Building Capacity for New Clients

You’ve had some new business success recently and now it’s time to staff for it. You might be too quick to hire people, and when you do hire, you may be hiring the wrong ones. So let’s see if I can help you out a little with some principles that might preserve the momentum at your agency and keep you out of trouble:

• Clean out your client base, first. If you land a great new client, well then of course you need to serve them well. But that doesn’t mean that you need new people to serve them. Instead, now may be the time to cut ties with that legacy client on an old pricing scheme that’s too tied to senior people who have better things to do. Do it respectfully, of course, but constantly upgrade your client base, just like you’re upgrading your capabilities.
• Always focus roles with every new hire. You always want to separate external account service from internal project management, and so if you have a person who’s doing a better job at one of those things, hire someone to take over what they aren’t as good at, freeing them up to concentrate where they are strong. Then maybe you’d have one person really good at account service: an extrovert who manages relationships well, grows the account, and is flexible. And you’d have a project person back at the firm who’s more objective and process oriented. Letting people concentrate where they excel is the mark of a strong firm, and addressing capacity issues is the best time to make those adjustments with as little disruption to employees’ lives as possible.
• Watch the big ratios. What will happen to your fee billings per FTE (full-time equivalent employee). Will your total unburdened (i.e., without taxes, benefits, bonuses) compensation load, including your own, remain below 45% of your fee revenue. Will each account person have six or fewer clients (this is nearly impossible in a smaller firm). Will your largest client represent less than 25% of your fee billings. Get an agency dashboard in place and don’t be afraid of what the numbers are telling you. The truth is your friend.
• Don’t let growth happen to you. By that I mean that you don’t want to wake up one day and find yourself running a large firm that requires things of you that you don’t really enjoy doing. Worse yet, you wake up and see that your offerings have evolved accidentally rather than intentionally. A client asks you to do something and you say sure. You hire for it, and then you have to keep finding clients who want to buy that same thing from you. What if you’d just said no in the first place? That’s what I mean by letting growth happen to you. Just because someone would pay you money for something doesn’t mean you should say yes. Are you good at it? Do you want to build a firm that does that? Are you comfortable managing those people? Be in charge of your firm rather than feeding a machine that your clients have built.

I love it when clients land new work because it allows them to make changes in the least painful way, rather than responding to a downturn or a string of bad luck. Make the most of those opportunities!