How to make sure you have capacity ready to handle new clients - without breaking the bank.

Hey there,

One common problem I see small business employers grappling with is that classic juggling act between adding clients and adding people to service them.

Do you add clients first and hope your existing team can cope with the extra load while you recruit?

Or do you take another team member on and hope enough new clients come along in time to cover the extra expense?

On the one hand you don't want to be paying additional staff when there's no additional income coming in to pay their wages.

On the other hand you don't want to overload your exisiting team to the point where your service breaks down right at the start of a client's journey with you. Or to the point where your experienced team members get fed up and leave.

Today I'm going to talk about 3 ways to address this problem:

Make sure you have enough slack to cope with a surge
Turn employment into a variable cost
Control the flow of new clients to suit your capacity

I'll talk about them separately, but they can be used in combination to give you maximum flexibility.

Make sure you have enough slack to cope with a surge

Many of the techniques I've already covered in this newsletter can be used to free up time for each and every team member, as well as for you:

Making sure everyone can answer Frequently Asked Questions means the load of answering them can be spread fairly. Publishing them to your website means clients and prospects can answer them for themselves. Eliminating the need to ask the question in the first place enables everyone to spend more time doing the job.
Using simple automations to reduce the amount of time you and your team spend on 'work about work' can really free up time for everyone on your team, not just you. Getting someone else to answer phones could save everyone several hours a month. Enabling prospects and clients to book their own meetings, or using well-designed and written email autoresponders could save you a further one or two days a month. Automating invoices and payments saves hours of chasing. Savings not just of raw hours, but also in the mental time taken up switching between tasks.
Making sure the information your team needs is up-to-date and easy to find, when they need to find it will save everyone time and improve the way you serve your clients.
Having simple, documented routines for starting and ending the working day means people can take it turns to do 'the housekeeping' and keep everyone else's brains free of clutter.

If you've already done one or more of these, you should have been able to build up enough slack to cope with a temporary surge in business caused by taking on a new client.

And if you've created a clear process for welcoming and onboarding new clients, and trained your team to use it, then you've already reduced the level of surge required.

The important thing here is to make sure that surge is only temporary.

As one of my favourite bosses used to say, "it's a marathon, not a sprint". And as sportspeople know, while a certain level of additional effort creates a beneficial stress (eustress) that leads to improved performance, an unrelenting schedule of high-intensity training is completely counter-productive, ending in burnout and exhaustion.

So, one way to solve the chicken and egg problem of new client income and team capacity is to create enough slack in your day-to-day so that you can temporarily overload your team, or even yourself. As long as you use the extra income to recruit extra capacity as soon as you can.

Do you want help implementing any of these?

Feel free to book a quick chat to explore how I can help.

Turn employment into a variable cost

The reason why this chicken and egg probem of income vs capacity is so hard to grapple with is that the most obvious way to increase capacity is by taking someone on as a new employee. And once they are employed by you, that person imposes a fairly large, fixed cost to your business.

Of course, once trained and familiar with your business, that new team member can probably handle more than one client, but it is always tempting to wait until the very last minute before you recruit, so that your new capacity will be fully utilised.

However, that means you're going to overload your existing team quite severely, and potentially for quite a while. What if that makes one of them decide to leave?

A way to avoid this is to look at how you can make some of the costs associated with getting other people to do things for your business variable - more tightly linked to the actual capacity you need, and the income you receive.

The extreme version of this is to sub-contract rather than employ, and pay your subcontractors only for the work they do.

I can't stress enough here that I am NOT advocating exploitation, such as using zero-hour contracts to transfer risk to 'freelancers', while requiring them to be dependent on you for all their work.

It is possible however, to collaborate with subcontractors productively and fairly.

My dog-walking client subcontracted this way very successfully. Their team was made up of genuine freelancers, in control of the hours they worked and free to work for other people, take holidays, or stay in bed, just as they liked.

What it meant though is that there was a lot more management to be done.

If you go down this route you will need a much larger team to make sure you actually get all the capacity you need. You'll also need to do much more real-time co-ordination of resources to make sure no client is ever let down. At the same time, you'll have to make sure that every freelancer gets enough work to want to stay with you. Otherwise, you'll lose them.

There are less extreme ways to use this idea. For example:

You could employ most of your team directly, expanding it only when there are enough new clients to cover the costs, subcontracting to cover the gap, again to someone who genuinely wants this kind of flexibility, and who is comfortable with the idea that there may be times when you have no work for them. This might also be a neat way to try potential new recruits before you buy. As long as they agree of course.
You could build some variability into your employment contract. One of my clients employs their team members on 5-hour days. They guarantee 25 hours of work a month and pay a higher hourly rate so the employee doesn't lose out. When a team member is in work, they work. No chat, no banter. What's relevant about this here is that this arrangement allows my client to offer more hours per month if they need to - without fear of overloading their team.
You could try another version of this, told me by a German client of mine. At the beginning of each year, they estimated how many hours of work they would need over the whole year, then agreed how many of those hours each team member would take. The team member's monthly salary was based on this figure divided by 12. Next, they agreed with each team member when they would actually put in those hours, based on quiet times and busy times in the business and the team member's home life. This meant a team member might work long days at really busy times, and not come in at all during quiet times, but would be paid a predictable amount every month. Again, the relevance here is that you effectively create slack during quiet times that can be taken up y mutual agreement if necessary.

intrigued by any of these ideas?

Feel free to book a quick chat to explore how it might work for you.

Control the flow of new clients to suit your capacity

Another way to make sure you have the capacity to serve new clients is to make them wait until you are ready to support them fully.

That might mean designating specific client intake times during the year. If you make sure all potential clients know that (and why you're doing it), and ask them to give you notice of wanting to sign up with you, you can confidently recruit and train new team members ready for them.

You don't even need to be as explicit as that. If you have a marketing and sales process (what I call 'Share Promise') that works fairly predictably, and you track your conversion rates, you should be able to see well in advance how many prospects are likely to convert and when. This will give you time to plan how you'll expand your capacity in any of the above ways, even if you can't be certain which prospects will be the ones who sign up.

That’s it.

Here’s what you learned today:

With an effective 'Share Promise' process, or by actively programming when clients start with you, it's possible to time capacity increases to match new demand.
It's possible to switch some or all of your employment costs from fixed to variable. Just remember that the more variable you go, the more management it will take to keep things running smoothly.
The simplest way to make sure your team can cope with the kind of surge new clients bring, is to build in some slack. Creating simple, easy to follow processes, automating drudgery and creating as much redundancy of capability as you can frees human beings up to do what human beings do best - step up to a challenge. Just remember that permanent challenge is counter-productive, and won't just lose you your team, it will lose you clients too.

Have you already solved this problem for your business? How? Would you be willing to share? That might make for an intersting networking meeting.

Feel free to book a quick chat if you'd like to.

Thanks for reading!