An evergreen guide for agency founders who want clarity, not chaos.
All agencies have slightly different sets ups. We know from working with some of our clients that for those who are project-based and don’t have the comfort of ongoing retainers, forecasting revenue can be difficult. Projects might get get delayed, scopes shift, clients ghost and payments can come in weeks after the work is delivered. It’s no wonder many agency owners rely on instinct or spreadsheets that haven’t been updated since last quarter.
But here’s the truth: forecasting doesn’t have to be perfect. It has to be consistent, structured and realistic. When done right, it gives you visibility, control and the confidence to make better decisions, from hiring the right alen to pricing to how much you can take out of the business this year.
As Blair Enns, author of “The Win Without Pitching Manifesto“, puts it: “You cannot control the timing of new business, but you can control how prepared you are for it.”
In our blog this month we wanted to explore this topic further and share how to forecast and budget revenue when your income is unpredictable. It’s based on what we use with our own clients at CFO for Growth and for agency owners who are in the £500k to £5m turnover range.
1. Start with the Foundations: 5 Core Budgeting Principles
Before you open a spreadsheet, it’s worth getting your team aligned on how you build a forecast and budget. These five principles set the tone for a process that’s collaborative not just founder’s back-of-the-envelope plan.
Start with a strategic growth goal: Start by defining what you wish to achieve in detail is really important. Think about your business, your challenges and your ambitions, don’t just default to “last year + 10%.” Instead, define what success looks like: revenue, margin, team size, focus areas and use this to shape the top-line budget.
Layer in bottom-up input from account and team leads: Ask your team leads to put forward revenue goals for their accounts or departments and be guided by this. It might surprise you, reveal untapped opportunities and help to create accountability.
Identify enablers and risks: What might accelerate growth? What could block it? Make space for these in your plan: team gaps, pricing changes, client dependency, etc.
Workshop the plan with the wider leadership team
Once you have gathered your initial thoughts, organise a leadership team workshop to finalise the plan. Encourage the heads of department to review and challenge each other’s targets, challenge assumptions and stress-test the plan.
Add a stretch goal: This will help you to distinguish a “good” year from a “great” one. It’s especially useful if you want to tie incentives or hiring to overperformance.
2. Forecast with Revenue Confidence
One of the biggest mistakes we see with our clients is that they treat all pipeline revenue as equal. To build a reliable forecast, you need to assign confidence levels to different types of potential revenue. We call this Revenue Confidence. Each stage reflects how close a project or client is to being real, billable work. In other words, how probable is that this project will materialise? Here are the five stages:
1. Confirmed – Contracts are signed, onboarding is underway, timelines agreed. (90–100% confidence).
2. Verbal – The client has given a verbal yes, onboarding dates are being discussed, contracts are in draft. (75–85%).
3. Probable – Positive proposal feedback, calls booked to discuss next steps, internal champions are on board. (50–70%).
4. Identified – There’s a conversation in play or an RFP/ brief received, but no strong buying signals yet. (25–40%).
5. Blue Sky – Ideas, inbound interest, or very early-stage leads. (10–20%).
Tip: Assign a % weighting to each category and apply that to the forecast value of each opportunity. This gives you a weighted pipeline that’s far more realistic than assuming everything will close. Agencies should aim for at least 3x your revenue target in unweighted pipeline to achieve consistent revenue results.
3. Combine Two Forecasting Methods for Accuracy
Great agency forecasting doesn’t rely on one metric. It blends two views: your pipeline and your delivery capacity.
Pipeline Forecasting (Sales View)
This is where your revenue confidence framework shines and you should be aiming for a 2.5/ 3x weighted pipeline coverage. Use your CRM system to help you:
- Categorise every opportunity by confidence stage.
- Apply probability weighting.
- Group by month/ quarter expected to close.
- Calculate total weighted pipeline.
For example: If your Q3 target is £300k, your weighted pipeline should ideally show £750–900k to feel confident.
Capacity Forecasting (Delivery View)
Now flip it: what can your team actually deliver?
- Estimate the available billable hours per month (e.g. 4 FTEs × 120 billable hours = 480 hours).
- Multiply by average billable rate (e.g. £100/hour → £48,000 capacity).
- Map confirmed and likely projects against this.
We often take even detailed approach to capacity forecasting and planning, but this simplified technique will give you a great insight. It will help you avoid overpromising or underutilising your team. The best forecasts look at both sides, what could be sold and what can be delivered. It’s a warning sign for when you might require more resource (for example freelancers) or maybe even consider hiring.
4. Take a Different Approach to New Business and Existing Clients
Not all revenue is created equal and that’s why new business and existing client revenue should be forecasted, tracked and reviewed separately.
New business is inherently less predictable. It involves leads that may be in early conversation stages or going through lengthy procurement processes. The confidence level is typically lower (Identified or Blue Sky) and forecasts should be weighted accordingly. Ownership of new business forecasting often sits with your sales, new business team, or a commercial lead. They should report on pipeline changes weekly and be responsible for maintaining up-to-date probability stages.
Existing client revenue, on the other hand, tends to be a bit more predictable. We usually have more visibility into our existing clients’ position. You can look at historical spend, project cadence, seasonality and expected renewals or upsells.
Forecasting this is about proactively planning upcoming work and spotting gaps early. This responsibility usually lies with Account Directors or the team closest to the client. They should contribute to the forecast monthly, flag any risks or growth opportunities and be held accountable for performance against their accounts. We often recommend additional client-growth and sales training to ADs and client leads as it pays of quickly. They must learn how to lead conversations with clients and spot opportunities to increase revenue.
To increase forecast accuracy:
- For existing clients: maintain regular check-ins, understand their roadmaps and build forecasts based on both secured work and highly likely discussions.
- For new business: log every opportunity in your CRM with realistic values, confidence stages and review your close rates regularly to refine your assumptions.
By separating these revenue streams in your forecast and assigning ownership to specific team members, you gain more accurate projections, better team engagement and faster response to risks or gaps.
5. Make Forecasting a Habit
Forecasting is something that we should be continually looking at across the year. Below we share the ideal frequency and ways in which we check in with these metrics, taken from some of our real client examples:
Annual Planning (Q4 of each year):
- Set company growth goals.
- Gather department-level input.
- Review and agree on revenue confidence stages.
- Assign individual targets.
- Add 20% stretch goal.
This is also the time to establish ownership and accountability. Account Directors and team leads should be responsible for contributing to the forecast not just during planning season, but throughout the year. Their knowledge of client intentions, upcoming projects and delivery risks is essential. Forecasting should be a team-wide responsibility, not just something the finance lead owns. Make it part of performance reviews and KPIs, each lead should understand how their accounts feed into overall agency performance.
Monthly Review:
- Update pipeline and project status via you CRM tool.
- Track forecast vs actuals.
- Spot risks or delivery gaps.
- Review margin by client/ project.
- Reassign or escalate any underperforming accounts.
Encourage your client and delivery teams to bring fresh information to each review. Are any clients slowing down? Is there an upsell opportunity coming? Empower your team to speak up, the forecast should evolve with input from the people closest to the work.
Quarterly Reforecasting:
- Update forecast with new wins/ losses.
- Realign resourcing and hiring plans.
- Share with wider team in a short team meeting.
Make forecasting part of your rhythm, a live document that drives decisions, not a static spreadsheet you dust off each quarter.
6. Pitfalls to Avoid
- Counting 100% of your pipeline as forecasted revenue: Always apply probability and stage-based confidence, otherwise, you’ll overestimate and under-deliver.
- Not linking sales to delivery capacity: Just because you can sell it, doesn’t mean you can deliver it. Align your forecast with team and resource availability.
- Ignoring existing client upsell or retention potential: Some of your best growth may come from deepening current relationships, not just chasing new ones.
- Budgeting purely off last year’s numbers without a plan: Historic figures are helpful, but growth requires a forward-looking strategy rooted in current reality. Always be mindful of the macro trends and environment, respond accordingly.
- Delegating forecasting to one person: Forecasting accuracy improves when it’s a collaborative, cross-functional process. Don’t silo it.
Forecasting revenue as a project-based agency isn’t about guessing the future. It’s about giving yourself and your team, visibility and control, so you can plan with more confidence. By using a clear structure and a rolling forecast rhythm, it will help you to make better decisions month after month.
At CFO for Growth we are building a Forecasting & Budgeting Toolkit for agencies. If you would early access or some help in forecasting your agency revenue over the next 12-months, please get in touch to arrange a no-obligation discovery call to see how we can help.
