Long time Rounded user Birgit Schönafinger founded Fishbowl PR, a communications agency in northeast Victoria in 2010. In her first guest post Birgit shares some insights from the journey she’s been on and asks: Is your micro business suffering from leakage?
When I first heard this term, I had no idea what it meant. Maybe you already know, but if not, it refers to time (and as we all know, time is money) and lost opportunities to invoice clients (more money).
So, how do you know if it’s happening in your business and how do you ensure you are billing for all the time you work?
When I started out, I was trying to minimise costs, so I used a hand-written time sheet and then moved to a simple spread sheet.
While I’m no data analyst, I really have always enjoyed looking at my business data to learn, among other things, which are the most popular services and most profitable services and monitor revenue and expenses. I kept records and compared one year’s data to the next as my business slowly grew.
It was all working fine. Or so I thought.
While chatting with another small business operator, discussion turned to accounting software packages and all the things they can do. I particularly liked the idea of instant reporting (BAS and P&L) and visually being able to track results month by month. I could see that would save me time. What I didn’t think I was looking for, but came as part of the software, was the time-keeping function.
A few months into using it, I had a revelation.
I had set up separate projects for each client’s different jobs and used the timer. The figures from the same months in previous years just didn’t compare; in the new system, I was recording more hours. Yet, I had no more hours in the day and I knew the level of work was similar.
When you are manually recording time or entering hours into a spreadsheet, you sometimes start work on a project but don’t note down the time, no matter how disciplined you think you are going to be. Therefore, your recorded time for the work is always under. Over a week or months, this adds up to a lot of unbilled time – leakage.
Likewise, when you are busy, you may completely forget to invoice for some projects or some of the expenses you pass on to clients. Using a software system means you can easily see what time is unbilled. And you can set up a draft invoice at any time and add the expense, so that at the end of the billing period you don’t overlook it.
I understand the resistance to invest in systems in the early days of a business. However, rather than saving you money, not having an accounting and time-keeping system is probably costing you money.
Not paying for one was an early business decision that cost me. Hopefully, you haven’t had this experience and you are capturing, billing and being suitably rewarded for all the hours you work.
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