For agency owners, few challenges are more important or more frustrating than forecasting future revenue.
Every hiring decision, staffing plan, contractor engagement, and operational investment depends on having some confidence about what the future holds. Yet most agencies are forced to make those decisions with incomplete information.
In a recent conversation we had with agency operator and consultant Michael Dupuis, we explored a different approach to forecasting growth, one grounded in historical win rates rather than arbitrary revenue goals. Along the way, we also discussed agency growth stages, operational challenges, and why successful change management matters more than documentation alone.
The First Challenge: Getting Founders Out of the Day-to-Day
For agencies in the 6-10 employee range, the biggest obstacle is often the founder themselves. Many founders become bottlenecks because they continue performing work that others could handle.
According to Michael, the first step is helping founders identify:
- Where they uniquely add value
- What work could be delegated
- Which roles need to be hired next
- How to build trust in emerging leaders
Every hour a founder spends on work that someone else could perform carries an opportunity cost. As agencies grow, success increasingly depends on building capable deputies and empowering project leaders who can operate independently.
Growing From 20 to 50 Employees: New Challenges Emerge
Once agencies reach the 20-50 employee range, organizational design becomes significantly more important.
Some agencies grow intentionally through specialization and strong market positioning. Others experience rapid growth after landing one or two major clients. Those paths create very different operational realities.
If Growth Was Intentional
Agencies that have developed a clear niche often face challenges around:
- Hiring strong talent
- Improving processes
- Supporting larger teams
- Maintaining culture
If Growth Came From Large Clients
The risks are different:
- Hiring too quickly
- Lowering hiring standards
- Becoming overly dependent on a few clients
- Lacking sufficient business development infrastructure
Why Most Agency Forecasting Fails
Many agencies forecast growth using one of two methods:
1. Hope
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Agencies simply react to whatever opportunities appear. There are no revenue targets, no win-rate analysis, and no structured forecasting process. Leaders make decisions based on whatever happens to be in the pipeline today.
2. Arbitrary Growth Targets
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Agencies create goals such as:
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- Grow revenue by 15%
- Increase sales by 20%
- Reach a specific annual revenue target
While these targets sound strategic, they often lack grounding in reality.
Michael describes this as "managing to KPIs."
He uses a simple analogy:
Imagine you're driving to a wedding two hours away. You know that driving 60 miles per hour should get you there on time. The mistake would be driving exactly 60 miles per hour regardless of traffic conditions simply because that's the target. Yet agencies do something similar when they fixate on growth percentages.
The result can be:
- Team burnout
- Poor decision-making
- Unhealthy client acquisition
- Unsustainable growth
KPIs should indicate performance, not dictate behavior.
A Better Approach: Forecast Using Historical Win Rates
Instead of starting with a growth target, Michael recommends starting with historical performance.
The process begins by evaluating:
- Current costs
- Payroll obligations
- Desired profitability
- Historical proposal outcomes
From there, agencies can establish realistic revenue requirements and determine how much business they need to win. The key is analyzing win rates more intelligently.
Rather than treating every proposal equally, Michael categorizes opportunities into three buckets:
1. Expected Wins
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Projects the agency should realistically win based on positioning, expertise, portfolio, and industry fit
2. Even Opportunities
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Projects where the agency has a legitimate chance, but no clear advantage, often close competitions
3. Unlikely Opportunities
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Long-shot opportunities pursues because they're strategically interesting or highly desirable
Learning More From Lost Deals
The most valuable insight often comes from opportunities that weren't won. Instead of simply marking deals as lost, Michael encourages agencies to ask:
- Why did we lose?
- Could this have been won?
- What was missing from our proposal?
- What would need to change next time?
This analysis allows agencies to identify "recoverable losses" (opportunities that realistically could have become wins).
Why More Leads Isn't Always the Answer
One common assumption is: "If we want 20% more revenue, we just need 20% more leads." In reality, the more you expand your lead generation, the more often qualification decreases. For agencies selling highly customized services, improving proposal performance is often more effective than simply increasing volume.
Operations Is Not Administration, It's Profitability
Toward the end of the discussion, the conversation shifted from forecasting to operations. Many agency leaders think of operations as administrative work, but Michael sees it differently. He thinks of it more as profitability.
Operations owns the cost side of the business, including:
- Team efficiency
- Delivery effectiveness
- Process consistency
- Resource utilization
That's why he starts most engagements by reviewing:
- Profit and loss statements
- Project margins
- Cost structures
- Resource allocation
Costs are more controllable than revenue. Understanding them creates a stronger foundation for growth planning.
Documentation Isn't Enough
One of the most common operational mistakes agencies make is believing that documentation alone creates change. Leaders spend weeks building processes and writing procedures, only to wonder why nobody follows them.
Successful operational leaders focus less on creating documentation and more on creating habits.
Build Systems People Actually Want to Use
Perhaps the most important takeaway from the conversation is that people adopt systems that help them. If a process feels burdensome, compliance will always be a struggle.
When implementing operational changes, leaders should ask:
- Was the end user involved?
- Does this solve a real problem?
- Is the benefit obvious to the team?
The best operational systems aren't imposed on teams, they're built with them.
Final Thoughts
Agency growth creates increasingly complex decisions around hiring, forecasting, operations, and organizational design. The temptation is to manage through ambitious revenue goals and aggressive growth targets. A more sustainable approach is to ground planning in reality:
- Understand your costs.
- Analyze historical performance.
- Learn from lost opportunities.
- Improve win rates systematically.
- Build operational systems people actually use.
Forecasting will never be perfect, but agencies that understand their historical performance, and use it to guide future decisions, will consistently make better decisions than those relying on hope or arbitrary targets alone.
For the full conversation, you can listen below and subscribe to Creative Outcomes for more!