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Best Tip for Increased Profitability

Business

I always hate when people answer a question with another question… BUT here I go. Do you really have to track your time? Answer: “Is your time worth selling?” If your answer is yes, then the answer to the above question is also yes. Especially if you are selling your services on an hourly basis, then it’s not just a yes; it’s a YES!

If you’re not keeping track of your time as a business owner and designer, you are probably not functioning at a profitable level, and if you are then you could be making so, so much more! 

I get it. Time tracking is no fun, especially if you are the principal designer and have a million things going on all the time. But the truth is, as a designer, your time is the most valuable asset you have and it is highly limited. Therefore, if you don’t track it and bill for it, it’s a colossal waste of a valuable resource. 

Once you get in the habit of tracking your time, it will become second nature. I’ve had moments where I finish washing the dishes in my kitchen and go to fold clothes, and I find myself thinking “gotta switch my timer” before remembering that I don’t get to bill anyone for that. 

Building this habit is a crucial task for your whole business. It’s so important to train the new designers you hire to track their time as well. Otherwise, you will quickly be paying a large salary to someone that isn’t covering their costs, and ultimately, isn’t worth the money or trouble.

Let’s think about it. If you are bringing in a million dollars a year, but you only get to take home $10,000 of that, maybe you should save yourself the trouble and just do 1 or 2 projects where you can make that same amount with much less headache. 

Remember, if you have a team of people and any of those people ought to be tracking their time, the habit starts with you. Good leadership goes top-down and shouldn’t have to start at the bottom. If you make excuses about why you can’t track your time, so will your employees. 

But what if you really hate tracking your time. Like, you really, really hate it, and no matter what, you know you just won’t do it. What then? Are you doomed? 

Luckily, no! If tracking your time isn’t in the cards for you, then it’s time to change up your mindset about what you are selling your clients. Look into flat-rate pricing based on the value that you offer your clients. 

If you are selling value, it doesn’t really matter how long it took you to do it. The one thing I will tell you about value pricing is that it still needs to cover all the TIME it takes to do the project. You will win some and you will lose some, but if you are too scared to quote large numbers confidently that you KNOW will cover your costs and then some, flat-fee pricing may not be for you. This pricing method is also best for those who excel at maintaining boundaries, catching scope creep, and generally have no issue wrangling clients into their process. A flat-rate fee can quickly get away from you, and become the project from hell that will never end, even if you love the client dearly. 

Pricing full-service design projects can be tricky, for so many reasons, but one reason, in particular, is that projects last SO damn long. Because of this, I’m often reminding my clients that you need to charge now what you want to make in two years because you will still be making that amount from this project then. So, keep in mind when you take the leap to raise your prices, you may not see the full effects from that for 1-2 years. 

Don’t let that make you lose hope for seeing good profits in the foreseeable future. Here at Tandem, we work every day to help clients to push their business into a more profitable space with small tweaks and changes that really add up over time.

And what’s the number one thing I tell them…?

“Start by tracking your time.” 


Even with flat-rate pricing, it’s important to do regular time audits for you and your team to ensure that you really are covering all costs associated with a project. Payroll is one of the largest expenses for a small business. If you know how people are using their time, you can make sure that you’ve got the funds coming in to afford it. You can also use it to see what is taking your team the longest so you can find opportunities to streamline workflows and improve efficiency, client experience, and employee satisfaction. All things you couldn’t do if you have no idea what everyone is doing and how long it’s taking them. 

Some of the best tools for this are Harvest and Toggl. They integrate with almost any system and provide quick and easy reporting and are great for small teams. 

There are some businesses out there that like tracking their time on paper or even in an Excel or Google Sheet. Any method works so long as you can track it and make it a habit. 

With time tracking, it’s important to note how long your task took, what project it was for, the type of task (design, project management, ordering), and a short description of what you were doing. These notes have saved me and my clients so many times over the years. Whether it was because we are able to see exactly how much time was spent on something a client was unhappy with, or bring objective data to an employee review to help them see how they weren’t meeting expectations. 

All in all, tracking time might feel tedious and outdated, but it can honestly be one of the very best tools to help you verify your pricing is accurate, manage your team, and find opportunities to save time and money. If for any reason you feel like you are working hard and not seeing the monetary results that you want to see, the best thing you can do for your business is to track your time and find where things are going wrong. 

Let me know in the comments if you have any questions about how best to track your time or how to audit it for opportunities to improve your operations. I bet in one 60-minute meeting reviewing your time reports, we could find at least three things you could do that would increase your profit margin in less than one month. 

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