Simple capacity planning for startups

As your startup grows, your team will get busier. More customers means more onboarding tasks, professional services projects, and support tickets. While this is a great problem to have, many startup leaders find it difficult to determine how many people they need in each team. Fortunately, some simple capacity modelling can simplify this process.

Today, we’re going to build a very simple capacity model for a customer support team. The principles of this process are applicable to any team that is made up of a number of staff who share very similar tasks and whose work is relatively focused. It should be easy for you to adapt this exercise for professional services, customer success, sales, account management, and recruiting teams. It may not work as well for marketing, product development or management/executive roles.

The first step of capacity planning is usually to tie our workload to the size of our customer base. This is important as it allows us to estimate our future workload based on customer growth. To do this for our imaginary support team, we need to know how many support tickets are coming in each month, how many customers we have, and how these numbers relate to each other:

1. Record how many inbound support tickets were raised for each recent month.
2. Record how many customers we had in each recent month.
3. Calculate the average number of tickets raised per customer by dividing the number of support tickets raised each month by the number of customers for each month.

Now that we know how our workload relates to the size of our customer base, we can use our sales targets or projections to estimate how our workload will increase over time.

1. Add the number of expected customers, based on the sales targets or projections for your startup, to the model.
2. Estimate the number of support tickets you will receive in the future by multiplying the average number of tickets raised per customer by your expected future customer count.

Let’s form an understanding of how we’re handling our current workload.

1. Add to your model the number of support tickets we are resolving each month.
2. Use the historic median or average to estimate how many you expect to complete in future months.
3. Calculate the gap (i.e., the delta) between the work that is coming in and the work that is being completed. To do this, simply subtract the number of support tickets your team is resolving from the number that is coming in. You might want to also calculate this as a percentage.

Now, we already have a very simple model which tells if we are over capacity or not. Next, we will consider the current size of our team to estimate how many individuals we’ll need in the future.

1. Add the current number of customer support employees for each month.
2. Divide the number of support tickets we are resolving each month by the number of customer support employees for that same month. This tells us how many support tickets the average employee can complete. In the example, I instead use the median.
3. Multiply the support ticket delta (i.e., the gap between the work that is coming in and the work that is being completed) by the average number of support tickets per employee. This tells us how over (or under) capacity we are in terms of customer support employees.
4. Apply this same logic to future months to get an idea of how many people you could need in the future.

For many teams, what we have so far is enough to roughly predict how many people we should be hiring each month to keep up with our momentum in sales. One shortcoming, though, is that by relying on historic averages, our model assumes that we are happy with the efficiency or productivity of our team. This can result in inefficient team growth. Generally, the best way to grow a team is to not only hire new individuals but to also optimise the ways of working and enhance the capability of the existing team.

A simple way to consider productivity is to breakdown our current performance (i.e., the number of support tickets we are completing each month) by employee. This will provide some basic insights into how the team is performing, especially for larger teams.

Add to the model each customer support employee and the number of support tickets they are resolving each month.

Usually, clear patterns will be immediately apparent. You might notice that some individuals are over performers while others are clearly lagging behind. This simple information is valuable for optimising your team. Investigate what sets apart the over and under performers. Over performers might be employing specific tactics or ways of working that can be adopted by the rest of the team. They may have specific experience or skills that you can hire for in the future. Under performers could have specific skill gaps that you can improve through training.

As your team grows, you will want to forecast your resourcing requirements based on high-performing individuals, rather than the average for the whole team. This will ensure that you couple any budget increases with efficiency improvements (e.g., training, improved ways of working, better tools, better hiring).

1. Recalculate your tickets per employee metric to only look at the top performers in your team.
2. Your capacity gap should shrink. In our example, improving the productivity of under performers will allow us to handle our workload with two fewer employees.