Updated April 27, 2022.
You have a very powerful resource at your disposal, and you have had it all your life. You are born with it, molded by it, and every day you spend just a little bit more of it.
It’s a resource that when managed for both business and life you are enhanced. If left on its own, you will find yourself quickly overwhelmed.
This resource is Time.
Measure your efforts
Accounting has been around for thousands of years to track our money. But what about our time? Arguably this is a much more important resource since we can’t get money without spending time, to begin with.
Just as you account for your money to help guide your business, you should track your time to help guide you even better. This adds a whole new dimension to what you’re doing.
I’ve developed a very simple system that can bring you some wonderful insights. Implementing it to even the smallest degree can help you learn things about yourself or your business that are infinitely valuable, all you have to do is try.
The three categories of Time
Time tends to fall within one of the following categories.
Internal time represents the time spent improving or maintaining yourself or your organization. This can include things such as balancing the books, sweeping the floors, calculating and paying your taxes, or working out a better system for tracking your jobs.
External is time spent building relationships or marketing. This can include time spent attending events that can generate business, meeting with clients/customers, phone calls, and emails. If your organization does social media this would fall under that as well.
Value added is the important stuff, or what your organization sets out to do in the first place. For a restaurant that would be the time spent cooking and serving meals. For a print shop, this is time spent actually printing. For-profit this is time you are earning money for, else it’s time servicing.
Why should I measure this?
I would like to present to you a quick win for learning to measure these categories weekly.
Do you experience Feast and Famine?
As also presented in this wonderful article, feast and famine occurs when you take a purely reactive approach to your work. If the business is busy, you drop all marketing and relationship-building efforts to get work done. This is considered the feasting phase.
Later, things become slow because you have not been marketing. This causes you to desperately go out looking for business and market like crazy. This is called the famine phase.
Rinse and repeat.
Feast and Famine occurs when there is an imbalance of time spent between your External time and Value Added time. If you are measuring this time and adjusting accordingly, you can level out and improve your incoming work.
Let’s look at some examples and explain what we can expect in the future based on our time spent. Pie charts thanks to meta-chart.com.
Example 1: External Focused time
Looking at this chart we can see this is a clear example of a time focused solely on marketing. This is fantastic if the business is aiming to bring in as much work as possible, but with only 15% of time spent on Value Added, there may be some difficulty paying bills.
Almost worse, so little time is spent improving the business which means a lot of unnecessary work in the future or the risk of something breaking down. Still though the Internal vs Value Added is at a good ratio at 33% ( more on that next example ).
This could also be a sign that you are experiencing a time of famine if all your time is focused on simply getting work, but you would know this long before looking at the chart.
Example 2: Internal Focused time
This chart could be a sign that something is horribly wrong.
Of course, when taking on more work for clients and customers there will be an increase in Internal processing, but that value should be at a minimum. There are of course exceptions to this (for instance, if your business physically delivers a product). However, if your business does not deliver, and you find your Internal greatly exceeding your Value Added during busy times, that means that your Internal processes are horribly inefficient and needs work.
You want to aim for your attributable Internal work to be below half of your Value Added work.
However, this could also mean that you and your team had a week of improving yourselves, and have worked out many little fixes that make you guys even more efficient. If so good job!
Example 3: Value Added Focused time
In this example, your business would be making a lot of money. Your bills are paid, your employees are paid, heck why not even invest a little bit in that new printer that your office has sorely needed.
However, with so little invested Internally, is there now a pile of documents that need to be filed? Is there something that one of the employees needs to be taught but you haven’t taken the time to teach that will make him/her more efficient?
This could also be a classic example of a phase of feasting, and you should expect that with so little time invested in marketing that a famine will occur in the future.
This is great, but how the heck do I do this?
I have for some time used a fantastic little app called Toggl to track and report my time. There is both a phone app as well as you can simply access it in your browser. Plus if you want to get really spiffy with my help we can even use it to automatically generate invoices for you.
For free to $49/user/month (at the time of writing), the price is worth it. I highly recommend everyone dive into the free plan and give it a shot.
Something I would like to note is that the examples are interpretations based on my business. Your circumstances and what you’re looking for could be completely different.
Also, you should not be aiming to spend 33.333% of your time each week in each category, it’s nearly impossible. You use the reported time to help guide your efforts and change course as needed.
I hope this post has been insightful. If you are in the Genesee County area in Michigan and would like to talk more on the subject be sure to schedule a consultation or give me a call.
By the way, here is a screen capture in Toggl of my time gathering this post together. For me, this is time spent on an “external” task since this blog is a tool for building relationships.
Thank you for reading, take care, and good luck time-tracking!