Five reasons you should track your time
I wrote this post a while back. The content can still be relevant but the information I've linked to may not be available.
If you’re running your own business, time is a very important commodity. But do you know just how valuable your time is – or how wisely you’re using it?
Emily Coltman FCA, Chief Accountant to FreeAgent – who provide the UK’s market-leading online accounting system specifically designed for small businesses and freelancers – explains some of the key insights you can gain by tracking your time correctly.
1. You’ll know how profitable you really are
Tracking billable and unbillable time means you get a complete picture
You may bill your client for a certain number of hours worked on a project, but do you know how many more unbillable hours you worked for them? Or how much time you didn’t track that you could potentially have charged for?
Tracking both billable and unbillable time means you get a complete picture of your profitability – not just the costs you can pass on to your client. With that information, you’ll be better equipped to decide what kinds of project to take in the future and how to estimate a more accurate price to charge.
2. You’ll find out what you really do every day
Interruptions can be a massive productivity killer, so by tracking all of your working time (including all your phone calls and coffee breaks) you’ll see where the main interruptions are in your business and be better equipped to deal with them so you can work at full strength.
Tracking your time could also help you identify how long you spend doing non-work-related stuff online every day, and whether you need to tackle your procrastination. And it’ll also let you know how long you’re actually spending on your work, and whether that’s time that could be spent more effectively elsewhere. For example, if you’re spending hours updating your business social media channels and that effort isn’t delivering results, you may want to use that time to manage another area of your marketing instead.
3. You’ll see which clients are costing you
A key benefit of tracking your unbillable time is that you can see where your resources are being used up the most. So – if you regularly spend hours on the phone, in Skype meetings or chasing unpaid invoices – tracking and reviewing your time can help you see which clients you spend the most unbillable time on.
If you see any alarming trends, you can then consider whether to stop working with a particular problem client – or change your pricing for the next estimate you do for them!
4. Spot new business opportunities
Discover which areas of your business are most profitable
If you are a web designer, you may offer a range of specific services to clients, so tracking the time you spend on each of them can help you discover which areas of your business are most profitable. For example, you may find that the brand design or SEO optimisation services you offer are actually earning you more per hour than your traditional website building – which may affect the future direction you take your business in.
If you trade with different types of clients, you may also discover some other useful insights by tracking the time you spend working with them. Does a bigger organisation require a lot more unbillable time in the proposal stages and in chasing up unpaid invoices once the work is completed, for example? And does working with a smaller client require you to spend less unbillable time on them?
Once you know which jobs are more profitable – and which clients work best for you – you’ll be able to invest more time or resource in those parts of your business.
5. You can focus on monotasking – not multitasking
If your timesheet is full of lots of different small tasks rather than a few lengthier blocks dedicated to one project, it could be a sign you’re spending too much time multitasking.
Researchers believe that only 2% of people have the right brainpower to be competent “supertaskers”, while the majority of people see their productivity drop when they try to do multiple things at once. By tracking the time you spend on your work every day you’ll find out whether you’re trying to do too much at once, and decide if you’d work better by blocking out some “no interruption” time to focus on a specific task. Or alternatively, devise a daily-to-do list to schedule your key priorities and help focus your day.
Remember; time tracking isn’t just a discipline to follow – it’s an important method for checking how your business is performing and helping you work more effectively!
More: Get a 10% lifetime discount when you sign up for FreeAgent here.