Planning your agency’s future is important. No one would dispute that. But just how do you do it? That’s what we will cover in this blog. Specifically, the three critical forecasting models that you can use to prepare your agency for future hires, future spending, and future profit, which will likely influence your income as a founder.
These three models are your organizational chart, your capacity measure, and your P&L. You probably already have these models built out for where your agency is today (if you don’t, you should) but you need to reformat these models for what your agency will look like 30 days, 90 days, and even six months from now. Formatting these models for the future is how the best agency founders forecast and plan for their business to cross that 7 figure, and eventually that 8 figure threshold.
Let’s look at these three models and what to take in consideration as you build them out for the future.
Organizational Chart
Your organizational chart shows every current role in your agency, from you as the founder, the CEO, all the way down to your VAs. It will also detail what each role is responsible for, from the CEO’s vision and leadership responsibilities to your Sales Director’s revenue generation responsibilities, all the way down to the administrative task that your VAs cover.
Keep in mind that your organizational chart as it is today shows the roles and responsibilities for everyone in your agency right now. But to forecast into the future, you need to predict what these roles will handle as you reach your next milestone, as well as any potential hires you will need to make to build out your future organizational chart.
For example – if your Account Managers can only effectively handle 10 accounts, and you’re currently at 20 with a forecasted growth to be at 30 accounts in the next 60 days, then you know that you will need to make a hire soon.
Or maybe you need to bring some part-time employees up to full time, or restructure the responsibilities for your executive team. You get the picture. Creating a future state organizational chart will help you see what your organization needs to look like to scale effectively.
Capacity
The second forecasting model will help you see your agency’s current capacity and what that will look like as you grow. This goes back to the Account Manager example above. How many accounts can that role handle effectively, meaning without things being overlooked by overworked employees?
You want to forecast your capacity so you know what your agency looks like at 100% capacity – when you are completely maxed out. What 80% capacity looks like – where there is room to grow, but not much. And you need to know where the capacity threshold is that will require hiring a new team member. This is the threshold where you can serve your clients with quality work but above this threshold you see a decrease in quality.
You want to have a capacity threshold for each role in your organization chart. Knowing this info now will help you prepare for a hiring process of 30, 60 or even 90 days so you can bring on the right people before you cross your capacity threshold and quality starts to decline.
Profit and Loss
Your profit and loss statement is traditionally a lag-behind indicator. But it can also be a future indicator of what your agency will spend and make. This is a logical model that can show you how much profit you will make at each of your milestones and what it cost to get there.
As a founder, it’s up to you to dictate what your ownership compensation will be, and knowing how much profit your agency stands to make will help you make that decision. Your profit really should come first. After-all, you started your business for a reason and it wasn’t to be broke and hungry. Using your P+L forecasting model will help you know what you can expect to make as the founder.
The P+L forecasting model will also help you see what you are going to pay in salaries to your team and prepare to add on to that payroll as your agency grows. Knowing this information is how you play chess instead of checkers.
Be Transparent
Here’s one last piece of advice – be transparent with your team about your growth goals, about the roles and people you are planning to hire, and yes, even your P+L statements. Transparency earns you both respect and buy-in from your team that is helping you grow your agency. You will need this respect and buy-in from your team if you hope to make it to the eight figure mark.
Ready to See 8 Figures?
These forecasting models are essential building blocks as you plan your agency’s growth. But if you want to see 8 futures, you will need help. And we are just the help you need. We work exclusively with founders of high-growth, high-revenue agencies to bring them through the 6, 7, and 8 figure revenue mark, and we can help you too. Contact us today to get started.
