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Year-End Goal-Setting for Digital Agencies: Start with Your Pipeline

Published by Tom Wadelton on 20 Dec 2023

Eat more plants, spend more time outdoors, and grow the business 20%. 

Admirable goals, but more than likely destined to be forgotten by Valentines’ Day. 

Growth goals feel good. It’s not uncommon for business owners to sit down in December, and set a goal based on last year:

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“We grew 10% last year, let’s grow another 10% or – why not? – 20%.”

In the current market, however, those goals might look a little different, for example, “We’re down 30% from last year, so next year we need to at least get back to 2022 levels.” 

Whether your goal is reaching for the stars or looking to preserve the status quo, in order for it to be attainable, it has to be meaningful. 

For an agency, a meaningful goal needs to be based on an understanding of pipeline (committed work, expected work, and work that needs to be generated) and capacity (how much your team can produce on a weekly basis).  

It boils down to: Do you have enough work and enough production staff to reach your goals?

Within that equation, there are several other variables to weigh: Are you charging enough for your work? Are you compensating your staff appropriately (salary and benefits)? 

However, based on what we’re seeing in the digital agency space, by far the biggest question on the table for 2024, is about pipeline. With smaller budgets and more decision-makers weighing in on every contract, agencies need to set their goals with a longer sales cycle in mind.  

Here’s what a virtual CFO looks at to set realistic financial goals with their clients.

Set Attainable Sales Targets 

01_Set Attainable Sales Targets Goals often start with a number that sounds good: “We were $5 million this year. Next year we want to be $8 million.” Often that beginning sort of choice doesn't have a lot of thought behind it.  

We vet that number by asking: 

  • What work do you already have committed for next year? 
  • What recurring work do you think you’re going to be able to renew? 

That leaves a gap: what are you going to go out and hunt and get this year? Then you break it down by month, based on your average client size. 

With that number in mind, you can work your way into the goal by understanding what you need to achieve monthly – based on your average client size – and dialing in a marketing and sales strategy to get there. 


That level of detail eliminates the guesswork. You have a monthly number that allows you to know at any given moment: Am I ahead or behind? 

Build a Marketing Strategy That Makes Sense 

Agencies have been hit really hard this year with a poor sales environment. We started the year with people worried about recession and that turned into not getting as many sales, or the sales cycle slowing down. Many agencies have had to make tough choices about layoffs or closing their doors. There have been encouraging signs about the economy, but nothing so

02_Build a Marketing Strategy That Makes Sense

decisively positive that everyone is rushing into 2024 ready to celebrate.


Smaller companies – one to two owners and a 15-20 person team – often rely on the owners’ networks to fill their pipeline. They do good work and word gets out. When times get tight, many realize that they’ve been living off their reputation rather than relying on a marketing and sales strategy.


Breaking down a sales goal is a great way to prompt a vital conversation: Where are you going to find those clients? Are your current channels sufficient? How much are you spending on sales and marketing?


We recommend agencies spend 10-15% of their revenue on sales and marketing, but many agencies are only spending around 5%. That’s not to say you need to rush to up your budget. You may want to bring on a marketing company to do mailers or SEO strategy, a branding consultant to hone your message, or a writer to help generate a content windmill


Then, you want to monitor your expenses as they relate to your number of qualified leads. A good strategy will ensure you’re not just pouring money down the drain.


Use Pipeline and Cash to Check Capacity

03_Use Pipeline and Cash to Check Capacity

A realistic pipeline is one way to ensure your team is the right size. While in past years, the top concern was to find and retain good people, now the industry is grappling with layoffs.


If you’ve built a team around the expectation of billing $600,000 per month but you’re doing $300,000 with a reasonable hope of bumping that up to $350,000, that’s still a quarter million monthly deficit. 


No one likes to have conversations about cuts, but if nothing in your sales meetings suggests that you’re about to turn a corner, it’s time to think about what your team needs to look like to return to profitability.


How long can you ride out a rough patch? That’s where cash comes in: It allows you to take an honest look at your runway, how many months you can continue operating until you’re out of cash. At that point, you are left with less attractive options: running the business on a line of credit or shutting your doors.


The end of the year is a natural inflection point: You’ve gotten through a tough year. Now it’s time to look back and reflect, “Coming into the next year, does it make sense to have this team if we’re realistically looking at this amount of work.”


It’s better to shrink now and then when the work comes, go ahead and grow – even though it’s painful.


The yearly plan can help make tough decisions. If you build a model that says, “What would you do if you didn’t get new work?” It’s a lot easier to make the decision when it’s on paper, before you’re in the thick of it.


Set Your Plan in Stone


Unlike those pesky New Year's resolutions that get abandoned before Valentines’ Day, our clients’ annual goals get locked into place for the next 12 months. That doesn’t mean we follow the plan to the letter; we update their forecast and make our decisions based on real-time information – but always with the original plan as an anchor.


It can be uncomfortable to look at your 2024 plan if things aren’t going as hoped for, but it’s tough medicine.


When there are multiple owners, the plan can serve as an anchor: Once everyone has agreed on where they’re going during the planning process, it’s much easier to make decisions that stay in alignment with that plan. 


It also means we have a point of reference throughout the whole year that allows us to see where we measured up, where we fell short and why. Then when we sit down to do it again, next December, we’ll already be starting with significant data to make it even more likely we’ll reach our chosen destination.


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