Late-night, last-minute pitch amends with pizza and beer are part of the agency fun, right? But for every Friday that you go home with shoulders up against your ears – there are calmer times. Times when specific skillsets aren’t required so that team can polish their craft or do some R&D.
But what do these peaks and troughs do for your bottom line? You’re still paying salaries in the quieter times. How much of that spend is recoverable?
Ultimately, if you want your agency to be more profitable, calmer and more balanced working patterns where teams are consistently fully utilised are key. So what can you do to better manage utilisation fluctuations and profit month-to-month?
Can you see what’s in your pipeline? Do you know how likely the work is to land and when? And if it doesn’t, what does this mean for suddenly available resource? Do you have other work for them?
These are all questions you must be able to answer easily if you want a continual flow of manageable work through your agency teams and fewer utilisation surprises when you look at project progress and budget.
Getting to grips with the work coming in and seeing the implication of any won or lost work against billing plans, capacity, and the schedule will guide you towards the right actions to take if you want to level out any peaks and troughs – both in terms of workload and financials. If you’re really on top of these areas, you give yourself time to make the right moves.
If your pipeline is fit to burst – knowing what’s coming in can really help you stagger when projects get the green light, creating a more manageable flow of work. And if you’re honest with your client about why you want to delay work slightly, they may not mind because they’ll know they get your complete focus when you do it.
If your pipeline is lean, it can be tempting to take any work. But if that work makes the busy people busier, and leaves those twiddling their thumbs with nothing new to do, then you’re inviting a capacity issue. An issue that’s going to impact the utilisation greatly, and therefore recoverability, of some team members.
The ideal scenario is that all team members are working on chargeable work all the time. To move as close to this scenario as possible, you need a clear view of the schedule, what’s booked against each department and individual and what’s highly likely to land. From there, you can look at where there are gaps, and your new business team, account managers, and project manager can look to fill these gaps.
If you can see in advance that someone has capacity, you can manage it. You don’t want to be looking at all this at the end of the month and seeing that someone, or a number of people with the same skillset, were under-utilised. You need to be constantly looking ahead and see how things are panning out week-to-week and whenever a big pipeline project is launched or declined.
If you can’t sell new work to keep everyone busy, you can still use the time productively. Perhaps strategically over-service a client or book team members on internal projects or some specific R&D. You’re paying their salary regardless, so use their time productively, but you can only do this if you see the gap in advance.
And if you continually have more work coming from an existing client than your current team can handle, Client Services need to have an honest chat with this client to find out how long this additional work is likely to continue. If it’s indefinitely, then you can recruit accordingly.
If your agency is doing all the above and you’re still struggling to manage capacity, ask yourself, has the proposition of your agency changed? Either via a conscious move, because you’ve looked at upcoming trends and are moving towards demand, or naturally as your clients have stopped asking for specific services.
If so, have you shifted your team skills mix accordingly?
If you’ve spotted that your artworkers are frequently under-utilised because your clients all want development work, this suggests you need more developers and fewer artworkers, changing the proposition of your agency.
Rather than try and sell clients something they don’t want in order to keep your whole team busy, spot these patterns early and adapt your resource mix accordingly. Otherwise, you’ll end up paying for expensive freelancers to cover over-capacity resources while paying salaries that aren’t recoverable for under-utilised resources.
If you can’t clearly see utilisation and recovery rates by skill set or individual, then it could be a long time before you spot these patterns, which means you’re stuck with the wrong skills mix for longer than you need to be. Given resource is an agency’s biggest expense, that’s really going to impact your recovery rates, overall profitability and growth.
Some factors that cause peaks and troughs aren’t entirely in your control. Economic downturns, for example, or seasonal disruptions such as summer holidays and Christmas.
But whilst you can’t change these, you can better prepare yourself for the challenge. If you’re able to see and efficiently manage everything discussed in this article, perhaps with a solid agency management system, then you’re in the strongest position possible to look ahead and make the right decisions. Then you can enjoy monthly figures that only ever go in one direction – up!