ManyRequests is a client portal and client requests management software for creative services.
Growing your agency from 5 clients to 10, 15, 20, and more is great. But how do you keep up with this rapid growth? If you’re faced with the need to hire and fire employees constantly due to fluctuating demand, this article is for you.
Let’s say you just closed a deal and have a new project. You have other active projects, and you're now faced with determining whether you can take on additional work and at what expense.
You could consider existing workload and available employees and assume the next steps is to reject the project. You may even accept it because you don’t want to say NO.
The problem with this is that assumptions can be costly, both in terms of clients and work relationships. The timeline you estimated for the project may be infeasible, especially since you haven’t gauged your existing capacity.
Rather than playing guess games and hoping your team will complete deliverables before the deadline, adopt a data-driven capacity planning strategy to manage work demands over time.
In this article, I’ll explain what capacity planning is and how it can help you manage demands without compromising delivery or hiring more than you need.
What is Capacity Planning?
Capacity planning assesses how much work you can handle based on your current headcount and time constraints. It helps companies balance demand for their services and their ability to meet that demand. This process lets you evaluate the available resources—time, software/tools, and skills—and align them with the project's demands.
This applies to your agency, too. Capacity planning helps you determine the optimal number of employees to meet present and future demands by calculating available hours. This means that the more hours you can clock for extra work, the better. In this context, hours equal the number of available team members to take on the forecasted projects.
According to Dr. Mark Alpern, professor at Athabasca University and founder of a business strategic solutions company, Cinareo, capacity planning balances need and demand. To him,
- Occupancy (that is, occupying/engaging employees) drives employee satisfaction and
- Accessibility (that is, being open to more work from new or existing clients) drives customer satisfaction.
You’ve worked hard to scale your agency. Here are some popular strategies to effectively plan capacity and keep up with demand.
3 Key Capacity Planning Strategies
There are three major capacity planning strategies, each with its unique advantage depending on the scenario:
1. Lead Strategy
Lead strategy involves making plans for future increases in demand for your services. Here, you anticipate a major increase in clients and make plans to ensure you meet the demand. The higher the demand, the faster you hire the talents.
For context:
You’re expecting more work from a client who promised to send the tasks in the coming quarter.
You increase staff list in anticipation of the demand.
This is understandable. Once you forecast increase in demand, you want to have a team that can work on the projects without any form of delay. The only downside to this is that you might be overstaffed, especially when demand fluctuates.
This means you’ll have to pay their salaries and other promised benefits—it also means you may later need to fire many people, like the 449 tech companies that have fired over 137,566 people in 2024 alone.
As an alternative to firing due to fluctuating demand, you can curate a list of freelancers you can hire anytime you have more work. Jakub Rudnik built a list of writers in 2023. He even made his form publicly accessible— now, as head of content at Rudnik, he can easily tap into the writer database and hire them.
You can also use this strategy while working on projects that require skillsets you don’t have in-house. This allows you to scale up your team based on demand without being tied to long-term employment.
2. Lag Strategy
The lag strategy involves making changes to capacity structure after the demand for services has increased considerably, now surpassing what the current workforce can handle.
Here, actual demand exceeds capacity before hiring more talent. You plan based on your actual workload, not the forecasted workload . If a client promises to send more tasks and they haven’t sent them, you’re not hiring more talent until it’s sent.
This conservative capacity planning strategy is best if you’re concerned about overhiring (or overstaffing) in the long term. It leads with demand first, hiring later, as existing capacity is maxed out by current (increasing) demand.
The downside to this is that you may lose clients if you don’t have enough people to handle the workload. You also risk overworking your existing staff because they’ll get more work than they should, which can compromise the quality of work. Finally, the hiring process isn’t fast. According to a 2023 report, the average time to hire is 44 days (from when you publish the job ad to when someone joins your team). This makes the lag strategy a little bit more time-intensive.
💡 Tip: Read our article on workload management to learn how to avoid burnout and maximize your team’s potential.
3. Match Strategy
Match strategy involves adapting your capacity to match demand at various levels.
It’s more like a side-by-side evaluation of capacity and demand. If capacity increases by 2%, you’ll increase your workforce by 2%. But that also means that if capacity reduces by 10%, you will likely reduce your workforce by 10%.
The match capacity planning strategy integrates elements of the lead and lag strategies but without their risks. Using a match strategy means you constantly monitor and adjust the number of employees, products, and resources needed to match demand levels.
Let’s say you're running a software development agency.
You experience a significant increase in the number of clients per month.
You hire more developers to meet the increase in demand.
When there is a decline in demand, you reduce your workforce.
Adopting a match strategy implies that you’ll bring in additional help once the workload exceeds current capacity and scale back to your normal workflow once demand decreases. To do this, you can hire freelancers or part-time or temporary employees who can meet your demands without the commitment of a full-time employee.
Now, how do you engage in effective capacity planning?
5 Capacity Planning Process for Your Agency
Capacity planning is executed differently across various agencies and organizations, but it takes these steps into account:
1. Calculate Your Capacity
How many people are on your team? What are their possible deliverables in the available hours? What are the available hours we can factor in for ongoing projects?
Answering these questions helps you determine your current capacity and decide whether you need more people to handle the current (or forecasted) workload.
You can also use our Requests feature on ManyRequests to see your current team workload, the people who are working, or the projects that are yet to be completed and sent. See screenshot below:
As you can see, you have a bird’s eye view of all active tasks. You can also see the project statuses (in progress, pending feedback), the priority level, the assignees, and the due date.
This bird’s eye view helps you gauge how much additional work your team can handle based on their current workload.
2. Understand the project overview
This involves getting a big picture of the project, its major deliverables, objectives, skills required, and possible deadlines. This helps you determine whether you can take on the project with your current workload (and workforce) and who to assign roles to, depending on their availability and expected turnover time.
If you're yet to secure a new project but want to be prepared when it arrives, estimate the project requirements and deliverables. This will give you an idea of the capacity you need to take on the project versus what you have at hand.
3. Optimize capacity to meet demand
Organizations and agencies should forecast all input. This means forecasting work volume, average client return rate, new learning curve (skills), shrinkage, attrition (people leaving your agency), and other input that could affect the relationship with your clients.
Doing this lets you know when to prioritize hiring and when you don’t have to.
It lets you evaluate your team, their strengths, and the resources and software available to facilitate work processes. You may have to invest in new software, hire more staff, train your staff, or bring in additional contractors to boost capacity levels.
The capacity planning strategy you employ will depend on what stage of the project you're in. If you're optimizing capacity before you take on the project, you're using the lead strategy. If you would rather wait till you get the project, you're sticking with the lag strategy, and if you're optimizing based on demand fluctuations, you're using the match strategy.
4. Capacity Monitoring
Once you've decided on a plan to optimize capacity and meet project objectives, set up a system to monitor the plan’s effectiveness. You can use key performance indicators like task turnover rate and quality rating to track your team's productivity levels, quality of output, average client return rate, and how valuable a resource is to your processes to determine its relevance to work done.
This way, you know what works, what needs to be eliminated, and what needs more attention.
5. Use a project management tool
A quick look at your project management tool should show your list of active tasks or tasks for a particular period (say, past month or the past quarter. If you have 10 active projects and a new client needs a website redesign and specific blog content within a month, it will be 11 active projects.
You need to be able to conveniently complete the 11th task without overwhelming your team. One way to do that is to know the deadlines for current projects.
Using ManyRequests, you can get an overview of all active deliverables, including who they’re assigned to, priority levels, and due dates. This helps you decide if you need to hire more people or if your current team (based on their deadlines for active projects) can take on the new project.
Remember, occupancy drives employee satisfaction, and accessibility drives client satisfaction. You must keep your employees engaged so they feel fulfilled at work and deliver on client projects to ensure they hire you again.
With an all-in-one project management tool like ManyRequests, you’ll see the active tasks, pending tasks, deadlines, and other details relevant to a deliverable:
After every task, you can share the deliverable with the client through our custom client portal and send invoices without leaving the ManyRequests app.
Capacity Planning and Project Management Software—ManyRequests
Implementing capacity planning is much easier with project/client management software. Our software caters to all project and client management aspects, from task allocation, time tracking for accurate billing and invoicing, and real-time client messaging. Here’s an overview of the key features:
Time Tracking
You can use the ManyRequests time tracking dashboard (and manual timesheets) to see how much time an assignee spent on each task. This allows accurate calculation of billable and non-billable hours, ensures transparent client billing and payroll processing, and lets you monitor project timelines easily.
💡 Tip: We compared Toggl vs Clockify and wrote how we are a better alternative. Read it here to see how we help agencies manage their time better.
Capacity Planning
ManyRequests gives a 360° view of your workforce to gauge your current capacity. With ManRequests, you can view open, unassigned, and completed projects. This information will be useful when you’re about to take on a new client and deadlines are tight.
Reporting
You can make smarter business decisions with data-driven facts. A quick glance at the Reports section will give you insight into hours worked, service worked on, and which client’s work took more time than others. This way, you can easily spot trends and improve team capacity accordingly.
You can also use the Reporting dashboard to track your revenue per client and the number of tasks completed.
Client Management
Use ManyRequests to manage all your clients in one place. You won’t need to shuffle between email, Slack, and your project management platform to communicate with your clients.
If you need to discuss through video and screen recordings, ManyRequests has a Loom integration that lets you record a video without leaving the client portal. These help you access information quickly and easily.
Financial Management
You can set up a fast and easy system to manage your agency finances. Using the dedicated invoicing tool, you can manage client billings and know how much you’ll pay your team members (or freelancers) based on the work completed.
Frequently Asked Questions
1. What is the difference between capacity planning and resource planning?
Capacity planning ensures your company has enough resources to meet current and future demand. Resource planning involves allocating and managing resources to meet your company’s goals.
2. What are the factors considered for capacity planning?
Some of the things to consider include:
- Demand forecasts to identify future needs.
- Current capacity to know how much work your team can complete in their available hours, and account for things like admin, meetings, and sick days.
- Demand pattern over a specific time period.
- Workforce capabilities.
- The availability of tools needed to get work done.
- Production capacities of your organization.
3. What determines which capacity planning strategy is best for your agency?
The type of strategy you choose depends on the nature of your business, your workforce, market demand, and your risk management approach.
4. What are the best practices for capacity planning?
Implementing a successful capacity planning strategy requires you:
- Talk to your team to understand their existing workload and free time plans.
- Engage with clients to negotiate project deliverables.
- Adopt capacity planning tools to allocate resources and streamline workflow.
Wrap Up
Capacity planning helps you know when to increase or reduce your workforce based on current or forecasted workload. This keeps you prepared for all seasons and helps you increase employee satisfaction without compromising the quality of work.
If you don’t already have a project management tool, or you’re just scaling your agency to meet demands, use ManyRequests to onboard clients on your white-label portal and manage their projects from start to finish. You can also add your team members and freelancers to the platform to directly assign tasks and monitor project progress. Sign up for a 14-day free trial (no credit card required) to see how ManyRequests works.