The Quarterly Financial Review: Q1 Just Ended - Do You Actually Know What Happened?

Hey there, welcome back to Agency Finance Letters.

A fun announcement - I just launched my new YouTube channel! Real strategies. No fluff. Based on what works for agencies doing $50-500K/month. Check out my first video ‘The Only Video You Need to Make 2025 Your Most Profitable Year’.

And now onto the main event: reviewing your Q1 performance.
Now that Q1 is wrapped up, you're probably looking at your financial statements and wondering why the numbers never quite match what you planned for at the start of the year. You're not alone.

In working with dozens of agencies, I've noticed a pattern: most quarterly reviews focus on the wrong metrics, giving owners a false sense of security until problems become impossible to ignore.

What Your Q1 Review Should Actually Tell You

Your quarterly review isn't just about confirming you hit targets. It should answer these specific questions:

1. Which services are actually making money? Not just generating revenue, but contributing to profit after all costs.

2. Which clients are worth keeping? Beyond revenue, which relationships drain resources and which are truly profitable?

3. Where is your cash really going? The gap between invoiced work and money in the bank tells a critical story.

4. What's coming next quarter? What do your pipeline and upcoming big costs look like? Predict problems before they hit your P&L.

A Simple Framework That Works

Here's the straightforward approach we use with our clients:

1. Get the full picture first: Compare basic numbers to targets, but then go deeper – break down by client, service, and team allocation.

2. Look for patterns: Connect current numbers to past quarters. Are certain issues recurring? Are some clients consistently late with payments?

3. Make specific changes: Every review should end with 2-3 concrete actions with clear ownership. Not "improve profitability" but "adjust pricing on X service by Y amount."

Why This Matters

When you review your finances the right way, you'll discover opportunities to improve profitability without working harder. Simple adjustments to your pricing, resource allocation, or payment terms can make significant differences to your bottom line.

The agencies that thrive aren't necessarily doing more work—they're just more intentional about which work they do and how they structure their finances. A proper quarterly review gives you the insights to make these decisions with confidence.

Small improvements, consistently applied each quarter, add up to substantial gains over the year.

Till next week,
Joey