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.
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:
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.
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.
Agencies that have developed a clear niche often face challenges around:
The risks are different:
Many agencies forecast growth using one of two methods:
1. Hope
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
Agencies create goals such as:
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:
KPIs should indicate performance, not dictate behavior.
Instead of starting with a growth target, Michael recommends starting with historical performance.
The process begins by evaluating:
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
Projects the agency should realistically win based on positioning, expertise, portfolio, and industry fit
2. Even Opportunities
Projects where the agency has a legitimate chance, but no clear advantage, often close competitions
3. Unlikely Opportunities
Long-shot opportunities pursues because they're strategically interesting or highly desirable
The most valuable insight often comes from opportunities that weren't won. Instead of simply marking deals as lost, Michael encourages agencies to ask:
This analysis allows agencies to identify "recoverable losses" (opportunities that realistically could have become wins).
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.
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:
That's why he starts most engagements by reviewing:
Costs are more controllable than revenue. Understanding them creates a stronger foundation for growth planning.
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.
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:
The best operational systems aren't imposed on teams, they're built with them.
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:
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!