Most agency owners talk about growth.
They brag about hitting $10 million in revenue, landing bigger clients, or hiring their next team of specialists. But if you dig deeper into their numbers, the truth often looks different: higher revenue, higher stress, lower profit.
Here’s the reality — a bigger business doesn’t always mean a better business. In fact, many agencies get less profitable as they grow.
Let’s break down why that happens — and what to do about it.
1. Profitability Has Only Three Levers
Every business can improve profitability in only three ways:
- Increase price
- Improve productivity
- Control costs
That’s it. Everything else is noise.
Today, let’s focus on the third lever — cost control.
Because even when owners understand pricing and productivity, most fail at this one. They spend more simply because they make more.
2. The Illusion of Growth
Imagine two agencies:
- Agency A makes $5M in revenue, spends $3M in costs, and earns $2M in profit.
- Agency B makes $10M in revenue, but spends $9M in costs, leaving just $1M in profit.
Which one’s winning?
It’s not the $10M business.
Agency A earns twice the profit with half the chaos — and the owner probably sleeps better.
This is what we mean when we say:
Revenue is vanity. Profit is sanity.
The obsession with revenue is emotional. It’s tied to status and ego. But the value of your business — and your freedom as a founder — comes from profit, not top-line revenue.
3. The Math of Enterprise Value
Here’s where it gets real.
Your business value is often based on a multiple of EBITDA (earnings before interest, tax, depreciation, and amortization). Let’s say your agency earns $3M in EBITDA and you’re valued at a 6× multiple.
That’s an $18M enterprise value.
Now imagine your expenses creep up by $1.5M because you got “comfortable” spending.
Your EBITDA drops to $1.5M.
At the same 6× multiple, your business is now worth $9M.
That $1.5M in extra costs didn’t just cost you $1.5M — it destroyed $9M in value.
Every $1 in wasted expense can cost you $6 in enterprise value.
When you see it through that lens, cost control isn’t about frugality. It’s about wealth creation.
4. How Costs Get Out of Control
Costs don’t explode overnight.
They expand quietly — one new hire, one software subscription, one “temporary” contractor at a time.
The most common pattern we see as CFOs is this:
As revenue grows, founders lose visibility and discipline over spending. They start delegating purchasing decisions without accountability, and small leaks turn into profit drains.
The mindset shift is simple:
You don’t need to spend more to make more. You need to track more to keep more.
5. Start by Simplifying Your Financial Structure
You can’t control costs if your financials are a mess.
Most agencies have dozens — even hundreds — of expense accounts, making it impossible to see where money actually goes.
At our firm, we simplify everything into four overhead buckets:
- Sales and Marketing
- Management and Admin
- Operating Expenses
- Payroll Taxes and Benefits
Everything you spend belongs in one of these. That’s it.
Don’t overcomplicate your income statement with endless line items that all mean the same thing. Keep it simple, and use subaccounts only when you genuinely need more detail.
Once your chart of accounts is structured this way, it becomes far easier to analyze performance.
Example: Take your entire Sales & Marketing bucket and divide it by the number of new clients from your CRM — and you instantly have your Customer Acquisition Cost (CAC).
From there, if your bookkeeping is done correctly, you can pull vendor payment reports to see your ad spend by channel — Meta, YouTube, Google — and compare it to the number of deals closed.
That’s how you find which channels actually drive ROI.
6. Spending Without Systems Kills Profit
Once an agency passes $5M in revenue, it’s shockingly easy to lose control of overhead. Software, subscriptions, travel, meals — they multiply. Why? Because the founder stops being the only one spending.
And here’s the problem:
When people spend company money, they rarely treat it like their own.
That’s why we build spending systems with accountability:
- Assign ownership of budgets by department.
- Implement spend control tools like Ramp— virtual cards with preset limits.
- Set caps per vendor or category to prevent “leakage.”
Never hand out credit cards without clear accountability. You’ll bleed profit and not even notice until year-end.
7. Efficiency > Headcount
Most founders believe the next hire will solve their problems.
They think, “If I just hire more people, I’ll have more capacity.”
But capacity doesn’t come from people — it comes from systems.
Every new hire increases complexity. They need onboarding, oversight, and coordination.
If your processes aren’t tight, each new person adds cost without improving output.
The most profitable businesses in the world are masters at doing more with less. They focus relentlessly on automation, training, and workflow efficiency before adding bodies.
It’s not glamorous work, but it’s what builds scalable, valuable companies.
8. Overhead Discipline: Set Caps and Track Monthly
For most high-performing agencies we work with, the cost structure looks like this:
| Category | % of Revenue | Notes |
| Cost of Goods Sold (COGS) | 30% | Service delivery, subcontractors |
| Overhead (Total) | 40% | Including marketing, admin, operating |
| Profit | 30% | Before tax |
Breaking down overhead further:
- Sales & Marketing: 10–15%
- Management & Admin: ~15%
- Operating Expenses: 10%
The key is setting overhead caps.
If OPEX is capped at 10%, use virtual cards or departmental budgets to enforce it. When you hit the limit, spending stops.
What gets measured gets improved — but only if someone’s responsible for measuring it.
Review your forecast vs. actuals monthly.
If you’re over, dig into which subaccounts or vendors caused the overage. Ask:
- Was this overspending or an intentional investment in growth?
If it’s waste, cut it immediately.
If it’s an investment, tag it as “Launch Capital” (more on that in Blog #5) and track the ROI.
9. Doing Less, Better
Profitability isn’t about austerity.
It’s about discipline — spending only on what creates value.
Ask this of every expense:
“Does this make us more revenue or more productive?”
If the answer is no, cut it.
You don’t need more people, more tools, or more spending.
You need more clarity, accountability, and focus.
The businesses that thrive at scale are those that master simplicity — simple numbers, simple systems, and relentless measurement.
Because in the end, profit isn’t a number on a report.
It’s proof that you’re building a business that serves you — not the other way around.
About Argento CPA
Argento CPA partners exclusively with high-performing marketing agencies that want clarity, strategy, and profitability — not just compliance.
We specialize in fractional CFO services, financial strategy, and profit improvement systems that help agencies link performance with profit.
Our team helps agencies:
- Track and improve LER by department and role
- Build training and incentive systems tied to profitability
- Design bonus plans linked to financial performance
- Establish feedback and reporting rhythms that sustain growth
- Align personal development with agency financial goals
Our approach is practical, fast, and collaborative — built for agency founders who want to scale sustainably with a high-performance team.