As a store owner, you wouldn't let a person take something off your shelf and walk out the door without paying for it. Anyone witnessing such an incident would consider this a theft, and if such an event were to occur and a police report filed, the business owner might be able to recoup some of the loss, either from insurance or as a deduction on taxes.
But if you're a service professional, this kind of theft is happening to you all the time, only you don't know it, and you can't prove it. Even if you could, there's no insurance in the world that's going to cover you for it.
What I'm talking about is time tracking. A majority of service professionals are selling time, so we must think of their time and the time of their billable staff in much the same way we think about inventory.
At the beginning of the month, we start with X amount of time -- the maximum billable hours our staff can put in. This is the amount of an employee's work that we want to be billable. That varies based on roles and responsibilities, but it is never 100 percent of the scheduled work hours.
At the end of the billing cycle, we must bill for those hours devoted to clients or projects.
If you aren't accurately tracking your time, this is tantamount to ordering 100 Frisbees in January, inviting customers into your store and giving out a Frisbee to this kid, a Frisbee to the local church group, a Frisbee to your neighbor, and anyone else who happens to pop in and say hello.
Come February, you only have 20 Frisbees left to sell and the only way to recoup your initial expense is to sell those Frisbees for $20 apiece. Trouble is, the price is printed right there on the Frisbee for everyone to see -- you can't just jack up the price now that you're in a pinch. You also couldn't very well sell the Frisbees for that much, as you'd lose all your customers.
What to do? As far as this Frisbee venture goes, you're already at a loss, same as any billing period you might already be in. The most you can do is recognize the failure and move on.
But the moment a new billing period starts, for instance the first of the month, you need to start tracking your time as accurately and as efficiently as possible.
Most professional services offices that operate on time-based billings are already equipped to track time -- whether by cellphone apps, QuickBooks, online services, Excel spreadsheets or even punch cards -- so it's not so much the "how" of inputting time as it is a commitment to tracking time, every time.
Stop letting your inventory walk right out the door.
Kim Bowsher started her management track at Starbucks in Seattle. She now helps small businesses, putting to work the lessons she learned in the coffee business. Contact her at email@example.com.