The $255K Your Agency Loses Every Year (And How to Stop It)

If you run a 25-person agency, you're probably losing a quarter million dollars every year. Not from bad clients or failed projects – from invisible leaks you can't see.

I know because I ran an agency for three years. We thought we were doing fine until we discovered we'd missed tracking 4,200 billable hours. At $75/hour, that was $315,000 of work we'd done but never invoiced.

We weren't uniquely bad at this. Every agency I talk to has the same problem.

Let me show you exactly where your money is disappearing.

The Reality Nobody Talks About: You're Not 100% Billable

Here's what every agency owner pretends isn't true: your people aren't actually billable full-time.

Take your typical 25-person shop with 23 billable staff. They work 1,800 hours a year, but only 80% of that time (1,440 hours) can actually be billed to clients.

The other 360 hours per person? That's your reality tax:

• Team meetings and status updates

• Internal reviews and feedback

• Admin tasks and timesheets

• Training and development

• New business pitches

• Context switching between projects

This is NORMAL and NECESSARY. But it means you're really selling 33,120 billable hours per year, not the 41,400 you might imagine.

Leak #1: The Invisible Hours ($174K Gone)

Even during those 1,440 billable hours, you're not capturing everything.

Our research shows agencies miss about 7% of their billable time. That seems small until you do the math:

23 people × 1,440 hours × 7% = 2,318 lost hours 2,318 hours × $75/hour = $173,850 down the drain

Where do these hours go?

The "quick call" that turns into an hour. The founder doing strategy work but "too busy" to track. The designer helping with an emergency who logs it as "admin." The developer fixing something at 6 PM who goes home without logging.

It's death by a thousand cuts. Spread across 23 people and 250 working days, you never see it happening.

Leak #2: Scope Creep – The "Just This Once" Problem ($75K Gone)

What is scope creep? It's when a project slowly expands beyond what you originally agreed to do, without adjusting the budget.

It starts innocently. The client says "while you're in there, could you just..." or "it would be great if we could also..." Each request seems small. But they add up to massive unpaid work.

Here's how it kills your margins:

You quote a $40K website project (533 hours at $75/hour). The scope says: design, development, two review rounds.

What you actually deliver:

• Five review rounds instead of two (3 extra × 40 hours = $3,000 never billed)

• "Quick" mobile adjustments ("just take a minute" = 20 hours = $1,500)

• Emergency fixes for their old site (30 hours = $2,250)

• Social media templates ("since you have the files open" = 30 hours = $2,250)

Total extra work: 120 hours worth $9,000 Amount invoiced for extras: $0

Why does this happen? Because saying "that's out of scope" feels uncomfortable. Because you want to be helpful. Because the account manager promised it without checking. Because you think it'll lead to more work later (it won't).

Across all your projects, industry data shows agencies lose 3% of revenue to scope creep.

For your $2.5M agency, that's $74,520 annually.

Leak #3: The Utilization Disaster ($466K in Lost Capacity)

This is the killer.

Your people should be billing 80% of their time (1,440 hours). But they're actually billing 65% (1,170 hours).

Why the 15% gap?

• Your senior developer sits idle while juniors struggle

• Three designers are slammed while two developers have nothing

• Everyone looks busy but half are at 50% capacity

• You hire freelancers while your team is underutilized

You can't see who's actually available. So you make bad resource decisions every single day.

The cost: 270 lost hours × 23 people × $75 = $465,750 in lost capacity

The Three Leaks: Your $255K Problem

Here's what's really happening:

Let's be conservative and only count what's easily recoverable:

• Better time tracking (capture 5% more): $86,925

• Scope management (prevent half): $37,260

• Utilization improvement (just 5% better): $131,000

• Realistic Recovery: $255,185

Calculate Your Own Agency's Leaks (2-Minute Exercise)

Want to know what you're losing? Here's the quick math:

Step 1: Your Billable Capacity

• Number of billable staff: ___ people

• Billable hours per person per year: ___ × 80% = ___ hours

• Your average hourly rate: $___

Step 2: Calculate Your Three Leaks

Leak #1 - Untracked Time:

• Billable staff × Billable hours × 0.07 × Hourly rate = $___

• (Example: 23 × 1,440 × 0.07 × $75 = $173,850)

Leak #2 - Scope Creep:

• Annual revenue × 0.03 = $___

• (Example: $2,500,000 × 0.03 = $75,000)

Leak #3 - Poor Utilization:

• Billable staff × 270 hours × Hourly rate = $___

• (Example: 23 × 270 × $75 = $465,750)

Step 3: Your Recoverable Amount Take 35% of your total (that's what's realistically fixable): $___

Most agencies find they're losing 10-15% of total revenue to these leaks. If your number seems crazy high, it's probably right. That's why cash is always tight despite being busy.

The Scary Part: It Gets Worse As You Grow

Running a bigger agency? The leaks scale with you.

A 50-person agency billing $100/hour loses $680,000 annually from these same three problems. Same percentages, double the pain. That's not a typo – over half a million dollars vanishing into thin air every year.

The bigger you get, the more expensive these invisible problems become.

Why This Stays Hidden

The problem compounds because you're looking at the wrong numbers.

What you think is happening:

• Plan: 1,800 hours per person

• Assume: 85% utilization

• Expect: Good margins

What's actually happening:

1. Start with: 1,800 hours

2. Only 80% billable: 1,440 hours

3. Actual utilization: 65% = 1,170 hours

4. Hours tracked: 93% = 1,087 hours

5. Reality: You collect 60% of planned hours

Your spreadsheets show 40-hour weeks. Your timesheets say everyone's busy. But you're hemorrhaging money you can't see.

The $75/Hour Squeeze

At $75/hour, you can't afford these leaks:

• Your cost: $50/hour (salary + overhead)

• Your rate: $75/hour

• Your margin: $25/hour (33%)

Every leaked hour eats directly into that thin margin. Lose 7% of hours? There goes 21% of profit. Drop 15% utilization? Another 45% of profit vanishes.

What Actually Works

You need real-time answers to three questions:

1. Who's actually working on what? (Not what timesheets say)

2. How much budget is left? (Not what you hope)

3. Are we making money? (Not just staying busy)

That's why we built Supervisible.

Instead of discovering problems in month-end reports, you see them as they happen. When someone's at 45% utilization, you know today, not next month. When a project burns through 80% of budget at 50% complete, you get an alert, not a surprise.

For a 25-person team, it's $125/month. The cost of 1.6 billable hours to save 3,400.

The Bottom Line

Every agency owner tells me the same thing: "We're busy but cash is tight."

Now you know why.

You're not bad at business. You just can't see where the money goes. At 25 people, you're too big to track everything manually but too small for enterprise software.

You're stuck in the expensive middle, losing $255K annually to invisible problems.

The math doesn't lie. The only question is whether you'll do something about it.

Want to see exactly where your agency is leaking money? We'll run a free audit of your utilization and show you the specific gaps. No sales pitch, just data you need to see.