2023 Best Practices Study

Pro Forma Expenses

(expressed as a percentage of pro forma net revenues)

AGENCIES WITH REVENUES OF:

<$1.25M $1.25-$2.5M $2.5-$5M $5-$10M $10-$25M >$25M

Compensation

Payroll Employees

38.3%

37.0%

44.9%

47.7%

48.5%

53.3%

"Non-employees" (1099 Prods/outsourced)

2.5%

3.1%

1.8%

3.2%

3.3%

2.6%

Total Payroll

40.8%

40.1%

46.7%

51.0%

51.9%

55.9%

Benefits Payroll Taxes

4.0%

3.6%

3.2%

3.1%

2.9%

2.9%

Retirement

1.0%

1.4%

1.9%

1.6%

1.5%

1.6%

Insurance

3.1%

3.3%

3.4%

3.3%

2.8%

3.4%

Other

0.6%

0.2%

0.1%

0.2%

0.2%

0.3%

Total Benefits

8.8%

8.5%

8.6%

8.2%

7.5%

8.2%

Total Compensation

49.6%

48.6%

55.3%

59.1%

59.4%

64.1%

Selling Travel and Ent./Conventions

0.7%

0.8%

0.9%

1.0%

1.1%

1.4%

Automobile Expense

0.6%

0.5%

0.6%

0.5%

0.4%

0.4%

Advertising/Promotions

2.1%

1.5%

1.3%

0.9%

0.9%

0.9%

Total Selling

3.4%

2.9%

2.8%

2.4%

2.4%

2.7%

Operating Occupancy Expenses 1

4.4%

4.2%

3.5%

3.5%

3.1%

3.1%

Office Equipment Expenses

0.4%

0.3%

0.3%

0.3%

0.3%

0.3%

IT Expenses

3.1%

3.3%

2.7%

2.8%

2.7%

2.6%

Telephone

1.0%

0.5%

0.5%

0.5%

0.4%

0.3%

Postage

0.2%

0.2%

0.2%

0.1%

0.1%

0.1%

Supplies/Printing

0.8%

0.5%

0.7%

0.5%

0.4%

0.3%

Dues/Subscriptions/Contributions

1.3%

0.9%

1.0%

0.8%

0.7%

0.6%

Taxes/Licenses

0.4%

0.3%

0.4%

0.4%

0.3%

0.3%

Insurance

1.4%

1.4%

1.2%

1.1%

1.1%

1.0%

Professional Fees

0.7%

0.8%

0.9%

1.0%

0.9%

1.0%

Bad Debts

0.1%

0.1%

0.2%

0.0%

0.1%

0.1%

Outside Services

0.3%

0.4%

0.6%

0.7%

1.2%

1.1%

Education/Training

0.3%

0.4%

0.5%

0.2%

0.3%

0.3%

Miscellaneous

0.3%

0.6%

0.4%

0.4%

0.5%

0.3%

Total Operating

14.7%

14.0%

13.0%

12.2%

12.0%

11.3%

Administrative Depreciation

0.6%

1.6%

0.8%

0.7%

0.4%

0.9%

Amortization of Intangibles

0.8%

1.4%

1.1%

1.1%

1.7%

3.1%

Officer Life

0.3%

0.2%

0.2%

0.2%

0.2%

0.1%

Interest

1.5%

0.9%

0.6%

0.7%

0.7%

1.6%

Other

0.0%

0.8%

0.6%

0.3%

0.7%

0.5%

Total Administrative

3.2%

4.9%

3.3%

3.1%

3.7%

6.1%

TOTAL EXPENSES (PRO FORMA)

70.9%

70.4%

74.3%

76.9%

77.5%

84.2%

PRO FORMA PRE-TAX PROFIT/LOSS

22.8%

26.7%

24.3%

22.1%

22.5%

15.8%

PRO FORMA EBITDA 2

26.6%

30.9%

27.2%

25.2%

25.8%

21.9%

1 For firms that own their building and reported a much lower than peer expense load, we have normalized their occupancy expense. 2 Pro Forma EBITDA reflects normalized income and expenses after discretionary owner expenses are eliminated; excludes all administrative expenses.

Cross Category Comparison

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