Jody Grunden built a virtual CFO practice from scratch to a $10 million sale, then grew it to $17 million after merging with Anders CPAs and Advisors. He came on Deconstructing Data to break down the profit maturity model he built specifically for marketing and creative agencies.
Here’s a scenario every agency owner has lived through. A big opportunity lands on your desk. Maybe it’s a new hire, maybe it’s a CMO you want to bring on, maybe it’s a bet on a new service line. Your gut says yes. But should you actually do it?
Jody Grunden has an answer, and it’s not a feeling. It’s a number. Specifically, it’s whatever’s sitting in your cash reserve account. Grunden has spent over two decades as a virtual CFO to marketing and creative agencies, and he’s distilled that experience into four pillars that determine whether an agency is actually built to grow or just hoping to.
How much cash should a marketing agency keep in reserve?
The formula is simpler than most agency owners expect: 10% of annualized revenue, sitting in a liquid account you can access immediately.
A million-dollar agency needs $100,000 in reserve. A five-million-dollar agency needs $500,000. That’s separate from a tax reserve account, which Grunden recommends funding at about 40% of bottom-line net income to cover monthly tax payments as they come due.
“That’s the amount of money that you should have in the bank and access to at a moment’s notice.
— Jody Grunden, Partner and Virtual CFO Practice Leader, Anders CPAs and Advisors
Why does this matter more than people think? Because cash reserve is what determines whether you can actually say yes to growth. Grunden has watched agency owners get a great opportunity and have to pass because they’re running on a line of credit instead of a reserve. The agencies with a cash cushion take the risk. The ones without it can’t.
What’s a healthy profit margin for a creative or marketing agency?
Grunden’s benchmark: a bare minimum of 10% net profit, with healthy agencies operating between 15% and 25%. Most of his clients land around 17%.
Below 10%, you’re just covering the cash cycle, with nothing left to fuel growth. Above 15%, you start seeing real, compounding, profitable growth.
“When we look at profitability, we look at a typical agency should have a bare minimum of 10% bottom line, 10% net profit. But they should be striving more towards 15 to 25%.
— Jody Grunden, Partner and Virtual CFO Practice Leader, Anders CPAs and Advisors
He breaks the revenue allocation down further: roughly 50% of revenue should go to production staff and contractors, another 25% to admin, marketing, and facilities, leaving that 15-25% bottom line. It’s a clean benchmark you can hold your own P&L up against.
Why a budget isn’t the same thing as a forecast
This is where the conversation got interesting. Most agency owners think they have a forecast because they made a budget in January. Grunden draws a hard line between the two.
A budget is static. You set a revenue target at the start of the year and measure how far off you are every month. A forecast is dynamic. It updates constantly based on what actually happened last month, and it projects forward from there.
“A forecast is very similar to a GPS system in a car… it shows you exactly how to do that and then eventually get to Fort Lauderdale in the quickest manner.
— Jody Grunden, Partner and Virtual CFO Practice Leader, Anders CPAs and Advisors
A budget is a map. It tells you the route, but it doesn’t account for road construction. A forecast is a GPS. It rebuilds the route every time something changes, whether that’s a slow March or an unexpected win. And a real forecast doesn’t just track revenue. It tracks team capacity, utilization rate, billable days per month (November and December have fewer billable days than January, for instance), and the balance sheet, not just the P&L.
“The worst thing you can do is create a forecast, create a budget, do all your planning that you just decided to do and assume everything is going to happen.
— Jody Grunden, Partner and Virtual CFO Practice Leader, Anders CPAs and Advisors
The fourth pillar, sales pipeline, is what keeps the forecast honest. If your contracted capacity doesn’t match what you projected, you adjust: hire faster, hire slower, or reset expectations before you overspend against a forecast that was never grounded in reality.
How did switching to subscription billing change the agency’s growth trajectory?
This is arguably the most practical part of the conversation. Grunden didn’t start with subscription pricing. He started billing hourly, like every accountant does, and ran straight into the classic service-business problem: clients who owed money stopped showing up to the meetings meant to help them.
So he experimented. First a flat monthly fee. Then, weekly billing, charged automatically every Monday like payroll.
“I closed 30, 40, 50% because that barrier of entry was super easy for the client.
— Jody Grunden, Partner and Virtual CFO Practice Leader, Anders CPAs and Advisors
No annual contract, no cancellation penalty. Just a weekly charge you could walk away from anytime. Counterintuitively, that flexibility became the moat. Client retention landed at 92-94%, and the average client stayed over five years, mostly leaving because they hit their goal (sold, merged, or grew big enough to bring the function in-house), not because they churned out of dissatisfaction.
Subscription billing also solved a concentration risk problem most agencies don’t think about until it’s too late.
“We don’t have any clients over 2% of our entire revenue. So if that client leaves, then we just lose the next weekly amounts.
— Jody Grunden, Partner and Virtual CFO Practice Leader, Anders CPAs and Advisors
Losing a big client under an hourly or project model can mean losing $100,000 overnight. Under Grunden’s subscription model, it means losing a fraction of next week’s revenue, spread and absorbed instead of taking a single gut-punch.
The real lesson: hiring is a data problem, not a gut-feel decision
Grunden’s biggest insight might be the least flashy one. Most agencies hire reactively, based on a feeling that the team is “getting busy.” Grunden hires off the forecast instead, knowing months in advance exactly when he’ll need to start interviewing for a role because the capacity math already told him.
“Hiring is really the key to profitability. If you can hire at the right time as sales are coming in, that’s when you’re going to be profitable.
— Jody Grunden, Partner and Virtual CFO Practice Leader, Anders CPAs and Advisors
He also touched on something that should resonate with any founder: he stopped doing client work himself roughly a decade ago, and that’s when real growth started.
“Our success really didn’t happen until I got myself out of client work.
— Jody Grunden, Partner and Virtual CFO Practice Leader, Anders CPAs and Advisors
For tooling, Grunden pointed to Reach Reporting as his top recommendation for agencies looking to build out forecasting without a heavy financial background. It plugs into QuickBooks and other accounting platforms and lets you visually track things like when you’ll hit that 10% cash reserve target.
The bigger picture
What struck me most about this conversation is how much of “agency profitability” comes down to just knowing your numbers, consistently, not just at tax time. Cash, profit margin, forecast, pipeline. Four numbers, checked every month, not once a year.
A lot of agency owners are incredible at the creative and strategic work and treat the financial side as something to deal with later. Grunden’s whole practice is built around proving that’s backwards. The agencies that scale profitably are the ones that treat their numbers with the same rigor they treat their client deliverables.
If you run an agency and you can’t answer “what’s my cash reserve, what’s my margin, and what does my forecast say about next quarter” off the top of your head, that’s the gap worth closing first.
To learn more about Jody Grunden and Anders CPAs and Advisors, visit anderscpa.com or reach out directly at jgrunden@anderscpa.com.
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Scaling Creative Agencies with Profit-Focused Models
This article was adapted from an episode of Deconstructing Data, BDEX’s weekly podcast on data-driven marketing. Tune in live every Thursday at 4:15 PM Eastern on LinkedIn.
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