Running an agency often feels like a balancing act—keeping clients happy, maintaining profitability, and ensuring your team stays engaged, all at the same time. Many leaders believe they have to choose between running an efficient business and creating a great place to work. But in reality, these two goals go hand in hand.

A well-structured agency creates a better work environment, and an engaged team delivers better business results. The challenge? Too many agencies rely on gut feelings rather than data, leading to firefighting, burnout, and unpredictable workloads that keeps orgs stuck in survival mode. 

So how do you know if you’re approaching this “survival spiral” and how can you escape? 

We’ll cover: 

• Signs Your Agency is Stuck in Survival Mode
• Characteristics of a Thriving Agency
• The Metrics That Will Transform Your Agency
• How to Transition from Survival Mode to Growth

The Survival Spiral 

Some agencies unknowingly trap themselves in a cycle where work is overwhelming, profits are shrinking, and employees are heading for the exit. If this sounds familiar, you might be stuck in the Services Spiral of Death—which, yes, sounds dramatic, but for agency leaders trying to make payroll while keeping clients happy, it can feel all too real.

Signs Your Agency is Stuck in Survival Mode

1. Compressed Margins – Costs keep rising, but pricing hasn’t kept pace, eating into profits.
2. Stagnant Revenue – New business isn’t coming in fast enough, and existing projects aren’t generating enough value.
3. High Employee Turnover – Your best people are leaving, and those who stay are burning out.
4. A Reactive Culture – Instead of proactively managing workloads, leadership is constantly putting out fires.

A common reason agencies get stuck in this cycle is lack of visibility into key metrics. Without utilization and margin data, it’s impossible to know if the business is actually making money—or just running in place.

Intuition is great for creative work, but it’s a shaky foundation for business operations. Agencies that don’t measure what matters end up making pricing and staffing decisions in the dark.

The Services Growth Flywheel: A More Profitable, Engaged Agency

The good news is that agencies that shift their focus to operational efficiency can break free from the survival spiral and build lasting momentum, where strong processes, engaged employees, and profitability continuously reinforce one another.

Characteristics of a Thriving Agency

1. Predictable Revenue Growth – A strong sales pipeline consisting of strategic opportunities. 
2. Healthy Margins – Pricing reflects value, and projects are consistently profitable.
3. Engaged Employees – Clear career paths and balanced workloads keep top talent invested.
4. Proactive Workflows – The agency is structured to anticipate challenges rather than react to them.

The biggest difference between agencies in the flywheel versus the survival spiral? Visibility into key business metrics. Agencies in growth mode aren’t guessing—they’re using data to guide hiring, pricing, and resourcing decisions.

For example, tracking utilization rates helps agencies determine whether they need to sell more work or hire additional staff. Similarly, understanding project margins allows agencies to focus on the most profitable work instead of taking on projects that show little return.

The Metrics That Will Transform Your Agency

Tracking everything is overwhelming, and let’s be honest, no one has time for that. Instead, agencies should focus on two core metrics that provide the clearest picture of financial health and operational efficiency.

1. Billable Utilization: Are You Using Your Team Efficiently?

Billable utilization measures how much of an employee’s available time is spent on revenue-generating work. This helps to understand whether there may be too much, or not enough work for the team and what actions to take in order to balance off workloads.

• If utilization is too low, you may be overstaffed or struggling to win work.
• If utilization is too high, employees are at risk of burnout.
• A balanced utilization rate ensures profitability without pushing employees to their limits.

A key takeaway? Agencies that don’t track utilization are flying blind. Without this metric, they risk hiring too soon, waiting too long to bring on new staff, or mismanaging workloads.

2. Project Margins: Are You Making Money on Your Work?

Project margins reveal how much profit remains after accounting for labor and other costs. It’s important to track margin on both the project type level as well as project margins for specific clients. Calculating and tracking both is key to identifying what projects and clients are the most profitable, and which offerings may need to be adjusted in order to maintain healthier margins. 

Many agencies assume that as long as revenue is growing, everything is fine. But without monitoring margins, they might be taking on work that keeps them busy but doesn’t contribute to long-term growth.

How to Transition from Survival Mode to Growth

Unfortunately, selling more work is not the quick fix to unpredictable revenue, compressed margins, or erratic utilization rates. Growth without operational improvements will only magnify existing problems. Instead, there are a few strategies you can focus on to gain momentum for growth.

1. Track Utilization and Margins

Start by calculating your team utilization and project margins. Then, set a cadence to continuously monitor these metrics. Visibility into where time and resources are going will immediately highlight areas for improvement.

2. Adjust Pricing and Scope Management

Evaluate project types that typically lead to lower margins and identify where there may be opportunities to adjust pricing or resource management processes.

3. Balance Team Structure

A team made up entirely of senior-level employees may struggle to compete on pricing. Introducing more junior talent can create a more sustainable cost structure while giving senior staff opportunities to mentor and lead.

4. Move from Reactive to Proactive Sales

A strong pipeline reduces the pressure to take on unprofitable projects. Identify your most profitable services and ideal client types, then focus sales efforts accordingly.

5. Prioritize Employee Development

Employees who see a clear career path are more likely to stay engaged. Organizations that invest in mentorship, training, and leadership development build stronger teams—and ultimately, a stronger business.

The Secret to a Scalable, Engaged Agency

Agencies don’t have to choose between profitability and employee satisfaction. When operations are dialed in, the business runs more smoothly, employees feel supported, and clients receive better service. The agencies that succeed in the long run are those that balance financial health with a strong internal culture.

By focusing on billable utilization and project margins, agencies can break free from the cycle of uncertainty and build a business that thrives—for both leadership and employees alike.

For agency leaders ready to shift from survival mode to sustainable growth, the path is clear: track the right data, refine operations, and create an environment where both the business and its people can grow together.