The First Step to Agency Growth: Forecasting Existing Revenue

When you run a marketing agency or service-based business, you're constantly making big decisions. Should I hire another person? Can I afford a bigger office? Why doesn't my profit match the effort I'm putting in?

These questions all lead back to revenue forecasting. Without one, you're flying blind. With a clear and accurate forecast, you can see if you're on track, spot potential shortfalls early, and find growth opportunities already sitting within your client list.

This is precisely why revenue forecasting is the first deliverable in our Growth & Profit Engagement. Before we look at expenses, staffing, or cash flow, we have to understand exactly how much money is coming in and where it's coming from.

The Problem with "Guessing" Your Revenue

Most business owners have a rough sense of their revenue from invoices or accounting reports, but that surface-level view misses critical details. Revenue might look stable on paper, but a few client budgets could be seasonal, leaving you with unexpected dips later in the year. Retainers might cover some costs, but your profit margins could be too thin to support real growth. And upsell opportunities are often hidden because no one has mapped out which services each client truly needs.

The Cost of Uncertainty

This lack of clarity creates stress and hesitation. Many business owners delay hiring, hesitate to take distributions, or avoid investing in growth (not because they can't, but because something feels off). A robust revenue forecast removes the guesswork, giving you a clear picture of your business's true health and potential.

A clear forecast also tells you whether now is the right time to hire or expand client services and helps manage cash flow to avoid surprises!

Three Financial Metrics That Frame the Conversation

Before you dive into the details of clients and contracts, keep these three financial metrics in mind. They act as guardrails for your business's financial health:

• Revenue: This is your top-line fees, net of any pass-through or media costs.
• Gross Margin: This is the money you keep after servicing your clients. A healthy gross margin for agencies is typically 50% to 60%. A lower percentage often indicates that you're over-servicing or under-pricing your work.
• Operating Profit (EBITDA): This is what's left after all overhead, selling, and administrative costs are taken out. A good target is 20% or more. If you're consistently below 10%, the business model itself likely needs attention.

The Numbers That Drive Decisions

These numbers ultimately drive decisions about staffing, pricing, and growth. They are also the exact numbers investors, lenders, and buyers look at when evaluating your business.

How to Build a Forecast That Helps You Succeed

Think of a forecast as a tool that organizes what you already know into a model you can use to make decisions. It's not just a spreadsheet, but rather a roadmap for predictable growth.

The Process

1. Start with your current clients: Gather every contract and invoice to see what your true monthly revenue is. This will also highlight potential shortfalls that could affect hiring or cash flow.
2. Break down services: Don't group all your revenue together. Track different fee types (like flat-fee retainers, project work, and percentage-of-media contracts) separately, as they behave differently.
3. Use history as a guide: Look back at last year's data to find patterns. For example, did clients spend more during the holiday season? These seasonal patterns often repeat.
4. Fill in the blanks realistically: Avoid leaving zeros in your forecast. If you don't have a current budget from a client, use historical averages or their minimum commitment.
5. Spot upsell opportunities: As you review each client, ask what other services they could benefit from. This is considered "low-hanging fruit" because it's generally easier to get additional work from an existing client than to find a new one. Identifying these opportunities is critical for growth and can help fund new hires without stretching cash flow.

This forecasting exercise is just the beginning — see how it connects with staffing, expenses, and cash flow in our Growth & Profit Engagement.

By the end of this exercise, you'll have a clear picture of your revenue run rate – the predictable revenue you can expect each month.

Forecast vs. Actuals

A forecast becomes a powerful tool when you regularly compare your actual revenue against it. The differences between what you predicted and what actually happened tell a story: A client underspent, you forgot to invoice for a project, or a new upsell landed. Each variance helps you sharpen your next forecast, making your numbers and your decisions more accurate over time.

Confidence In Making Big Business Decisions

This process helps you move from stress and guesswork to clarity and confidence. It's the foundation that allows you to confidently answer the big questions and focus on leading your team.

Ready to Strengthen Your Business?

Bender CFO Services' Growth & Profit Engagement gives you clarity on revenue, expenses, staffing, and cash flow — all backed by advanced valuation tools. It's a structured, short-term engagement designed to uncover growth opportunities, improve profitability, and help you plan for the future with confidence. Learn more about the Growth & Profit Engagement.

Book a Consultation with Bender CFO Services