Understanding Capacity Planning For Your Firm

It’s common practice for many accounting firms to operate according to an “always-on” mindset, meaning that firms take on any new business that comes their way without stopping to assess whether they have the time or resources necessary to deliver on their word.?

While it's understandable that firm owners (or any business owner for that matter) don’t want to turn away an opportunity to increase their earnings, saying yes immediately to every new client ultimately hurts, rather than helps, your firm.?

Not only does it undermine your ability to streamline your focus on a particular business niche, but it also creates bottlenecks in your output, and puts strain on your most valuable business resource - your team.?

To create a workplace that values your employees’ time and capabilities while still being able to onboard new clients requires intense and comprehensive capacity planning, in which you assess your firm’s current capabilities and make adjustments to accommodate future client demand in the short and long term.?

Why Capacity Planning is Essential For Your Firm

When there’s incongruence between your incoming workload and your firm’s available capacity, it’s never safe to assume that it will just “work out”. Eventually, the knock-on effects will catch up and you’ll feel them at your firm.?

If there’s one thing the last 24 months have taught all of us, it’s that we need to protect our workforce from exhaustion, burnout, and apathy above all else. Diminishing talent within the accounting landscape is an unfortunate reality facing the industry, and finding the right employee is becoming increasingly difficult to do.

Taking on new clients without first assessing your firm’s capacity will overextend your workforce, pushing them to work harder for longer hours and under increasing pressure.?

Eventually, your team members will begin dropping out and resigning to seek a better work-life balance somewhere else.??

This will create more pressure for you as you struggle to stay on top of client deliverables, extending your work hours, reducing the quality of your output, and affecting client satisfaction.?

Sometimes, rapid growth is unavoidable, especially if you’ve just launched your accounting practice. But it should be the exception, rather than the norm.?

Firms need to anticipate and account for growth to scale without sacrificing their team’s longevity and the value of their service delivery. Capacity planning allows you

to do that while obtaining a bird’s eye view of all your business operations and processes.?

Measuring and Planning For Capacity

There are a lot of existing playbooks out there for how to tackle capacity analysis and planning, even services available to help, but before you sign up for anything, make sure their recommendations suit your firm’s structure and operations.?

If you want to avoid that route, here are a few practical steps you can take that don’t require any serious commitments on your part.?

Capacity planning firstly requires capacity recording, more specifically recording your team’s current capacity and output levels.??

Your firm consists of your services (the deliverables you produce for clients) and your processes (the systems you have in place that allow you to produce those services).?

Document all of your services and processes if you don’t already, to standardize your existing workflows. This might sound like real back-to-basics stuff - that’s because it is, and it’s necessary for getting an accurate understanding of where your team is at.?

List and record everything by breaking it down by task and person. Who does what and roughly how long does it take them to complete it??

By doing this you’ll be able to assess the current output of every person in your firm and identify where potential bottlenecks might form as you grow and take on more clients.?

This will allow you to avoid impending bottlenecks and output obstacles by anticipating and planning for them.?

The more detailed you go, the better the idea you’ll have of where your output rate is speediest and where it’s slowest, as well as which tasks certain team members excel at and which tasks take more time, and may require more staff to ensure your team can comfortably tackle the eventual increasing volumes.?

From there, you can determine what’s currently working and what’s not. What processes and services need to be refined and improved before you commit to onboarding new clients??

Most importantly, will these refinements and improvements hold firm as the workload climbs? Estimate the additional work hours that will be required to complete the incoming work and determine if your proposed changes will comfortably account for them. If not, revise and make changes where necessary.?

Maybe it means hiring more staff than you initially planned for. This impacts the workload of your HR person or team, so ensure they can handle these revisions as well by assessing the output records you’ve made. Try to think of the potential outcome of every strategy you implement and plan as needed.?

Ultimately, capacity planning is about striking a balance between your firm’s efficiency and resources.?

You either need to increase your efficiency by elevating your team’s output or increase your resources by growing your team, or do both simultaneously. Your capacity data will help you determine what action you ultimately take.?

The Role of Technology in Capacity Planning

It goes without saying that you can’t effectively implement capacity planning or reap its benefits without utilizing technology in any sort of way.?

If your team’s efficiency is being undermined because they’re performing repetitive tasks that take up their time and don’t allow them to focus on larger operations, then it won’t matter what strategies you implement.?

Inevitably they’ll fall into the same productivity pit that will keep popping up, especially as your client base grows. Not only is this not the best use of their time, but it also wastes their talents.

Support your team and give them the tools they need to complete their tasks with minimal hassle.?

Automating routine activities like document fetching, data aggregation, client communication, and reminders among others, will free up your team’s capacity to focus on more important things where they can put their skills to work and also get a sense of satisfaction and accomplishment from the work they’re doing.?

Applying technology to your workflow will enable your team to break out of the negative, self-sustaining capacity-productivity-output loop and equip them with the resources they need to take on higher volumes of work without losing productivity, motivation, or morale along the way.?

Conclusion

Adopting the right approach to growth and scaling, based on anticipation and resultant planning, is vital to the long-term success of your firm. Ask any surfer and they’ll tell you that it’s better to predict the wave than be caught in it.?

Firms need to take the same proactive approach by predicting the incoming work wave and preparing their organizations and teams for it, instead of taking a reactive approach and opting for quick, ‘knee-jerk’ solutions like BPO or outsourcing.?