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Example firm

The Margin Drain

Busy and growing, while scope creep eats the margin.

Now, Oct 2026
$513K · 26%
If nothing changes, Oct 2027
$649K · 16%
With the Growth Plan, Oct 2027
$640K · 16%
Extra profit, next 12 months
+$535K

Monthly revenue · Growth Rate. The healthy range for Growth Rate is 10% to 35%.

What went wrong

Nine clients slowly used more hours through scope creep and rework while their fees stayed the same. Hours per Advisory client went from 75 to 113 a month. Contribution margin fell from 59% to 47%, and 6% of clients now lose money, the worst at minus 32%. The firm kept hiring to keep up, so utilization looked busy and healthy.

What the Dashboard showed
Profit by Client, The Margin Drain. Portfolio contribution margin slid from 59% to 47%, while the normal firm held near 66%.

Profit by Client, The Margin Drain. Portfolio contribution margin slid from 59% to 47%, while the normal firm held near 66%.

If nothing changes

Scope keeps creeping and the firm keeps hiring to keep up, about 10 more people by October 2027. Revenue still grows, to about $649K a month, but margin keeps sliding and 12-month profit is only about $0.98M.

The levers to pull, and why

  • Profit by Client. Margin fell from 59% to 47% while revenue barely moved. The Fix-tier clients are the drain: reprice or rescope them, and exit the one that can't be fixed.
  • Cost to Deliver. Hours per Advisory client rose from 75 to 113 with no change in fee. Getting those hours back is what lets the firm stop hiring.

With the Growth Plan

Revenue is about the same either way, about $640K a month by October 2027, a little lower because the Exit client leaves. The gain is margin: the freed hours carry the growth, the firm needs about 10 fewer hires, and profit is about $535K higher over 12 months.

Revenue: if nothing changes, and with the Growth Plan
Revenue and what the Growth Plan is worth, The Margin Drain. Revenue is about the same either way. The gain is in costs: hires the firm no longer needs, less the Exit client's revenue.

Revenue and what the Growth Plan is worth, The Margin Drain. Revenue is about the same either way. The gain is in costs: hires the firm no longer needs, less the Exit client's revenue.

Illustrative. Juniper Ridge Advisory is a fictional firm with a full year of modeled data, analyzed the way we analyze yours.

The tempting fix

Why not just keep hiring?

Hiring hides the drain: it adds cost for hours clients aren't paying for. Fix scope first.

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