DBA Member Forum | February Summary

Business performance and profitability

• Staff cost to fee income ratio remains one of the most critical profitability metrics, with 60% being considered healthy.
• Fluctuations in overheads since the pandemic have seen businesses operating closer to 65/70% on staff costs (leaving 10-15% for overheads and 20% for profit) but you need to keep a check on these ratios to maintain profitability. 

Business development and differentiation

• With clients viewing largely undifferentiated agencies as interchangeable, price-led decisions become inevitable. So how do you really stand out in the current market?
• The next DBA Member Forum on Monday 2 March, 1:30-2:30 will explore this in more detail.
• One point of difference for DBA members is to add the DBA logo to your website and Linkedin. It shows that you care about the development of your business, your staff and how you manage your clients and builds credibility and trust. Members can download it here. 
• Ask bigger, deeper questions to uncover the real business problem upfront beyond the brief.
• Define what success looks like and commit to measuring outcomes over time. We can help with this – book in a call. 

Talent, culture and people strategy 

• There’s a trend in design businesses at the smaller end of the scale operating with a senior, core team supplemented by freelancers, reducing the pressure to take on work that might be unprofitable. 
• Conversely, from the conversations the DBA is having with the Council for Higher Education in Art & Design (CHEAD), larger agencies are bucking this trend, taking on more junior talent.
• Entry level salaries below the London Living Wage (£28,860) limit who can afford to enter the industry – and early career conditions directly shape the future diversity and leadership of the industry.
• If headcount reductions are on the cards, be sure to audit the skills you need and where they sit in the business to prevent any unintended impacts on gross income. 
• Where pay rises are frozen, transparency is even more important. Clarify routes to progression and take a more holistic view of reward to keep hold of your top talent. 

Operational effectiveness and efficiency

• Protect your margins through accurate project scoping to prevent the age-old issue of ‘working for free on a Friday’. Timesheets are critical. For smaller agencies, this often starts with disciplined use of Excel.
• Operational efficiency depends on clear internal commitment to agreed budgets. Everyone needs visibility on what was sold, what the budget is, and how to stick to it.
• True efficiency comes from forward-looking resource management, not last-minute scheduling. Visibility of pipeline and capacity ensures you have the right people on the right work.

If you’d like tailored, strategic business advice, please do take a look at the DBA Experts Register. And why not consider booking yourself and your team a ticket to the Design Effect on 10 March to see how design is shaping organisations at a strategic level. The day is designed to create space to step back from day-to-day pressures and engage with the bigger picture together.

Our next DBA Member Forum is on Monday 2 March at 1.30pm GMT. Find out more and join us >