If you feel like you’re living in a perpetual state of belt-tightening, let me assure you, you’re not alone. The last eighteen months have been tough and unforgiving for agency owners. Disciplined operations have been core to survival, and the “cost reduction” muscle is seeing a lot of action.
But for those of us who have that friend who got really into CrossFit, showed up on day three ready to lift a 400-pound tractor tire with all back and no legs, we know - there’s a right way and a wrong way to exercise a muscle.
And from what I’m seeing, some of you are gonna need a good chiropractor.
So let’s talk about how to do this the right way, starting with the fundamentals. We can think of all agency costs within the context of this 2x2 matrix.
On one axis, we have “business necessity” - how important is this cost to maintaining your current level of revenue?
By the way, “current” is the operative word here. No matter how inspired, costs that support your aspirations and vision but aren’t critical to servicing today’s revenue do not score high on business necessity. If we’re in a cost-cutting cycle, we’re focused on keeping the doors open. We don’t have the luxury of optimizing for a future we may never see.
On the other axis, we have “cost impact” - how expensive is it?
To make this tangible, let’s walk through some examples of typical agency line items and where they land.
FUEL
These are your high-necessity, high-cost items - the lifeblood of the agency. Think billable service staff, mission-critical platforms, and the benefits that keep your team from rage-quitting. This also includes account management and proven new business roles that directly support revenue. (Notice I said “proven.” Your Hail Mary first sales hire does not go here.) These costs are expensive but essential. Cut them, and the whole engine stalls.
STAPLE
These are the non-negotiables that don’t wreck your budget. Stuff like Slack, your accountant (obviously), internet, insurance - foundational tools that support the machine. Not flashy. Not optional.
CANDY
Low-cost and low-necessity. These were easy to greenlight when business was booming, but now they stick out like a sore thumb. Think co-working spaces you don’t use, meals no one asked for, and let’s be honest, most conferences. Cutting them is easy and obvious.
POISON
This is the danger zone. High cost, low necessity. Usually people - service staff, sales, or consultants - who are underutilized or underperforming. Here’s the thing about poison - it wasn’t always poison. When you made the decision to purchase, it was fuel. But your business changed, demand shrank, and now it’s excess weight. And it’s killing your margins.
And here’s what (many of) you are doing wrong.
You’re spending all your time cutting candy when you should be focused on the poison.
Eliminating candy is easy. These costs are visibly silly. They’re not embedded in your workflow. They don’t have families or mortgages. Cutting them feels productive. And business owners, we love easy.
I’m not saying keep the candy. Cut it. Just don’t celebrate like you solved anything. That extra two weeks of runway isn’t going to save you.
Candy is waste. But it’s also a distraction.
Poison is what matters. Poison is the difference between debt and survival. Between losses and breakeven. It’s the eighty for the twenty.
But ridding the poison is tough. It requires a mindset shift - a realization that you’re in wartime, and you’re fighting for the livelihood of your business. You can avoid difficult decisions at the likely, eventual expense of all decisions, or you can step to the plate and lead.
I don’t need to tell you how to identify the poison. You know. The issue is never the discovery. It’s always the execution. Don’t waste all of your courage on cutting out candy.
Start with poison. You’ve got this.