4 reasons a great business owner tracks their time

I haven’t tracked my hours in years. I’ve had no need since I don’t charge by the hour and I was so terrible at remembering to click start on that timer. But recently I realized I was missing a valuable metric for monitoring the health of my business.

Every Friday I sit down and plan my week. I decide which clients will fit into a block of time devoted to clients. I decide which content I’ll be working on during my content creation blocks. I make sure that I’ve got the time I need to really dive into projects without interruptions.

I’ve got my ideal week all ready to go on Monday morning when I get to the office.

The metric I was missing

The problem with an ideal week is that almost nothing ever goes according to plan in anyone’s life. Add in three little kids that get sick and an old dog that needs trips to the vet, and I’ve got a recipe for not having a truly ‘ideal’ week anytime in the next 20 years.

Without tracking my time I didn’t know how close I was to my ideal week, though. I already know that I can’t sit down for three hours straight and work on anything. I’ll need to get up and use the bathroom and fill my coffee cup and take a walk in the field beside my office. The question is, how much time do I take up with those crucial breaks in my work?

Since I wasn’t tracking my time, I didn’t know.

Benefits to tracking your time

If you’re not going to charge hourly (and you shouldn’t) then why on earth would you add an administrative task like time tracking?

You don’t have to just trust me on this one — here are the benefits of tracking your time even if you’re not charging hourly.

1. Know your profitable projects

While you shouldn’t charge hourly, having an idea of what your ‘effective hourly rate’ should be is a good idea. You should be looking at each project in light of how long it took you to accomplish and how much you charged for it.

Hopefully all of your projects will come out positive, but when they don’t, you’ll know because you’ll have the time tracked and be able to see where things went off the rails. When you look back at a project and realize it wasn’t profitable, you know that you need to sit down and figure out the issues so they don’t come up again.

Tracking your time will also help you identify the most profitable projects you have. As you narrow down your niche this is going to be important information to have, since what is most profitable and what you enjoy most often coincides.

2. Know how much you’re actually working

While you may spend eight hours a day in the office, are you actually working that much? If your ideal week has 25 hours blocked out for client work, do you actually get 25 hours of client work done in a week?

You’re never going to know if you don’t track your hours. What I found was that I was spending much less time working on client projects and much more time writing blog posts than I thought. It would seem that I’d hit a sticking point with a client project and then I’d take a break to write for a bit, only to take a huge break doing something that I find fun and easy.

With this information I was able to be more diligent about my time and stay focused on client work.

3. Figure out where your 80/20 lines up

There are some tasks you love and some you hate. I hate entering my business expenses — as in I hate it with the fire of one thousand suns. More than the fact that you hate some tasks, there are some that you’re simply not good at in any fashion. You should never be doing them because they’re not the things you’re best at.

By tracking your time you can get some insights into which tasks take up way more time than needed and don’t truly move the needle for your business.

When you see these tasks you can delegate them to someone else, like a VA. I have my VA enter in all my receipts for me. All I do is add them as an image to Evernote and then I’m out of the process until I jump in monthly and take a scan of the numbers to make sure it all looks about right to me.

Freeing myself of that task saved me hours in a month which I could put into profitable work for my business.

4. Know how much of your time is ‘not billable’

Those eight hours you spend in the office don’t equate to eight billable hours. Even if we exclude the time it takes for bathroom and coffee breaks, you’re not going to bill six hours most days. You’ve still got email and other business administration tasks to deal with.

If you’re not tracking your time you’ll never know how much of your day is involved in these administrative tasks. You may find that while you thought you were very effective with your email, you spend hours a day in email instead of doing work for clients.

When I’ve got my coaching clients to start tracking their time we’ve regularly found that the 40 hours they thought they spent in the office was actually more like 50 hours. Out of those 50 hours they were billing about 50% less than they expected to clients. With this knowledge in hand we’ve been able to prioritize their work and keep them focused on the few things that really bring in money in their business. We’re able to get the 50 hours down to 40 or less and increase business profitability.

Don’t forget to look

Now that you’re time tracking it’s important to remember that you need to look at the numbers. It’s not good enough to record time for a month and then let it sit there without your eyes on it.

Even looking at the numbers isn’t enough. You need to spend some time digging through them and comparing the time to your ideal week. Do the two match up? Are you spending enough time on the tasks that push your business forward? Are you getting enough time in for client work in a week?

Once you have some idea of how your business is operating, it’s time to devise a plan to make those hours look better. If you’re spending too much time on email then ask yourself why? Are you leaving it open in the background and then quickly checking it in an idle moment? If so, look at an application like Quitter which will close email if it’s been idle for a few minutes. If you are active but spend too much time in email then look at using a Pomodoro Timer and only allowing yourself 1 Pomodoro block during the day.

Without taking some action to make your time match up better with the ideal you might as well stop tracking your time.

What I’m using

Now the question is, what time tracking system should you use? In the past I’ve used a basic Pomodoro Timer and then drawn little circles in my daily notebook to represent each block of time I’ve worked on a task in the day.

Now I use Toggl in part because it has a Pomodoro Timer built right in to the system. I also love the ‘idle time’ reminders which pop up if you’re at your computer but not tracking time. This was a crucial thing as I started tracking time again and the habit wasn’t built in yet.

If you want a more profitable business, start tracking your time today and then start making changes to what you do during the day. I’d love to hear about what changes you make and how you make your business better.

photo credit: swoofty cc

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