For a service-based company such as a design agency, marketing consultancy or a law firm the ideal or “utopia” is a balanced and controlled state for the business where all the time available to all the resources within the business is being used efficiently and as planned. If this is the case for example, the number of hours per month spent on marketing the business will be on budget, all projects would be delivered on or under budget in terms of time and the time spent on new business pitches would be at the expected level with the desired return on investment. Sounds great doesn’t? A commercial utopia. Sadly the fact is that this is rarely the case, something which would not come as much of a shock to most of us. However, what would probably be more of a shock to you is that in this state of Utopia what is the actual percentage of time that gets billed/invoiced? At bcToolkit we suggest that if a business is billing more than (recovering more than) 50% of their available time, then they are doing very well.
The problem for service-based businesses being of course, that time needs to be spent on activities other than billable work. Some administration has to happen, marketing has to happen, time has to be spent at conferences and so on. Often businesses just have no idea how much time time they spend on non-billable work and moreover often never set budgets for it.
The first step in setting an achievable target for the % of your total time you want to bill, which will be in effect your sales turnover target, is to understand where you are now in terms of billable v non-billable time. In addition, to understand whether you are delivering all your time-based projects on budget you will need to link time-entry by all the resources working on the project with the budgeted time set for each project. In order to understand granular detail regarding your non-billable time for marketing, administration and new business pitches you will need to be able to categorise all projects as marketing or new business or administration and then analyse the time entered by each member of staff in each of the projects in these categories to see how much time and therefore money has been spent on each.
Many serviced-based companies don’t make the connection between time and money. The old phrase “Time is money” is 100% relevant in service-based businesses. Converting time to money, either by using a day rate or true cost to the business method, is of fundamental importantance and critical to being able to plan for the future. With bcToolkit as your Basecamp Reporting Tool you will get the answers to all these questions regarding how much time and on what type of project each resource is spending time. For example, it maybe the case that the business has been restricted from billing time because resources are being utilised in unprofitable, non-billable work. The decision to redeploy resources could be the difference between profit and loss.
Almost without exception any activity, be it billable or non-billable, in a business can be thought of as a project comprising tasks and milestones and therefore requiring project management. Basecamp from 37signals is a good place to start for an online project management or online collaboration tool. And if you want a Basecamp Reporting Tool then look no further than bcToolkit to unlock business-changing information from your Basecamp data.
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