How Time Tracking can Increase Profitability

Whether you bill hourly or a flat rate, you need to keep track of your TIME. If you're just guessing or estimating how much time xyz task takes, it can easily be over or under estimated and then as the business owner you have no idea how much you're paying someone to do a specific thing. When you go to set up your time tracking, you'll want to be able to pull and/or split reports for the following information:

Time for each employee or team member

This one is pretty self explanatory, but especially for hourly employees you have to know how much they're working in a week. Even if you pay them a salary or flat rate, it's nice to see if they're hitting their required hours on average. Tracking time for each employee is really simple, and later in this blog I'll go more into how we further split and track things so we can see how much time someone is spending on a specific task. Like I mentioned, it's easy to over or under estimate how much time you're spending on something. So having this information for how much an employee is working per week and what they're spending their work hours on is crucial for you to know!

Time for each specific service you offer

As an example, we obviously do monthly bookkeeping. But within that we track time for the actual bookkeeping, sales tax, client meetings, cleanups, onboarding, etc. I like to have those things split out so that we can see exactly where our time is most being spent as a whole company AND for each individual team member. Why does it matter to see how much time is being spent on a specific service? And for that matter, why would you need to see those hours split by each person on your team? I'd love to tell you.

Once you have that information, then we can look into the products and services that you offer. We did this a couple of months ago with one of our CFO clients where we did a deep dive into where all of the team was spending their hours. We found a lot of time was being spent in team meetings and consolidated it down to one team meeting a week and then doing quick slack updates in between to where we're not wasting time on calls. We also found that with the scope of one of their services, their profit margins were a lot slimmer than what they thought they were. Turns out they were spending a LOT of time on a service that wasn't actually as profitable as they thought, so we redid the pricing and offerings and sent out new proposals to their current clients that were on retainer.

If you're spending a ton of time on a service that's not actually bringing in a lot of profit, it might be time to cut or restructure that service. And if you have an employee that's spending a lot more time that they probably need to on a specific task... well that's a conversation for a different blog post but really important for you to know.

Time spent on each client

This is similar to seeing things broken out by specific task. It's also nice to be able to pull time reports by each client, that way you can see if there's one where you're spending a LOT more time than others, what your average time spent on a client is, etc. If you have someone on retainer and they're requiring a ton of hours, it might be time to send out a new proposal. This is also really helpful information for you to have as you review your services and what your packages or pricing will be for future clients.

You all know I love ClickUp so that's where we track our time, but you can also use a software like Toggle. We've used it before and really liked the reporting, I just wanted everything to be inside ClickUp. Hopefully those tips help, and if you're not as profitable as you want to be it could be time to really take inventory of how you're spending your time! And if you’re interested, you can check out ClickUp with my discount code here.