As a professional services organization, the expectation is that the company should be consistently growing year after year. However, trying to manage growth can sometimes be more complex than obtaining growth. This is especially true for companies with growth beyond what they were expecting. On the opposite side, other organizations are performing slower than hoped and need to figure out how they can boost growth. With so many factors, how do you plan and manage growth?
Predicting Growth Starts with Establishing a Plan
Managing growth starts with a plan. The plan is two-part: one as a revenue measure and one as a billable headcount measure. The purpose of establishing a plan is to have some type of forward-looking measure to determine whether or not you need to adjust how you’re performing in the company.
- Start your plan by computing attainable earnings based on your current staff. Typically, this is billable headcount delivering services. Ask yourself how many billable hours could be delivered if every billable resource was billable full-time for the year? This will give you the number of hours in capacity that you could deliver as a services organization.
- Next, determine the quantity of hours that you expect those individuals to hit. For example, a percentage of the total capacity hours such as 75%. This would be a target utilization which can identify a target quantity of billable hours. Targets accommodate such considerations as holiday, vacation, training, administrative time, etc. The target hours are a realistic view of attainable services delivery effort.
- Now compute your average bill rate, which may be different by type of resource or role in the organization. By applying the average bill rate to the computed target hours, a revenue plan by month can be determined and used as a base for measure to ensure your current staffing model is delivering services, and earning revenue as expected.
- Next, layer into the plan an expectation for growth. To reach 20% growth, for example, where will you need to hire more billable headcount and when would you expect those new resources to be fully billable to contribute to the overall plan? Factoring new headcount with additional target hours at the average bill rate gives you an ideal target revenue plan.
- And finally, factor in known impacts to your revenue plan such as holiday season where resources take vacation and internal events such as corporate kickoff that may pull resources away from delivery. By refining your hours and revenue plan by month to consider these influences, you have a realistic growth plan to measure progress against throughout the year.