How many months of work are already secured?
Work already won but not yet delivered. Backlog is the clearest early view of the months ahead, and it turns hiring and capacity decisions into planning rather than reaction.
Get a finance reviewValue of contracted work not yet delivered ÷ Average monthly revenue = months of backlog
Three to six months of backlog is generally healthy for project-based practices. Under two months leaves little room to react.
The value of work that has been won but not yet delivered or invoiced. It is often expressed in months, by dividing the backlog by average monthly revenue, which gives a simple measure of how far ahead the business is covered.
Backlog is the most reliable indicator of near-term revenue, because the work is already agreed. A shrinking backlog is an early warning that revenue will fall in a few months, even when the current month looks strong. A growing backlog can be good news or a sign the team cannot keep up, so it is best read alongside capacity.
Only include work that is contractually agreed. Verbal promises belong in the pipeline. Update it when fee changes or variations are agreed, and remove work that is on hold. For long projects, spread the backlog across the months it will be delivered, since twelve months of work landing in one quarter is a capacity issue rather than a cushion.
Most owner-managed businesses don't, or they work it out in a way that flatters the result. We'll calculate it from your own numbers and show you what it's telling you.
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