founder steps back, and earnout length is proportional to the answer.
What good looks like
Relationships distributed across the leadership team, with the founder holding under 30%. Margin produced by the operating model, not by individuals working beyond sustainable capacity. Normalised EBIT above 15% and consistent across periods. A data room you could produce within 30 days, on demand.
Putting the system to work
Planned pathways or done-with-you consulting
The Operations System is best implemented in a planned pathway or by taking the Operations System Diagnostic first, then opting for an operations consultation.
We assess your operations the way a buyer's diligence team would, and tell you where margin is leaking. The operations consultation is a done-with-you project that examines how you the the work done in detail. It works like the pathway programmes, but it's priced per project. Either way, you get a 12-24 month plan to tighten revenue quality, delivery, performance and sustainability in the order that moves value fastest, and your team then delivers it.
"Workflows, systems and procedures aren't the most glamorous parts of agency life, but they are often the difference between agencies that keep growing and those that have a revolving door."
Dom Hawes
Start with an operations system diagnostic
Completed online and analysed by our experts, you receive a detailed analysis of your agency's operations and what's costing you value. The report gives you concrete actions to improve your operations system or enough data to justify kicking off a consult programme for positive change.
Frequently asked questions
What do buyers look for in an agency's operations?
Buyers dig into operations because operational infrastructure is the best predictor of sustainable success. They test four things: revenue quality (who pays you, on what terms), delivery (consistent and documented, not held in people's heads), performance (whether you can see your own numbers), and sustainability (whether the business holds up without you). Weakness in any of them means a lower multiple, a longer earnout, or both.
How much of my agency's revenue should come from one client?
Ideally, keep any single client below 12% of net revenue, but between 12 and 18% is perfectly acceptable AND quite normal. Above 18% is fragile, and buyers treat it as a standard due diligence red flag that triggers earnout structures and price adjustments. Watch the top three combined as well: below 40% is strong, above 50% is fragile. Three clients at 16% each is healthier than one at 30%.
Should my agency move away from time and materials?
Yes, deliberately and over time. Time and materials is the most common commercial model and the least valuable. It commoditises your time, caps income at the hours you can sell, and hands every efficiency gain to the client. Buyers pay a premium for agencies that price on value with defined scope. The shift takes operational capability and leadership conviction, not just a new rate card.
What is a good utilisation rate for an agency?
70 to 80% billable is strong. 60 to 70% is acceptable. Below 60% signals poor capacity planning or the wrong client mix. Above 80% looks efficient on paper but risks burnout and degrades quality. The other half of the answer is visibility: if you can't see capacity eight weeks ahead, you're reacting to problems that were predictable and preventable.
How do I stop scope creep eating my margin?
Start with one maxim: somebody always pays. If the client isn't paying for the work you deliver, you and your team are. Then build the system that catches it: track scope variance by client, run a formal change control process so out-of-scope requests trigger a commercial conversation, and hold your rates at renewal. Persistent over-delivery is a commercial confidence problem before it's a process problem.
How should my agency use AI in delivery?
Work through three levels. Ad hoc tool use: individuals using AI informally, gains inconsistent and uncaptured. Embedded workflow integration: AI built into specific workflows with shared standards, prompt libraries and quality checks, with impact measured. AI-native delivery: processes designed around AI, decoupling output from headcount. Ad hoc is now the market baseline. Margin advantage starts at embedded, and clients can already see the difference in pitches.
What metrics should my agency track?
Six numbers, tracked weekly: gross income per head, utilisation rate, revenue concentration, income security (your mix of commercial models), scope variance, and client success attribution. The limit is deliberate. The discipline is in choosing what matters, not measuring everything. If your dashboard is full of activity metrics, hours logged, posts published, you're measuring busyness, not performance.
What profit margin should my agency make?
Measured on a normalised basis, 15 to 22% EBIT is acceptable and above 22% is strong. Below 15% is fragile. Normalised means stripping out founder salary adjustments, overtime and non-recurring items, because that's the number a buyer will use. Then test how the margin is produced. Margin that depends on people working beyond sustainable capacity reverts when they leave, cut their hours, or burn out.
How do I make my agency less dependent on me?
Measure it first. If you hold more than half the client relationships, buyers see risk, not strength. Get below 30%, distributed across your leadership team. Then do the unglamorous work: hand over relationships deliberately, document what only you know, and build deputy coverage that's real rather than nominal. Earnout length is proportional to founder dependency. Lower dependency means a cleaner exit and a higher multiple.