Tracking Time Sucks. Embrace the Suck.

Should you track your time in your company? If you run any services business – especially an agency like I did, you might hate the idea.

Time tracking is frustrating, painful, and for most services business owners it’s a major source of unhappiness.

So why should you do it?

I hate tracking time – before I ran an agency, I was a lawyer and there was nothing worse than spending your day watching the clock and writing down everything that I did. So much so that I converted my law firm business model to never track time.

So many years later when I started the agency, I didn’t track time either.

I’m going to tell you why I was wrong – how I learned to love time tracking – and why time tracking will:

1. Make you a lot more money, and
2. Make your profitability numbers more believable in an acquisition.

Before we start, though, I want to be clear – I mean tracking time internally for your own records – NOT for clients. As I’ve said a million times, if you run a services business you should NEVER bill by the hour.

First we’ll look at WHY time tracking is important

Then we’ll look at FEARS people have for implementing

finally we’ll go over HOW to do it to be most effective

So first, the WHY

Let’s imagine that every member of your team – at every level – had a company credit card. They’re told that they can buy whatever they need for work, and that’s it. They’re not told how much it can cost, or what’s work appropriate.

And you never look at the credit card bills.

That’s what you’re doing if you don’t manage time.

Your team is getting paid for their time, but without knowing how they’re spending it, you don’t know if they’re making good choices. You don’t know if the things they’re spending time on are actually a good value for you or your clients.

In fact, you don’t know much of anything about how well they’re making decisions with the thing you’re paying for – their time.

This means that if you don’t look at their time, you could be paying for massive inefficiency. You could be under-paying superstars and overpaying for laziness.

I know, you’re probably thinking “I have a sense of who’s good and who’s not” … But I can tell you, having looked at the time in more businesses than I can count, that you’re wrong. You have no idea.

And it’s hurting the team.

So that’s the downside. What’s the upside?

Tracking time gave me huge insight into:

• profitability – imagine looking at a dashboard and being able to see that you could make 10% more profit with just a few tweaks.
• resource allocation – think about not feeling understaffed all the time because you know how to cover all your client engagements
• team effectiveness – imaging being able to reward superstars and keep them from leaving
• timing hiring – imagine knowing the right time to hire, and having the budget to do it

When I finally got my head around time tracking, that’s what I got out of it.

But wait, I’m afraid that it’s going to make my staff unhappy. And not only that, I don’t want to track my time.

Let’s talk about the fears of forcing the team to track time

• They’ll hate it
• They’ll leave
• They’ll just lie on the timesheets

Before your mind goes there, remember what you’re trying to create – a great business that attracts superstar employees. And guess what? Superstars LIKE accountability. Sure, time tracking might piss of Lazy Larry who spends most of his day on eBay, but isn’t that a good thing?

Remember that time tracking is a way to have the team get better at what they do. It’s a way to be more effective for clients. It’s transparency so that everyone knows that the whole team is pulling its weight

And that’s ALL things that superstars love. (side note, I’ve got other videos on hiring and rewarding superstars)

Now how about you? Well, here’s the thing. As the owner you don’t have to track time (you can breathe a sigh of relief now). I recommend that you do, as I’ll get to in a moment – but you could make it a requirement just for anyone doing client work (which shouldn’t be you, but that’s a different topic)

So before we wrap up, here’s how to run your billing system to get the information you need from timekeeping. The software tool isn’t important – what IS important is how you collect and use the information.

Here’s the formula in four easy steps:

1. Before each week, the staff should plan their allocated work time to each account and record it for the upcoming week (based on the metrics you set for profitability per account/service line).
2. At the close of the week, compare actuals to estimated. This gives a sense for “is the organization learning how long it takes to do things” and “where are we misestimating things due to internal or external efficiency?“. This process was huge for me getting good at time tracking and profitability.
3. Add the agency as a “client” in your tracking software and have staff bill to that. This does a couple of things: (1) lets you see who is working on systems/processes to make the business better, and (2) makes it so there’s an ‘escape valve’ for where people bill time. Without this, they’ll fill up a 40 hour week by inflating client billable time and that will make your metrics less useful
4. If you, the owner, are billing time – set up a client called “Client Number One”. You are Client Number One. Time you spend working on the business vs in the business gets put there. Your goal is to increase Client Number One time as much as possible.

Wait – there’s one more thing before you move on to the next thing. And that’s to know that of the hundreds of services businesses I’ve helped, ALL of them that got any scale tracked time. So now is the time for you to decide whether that’s going to be you.