Every agency owner wants more new business. New logos are exciting. They validate your positioning, energize your team, and create opportunities for growth.
The problem is that too many agencies build their annual revenue plans around business they haven't won yet. When that happens, your forecast becomes less about predictable growth and more about hope.
After working with more than 140 agencies over the past decade, we've noticed a consistent pattern: the agencies with the healthiest financial foundations aren't necessarily the ones closing the most new business. They're the ones that understand how to balance new client acquisition with client retention, account growth, and realistic revenue forecasting.
Not Every Agency Should Have the Same Growth Strategy
Before we dive in, it's important to acknowledge that every agency operates differently. Some agencies specialize in project-based work like branding, website builds, or one-time creative engagements. Their business model naturally requires a constant stream of new clients.
Others build long-term relationships through retainers, ongoing marketing support, production, PR, or media services. Their growth often comes from expanding existing accounts over time.
Neither model is inherently better than the other. The question isn't whether you should pursue new business, it' s whether your agency depends on it more than it should.
When New Business Becomes a Symptom
If a significant percentage of your annual revenue has to come from brand-new clients, ask yourself why. Is it because your sales process is exceptionally strong and consistently produces results? Or is it because clients leave just as quickly as they arrive?
There's a big difference.
High new business targets often mask another issue: client churn. Instead of growing, the agency spends its energy replacing revenue that has already walked out the door. That creates an endless cycle of selling just to stay in place.
Think of it like trying to keep a boat afloat while it has a hole in the hull. You can keep bailing water, or you can fix the leak.
Existing Clients Are Usually Your Lowest-Risk Revenue
Winning a new client is difficult. You have to identify the opportunity, qualify it, earn the meeting, compete against other agencies, negotiate the engagement, and successfully close the deal.
Growing an existing client is usually much easier. You've already built trust. You already understand their business. Contracts and procurement hurdles may already be in place. Your team has relationships across the organization.
That doesn't mean expanding existing accounts is automatic, but it generally carries far less risk than winning a completely new logo. That's why mature agencies invest heavily in account planning alongside business development. Every existing client should have a growth strategy, not just a delivery strategy.
The Other Extreme Isn't Healthy Either
Of course, relying entirely on existing clients creates its own risks. Many agencies have one or two "anchor clients" or "whale clients" that represent 20%, 30%, or even 40% of annual revenue. Those relationships often feel stable, until they aren't.
Every client relationship has a lifecycle. Budgets change. Leadership changes. Priorities shift. Even great partnerships eventually evolve. If losing one client would create a massive hole in your P&L, you're carrying concentration risk, even if today's revenue feels secure.
That's why agencies should never stop investing in business development. The best time to find your next anchor client is immediately after you've signed your current one.
A Practical Benchmark: The 20% Rule
One of the most useful planning benchmarks we've found is surprisingly simple. For many agencies, approximately 20% of annual revenue should come from net-new business.
Why? Because it strikes a balance between growth and predictability.
Imagine your revenue forecast consists of three buckets:
1. Already booked revenue
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Projects that are under contract and expected to be delivered during the year. This is your lowest-risk revenue.
2. Expansion revenue
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Additional work from existing clients. There's still uncertainty, but you're working inside established relationships.
3. Net-new business
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Revenue from clients you haven't won yet, or perhaps haven't even identified yet. This is your highest-risk revenue.
If your forecast depends on 40% or 50% coming from new business, you're asking your sales team to shoulder an enormous amount of uncertainty. If it depends on only 5% or 10%, you may not be investing enough in your future pipeline.
20% isn't a universal law, but it's a useful conversation starter. Whenever your number is dramatically higher, or dramatically lower, it's worth asking why.
Every Dollar of Revenue Has a Risk Profile
One of the biggest mistakes agency leaders make is treating every forecasted dollar as equal - they're not.
Booked revenue isn't the same as projected account growth. Projected account growth isn't the same as unidentified new business. Each carries a different level of risk. When you're building your annual revenue plan, don't just ask:
"How much revenue are we forecasting?"
Also ask:
"How risky is each source of that revenue?"
That shift in thinking often leads to better hiring decisions, smarter investments, and more realistic expectations throughout the year.
How Much Should Agencies Spend on Sales & Marketing?
This conversation naturally raises another question:
How much should an agency invest in sales and marketing?
While every business is different, we've generally found that 8–10% of projected annual revenue is a healthy target. If you're spending significantly more than that, it may indicate you're relying heavily on constantly replacing clients. If you're spending significantly less, you may be underinvesting in the long-term health of your pipeline.
Think of sales and marketing this way:
At the low end, it's insurance. At the high end, it's fuel for growth. Either way, it's an investment, not an expense to eliminate whenever budgets get tight.
Questions Every Agency Leader Should Be Asking
As you review your own revenue forecast, ask yourself:
- What percentage of next year's revenue depends on clients we haven't won yet?
- Are we replacing churn—or creating real growth?
- How much revenue expansion have we planned from existing clients?
- Would losing our largest client significantly impact the business?
- Does our sales and marketing investment align with the level of growth we're expecting?
The answers will tell you far more about the health of your agency than your topline revenue target alone.
Build a Forecast You Can Believe In
Healthy agencies don't eliminate risk. They understand it. They diversify where revenue comes from, invest in existing client relationships, and pursue new business with realistic expectations instead of wishful thinking.
The result isn't just a better forecast. It's a more resilient business.
Final Thoughts
If you're building your annual revenue plan and wondering whether your growth targets are realistic, take a closer look at your revenue mix, not just the total number.
Sometimes the biggest opportunity isn't closing more new business. It's reducing the amount of new business you need to close in the first place.
If you want a more in-depth conversation about this topic, listen to the full episode of Creative Outcomes below and subscribe to our channel for more insights!