The importance of capacity planning

Ed ChanFounder & Non-Executive Chairman, Chan & Naylor

Have you ever used capacity planning to determine the number of staff you need at your firm? In our experience, developing and working to a capacity planning strategy is not something that is done enough in practice.

As a rule, at WIZE Mentoring, we don’t allow any of the firms we work with to hire new staff members until capacity planning has been completed. It’s not a case of hiring more bodies to throw at the problem—this never works.

It’s about finding people with the right mix of skills, and placing them in a team of others who have complementary skills. This will allow you to scale your accounting firm.

If you don’t have the right mix of skills in your team, it can become clunky, inefficient and your firm will suffer from a loss of productivity.

Simply, capacity planning determines whether you’re under or over capacity, and it will provide you with the clarity to rebalance your firm’s capacity.

If you don’t give focus to capacity planning, the majority of your capacity management will be guesswork. You should be more scientific than this.

Discover and implement your ideal team structure as a foundation

At WIZE Mentoring, this is what we call ‘building an ideal team structure’.

Team design is critical to building a firm that can run without you. It’s not a matter of hiring an experienced person, putting them in a seat, and expecting them to do everything. This fails more than it works out.

You need to have a deeper understanding of how team structure affects the operation and growth of your business.

A traditional, shallow and wide team structure will see you remain a prisoner to your business, because all queries, work, and demands land squarely back on your shoulders. You're also reliant on hiring extraordinary people who are hard to find and expensive to keep (and expensive to lose).

But with our scalable, deep and narrow team structure, you build a resource mix that creates a high-functioning team that is not dependent on you.

Remember, part of your role is to ensure your team is focused on productive tasks, not mundane work that may keep them busy, but are of no or low value to your firm.

Once you have your team structure right, you can increase the productivity in your firm by working out your team capacity.

How to develop your accounting firm’s capacity plan

You can develop your capacity plan by calculating the available hours of each team member:

(52 weeks – 8 weeks annual/ sick/ training leave = 44 weeks) 

x the appropriate chargeable time for their role:

(60% for minders, 85% for grinders) 

x the hourly charge out rate for their time. 

This will allow you to calculate the current capacity of your full team and determine whether you are over or under capacity. 

Ed Chan
Founder & Non-Executive Chairman, Chan & Naylor

Ed started Chan & Naylor from a small home office in Sydney and grew it into a National Financial Services Organisation that now works without him, with offices in most capital cities around Australia, servicing more than 10,000 clients.

In 2018 he co-founded WIZE Mentoring, a network for accountants who want to know how to successfully grow their firm and have it run without them.

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