Time flies – but it can also sink you. So how do you better control it?
Usually only people that bill by the hour use time sheets. I think a lot of other businesses should as well.
When most people think of timesheets they think of the 6-minute interval hell stories we all have heard about. Or if you are unlucky, experienced. But for most of us, it’s not like that. Most of us would only have four or five items on our timesheets each day. If nothing else, at the end of each day, and you need to do it every day, it makes you consider what you spend your time doing, and if it’s really worthwhile.
For all those people that say “I don’t know where the day goes”, this is a simple solution. Just make sure you use an easy system like Harvest and keep the choices simple.
But, more importantly, it allows you to calculate the performance of the business in ways that a normal profit and loss can’t.
The most important measures of performance for your business are; what it costs to get new clients and how much they are worth to the business, and therefore you. To know this you also have to know how much it costs you to deliver your services.
Your biggest cost is people right? Yet you probably have one, maybe two, lines in the profit and loss for wages. And a line for filing fees that is one small expense a year. Crazy. Even if you have more lines it’s probably not going to tell you what income streams are making you money.
The average profit and loss separates sales by income stream but the costs alphabetically. Not apples and apples. And if you do try to split the expenses you can end up in a bit of a mess.
The solution is to use operational reports that show performance by income stream, and they should tie back to the profit and loss. There are a few ways of doing this but you need the data that shows what income streams people are spending their time on. And often delivery people do business development, managers do some admin, etc. So you can’t just split it by job function.
And while you’re at it, you get to see what clients are profitable, what offices and what teams.
Seize the day.