We need to have a chat about capacity forecasting for a service business. I haven’t got all the answers YET. But I’m on the right track.
What’s your biggest wish right now?
Mine? A CRYSTAL BALL.
But to be honest, I’m not fussy.
I mean, anything that predicts the future will do.
Considering that my chances of venturing in wizardry are minimal, I’m working on other avenues.
You’re probably thinking I’m speaking in riddles at the moment, so let me explain.
I’m Dealing With Capacity Issues In Business
Most of the time, when I present you with a problem on the podcast or the blog, I have worked my way through it. 
I recognised the problem I have found a way to the other end I’m ready to present you with a pathway.
Not with my current issue. I’m only halfway there.
I have identified the issue I kinda have figured out the tools that are going to be useful. BUT DON’T EXPECT A 5 STEP PLAN AT THIS STAGE.
I’m still working on that.
That said, I figured it would be useful for you to join me in the process.
- First of all, because I think there’s a big chance I’m not the only one trying to find an answer to this problem.
- Secondly, because it helps when you can witness how other business owners try to find a solution to a problem.
- Last but not least, two minds know more than one.
So… the issue?
FORECASTING CAPACITY IN BUSINESS
I’m sure the frustration won’t be foreign to you either.
Causes For Capacity Issues In Business
I’ve seen capacity issues in businesses experiencing a growth spurt on a number of occasions.
Usually, this is the scenario:
Young businesses offer exceptional work, clients start falling through the door, capacity comes under pressure, and the quality starts to suffer. If you’re not careful, word gets out and your reputation takes a knock.
But that’s not really the situation I find myself in.
Capacity issues in business are kinda the name of the game, if you ask me. Especially when you’re offering a service. I mean, whose business is perfectly steady all year long?
It’s definitely not the case for my business.
- For 3 months, things are dead-quiet.
- For 6 months, it’s steady; just right.
- For the last 3 months, it’s bonkers. Struggling-to-cope-with-it-nuts.
Potential Solutions For Capacity Issues In Business
There are some solutions that look as if they may help on the surface. But on closer inspection … don’t solve the problem. At least not for me. 
Capacity Management Tools.
Once you have identified the problem, the obvious first thing to do is to present the problem to Aunty Google. Sure enough, she spits out a plethora of capacity management tools.
But here’s why they don’t work: they assume your business is steady throughout the year. They don’t allow for seasonal drops or increases in demand.
Hire Extra Staff
Again, a logical solution for capacity issues when you look at it on the surface.
Here’s the problem: onboarding staff takes 3 months, getting them up to full speed an entire year. In the meantime, demand on my part increases, because I need to train them.
Also, …. demand is seasonal.
Don’t Bite Off More Than You Can Chew
Sounds simple.
The thing is… clients don’t wait.
When my clients contact me for their next event, they have a date in mind. If I tell them I can’t fit them in during that time of the year, would they like to look at two months down the track? They’ll simply move on to somebody who can help them on their terms.
I know. It’s a bummer, but that’s what it is.
Long story short… I’m on my own in finding a solution for capacity issues in my business.
But if you know anything about me, you won’t be surprise I’m coming up with my own answer to capacity planning.
So far, I’ve identified the tools that will come in handy.
Tools On Hand For Forecasting Capacity In Business
I asked myself, if the answer is not readily available, what tools do I have in my business and that can help take stock? From there I can potentially start forecasting capacity in business.
Ultimately, capacity in business is determined by the work that needs doing and the amount of work your team can get done.
With that in mind, I’m looking at….
Time tracking
As a service-based business, we are selling our time which, we’ve identified in the past, is a finite resource. So you want to understand how everyone's time is being used. Who does what at what moment in time, basically?
Job Tracking (Or Project Tracking)
Job tracking is valuable information to help with capacity planning because it helps you understand how much time it takes to deliver the services you are contracted to deliver. If your processes are set up as they should, you should already have an idea of how much time a job will take. (It’s what you have based your quote on.)
But is this accurate? Does it match with reality? This is basic but important information to double check if you want to work on a solution for capacity issues.
Chargeable/Non-Chargeable Hours
Calculating the total time your team is working is one thing. But how much time can you allocate to actual client work? You want to have benchmarks for each of your team members. Depending on their role, their chargeable hours might be high - around 80% and others might be lower at 50%. You want to understand the total tally of available hours to deliver the client services.
Deliverables
I have called it this for want of a better word.
Workload throughout the year is up and down, but so is the workload over the duration of a job or project. In my business, some weeks we have milestones and therefore are more intense than others.
When you're working on multiple jobs at once, it helps to understand how many hours per week the sum of these different jobs equates to. I’m working on this at the moment.
I’m thinking: If I know how many chargeable hours per week I have across my team and how many chargeable hours per week I need to get the several jobs done, I should have a good idea of whether I have a green, orange or red light in the capacity management department.
Productivity
This is the final lever in the capacity planning game. Because to deliver the job within the number of quoted hours, people need to have good productivity habits. But also, your systems and processes need to be geared towards helping your team be as productive as they can.
If you can help your team move more work within the same timeframe, you’re winning.
AND THAT’S WHERE I’M AT.
As I said,… not 5 comprehensive steps for forecasting capacity in business…. YET. But I’ll get there. I think I’m on the right track.
What’s your 5 cents of wisdom for forecasting capacity for service business?
I Also Need Your Help With This!
I am looking for new guests to bring to the podcast.
- If you're a female service business owner with a small team, then reach out. I'd love to have a chat with you on the podcast.
- If you know of an amazing small business owner, then tell me about them so I can reach out to them.
If there are any topics or questions that you want answers to, then drop me a voice message using the Ask Me link.
