Leverage these Tips to Increase Profit and Founder Take Home Pay
Today, we’re discussing ways to increase profit & have more freedom with your money.
By focusing on increasing revenue, reducing unnecessary costs, and optimizing both tax strategy and payment structure, creative agency founders can significantly boost their take-home pay.
Motivations:
Everyone is in it for different reasons and has different versions of success.
Some want to ensure they have enough to support their lifestyle.
Others want to pay themselves the salary they were paid in their last corporate job.
Others have sufficient funds but want to save the money for their kids college education or in a retirement fund.
Where to start: figure out what that reason is, what the reason behind the goal is. From there, you can form goals and targets to get there.
Increase Prices
Regularly reassess your pricing structure and raise rates to reflect the value you provide, especially for long-term clients. Value-based pricing can help capture higher profits.
Streamline Expenses
Review and cut unnecessary costs, such as software subscriptions, office space, or underutilized services. Trim your budget without compromising quality to increase your margins.
Move to Retainers
Shift from one-off projects to retainer agreements. This provides consistent, recurring revenue, allowing for better financial planning and smoother cash flow.
Optimize Team Structure
Outsource tasks that don’t need full-time attention, such as admin or bookkeeping, and use contractors for project-based work. This keeps your fixed payroll lower while scaling up as needed.
Take Dividends or Profit Distributions
If structured as a corporation or LLC, explore taking dividends or profit distributions instead of a salary. These can be taxed at a lower rate than regular income, depending on your country’s tax laws.
Pay Yourself First
Set a fixed percentage of monthly revenue as your salary or owner’s draw. Prioritize paying yourself early to ensure you're not leaving personal income as an afterthought.
Increase Client Retention
Focus on retaining high-value clients with strong relationships and upsell opportunities. Retaining existing clients is more profitable than constantly acquiring new ones.
Optimize Tax Strategy
Work with an accountant to maximize deductions and optimize your tax strategy. Look for tax credits, retirement contributions, and business write-offs that can reduce your tax burden and increase take-home pay.
By taking a hard look at your expenses, raising your rates, and prioritizing financial and tax strategy, agency founders can significantly increase take-home pay and profit.
