Building Agency Operations to Scale: A Guide to Profitable and Efficient Workflows

Every agency hits a crossroads: do we offer everything and become a one-stop shop, or follow the lead of 83% of agencies and focus on doing one thing exceptionally well?

Whatever your decision, know that it impacts how you staff, sell, deliver, and scale. Here’s how full-service and niche agencies compare.

Kyle says, “Find something that you do really well and focus on that one thing and try to scale it. A lot of agency owners I work with are really good at one service but think ‘why don't we add this other thing that we might not be good at but could drive more revenue?’”

The problem with horizontal expansion

If you choose to expand your service offerings, there are two paths you can take: horizontal or vertical.

Selling more to an existing client seems logical. If you’ve already sold them on one service, you can convince them to order more from the menu. But while these services might serve the same client, they don’t flow through the same processes or skill sets. They require new hires, new tools, and entirely different workflows, which takes its toll on your operations.

Kyle says, “What usually happens is you're good at one service, and then a client asks for another service. Because you're revenue-hungry, you say yes. I think there might be certain business models where that can work, but I don't think agency is one of them.”

“Single-service agencies or people who focus on one thing tend to be more profitable. They have fewer employees and a higher revenue per employee. Operationally, it's an easier business to run,” Kyle elaborates.

Once you’ve figured out whether you want to specialize or go broad, the next challenge is delivery. Who does which part of the work in your agency? Typically, copywriters, SEO specialists, designers, and developers all jump between all your clients and projects, which can cause a number of problems for agencies:

As an alternative, Kyle recommends moving to a service line or pod model — a small team of specialists who own a defined set of clients from end to end. These pods function like mini-agencies within the overall business, each bringing greater operational clarity.

This type of structure doesn’t have to be rigid to work. Talkshop Media, a Toggl customer, has taken a more fluid approach to pods, blending collaboration with specialization to fit the team’s geography across three locations.

Tracking KPIs per pod makes everything easier — from evaluating output to capacity planning. Instead of trying to piece disjointed bits of work together, you have clear visibility into who's delivering what and for which client. That makes compensation fairer and performance management more meaningful, too.

Most agencies want better workflows — standard operating procedures (SOPs), dashboards, and the works. But many fail to make them stick because of who is putting the information together.

The team-led approach to SOP creation

In typical agencies, when things go south, the owner or other important stakeholders sit down to create standard operating procedures for how they think things work. The result is a tidy SOP that looks great on paper but is ignored in practice. It's disconnected from how the work actually happens.

SOP should be collaborative efforts rather than top-down commands. Kyle Hunt shares a simple, three-step process for creating a good SOP:

Bonus tip: Kyle devotes 15 minutes every day to fixing broken processes.

“If you do that for like 30, 60, 90 days, you will create a process very rapidly, and the team will learn how to create a good process because you're coaching and guiding them. Instead of telling them, “Here's the process,” I say: “Team, how do we do this?””

Utilization rate is one of the oldest metrics in the agency world. It tracks how much of a person’s available time is spent on billable work. But measuring time spent doesn’t deliver the full picture.

Kyle suggests a shift in perspective from utilization to capacity: how many clients or projects a team member can take on while still producing high-quality work. It's a human and practical approach, especially for creative roles where the average person has only about six hours of juice before the output becomes unpredictable.

Tracking that capacity in real time is where many agencies stumble. Tools like Toggl Track Projects give you a clear view of who’s working on what, how long tasks are taking, and when someone’s at risk of overload, so you can adjust workloads before quality slips.

The dangers of batching for your agency team structure

In an effort to speed things up, many agencies work in batches. For example, one part of the agency does strategy and then passes the relay baton on to copy and design until the deliverable is complete.

Every baton handoff creates friction: delays, revisions, and missed context. Something simple like an email sequence ends up dragging on for weeks.

The problem is the structure rather than the people. When teams are too segmented, no one really owns the outcome, and everything takes longer than it should.

Grey Matter’s Tony Bradberry approaches this differently. His team sets the tone early by involving the delivery team from the very first client call to build long-term trust and create space for proactive account growth later on.

A strong opinion from Kyle:

“Revenue, profit, churn... they’re all lagging metrics. Once you see it on your P&L, it's already happened. You can’t change it.”

So, what should you track instead? Kyle mentions five of the most important metrics to achieve operational excellence in your agency.

The “Big Five” metrics that matter:

These KPIs focus on the delivery and client experience, not solely how much money you’ll make from a client.

A simple price increase can be one of the biggest boosts to your financial management. As Kyle says, most agencies are simply too cheap for their own good, giving an example of an agency charging a $3,000 monthly retainer while making $1 million for the client in profit.

His resource management tip? Increase your prices. Toggl Track’s project dashboards and forecasts are a great visualization tool, allowing agencies to manage costs and budget more accurately.

Why 20% goes a long way

Most agencies undercharge relative to the value they deliver. A modest price increase of even just 20% can significantly boost your margins if your delivery costs remain constant.

Example: If your agency makes a 20% profit on a $10,000 retainer ($2,000 in profit and $8,000 in costs) and you raise your price by 20% to $12,000, your profit could jump to $4,000.

Even if costs rise slightly with more client work, the majority of that additional revenue still flows to your bottom line. You don’t need to double your prices to double your profits — you just need to run lean and price with confidence.

When paired with a pod-based delivery model, those higher prices become even more profitable because your team is working more efficiently with clearer ownership and less overhead.

To stay on track, you can use features such as fixed fee projects in Toggl Track, where you set a fixed price for a deliverable and see your progress against that fixed goal.

One of the biggest threats to retention is misaligned expectations. When agencies overpromise and underdeliver, trust erodes fast. And because the barrier to agency ownership is so low, clients are often burned by underqualified agencies selling outcomes they can’t produce.

Toggl Track supports this process with real numbers. You can build custom reports that show time spent by project, team member, and task type, giving clients a clear view of progress and value delivered.

Why audits are crucial for client management

Before signing a new client, Kyle Hunt’s team runs a deep audit of their operations, including full profit and loss reviews and balance sheets. Kyle advises,

“I would advise some sort of audit process — whether it's paid or unpaid is up for debate. But there should be a process where you know exactly the situation that you're walking into prior to signing the client. And then you're building the roadmap based on the team's actual ability to deliver.”

The audit is beneficial for both parties: the agency knows if they can do the work and achieve high client satisfaction. On the other hand, you deliver value up front, and all future client communication is based on you helping rather than simply trying to run with their cash.

It’s impossible to talk about agency operations without mentioning the elephant in the room: artificial intelligence. For some agency owners, it’s the key to task optimization and speeding up project delivery. For others, AI brings the expectation that you should be charging less as you’re spending less time on the work.

But clients don’t pay for hours; they pay for outcomes.

Tip: Struggling to find out where you’re losing money? Toggl Track’s Profitability reports displays profitability by member, client, project, etc, to understand if it’s really AI that’s digging into your profits.

AI can only get you so far

92% of businesses plan on increasing AI spending in the next three years, and businesses in any industry will likely need to figure out how to use the technology in some shape or form to remain competitive. If you don’t, your clients will.

But the Achilles’ heel for most agencies isn’t their ability to adopt AI at speed, but rather their lead generation and sales processes. If an agency sales team can’t get their customer acquisition costs under control, no amount of AI will help them stay afloat.