A peek at the future of a business is something that every CEO or agency owner would love.
You can plan a lot, but does that mean your agency will be successful?
These are some of the questions that you should ask:
- Can I predict the activities that will impact my future revenue?
- Can I predict incoming jobs, project management, resource availability, and other factors?
What is the purpose of knowing the future?
Forecasting can help you plan and prepare more effectively. If you are a new digital marketing agency in Los Angeles on the market, and just getting started, then you should use qualitative forecasting. This is useful if you don’t have any historical data.
When you have been managing your agency for a while, quantitative forecasting is possible. It allows you to look at your past data and see trends. Quantitative forecasting allows you to predict the future, identify gaps, and make adjustments in order to avoid them.
We’ll now show you how to forecast four key metrics that impact your agency’s future.
Forecasting Four Key Metrics
Forecasting will be easier if you have all of your historical and current data in one place. You should choose a tool that integrates the budget, resource management, reporting, and project management.
1. Forecasting Sales Revenue
Your agency should be profitable over the long-term. Start with the beginning of your business cycle, your sales pipeline. A tool that integrates revenue forecasting and sales funnel capabilities with resource planning is a great help.
Your business development team should work closely with operations in order to see the incoming work and ensure that you deliver potential projects on time.
You can forecast your sales revenue by knowing your resources and the budget of your potential clients.
2. Forecasting Resource Management
Resource planning is a way to plan and allocate resources for different tasks. Effective resource management can be difficult in agencies due to the complexity and shifting deadlines.
In the absence of an agency management tool, it is up to you to use your gut feelings and past experiences to hire new staff. Forecasting team availability is essential. Forecasting time off (vacations and unpaid time off), parental leave, and other time management tasks are all part of forecasting resource management.
To keep track of all changes in a project, it’s handy to have an end to end tool. This will allow you to see the maximum and current capacity of your resources.
3. Forecasting Utilization
Time tracking gives your agency precise profitability data which can be used to make better decisions that will help you steer your agency’s future.
Forecasted usage is an important metric to keep track of. Billable utilization is an important metric to monitor as your work revolves around providing services to clients. Software development agencies aim to maintain their billable utilization rates between 75 and 85 percent.
4. Forecasting Revenue
Once you have mapped out your resource planning, you can now focus on what every company must do to succeed in the long term: forecasting agency revenues.
Productive allows you to forecast your revenue using forecasting charts or budget overviews. Different reports allow you to dig into your data more deeply.
Forecasting charts
The main players in this play are your project budgets, and the scheduled resources.
Productive will forecast the amount of budget you will use in the future, as well as your projected profit, revenue and billable time.
As a project manager, you will notice that forecasting revenue for certain budgets can help you communicate with your customers and teammates.
Productive Insights
You can customize a financial insight by filtering revenue by revenue and grouping data by date. This will allow you to forecast how much revenue each project is likely to bring in each month.
Forecasting Revenue with Retainer Agreements
Working with clients on a retainer is different from working with them on an hourly or lump-sum payment arrangement. This means that only a portion of your services (and resources), are booked each month. A retainer fee allows you to forecast a specific amount of revenue for your agency each month.
Productive makes it easy to manage retainer agreements by creating recurring budgets. You can create a budget in Productive by following these steps:
- Make a budget change
- It should be a recurring expense
- You can choose a budget interval and the next occurrence. This will be the date that Productive creates a new budget automatically for you.
- Last, add time, services, and rates to the recurring budget.
Don’t Get Left Behind
You have a vision for a better future. However, you can only predict the future with consolidated and current data.
This article will show you how to forecast four key metrics which can have an impact on the future of your agency. Now, it’s time to put your focus on forecasting. You can predict the future and be ahead of the curve. Examine your sales pipeline, expense tracking, and resource allocation data.
