The New Rules of Agency Profitability: Moving from Indigestion to Insight
Many agency leaders are stuck in a relentless "Cycle of Insolvency." They win new work, reach capacity, hire to ease the crunch, and then watch profitability slide as payroll rises before new hires are fully productive. To fix it, they chase more revenue.
Marcel Petitpas, Co-Founder and CEO of Parakeeto, argues that this is a misdiagnosis. Most firms don't have a starvation problem; they have indigestion. They are fundamentally broken in how they convert revenue into profit, and adding more work only makes the problem worse.
Profitability is an Operations Problem
A P&L statement tells you what happened, but it doesn't tell you why. It can't show you if the issue is pricing, utilization, or delivery efficiency. Marcel points out a critical truth: no amount of bookkeeping will improve your profitability—only changes to how the business operates can do that.
The Shift from Retroactive to Proactive
The traditional model relied on a linear relationship between time and money. But with the rise of AI and value-based pricing, that link is breaking. You can no longer wait until a month after a project ends to find out if it was profitable. Under the "New Rules," sales, delivery, and finance must operate from a shared, real-time model.
The Three Foundations of Profit Management
To move beyond reactive accounting, agencies need three core elements:
A Shared Framework: Clear definitions of metrics and targets so data creates insight rather than noise.
Reliable Data Production: Tools and workflows that capture data as part of normal operations, not as an administrative burden.
Repeatable Processes: A system to validate and normalize data as the business evolves and workflows shift.
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