alright guys so in today's video we are gonna talk about capital allocation for agency owners now you might be wondering what the hell does capital allocation mean it sounds like one of those fancy like banker terms and that's because quite simply it is well capital allocation means where here you allocate your capital you know where you put your money now I'm going to talking to you specifically as an agency owner you know and there's some things that are you know the thing is if I was speaking to someone with an e-commerce brand if I was
speaking to someone with a gym for example my advice would be very very different but like 90% of you guys on this YouTube are either currently building your agency or have a successful agency or you are you know on the cusp of starting and diving into building in an agency so capital allocation is something that I feel is or not a lot of people touch on you know most people focus so intently on how can I you know get more retainers from my agency how can I increase revenue and then also you know how can
I you know increase profits I guess they go hand in hand and one of the beautiful things about owning an agency is profit margins are just ridiculous because the entity it is a service you know it's not a product it's not a commodity it's nothing like that it's a service so with that said before you can start thinking about capital allocation where to put your company's money and take company I'm gonna say company right now but take company with a pinch of salt because look you'll be on the other side of this and you may
be like dude it's literally just me like what are you talking about company but look if you have ten employees if you have a team of five or if you were just on your own this is still applicable to you as long as you are an agency owner so before you can start thinking about like where do I put my money where do I put my you know my resources where do i allocate my capital you got to actually have capital and money to put away or put into different buckets etc etc and this brings
me on to my first point I had a private consultant clan of mine you know I pretty much never do one-on-one consulting only for people that are like really really promising and it's very very high ticket I pretty much only do one-on-one consulting with my agency clients because you know they're like eight nine figure businesses so they can actually afford it that was a you know consulting this guy coaching this guy on how to use his personal brand to leverage more coaching gigs you know who's trying to build up his coaching business etc etc and
you know this guy was doing around like I'm not gonna say his name he was doing around like 15 20 25 km month and I was like okay cool cashflow is looking good you've got a good healthy business right there and you know in one of our last coaching sessions I asked him like hey dude you know how much money do you have in the bank I'm like you know you don't need to tell me precise number if you're uncomfortable that reason I asked is simply because like I need to know you know you've got
this money coming in where should we allocate it and where as a put best and to my shock the guy told me yeah I've got roughly seven and a half thousand a bank and I was like just blown away you know that is not a healthy business right there and that kind of brings us full circle back to the point which is please please please please please please put some money in the bank put some money away because they said you can't start think about where should I put my money most effectively if you have
no money in the first place that you've put away you know and we'll kind of come back to that point as an agency owner one of the beautiful things as I said is kind of like the fact that like we have such high profit margins so one thing that will always be you know ever-present as an agency owner is software now if you run any sort of online business you're gonna spend a bit on software now as you start to scale your agency more you can start to bring on new sort of expenses you know
I have a thing called like type form and I pay like twenty four bucks a month for it and it's like Google Forms it just does the same thing I just like the style of type form or yeah I spend a year in a year like 300 bucks on a software you know so as you start to grow your agency you can start to do like that you know that's like you know upgrade software is and you know but when you first start just bootstrapping you know use Google slides use canva use Google forums use
like click funnels free trial use like like there's so many different things that you can just freakin like bootstrap it with when you first start and that's a beautiful thing but you know one place as an agency owner you you need to allocate a little bit of capital to is software so now with my agency doing around forty forty five thousand dollars put him on the profit monthly software costs I would say come up to roughly not that much I think roughly around like three hundred bucks we've got like typeform clickfunnels loom loom Pro once
again I don't even need loom Pro I just get it because like I love the free version of loom so much I'm like I'm so happy with that there's a software called choir I think that's how you pronounce it that's for running ads you know creating new ad variations stuff like that overall I think it comes out to like 300 bucks so agency that's pulling in roughly fifty thousand dollars per month in revenue you know to spend like three hundred bucks on software pretty pretty good so one place you always need to allocate or leave
a little bit of a budget to allocate some capital to is your software and that's gonna be ever-present so the next thing once you have your software is your team the beautiful thing once again about agency is I always always tell my customers in six various main and people that comes to Moorea mastermind etc etc is whenever a client signs you build them straight away okay I always always always start work after a client has paid the invoice let's just say for example I sign a client on January first you know January first I receive
the payment we on board the client and then at this point I have one full-time employee for my agency and I have a second that works for like my agency and my training business so um you know I would say I have a technically one and a half employees but you know my point is I actually have employees now so it's a little bit different but for most of you guys if you're using contractors you know your contractor might be charging you per client per month like seven hundred bucks or whatever to deliver whatever service
you know whether that be like you know email marketing or like Facebook ads or Google Ads you know whatever service you're actually delivering for your client so the best part is you build a client on day one and then on day 30 your team member your contractor they bill you so that's really really good healthy positive cash flow right there that actually allows you to create something called flow we don't really need to go to an than that but float is the reason that say someone like Warren Buffett has a lot of extra capital to
invest and front because of a business like Geico so you know that kind of creates a little bit of like a 30-day float for you but once again we wait to go to in depth on that my point is with team members you know there's no thought that it doesn't need to be any thought in your head about capital allocation because you get paid on the front end they get paid on the back end so like there's you don't need to think about that ever as a expense or you know somewhere that you need to
assign your money so really what makes up an agency is software is team members and that's really it that's the beautiful thing that is really at the the you know the profit margins are just through the freaking roof so now because it said you don't need to worry about your team because they get paid on the back end you hopefully you build on the front end software is the only thing you need to think about and then after that now you're in this beautiful position where as you know a gym owner is like stress through
his freaking mind because he's got like all these like expenses and stuff he knows we're coming through payroll etc this this that and you know he can't like you know a gym owner has actual employees he can't tell his employees oh you know if he gets their amount of gym memberships I'll pay you a ten a month so you know that really causes a lot of stress for all these other businesses but with you you are in this golden situation right now where you are starting to collect cash now especially when you start as an
agency owner the best investment you can make is in your self education now I sound like 99.99% of motivational idiot speakers out there invest in yourself so you know self education is the most important but like it's actually true and let's sit down logically and think about it in an ecommerce business the thing that is driving sales is pay traffic or influence or you know a lot of people do that influence your stuff etc etc but most of time gets paid traffic in order to pay for that paid traffic you need some money sitting in
the bank whereas with an agency you know most of the stuff that you're doing when you know your outreach whether you're doing old video outreach you're doing email outreach you're doing cold calling you're doing LinkedIn you you're building a personal brand and getting inbound leads like none of this stuff really takes any money so this leaves you in this beautiful position where you're sitting on a lot of cash and that's why I say especially at the beginning the only person driving you forward at the beginning as an agency owner is you like you are the
main lever you're the main variable to your agency success so why not improve yourself now here's the thing if I was talking to an e-commerce business I would say okay know like the most important thing you need to focus on is paid traffic scaling your paid traffic but an agency owner it's different we're using pretty much all free methods so really the best investment you can make as an agency owner is in yourself in your own education and in giving you that information to drive your agency for it now once you get to around 20
30 40 km on profit consistently my best piece of advice is spend money on paid traffic to either grow up your social platforms if you go look at guy like Gary Vee spends millions and millions on social ads to grow up as social platforms once the social platforms are frickin huge then from there he can command huge retainers from you know clans paying like two hundred thirty three hundred four hundred five hundred K a month for marketing services because he's Gary Vee so that's number one and that to me that's like you know you can
do that because it's kind of easier to run ads for that or what you can start to do is you can start to build an auto acquisition funnel a case study funnel or a webinar funnel I mean there's like four or five different ways that you can get agency clients through paid traffic and then you can start spending money on there you probably lose you know a couple thousand dollars when you first start because it's quite hard to get right you know if any of you guys want to watch my case study funnel you know
the one I personally use for my agency it's like right down below this video I think there's a link to my website or maybe even the case a I don't know if I'm the links at this point but there'll be a link to my website and then that on there you can just go view the case they're here whatever so you know that's a place that you can put your money as you start to grow and as you start to scale as you start to want to get clients on autopilot now here is the place
that I would honestly say after investing in yourself is the second most important as an agency over the best place to put your money is back in your bank and here's why one of my favorite sayings is the hungry don't get fed I hope eat that the hungry don't get fed you know like me and Bob I'm sure law you guys know ball we joke about it all the time you know the hungry don't fit don't get fed you know whenever we see someone taking certain actions or doing certain things like you know ouch the
hungry don't get fed and basically what the hungry don't get fed means is that don't you find it funny that like you know say someone like Gary Vee you know say someone like Gary B has so many people hitting them up saying hey let me do this free work for you let me provide you value let me do this let me do that look and the funny thing is Gary view of all people is the least you know as a person that least needs it yeah your standard ordinary guy that just starting to build this
agency you would never like be like oh let me buy you lunch let me you know let me do this free service for you and then if I'm good then you know you can pay me etc etc like the point is the hungry don't get fed you know people who are in the scarcity mindset people smell it from a mile away abundance attracts more abundance and I'm not someone who's very like you know airy-fairy like you know super super spiritual I'm quite spiritual but not super super spiritual a little bit to airy-fairy but you know
it's just simple psychology it's social proof it's social proof and sub communication so when you go to pitch agency clients and you know you're pitching a retainer for 5k 10k a month and like they smell that you needed a little bit too much you know one of the reasons that I've had good success in my agency and I continue to get really high ticket leads and high ticket clients through the door is because when and a good place to check this out is go check out that case new phone as I said and you will
see it like it's a totally transparent the fact that I really don't give a whether I get that person's business or not because I'm sitting on good good money in the bank and here's the thing if you put two scenarios through you know two people with the same skill level two people with the same sales level you know ability to actually sell their service and you send us the same client if one person has is sitting on 30k in the bank one agency owner and the other is sitting on like 3k in the bank which
one do you think mentally psychologically needs it more it's the one with the 3k in the bank and the funny thing is as I said the hunger you don't get fed the people who needed the most never seem to get it and you know that's that abundance mindset that like it's just so so important you hold through your life you know it's funny the first ever at the time recording that's the only tattoo I have this says my cup runneth over you know what my cup runneth over Macy means is I have more than I
need you know I am abundant and this you know this tattoo meant a lot to me just because of some of the things I went through as a child some of the things that saw some of the things I experienced it wasn't great and you know it's funny one of the things my mom was instilled in me she came from the Soviet Union one of the youngest of seven children and she always said 'man take everything you have because you never know when you're gonna get more and when you're the youngest of seven children growing
up in the Soviet Union that's true but when you are living in you know the 21st century in a first world country with all this opportunity to us you really need to remember stepping into meeting that if you lose that client or you don't get that deal it's totally cool you got tons and tons more and even if you have a dry month if you have a drive month most agency orders get so desperate and when you get desperate you get is not a really place where you start signing agency clients you know you shouldn't
sign where you know your sale your sales is off because you know a potential clan will give you some sort of rebuttal or some sort of pushback and you know rather than just like dealing with it calmly you know you're you're suddenly you're suddenly starting to chase them and you're suddenly starting to just trip over your words and just like you know as I said most people they know that like they know if you need it too much and if you need it too much they don't want to be that person that's why I love
this phrase so much it just encapsulate every I'm trying to stay here which is the hungry don't get fed so to sum up this video if you are an agency when you're trying to grow your agency you're starting to get some positive cash flow and you're looking like where should I actually put this money and you really should be doing that first things first throw it in the bank because it said the more money you have the more in the bank it creates this flywheel effect if you ever read the book that everything's stored by
Jeff Bezos and also good to great I believe Jim Collins a good degree you know you all understand what I mean by flywheel the funny thing is the more clients you sign the more money you can put in the bank the more money you can put in the bank the easier it is to sign clients and you you know when you go into meetings like they can tell you don't give a whether they sign or not they can tell you they care about you know you care about their business you want their business but you're
willing to walk away at any moment and when they know that they know that like you're the right person for the job so yeah number one put money in the bank it's actually gonna make your sales skills a lot better and it's gonna mean that you know you've got that level of security and number two invest in yourself because the thing is in as an agency owner it's different to Jim where there's like all these different expenses employees etc etc you know a gym or to even say something like an e-commerce brand where you need
some sort of traffic some sort of traction to drive the business forward it's totally different with an agency with an agency we've got really high profit margins we've got a lot of money to sort of play with and put where we want so the best place to put it is in you because you are the main driver of your business whereas say something like an e-commerce brand paid traffic is the biggest driver of their business so almost remember that always keep that in mind and guys I hope you enjoyed this video and I'll see in
the next one
