Business Tools

While searching the net for how to increase billable hours, I found an interesting article about business improvement in a professional service firm. It struck a chord with me, so I thought I'd share it with you. I have a few comments below about what I think of the article.

-- Brad

One thing is for sure, we are all busy busy busy on a daily basis. To the point that sometimes we get lost in it. We all know that being busy doesn't always mean being profitable, unless of course, you are concentrating your efforts on moneymaking activities.

Years ago, we did an experiment with our team at Scenario Design as we needed to increase our overall efficiency and profitability. Before we made any shifts, we needed to know how much time we were all spending per day on non-billable activities. On a Monday morning, in our regular daily huddle, I asked everyone on the team to get a white piece of paper, a red pen and a green one (Being a very creative team of designers, I probably asked for specific Pantone Colors like PMS 485 for red and PMS 382 for green...ha! ha!).

The mission was simple. To keep this piece of paper handy at all times for 14 days. Each team member was to draw a red line when doing Non-Billable tasks and a green line when working on Billable tasks or activities with an approximate time log for each task. The results were mind-blowing. Everyone was surprised as to how much time and energy was spent on non-billable or non-moneymaking opportunities every single day. It was a real eye opener for me, as an entrepreneur, needing to be more profitable without necessarily hiring more employees.

THE FINDINGS:

We were shocked to find out that our main production designer, who was hired to be our #1 "production profit centre" because of his amazing talent and speed, was only working on billable activities at an astonishing low rate of 46%. Our senior designer was on average billing only 39% per week, and the list goes on. Trust me when I say knowing is half the battle.

THE #1 PROBLEM:

It's amazing what you can find when you are actually looking. Our #1 problem was our unprofitable habit of working way more hours than estimated or proposed to the client. Sound familiar? In actuality, a lot of our team's time was billable...but was not accounted for nor billed because the project had gone over and beyond our initial proposal and no one felt like we could bill those extra hours at that point...and they were partially right. Rule of thumb: never spend someone else's money without letting them know first.

THE PIVOTAL SHIFTS:

Once we were aware of everyone's efficiency or deficiency patterns, we then made 6 pivotal shifts:

1. We established Billable Percentage Targets for each team member to hit weekly according to their position and responsibilities. We even included our admin assistant in the mix.This is what it looked like:
• Production Designer's Billable Target: 90% (mission findings: a low 46%)
• Senior Designer's Billable Target: 75% (mission findings: a low 39%)
• Creative Director's Billable Target: 85% (mission findings: a low 45%)
• Admin Assistant's Billable Target: 25% (mission findings: a crazy 0%)
• Project Manager's Billable Target: 65% (mission findings: a low 26%)
2. We started Estimating with Ranges to allow the team a buffer of time to work within and added a clause to our proposal letting the client know that we would advise them in advance should the project go above 10% of the project range.
3. We tweaked our Client Meeting Rhythm to allow for entire days of design production without interruptions. For example, Mondays + Wednesdays became meeting days for some of us and Tuesdays + Thursdays became production days for everyone. It does not mean that we never had exceptions...but this was the new "productivity" norm.
4. We implemented BubbleTime. BubbleTime is a block of uninterrupted, productive time. No calls, no emails, no talking...just pure productive energy. It is recommended to have at least 2 blocks of uninterrupted time per day of at least 1 hour and a half.
5. We tweaked our Monday Huddles to include each team member's billable % average from the previous week. It is very important to publicly celebrate the team members that are making it happen week after week and to also look at which team members are falling behind and why so you can either tweak the expectations, find solutions together to reach the target, or simply evaluate if this employee is assigned to the right seat on the bus.
6. We continually Measured Efficiency and Profitability against our targets and our client proposals to ensure that we stayed the best "well-oiled machine" that we could be.

THE RESULTS:

We grew an astonishing 85% that year alone without hiring anyone new...and we did it pretty effortlessly when all considered. This simple mission allowed us to uncover and course-correct a few major growth blocks, or potholes as I like to call them.

Don't operate your business blindly. Know your numbers...including your team's efficiency rates and go from "Survive" to "Thrive."

My View on Isabelle's Article:

In working for a professional services company, it's amazing to see how the profitability of the business affects the culture and future growth. When you've built a company based on service, you should remain aware of the costs associated with doing business, and realize what margin you can reasonably expect. As you increase your billable time (by following what Isabelle did), you'll notice that you're able to provide quality work and get compensated for the value you add. In the end, everyone benefits. This increases morale of clients and employees alike, and begins what I've recently learned is called a "Virtuous Cycle." More on that in an upcoming post!

Please, tell me what you think of Isabelle's article, and how does it relate to your business?