STANDOUT agencies use Oterap’s Law

STANDSTILL agencies have too many fee burners.

STANDOUT agencies are dominated by fee earners.

One of the hardest challenges of growing an agency is managing the balance of billable versus non-billable staff. If the latter gets out of control, you’re in trouble.

Whether you’re charging clients by the hour or not, if you’re running an agency, you’re in the knowledge business. You make your money from selling your people’s expertise. That means you want as many of those people as possible billing as much of their work as possible to clients.

That said, we are dealing with human beings and growing a business here. Nobody can bill all their work to clients all of the time. Team meetings, admin. etc are all necessary and valuable internal activities. As you grow, you’ll need more people dedicated to admin, marketing, finance and HR. Many of these won’t directly earn revenue for you at all.

So how do you know what numbers of billable staff you should have?

Simply use what I call the Oterap Law. Unlike it’s better known cousin Pareto’s Law, Oterap uses the 80:20 ratio in reverse. Dedicate 80% of your people resources on earning revenue. Ensure no more than 20% are engaged with none fee earning activities.

Oterap means that in a team of 10 you should have 8 people as fee earners with only 2 non-billable. The same ratio applies if you are 100 hundred people strong.

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