Profitability And Time Tracking For Small Businesses
Running a business is hard but turning a business profitable is even harder. The reason why many startups fail to cover their costs is that they have no idea how much their projects are worth.
How many small businesses, do you think, know the exact number of hours it takes for a project to be completed by their business?
In the IT-industry, a study by McKinsey, conducted in collaboration with the University of Oxford found that IT projects run 45 percent over budget and 7 percent over time while delivering 56 percent less value than predicted. Similarly, another study looking at the construction industry suggests that the main reasons projects run to long are directly related to poor time estimation.
Determining accurate project schedules is a difficult process for many small businesses that do not have historical time data. What we mean by historical time data is:
the number of work hours it takes for that particular small business to fully complete a project”.
In essence, every project is different but as a small business operating in a particular industry, there are similarities that can be drawn from previous experiences. As such, we recommend that you start looking into advanced time management solutions that will help you understand how long your current projects last, and estimate future projects with greater accuracy.
Start Managing Profitable Projects By Tracking Time
Time tracking shouldn’t be a strange concept to anyone. At the start, businesses used various time tracking techniques as a means of ensuring that people are working for the duration that they are supposed to. However, over time the goal of tracking time evolved to play a more important role.
Today time tracking isn't simply a means of tracking work hours but also measure the productivity of projects, determine historical costs and measuring the effectiveness of staff across various tasks.
Furthermore, advancements in technology have paved the way for automated time tracking solutions that allow businesses to monitor activity from any place at any time - as long as there is Wi-Fi or cellular network.
Why automate time tracking as a process?
The key to building a successful business is insight. The majority of small businesses have a hard time understanding how data can benefit their daily operations. However, if there is one lesson that can be learned from large organizations is that automation and use of data are two fundamental concepts that allow them to reach high levels of growth.
Take the example of Airbnb, as put by Brian Chesky:
“We had a saying that you would do everything by hand until it was painful. So Joe and I would photograph homes until it was painful, then we get other photographers,” says Chesky. “Then we’d manage them with spreadsheets until it was painful. Then we got an intern.”
What Chesky means when he talks about “doing everything by hand” is the degree to which they were still manually completing tasks. As businesses grow, their need for automation increases. Would it be more cost-efficient to purchase a time management tool that costs $4 a month or hire an employee that keeps track of timesheets for $15 an hour?
For any growth-oriented entrepreneur, the second option should be a more appealing alternative. So why bother hiring an employee to run around and collect timesheets when you can have a digital system that takes care of it automatically?
Three benefits of using a time tracking solution
Although the benefits to time tracking automation are countless, we will be focusing on only three of the most important ones.
Interested in reading more about time tracking automation?
Visit our informative blog section where we discuss the benefits of automation in greater detail.Learn More
The three main benefits of time tracking are:
- Higher levels of productivity,
- Reduced time-wasting behaviors,
- Increased transparency and accountability
Let’s explore each of the above benefits and learn from real-life examples.
Higher levels of productivity
How productive are my employees? How many hours do they need to finish task X? What's the variation? Is there a correlation between previous projects and hours worked?
Access to historical data is crucial for businesses looking to manage profitable projects. The data businesses obtain from digital time tracking solutions can be used to determine the current productivity of employees, and predict the future work hours to complete a project without facing cost-overruns. So, why are there so many failed projects when such solutions exist?
The problem lies with the business owners who look at automation as a complex process that is difficult to implement. However, this is a misconception that is commonly observed among smaller businesses - especially those across labor-intensive industries, such as construction, home repair contracting, landscaping and more.
Contrary to this belief, time tracking automation is an easy process that doesn't require more than 1 week to fully integrate within any business structure. Modern time tracking apps, such as Atto have developed a user-friendly web and mobile app that allows users to track time and location, extract timesheet reports, and manage tasks in 2 or 3 easy steps.
Reduced time-wasting behaviors
In addition to productivity, automation helps businesses ensure that employees are not wasting time across tasks unrelated to work. Time-wasting behaviors in the workplace are increasing each year.
According to a study published by Forbes “a year ago, 69% of surveyed employees said they waste at least some time at work on a daily basis. But the number of people who now admit to wasting time at work every day has reached a whopping 89%”.
Any business should look at time tracking as a system that needs to be abided by every employee. As such, one of the indirect impacts of a time tracking solution is that it adds a controlling factor to the culture that is designed to keep employees focused on their tasks.
Remember, removing all time-wasting behaviors is nearly impossible, but we can take measures to minimize them and save the company from incurring any extra losses from it.
Increased Transparency and Accountability
It is not uncommon for businesses to run projects that go over budget but it is common for businesses not to learn from their mistakes.
We already discussed productivity and its importance to the success of a project. Now, we will look at two distinct characteristics of operations that also influence the outcome of your businesses’ work.
On one hand we have transparency that builds a healthy culture based on trust, and on the other there's accountability that tries to create a sense of responsibility within that culture. These two concepts go hand in hand, as one fuels the other.
How does time tracking promote transparency and accountability?
Using time tracking software, management can make employees accountable by assigning specific tasks based on job codes. The progress will be monitored for the employee through the app - which builds a transparent evaluation system.
Businesses that rely on remote work can use location tracking as a means of ensuring that staff members are at the right job site at the right time, doing the right tasks.
Every feature of a time tracking solution is designed to promote productivity, efficiency, transparency, and accountability. The key lesson is that data is important to successful decision-making. Start exploring automation software and use it to maximize profits!