7 Common Mistakes Agencies Make When Annual Planning (And How to Avoid Them)
There’s a difference between plans and planning.
There’s a difference between plans and planning.
The plan is a product. It’s nothing more than documentation, so everyone is aligned and moving in the right direction.
A plan is based on a set point in time.
Planning is a process. It’s the act of discussing and evaluating options. It requires knowledge of variables and situational awareness of the environment.
Planning can be ongoing. But at some point, we have to put pen to paper and “finalize” the plan.
There’s no sugarcoating this: planning is hard.
If you’re doing it right, it’ll take time and a lot of mental calories.
We spend months upon months learning this in the Army. And unless I’m mistaken, there’s no clear path for learning to plan for agency owners.
So, I wanted to throw out some thoughts you should consider when going into your annual planning process. They just might save you from some mistakes in 2025.
1. Setting Vague Goals
I’m not going to get into setting SMART goals. You’ve heard that enough times.
The challenge with goal setting for agencies is that there’s often a lack of clarity and focus around the target. It’s not that you don’t know what you want, it’s that you don’t necessarily see all the areas that need to be influenced to make it happen.
For example, setting a goal of doubling your revenue from $1mil to $2mil looks simple on paper. But when you look at the numbers and your team, it’s way more of a project than just doing more of what you’re doing now.
You might need twice the leads, or to double your close rate. You may need more efficient team members so they can expand capacity. You might need everything.
If it was an easy target, more people would be doing it.
The reason they’re not doing it isn’t for lack of want. It’s because they don’t know how to get there.
Clear goals keep your team aligned and focused on what matters most. But equally important, they help you narrow down the areas you need to watch.
2. Ignoring Financial Planning
Many agencies fail to properly plan their finances, leading to cash flow issues.
I’ve talked with a lot of agency financial experts. One thing I ask all of them: “Why don’t more agencies have a better grasp on their finances?”
I usually get back two reasons.
They don’t know what to look at, and think they have it figured out.
They’re intimidated by the numbers and do the minimum required.
Don’t let these reasons by why your agency fails.
You need a detailed financial forecast that accounts for operating costs, salaries, and potential investments. Regularly review revenue projections and expenses, and plan for growth scenarios. Without this, you could end up overspending or underinvesting in critical areas.
Every agency should have someone they can go to for financial advice. And during the planning process is the perfect time to work with them.
A solid financial plan ensures your agency can scale sustainably and you can sleep soundly at night.
3. Overloading the Team
Ambitious plans often lead to overworked teams and missed deadlines.
As I’ve said before, the status quo for agency leaders is change. Maybe it’s because you’re an entrepreneur, maybe it’s just in your DNA, but most of the agency founders I know have a high tolerance for change.
The issue is that your team likely doesn’t have the same tolerance. They’re just trying to keep up.
So when we dump a new plan on the team without (1) getting buy-in, (2) ensuring they have the skills to execute, and (3) verifying they have the capacity without breaking them.
Overloading your team leads to burnout and subpar work, no matter how motivated they might appear.
When planning for the year, be realistic about what your team can handle. Look at your current utilization rates and determine how much more they can take before you have to hire.
Bonus: Those utilization rates will help feed your financial planning.
4. Failing to Focus on Core Services
How many services did you add on last year?
A lot of agencies slowly add services to the list of what they provide, normally as current clients request them.
This is one of the fastest ways to kill your bottom line and eventually top line. Your team’s efficiency is going to tank because they have to learn 10 services instead of 1, and your messaging is going to suffer because you’re not targeting a specific problems.
While growth is essential, it’s easy to lose focus by trying to offer too many services at once.
Double down on the core services that generate the most revenue and where you have proven success. Only add services that directly support your core service once you have the bandwidth and expertise to deliver them effectively.
Focusing on your strengths helps you stay competitive and profitable.
5. Underestimating Sales and Marketing Efforts
The reason most marketing agencies exist is because companies can’t do all the marketing and sales themselves. They need help.
If it was easy, people wouldn’t pay as much for it.
Yet thanks to Solomon’s Paradox, we often forget that we’re going to struggle with our own marketing, much like other companies do.
It’s hard to read the label from inside the jar. And it’s hard to know exactly what to look for unless you’ve set up the right systems to stay on top of it.
When planning for sales marketing, you need to know how you’re going to hook prospects, reel them in, and then keep them happy as clients. It’s not as easy as saying, “We’ll use social media more.”
Your efforts need to be targeted and deliberate. There should be budget applied to each, and you should expect to spend some of that budget testing ideas.
A lot of marketing budgets fail because people treat them like vending machines. Put $1 in and get $2 out.
The issue is that most marketing vending machines eat your money. There’s no guarantee you’re going to get a return, so it’s important to test everything and have a budget for that specifically. It’ll save you money in the long run.
6. Overlooking Team Development
I referenced this earlier, but decided it needs its own section entirely. Agencies often plan for growth without considering the development needs of their team.
What got you here won’t get you to the next level. And you could play revenue-headcount ping pong and try to work the volume game, but a lot of agencies I see doing that have gone into layoffs in the last year.
Want different results? Play the game differently.
Develop your team so you can create masters in each craft. Agencies have the ability to get more reps than a standard company. Use that to develop team members faster.
As long as you’re deliberate in what specific skill they’re working on at any given time, their speed to improvement will increase dramatically.
Side note: Don’t just plan to buy a tool, and believe it’ll make your team better. Get them good at the skill, and then the tools become efficiency multipliers. But if they don’t know what a great result looks like, the tool will only help them create mediocre results faster.
7. Failing to Account for Flexibility
Rigid plans can crumble when unexpected challenges arise.
Everyone likes to quote Mike Tyson saying something to the effect of, “Everyone has a plan until they get punched in the face.”
Clausewitz had been saying that well before.
The enemy gets a vote. And in agency life, the enemy isn’t only your competitor. It’s the market. It’s technological advancements. It’s the beliefs in your clients’ companies that have them considering other options.
Planning for contingencies is important. There are key decision points in any plan that should be highlighted with the key criteria so you know what direction to go.
This isn’t an easy process.
I spent months in courses in the Army learning how to mitigate risk and plan for contingencies.
Still, any step you can take to have a backup plan can go a long way when things don’t fall into place. Nothing would be worse than your agency failing only because you left no wiggle room for in the plan.
Build a Resilient Annual Plan
Annual planning is your agency's roadmap to success, but it needs to be clear, focused, and adaptable.
I’ve brought together 5 other agency experts to run a live workshop where we’ll help you work through every part of your annual planning process.
It’s called the Agency Forward: 2025 Planning Accelerator.
For 3 days, we’ll dive into the most important parts of your business so you can start 2025 with a clear path to success.
You can register at DynamicAgencyOS.com.