A creative agency grew revenue 22% while team cost grew 13%

Revenue up 22% in eight months, team cost up only 13%, net income three times the prior year period, and receivable days back to normal inside a month.

Percentages, multiples, counts and timeframes only. Client revenue, profit and cash figures stay private.

The situation

The agency is 10 people running video, design and web work. We first talked in December 2024 and the agreement took effect the following April.

It wasn't broken when we started. It was growing, and growing is when margin quietly walks out the door.

The owner's instinct was already right. He had a people cost target in his head and a reason for it: "I like to keep things simple." What he didn't have was a monthly read that told him whether he was hitting it, or what was moving the number when he wasn't.

The industry wasn't helping either. Partway through 2026 he described business development across the industry as "just very really challenging right now." Growing 22% into that is the part worth noting.

What we did

Put the people cost percentage on a chart with a rolling average

People cost in dollars grew 13% year over year. Revenue grew 22%. So the percentage got better even as the spend went up, and the rolling average bent downward. That's the whole story of the engagement in one line, and it was invisible until it had a chart.

Since April the rolling twelve-month figure has held flat through team changes, contractor-to-employee shifts and a sales role coming off payroll. Flat, through all of that, is the result.

Built a mini P&L for billable pass-throughs, because he asked for one

Client travel, client meals, client advertising, billable expenses and production expenses were all being spent and rebilled, across a lot of projects. Nobody could say whether the rebilling covered the spend.

So we consolidated all of it against the matching income, with monthly and annual totals. The aggregate came out positive, and wide enough that he decided to audit his own team's billing: "I want to make sure that we obviously are, um, have integrity, so I'll check into this, too." A report that makes an owner check his own work is doing its job.

Moved equipment off the P&L

Photo and video equipment was hitting the profit and loss statement in the month it was bought, which made margin look worse in heavy purchase months and better in quiet ones. It now sits on the balance sheet and depreciates over the years the gear is actually used.

Split an operations salary across the gross profit line

One team member spends about half her time on client project management. Half her payroll now lands in cost of goods sold and half stays in operating expenses, so gross profit reflects the delivery cost it really carries.

Built a gross-profit-only report so a manager could own margin

The owner wanted to hand gross profit margin to a senior team member as his primary KPI, with an incentive tied to hitting it. He couldn't hand over QuickBooks access without exposing owner compensation, and locking down permissions wasn't enough, because anyone who sees the P&L can work backward.

The report stops at the gross profit line. A high-level summary with a granular breakout underneath, monthly, delivered as soon as the books close. Gross profitability transferred to that manager on October 1.

Where it landed

Through eight months of 2026: revenue up 22% year over year, team cost up 13% over the same stretch, and net income through the first five months running three times the same period the year before. Receivables ran up to 20 days once and came straight back inside a month.

The owner's own framing of why the gross profit focus works: "if I control my cogs it makes my revenue ... pretty explicit ... It's pretty predictable if I hit my GP is basically what I'm trying to say."

I'm trying to get everybody on your system because it makes my life easier.

Owner, 10-person creative agency

What this maps to

• Service: fractional CFO for agencies, and the dashboard that carries these charts
• OS module: Team Pay System, which is where the people cost benchmarks live
• OS module: Agency Profit Engine, for margin by revenue band

Monthly bookkeeping, a Fathom dashboard, and fractional CFO advisory for marketing and creative agencies. Logan works every account, and the rates are published rather than quoted.

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