What’s the difference between “paper profitability” and actual cash in the bank?

That’s the gap we explore in this week’s The AgencyHabits Podcast.

Peter and Sei-Wook break down what every agency eventually learns (sometimes painfully):

• A profitable month doesn’t mean a healthy cash position.
• Late client payments can turn a great quarter into a crisis.
• Project-based work creates lumpy, unpredictable cash cycles.
• Retainers behave differently, and can actually create float.
• And yes, taking 50% upfront can be a trap if you treat it like profit.

They also get into one of the trickiest founder questions: How much cash should you actually keep on hand?

Their answer is surprisingly grounded:

• 1-3 months of expenses for retainer-heavy agencies
• 3-6 months for project-heavy ones
• Any more than that? You may be masking deeper issues: slow decision-making, bloated teams, or lack of focus.

Now, here’s my perspective.

(Hi, Ivona here. Yes, you are getting this e-mail from an actual human.)

Listening to the recording felt like watching two decades of agency experience distill into one theme:

“Cash isn’t really about money, it’s about how you make decisions.Too little cash forces panic. Too much cash creates complacency. The real discipline is learning to make decisions before either extreme sneaks up on you.”

That’s the part that stuck with me. Healthy agencies don’t sit on giant cash piles, and they don’t run dangerously lean. They build systems where cash supports clarity, not emotional or reactive choices.

If you’ve ever stared at your bank balance and wondered, “Is this enough? Too much? Not enough?” - this episode gives you the clearest answer you’ll find.

P.S.

If you found value in today’s insights, join us tomorrow, Nov 19th, for the first AgencyHabits Knowledge Share, 12:30 - 1:30 PM. It will be a live, open conversation for agency founders and leaders who want to learn, share, and grow together.

Who are we?

Hi, we're Peter and Sei-Wook, co-founders of Barrel Holdings, a portfolio of agency businesses. We also run AgencyHabits, a resource for agency operators featuring lessons learned from our various agency businesses.

Thanks for being a subscriber. If you or anyone you know is interested in selling their agency business, please check out what types of agencies we're looking for and email hi@barrel-holdings.com.

Also: Peter posts a lot of agency content on LinkedIn, give him a follow!