There are some presentations you don't forget.  There I was, looking out into the audience, and I saw an advisor with his forehead planted firmly on the table. He wasn’t sleeping, as far as I could see; it was more a physical sign of resignation or, perhaps, pain. It was a little hard to tell. Then came the simple statement and a clear indication that the feeling was, in fact, relief.

That’s it! I don’t feel like I’m always behind because I’m inefficient. I’ve created a monster – it’s physically impossible to deliver the client communications plan I’ve been promising my clients for all these years.

Ah yes, the 'capacity conundrum'. It’s the bane of all Type-A personalities who believe that there is no challenge we can’t overcome if we just work later, harder or faster. Rudimentary mathematics, however, suggests we may be wrong. And coming to grips with that fact should be a relief because it means you’re not doing things wrong, so much as doing the wrong things. For all the right reasons, this advisor had crafted a client communications plan that was designed to be the best. He had ticked all the boxes of an effective plan: he segmented his clients based on value, tiered service to vary frequency of contact, education and appreciation and he had told clients what they could expect. Unfortunately, he had missed two critical steps: assess capacity and profitability. In this post, I want to get real about capacity – the number of client relationships you can physically manage if you are delivering on your own goals and with existing resources.

The Real Cost of Working with Too Many Clients

If you are operating over capacity, you aren’t alone. If you aren't sure, then it's likely true if you find yourself saying any of the following:

• “I feel out of control.”
• “My business is running me, not the other way around.”
• “Things keep falling through the cracks.”
• “I feel like I’m doing a lousy job in every part of my life.”

If you're trying to serve too many clients, something will suffer, likely the quality of the client experience, your sanity or both. There is another, perhaps more insidious, victim of operating over capacity and that is your ability to grow. We have a tendency to add more and more clients on the assumption that 100% of our time is available to manage client relationships. That simply isn’t true. Take heart. With a little analysis and a dose of self-discipline, you can work through this. I’m going to give you links to two spreadsheets that will help you do all of this analysis for your own business.

Step 1: Know your ‘real’ capacity.

To understand your personal capacity, start by examining how much time you have available for existing clients.  Ask yourself three questions:

• How many weeks do you have available for proactive client contact, in a given year? (Note that your answer should exclude vacation time, conferences and any statutory holidays.)
• How many hours a week do you (or do you want to) work, on average?
• How many hours per week should you devote to activities other than client management, in order to build and grow your business? This should include business planning, new business development and team management.

The tough part of this equation is the third point because it demands that you focus on the important activities and push aside those that are merely urgent. If you lock down this number, before you even think about how much time is needed to service your existing clients, you will end up with a more realistic number.

Step 2: Understand how much time you invest in client relationships.

The time you personally invest in client relationships has a substantial impact on your capacity (as well as client profitability). The amount of time you invest is, of course, going to be impacted by the scope of your offer, the expectations of your clients and the extent to which you delegate any or all of the communications process. Any assessment is a reflection of where you are today, not an indictment of your future. Getting to this number involves defining:

• Frequency of contact
• Length of meetings (including prep and follow-up)
• Your personal involvement in education and appreciation activities
• Time invested in managing client relationships beyond direct contact (e.g. estate planning, portfolio reviews etc.)

Step 3: Get real

With this information available  it’s time to get real about your capacity. You can use the data from Steps 1 and 2 to understand your optimal capacity (the number of clients you can manage if you only had top client relationships) as well as the cost of service delivery. Do the math, take heed, refine your plan and move forward.Here are two tools to help you find your own answers to two questions.

1. How Much Time Do You Invest in Client Relationships?

We make a lot of assumptions about how much time we invest in our clients. Unfortunately those assumptions are likely on the low side. Assess your own investment of time by downloading a spreadsheet to help you think it through.

With this data entered, you can see how many hours you invest in a typical client in each segment, each and every year. You can take the analysis one step further and assign an actual cost of service delivery to test your assumptions about what makes a client profitable in your business.

2. What Is Your Optimal Capacity

Your optimal capacity is a theoretical number but provides important information. It helps you understand your limitations with current resources. This analysis identifies the number of top client relationships you can manage today and draws on some of the analysis in the previous section. You can do your own analysis by downloading the spreadsheet Assess Optimal Capacity.

You can also add some data into the spreadsheet to assess your ‘available capacity’, based on the time you are investing today in managing client relationships. So the advisor in my session had an epiphany. For years he had been wondering what he could do differently to ensure that nothing fell through the cracks. He realized it wasn’t his fault but a flawed model. That said, he had some tough decisions to make. If you are operating over capacity you’ll need to:

• add resources,
• delegate more effectively,
• reduce the frequency of contact, or
• increase capacity through technology and process

Of course, there is always the status quo, but then you may end up with your forehead stuck to a conference table and that just doesn’t seem right. You can access these ideas and more through Advisor Impact’s Business Success Kit.