The 3 Key Financial Metrics for Agency Success, With Jon Morris

Jun 25, 2025

Ask episode

Chapters

Transcript

Episode notes

Points of Interest

0:00 – 1:00 – Opening: Marcel introduces the episode’s focus on financial visibility and growth, and welcomes returning guest Jon Morris, CEO of Fiscal Advocate and creator of EngineBI.
1:00 – 2:55 – Jon’s Background: Jon shares his journey from founding Rise Interactive to launching Fiscal Advocate, emphasizing the value of financial insights in scaling agencies.
3:00 – 4:30 – Overview of Fiscal Advocate & EngineBI: Jon explains the core services of Fiscal Advocate—bookkeeping and FP&A—and how EngineBI enables forward-looking budgeting, forecasting, and business intelligence.
4:30 – 6:45 – Clarifying the Relationship Between Fiscal Advocate & Parakeeto: Marcel and Jon outline how their services complement each other—Fiscal Advocate focuses on company-wide financial health, while Parakeeto dives deep into project-level delivery profitability.
6:45 – 8:25 – The Profitability Venn Diagram: The duo discusses the intersection of finance and operations in agency profitability, stressing that complete visibility requires both financial structure and operational clarity.
8:25 – 12:00 – The Three Key Financial Metrics: Jon presents his core framework: cash relative to monthly overhead, profitability (target 20% EBITDA), and year-over-year revenue growth (target 20%).
12:00 – 15:10 – Managing Cash with Discipline: Jon details a best-practice approach to managing cash through segmented bank accounts—operating, accrual, savings, and (if applicable) media accounts—with clear reserve targets.
15:10 – 17:20 – Strategic Use of Excess Cash: They explore scenarios where excess cash should be reinvested or removed from the business, with an emphasis on growth-minded planning or lifestyle-business clarity.
17:20 – 22:35 – Accrual Accounting & Forecasting Pitfalls: Jon explains how deferred revenue and mismanaged payment terms can create false security in cash flow and emphasizes the need for accrual-based accounting and detailed forecasting.
22:35 – 24:45 – Spending Benchmarks by Function: The episode outlines ideal spending allocations—50% on delivery, 30% across admin/ops/marketing, and 5% on R&D—to balance growth and margin targets.
24:45 – 27:55 – Growth vs. Profitability Tradeoffs: Jon advocates for disciplined reinvestment of margin into scalable functions rather than focusing solely on profit extraction, aligning with the “Rule of 40” growth philosophy.
27:55 – 33:59 – Importance of Gross Margin Visibility: Marcel and Jon stress the necessity of management accounting to accurately track delivery margin, revealing it as the single most powerful lever for scaling profitably.

Show Notes

Love the Podcast

Leave us a review here.