An honest conversation about agency owner compensation

In this episode, Chip and Gini offer up some tough love for many agency owners who aren’t compensating themselves fairly.

The co-hosts discuss the need for two income streams: compensation for work provided to the agency and profit-taking as a reward for entrepreneurial risk.

They talk about the different ways that owners can take compensation, the value of getting professional advice, and specific areas where they have seen owners miss opportunities.

Key takeaways

* Gini Dietrich: “Just because you own the business does not mean you should be giving your time away for free. Ever.”

* Chip Griffin: “If you’re in the United States and you’re an agency owner and you’re paying yourself less than six figures, there’s something wrong.”

* Gini Dietrich: “You can’t go to work every day and not be compensated for the work that you’re doing. You just can’t, nobody does.”

* Chip Griffin: “When you’re thinking about how you calculate your compensation for the work you’re doing, not the profit piece, just the work you’re doing, it needs to be substantially more than your highest paid employee.”

Related

* Ways you can compensate yourself as an agency owner

* The difference between agency owner compensation and profits

View Transcript

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Chip Griffin: Hello and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin.

Gini Dietrich: And I’m Gini Dietrich.

Chip Griffin: And Gini, I want to talk about our compensation today, because I think, I think it’s about time we started paying ourselves.

Gini Dietrich: I agree. Boom. Do it.

Chip Griffin: Right after this.

So today we’re gonna talk about owner compensation at agencies because this is something that I think a lot of owners struggle with getting correct for all sorts of reasons. First of all, I think they don’t think about it correctly and, and how they should be compensating themselves. They don’t think about all of the tools that they have to compensate themselves, and they don’t use the right numbers for compensation.

So I, yes. We can explore this from a lot of different angles, but I think fundamentally, if you’re going to be running a successful agency, you need to be taking the kind of compensation that makes you happy to be doing it. But you also need to be taking the compensation that fairly represents the work that you’re doing, right, so that you know whether the business is performing well or not.

Because too often I go into an agency and I look at their books and they tell me, oh yeah, we’ve got a 40% profit margin. We’re just killing it. And then I find out they’re not paying themselves.

Gini Dietrich: They’re not paying themselves. I’m like, So you don’t actually have a 40% profit margin.

Chip Griffin: Correct. And so that, I mean, and,