SSK #16: The Single Tactic I Used to Increase My Client's Profitability by 20%
Read time: 5 minutes.
If you're here expecting to learn some fancy "trick" for increasing profitability, I must disappoint you.
This tactic is far from flashy.
It's mundane and time-consuming.
In fact, my clients hate me when I suggest implementing it.
But here's the twist—they end up loving it because it works.
It adds tens of thousands of dollars to their bottom line, all without selling anything new to a single client or hiring additional help.
So, what's this magic solution?
If you're not tracking your time, you're losing money—period.
Take, for example, an SEO agency I recently worked with. I asked them to track their time for two weeks. We then spent an hour analyzing the results and identifying bottlenecks. Two weeks later, their profit margin had increased by a staggering 20%.
Curious about how time tracking can lead to a 20% boost in profitability?
Your business profitability is influenced by three critical factors:
- Prices: The more you charge, the higher the profit.
- Costs: The less you spend, the higher the profit.
- Efficiency: The more efficient you are (keeping your cost and pricing structure the same), the higher the profit.
Many businesses primarily focus on raising prices or optimizing their cost structure, but only a few concentrate on improving efficiency.
If you're spending time on non-revenue-generating tasks, you won't scale profitably.
Similarly, if you're focusing on tasks that your clients don't value, you're squandering your time.
Take, for instance, the common practice of creating detailed reports for clients and holding weekly meetings to present these reports.
Most clients are not interested in extensive data and analytics; they care about the tangible outcomes—how much they spent and how much they earned. That's it.
If you spend time preparing in-depth reports that your clients don't care about, you're wasting both your time and theirs. Time that could be better invested in acquiring new clients.
On the subject of client acquisition, consider my work with a client in reducing their client onboarding time from 4 weeks to just 2 weeks. With their existing team costing $9,000 per month, they could initially onboard only one client each month. After restructuring, they halved the onboarding time, allowing them to bring in two clients per month with the same team. This change significantly boosted their profitability.
All this was made possible through the mundane process of time tracking, which helped identify bottlenecks and develop effective strategies.
Here's my approach to analyzing time tracking:
- Use a Google sheet or a time-tracking app like Toggl to monitor time spent on each task.
I use a simple google sheet to note down:
- type of activity
- client name
- time spent
- how it made me feel - heavy or light.
That last bit gives me "qualitative" information. That way I can see if I am spending too much time on tasks that are heavy - I either don't like them or they don't bring much value to my business.
Using a simple google sheet is totally fine and you don't really need anything else unless your day is super busy with lots of small tasks, then getting Toggle or something similar would be helpful.
(If you're busy working on small things, then you have a bigger problem to fix.)
Also, if you have a team it might be easier to manage time tracking using the app/tool
You can also use features built-in the project management apps like Wrike, or ClickUp.
- Assign a dollar value to each task based on its ROI. Not all tasks are equal in value. It's easy to waste hours on $10 per hour tasks while you could be tackling $1,000 per hour tasks.
- Reorganize your week so you spend most of your time on high ROI tasks.You should focus on those tasks that move the needle the most.
Now, how many $1,000 tasks are sitting on your to-do list while you're bogged down in $10 tasks?
- Implement the D.A.D framework: Delete, Automate, Delegate. Focus on high-ROI tasks.
Calculate your hourly break-even rate.
Anything that's below that rate should be deleted from your list, automated or delegated to someone (like a VA) who has a lower hourly rate than you.
I, for example, put a price of $500 on an hour of my time.
This let's me be laser-focused on doing the things that grow my business and allows me to make delegation decisions easier and faster.
Here are some of the benefits and impacts of time tracking on your profitability:
- Unveiling Hidden Costs and Gains: By meticulously tracking time, you uncover the hidden costs associated with specific tasks or projects. This helps in pricing your services more accurately, ensuring you cover your costs and maintain a healthy profit margin. Moreover, it can reveal which clients or projects are more lucrative, guiding future business decisions.
- Efficiency and Productivity Boost: Time tracking can significantly enhance efficiency. By analyzing the time spent on various tasks, you can identify time drains and productivity killers. This insight aids in eliminating or automating low-value tasks, thus freeing up more time for high-ROI activities. The data from time tracking can also be used to set realistic deadlines and expectations, boosting overall productivity.
- Better Decision-making: Armed with precise data from time tracking, you can make informed decisions swiftly. Whether it’s about taking on a new project, hiring additional staff, or investing in tools to automate tasks, having a clear understanding of your time allocations and the ROI of different tasks empowers better decision-making.Improved
- Work-Life Balance: By tracking time, you can ensure that you're not overworking yourself or your team. Maintaining a healthy work-life balance is not only beneficial for mental and physical health but also sustains long-term productivity and job satisfaction, which in turn, impacts profitability positively.
- Smart Delegation: With accurate time data, you can identify which tasks should be delegated to free up your or your team’s time for high-value activities. This also helps in determining what tasks can be outsourced or automated, reducing operational costs and increasing profitability. Read about the D-A-D framework below.
- Profitable Project Management: Integrated time tracking in project management apps like Wrike or ClickUp can provide a holistic view of project costs, helping in keeping projects on budget and ensuring they are profitable.
- Strategic Planning for Growth: Over time, the data accumulated from time tracking can be instrumental in strategic planning. Understanding the time investment required for different tasks and projects facilitates more accurate forecasting and planning for growth.
By efficiently tracking and managing your time, you'll optimize your business for maximum profitability. It's like having a roadmap guiding you to invest your time where it matters most.
This not only boosts profitability but sets a solid foundation for sustainable business growth.
p.s are we connected on LinkedIn or Twitter?
...and whenever you're ready, here are a few ways I can help you. If you're still trying to figure things out, I'd recommend starting with an affordable course:
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