Tracking time: how one small habit can change the way you run your business
Understanding the value of your time
When you run your own business you already know that your time is valuable, and you may already pass that cost along to your clients. But just how valuable is that time and how wisely are you currently spending it? This quick guide will walk you through some of the key insights you can gain when you change your approach to tracking time.
Get into the habit: track all of your time
To get the best insight for your business we recommend tracking all of your time, not just billable time. When you track the time you spend sending invoices, travel, and even making phone calls, you’ll open up a wealth of potential insights about your business and how to optimise it. Read on to find out what you should track and what you can learn.
How profitable are you, really?
You may already know how much time you billed for a particular project, but how many more unbillable hours did you work? How much time did you spend on phone calls, or travelling to meetings, and how much does that vary from project to project?
A key benefit of tracking both billable and unbillable time is that you get a more complete picture of your profitability - not just the costs that you’re able to pass along to your client, but the true cost of each project to your time and business. Armed with the full picture, you can better evaluate what kinds of projects to take in the future, and estimate and price for your projects more accurately.
Time to track
- Everyday admin like invoicing, estimating, and managing expenses, tied to a particular project when possible. Don’t forget to track time you spend chasing clients for important information or unpaid bills!
- Travel time, meetings, calls, and emails.
- Unbilled support calls and emails for clients.
- Research time for a project or pitch.
What can you learn
- Project profitability: assign an hourly cost to any unbillable time associated with a particular project, then add this cost to your existing project’s costs and hours. Are there any surprisingly pro table - or unpro table - projects once you include this time?
- Estimate accuracy: after considering both your unbillable and billable time, go back and look at your original estimates for a few projects. If you had to estimate for a similar project in the future, what would you change?
- Good client, bad client: review how much unbillable time you spend for your clients, either on the phone, in meetings, or writing emails. Does one client need a lot of extra support time on the phone? Have you spent hours simply chasing clients to pay? If you see any trends, it may be time to look again at your client list or upwardly adjust your next estimate.
- General overheads: some general admin tasks like managing payroll or VAT can’t be tied back to a particular project or client, but are still worth measuring so you can spot any time sinks and get a better understanding of your overhead costs when setting prices. It’s also worth checking out online accounting software like FreeAgent to save a lot of valuable time!
What do you really do every day?
When your time is your business’s biggest asset, it’s worth taking a deeper look into exactly how you spend that time, and how you might be able to improve your productivity.
Time to track
- Time learning new things, reading industry blogs and emails, and catching up with news online.
- Time spent on social media (for the business, honest!)
- Time spent organising, setting up, tidying away, filing and generally managing your day-to-day work.
What can you learn?
- Find the interruptions: research has shown that interruptions can be a productivity killer - one study estimated that it takes an average of 23 minutes to return to our full work levels after every interruption. If your daily timesheet is full of phone calls and impromptu meetings, you might not be working at full strength. Consider scheduling some “no interruption” time every day so you can get the most out of your day.
- Up to date versus out of time: It’s a scary prospect to even try and gauge how much time you might spend on social media and websites, but it’s worth measuring this time even for a little while to get a better understanding of how much time you’re really spending staying up to date or networking online. If you find that you’re spending a scary amount of time online (and who isn’t?), check out tools like Productivity Owl, LeechBlock and StayFocusd that can help you resist the siren call of cat videos.
- Focus on monotasking, not multitasking: A busy daily timesheet can also be the warning sign for too much multitasking. Many people think that they’re competent multitaskers, but researchers believe that just 2% of people have the right brainpower to be competent "supertaskers", while the rest of us see our productivity drop when we try to do multiple things at once. As well as making use of your blocked out “no interruption” time to focus on a specific task, consider writing a daily to-do list to schedule your key priorities and help focus your day.
What are the opportunities for your business?
Once you’ve learned more about your productivity and the profitability of your business, you can use this same data to think more strategically: what has worked well and could serve as a launchpad for more opportunities?
What can you learn?
- Where to focus your time: If you offer different kinds of services in your business, you may find that some kinds of projects or services are more profitable than others. For example, an electrician may find that fixed-fee safety checks earn them more money when all time is considered than on-site contract work. Once you have an idea of what’s working well, you may decide to invest more time or resource in these parts of your business.
- The best kinds of clients (and the not-so-great): You may also find that if you trade with different types of clients, some may require less of your time than others. For example, a bigger organisation might contract you for bigger projects, but may require a lot more unbillable time in the proposal stages and chasing unpaid invoices. Once you know which clients work best for you, you can focus your energy in the right place.
Time tracking in FreeAgent
In FreeAgent you can automatically turn tracked time into invoices or timesheets to send to your clients. Find out more about tracking time on mobile and desktop in FreeAgent.