It’s almost too obvious a statement, but it's still worth sharing: Sales is the key to the health and success of any business.
Most people would agree that selling more is a good thing.
But what happens when the selling part goes so well that growth happens too quickly?
If you bring on more client accounts than your agency can handle, a host of other problems can occur: Your ability to serve clients to the expected standard is compromised, your staff members become overworked (read: disgruntled), and you lose focus on the important things as you become consumed with how to handle the growing capacity issues.
That success you worked so hard for becomes your #1 problem.
It’s an issue our organization faced in 2015, and it’s what forced us to become more disciplined in how we view capacity planning.
When You're Unprepared for Growth
In 2015, we set a goal of a 20% growth rate. At the time, we thought it was an ambitious but attainable goal, and we were already in the process of hiring for three new hires:
A director of business development whose time would be 100% unbillable.
A project manager who would help to improve our efficiency. This person would also be mostly unbillable.
A senior-level copywriter to handle additional projects.
We ended the first half of the year up 36% and were absolutely thrilled about the results. We were trending way ahead of our plan, and the outlook for the second half was even better. The pipeline was full of good prospects, and we had a few big proposals out that we felt fairly certain we’d close.
The downside was that we were running a little ragged: A few deadlines had to be pushed, and the effects of too many late nights and constantly juggling too many competing priorities was beginning to show in people's attitudes. But having too much work beats the alternative, right?
Our giddiness waned quickly halfway into the year when our traffic manager, the person charged with moving work through the agency and managing our deadlines, asked, “Hey, has anyone thought about how we’re going to handle all the new business coming our way?”
The answer, obviously, was "no." There was a mountain of work heading our way, and we didn’t have a plan for how to handle it.
4 Steps to Solve Capacity Planning Problems
Getting to a working solution took some time to plan and implement, but in the end, it's pretty simple. Here’s a walk-through of how we handled having more work than we could handle:
1) Create Better Revenue Projections
We added a corresponding capacity requirement to our revenue projections that detailed the number of people hours required to do the work overall.
In addition, we broke these hours down by category of role. Now, all projected revenue is defined by work type and time: research, strategy development, design, copywriting, lead nurturing, social media engagement, etc.
These categories will likely change as we identify valuable ways to delineate work types into more nuanced segments. Strategy, in this case, might be eventually broken down into inbound strategy, social media strategy, and content strategy, as each requires different amounts of time. Doing this reflects the reality that different tactics require different capabilities and therefore, different types of employees.
2) Define a Capacity Plan
Next, we audited our staff and the number of hours available from each person. This way we were able to put into numbers the capacity by work type: How much time do our copywriters have available this month for content? How much design time does our creative team have to give?
We did this by identifying billable hours available for every position based on actual from the prior year, with some adjustments for new, emerging work types.
3) Establish Capacity Goals for Employees
We also set capacity goals for each employee. These included:
The number of hours of billable work required for each role.
The number of hours spent on administrative work, such recording and submitting timesheets.
4) Determine an Optimal Revenue Capacity for Each Role
Using some assumptions about our client work mix (for each client, how much work will be coming in and how many hours will be required), we established an optimal revenue capacity by position, each department, and for the enterprise as a whole.
This allows us to prepare for upcoming surges in advance (an upcoming website project that will require an “unusual” amount of time, for example) and minimize the effects on any one person by shifting workloads.
With this process in place, we were able to add to our capacity by hiring new people with confidence, knowing the specific skills we needed based on the projection. We were also able to predict with more certainly the type of work these new people would take on.
The Benefits of Capacity Planning
Once we better understood our current and future capacity, we were able to better plan for recruiting and hiring new employees. Our talent search was more directed and purposeful, and we were able to give potential hires a better idea of the type of work they would be doing in their first few months on the job and even what percentage of their time would be billable and non-billable. We also have a better idea of when a specific role needs to not only be filled but also trained up and ready to get to work.
These small changes have also changed our attitude. We can sell and sell and sell knowing that we have a plan in place for getting everything done.
Originally published Mar 16, 2016 9:00:00 AM, updated February 01 2017