It happens to every service-based business. Effort is enthusiastically poured into networking and marketing to get leads. Discovery calls start filling up the calendar, and proposals start rolling out. Then contracts start getting signed, and suddenly, dread starts setting in – how is all this work going to get done? Long hours are invested in delivering on all the promises made while simultaneously pushing away the waves of overwhelm and burnout because “this is what you wished for.” Once the engagements are over, there’s the recovery period, then fear of lack of leads creeps in, and thus, the process starts over – creating an endless cycle of feast-or-famine, calm-and-chaos, under-engaged-and-over-capacity. And it doesn’t feel great. So the question becomes: as a service-based business, how do you prevent going over capacity?
Being over capacity as a service provider is a great way to start hating your business. Therefore, it’s important to break out of the cycle and ensure you’re setting effective boundaries with clients and yourself.
Love it or hate it, time is a finite resource. The bad news is there’s never going to be enough of it. The good news is because time is limited, over-capacity prevention can be solved with a little bit of math.
Calculate Productive Hours per Month
First, calculate your true hourly availability over the span of a month. Be realistic with your estimations and don’t forget to include the impact of personal obligations. This will give you your “productive hours per month.”
For example, taking into consideration child drop-off and pick-up, eating meals, and workouts, I could generally have 6 productive hours available per business day in a month. If I follow traditional business days (Monday through Friday), most months give me 20 business days. 6 hours per business day x 20 business days in a month gives me 120 productive hours per month.
The next question you need to ask is… are all the productive hours calculated for business available to clients? This is where most business owners get tripped up. Do you have other business development projects or marketing/networking activities that need to be completed during your productive hours? If so, estimate how much time you would like to delegate to those activities per month and subtract them from your productive hours per month.
Continuing our example, I write blog posts, engage on social media, do podcast interviews, update my bookkeeping, and attend a few virtual networking meetings per month. If I estimate those activities to be about 10 hours per month, we subtract 10 hours from 120 – giving me 110 productive hours per month for clients.
Having a number in mind of how much you can work is great – but it’s only half the equation. There’s still a little math to be done.
Calculate Service Time Value
The true key to preventing going over capacity is understanding how much time your services and client delivery processes actually take. While we know every client is unique, there is consistency in how the work gets done.
To do this, calculate the estimated time investment of each stage of your client journey for each of your services or packages.
For example, if I offer a VIP or intensive Day, I would estimate the amount of time it takes me to gather materials for and communicate with the client, the duration of client meetings, the actual time in the VIP Day, and any other activities that are related to a single engagement. This estimate of time is the time value of the engagement.
If you’re struggling with this step, the next time you go through these engagements, track your time and use this as your baseline estimation.
Repeat this for every service offered and document for reference.
What about services that span multiple months?
Break your estimations down into a month-by-month timeline and document them. In the end, you’ll have two sets of numbers – the total number of hours and the numbers in each month.
The final step is to put your calculations to work. Track your contracted services and their hours against your available productive hours per month. This will help manage your capacity and keep your sanity in check. A simple way to do this is in a spreadsheet.
Not good with spreadsheets? I have you covered with the Business Foundations Tracker. This pre-formulated spreadsheet provides you with a home for all your calculations and easy tracking of your capacity. As a bonus, it also has space for tracking your revenue and other essential operations information. Learn more here.