18
41
Gini Dietrich

The Importance of Tracking Time and Other PR Firm Essentials

By: Gini Dietrich | June 20, 2013 | 
81

The Importance of Tracking Time and Other PR Firm EssentialsIn the for-profit business world, it’s rare you get a look at what your competitors are doing, particularly if most of them are private companies.

But at Counselors Academy, an organization for PR firm leaders, best practices, strategic investments, and even financials are shared among peers with the goal of making everyone better business owners.

Such was the case when Ken Jacobs and George Rosenberg presented a workshop on profitability for PR firms.

There are a few things worth highlighting.

According to the 2012 Agency Billing and Utilization Report from StevensGouldPincus:

  • The average profit per agency is 18.7 percent
  • The average salaries and benefits per agency is approximately 55 percent
  • The average annual billable rate per employee is $199,000
  • The average billable time for the PR firm leader is 40 percent

Projected Billing

The study also shows, to figure an employee’s projected billing, you should take the number of working hours per year (1,800 at an eight hour day with paid time off and holidays removed) and multiply that by their target billable percentage. Then multiply that by their billable rate and you have a dollar amount.

So for an account executive, you’d use the following:

1,800 (workable hours in a year)

x

94% (time that should be spent on billable work)

=

1,692 (billable hours in a year)

x

$150/hour

= $253,800 (projected billing)

Of course, the percentage of time that should be spent on billable work decreases the further up the ladder you go (which is why the leader is at 40 percent) because the idea is, with more experience, your team is bringing in new business or growing clients organically, which makes up for their lost billable time.

The Importance of Tracking Time

I am not a believer in billable hours, as they pertain to invoicing clients that way. That said, it is extremely important you track your time and assign a rate to it. Without it, you have no idea how much things cost or how long it takes someone to do something.

That’s why, even when you’re overservicing a client, tracking time – every minute of it that is spent – allows you to be strategic and smart about the budgets you’re creating.

When you go to budget new business, you can go into your financial history, take the last three similar clients or projects, add up the costs, divide by three, add 10-15 percent for unforeseen issues, and voila! You have a realistic budget.

Can you imagine if you’re just guessing how much things will cost and then you go over by 50 percent? You’re unhappy, you can’t go back to the client and ask for more money, and the relationship ends badly.

Track your time…and do it honestly. I know my team sometimes wants to give clients some of their time for free. That’s fine. But tracking time means you know how much things realistically cost in the future.

Not Good at Math

I know most of you went into PR because you’re not good at math.

I know this because every time I speak, I ask, “How many of you went into PR because you hate math?” And typically more than 90 percent of the room raises their hands.

So I get it. I do.

But if you’re going to lead an organization that sells people’s brains for a profit, you have to get good at the simple math.

Understand what your people are doing. Understand where they’re spending their time. Take the time to figure out which clients are making you money and which ones you’re losing money on.

Use the new business time to figure out realistic budgets instead of telling new clients you can do everything they want inside their tiny budget.

Set expectations. Track your time. Be realistic. Work in buffers for the unexpected overages. Stay on strategy.

And, for heaven’s sakes, learn the math.

About Gini Dietrich


Gini Dietrich is the founder and CEO of Arment Dietrich, a Chicago-based integrated marketing communications firm. She is the lead blogger here at Spin Sucks and is the founder of Spin Sucks Pro. She is the co-author of Marketing in the Round and co-host of Inside PR. Her second book, Spin Sucks, is available now.

78 comments
walkssophia
walkssophia

Time tracking is one of the vital part in all possible ways to get ahead with the process that one looks out for. When come one practically gets aligned with the time tracking and management, then definitely the success comes into action. For a hassle free experience and approach, we prefer using the cloud based hours tracking software from Replicon ( http://www.replicon.com/olp/hours-tracking-software.aspx ) which is hassle free in experience and features the user friendly and calendar based interface that makes a difference.

KellyeCrane
KellyeCrane

"Tracking time – every minute of it that is spent – allows you to be strategic and smart about the budgets you’re creating" - preach it, my friend! For solo PR pros, I recommend using 1,000 billable hours as the baseline when considering hourly rates, since we wear a lot of hats (ahem, @3HatsComm) and this typically translates into unbillable time. Keeping close tabs on time, even when billing on retainer, is the key to profitability.

3HatsComm
3HatsComm

I was actually always good at math; liking it, that's a different story. I'm looking at the formulas and LMAO. I can get w/ the 1,800 hours a year. But that 94% is on what planet and why am I on the wrong one?! I started at an agency and oh how hard it was to bill time (even in 15 minute blocks; I track the tenth of the hour). I'm not a deadbeat and I struggled, slaved, stayed late and couldn't bill 40. When I went corporate, it killed me the hours spent on work that wasn't productive, never mind all that time wasted at work that wasn't really work at all. I'm the only chef in the kitchen, so doing it all .. hell even 40% is nigh impossible. Hat tip to those of you who can, I want to be you when I grow up.

I think of things in the shower. I map out strategies in my head while reading, driving, watching TV. My brain doesn't really turn off or work so well on forced schedules. Though I do a decent job to keep track, that makes it harder - which is why I'm thankful of your reminders here. When looking at new business, having accurate data and experiences on which to base projections can only help protect you from over-extending. And I cannot AGREE any more about not promising everything for a tiny budget, about keeping it realistic -- and the need to get the client on that page. FWIW.

MikeSchaffer
MikeSchaffer

This is so, so, so important! A former agency of mine never tracked time, which meant that they had no idea if a project was profitable or not. Leadership looked more at the project fee than the scope of work, which is a quick recipe to failing. Which they did shortly after I left. (I'm not necessarily linking the two events!) If a project brings in $100,000 cash but costs $200,000 in time and materials, you lost money.

Tony Felice
Tony Felice

Author's sentence: "But if you’re going to lead an organization that sells people’s brains for a profit, you have to get good at the simple math." Fantastic statement. As the owner of an agency, managing client expectations concerning the value of PR is often a challenge. We are paid to use our wits and experience as former journalists to present news to journalist from their perspective, not "sell" our client's news. That delivers results.  It takes brain power to do that...not basic tasks for which hours can be billed.  So, we've shifted our model to bill based on stories we guarantee to land (I know, that's bold), but it get's the client thinking beyond billable hours. It's been working well for four years straight. Stories landed are on strategy too, not just news placement for the sake of news placement.  

Randy Milanovic
Randy Milanovic

Agreed. There's a fine line between billing for hours and billing for value. The better you get, the higher the value, but of course, the less time needed to accomplish it. If you were to bill hourly only, your rate would need to climb (counter productive to getting/keeping clients). On a side note, our online marketing firm, Kayak Online Marketing, discovered HARVEST time tracking (includes value, hourly, estimating, quoting, billing and collection). One of the smartest Apps out there and syncs between all our platforms, from iPhone to desktop for all our team members.

sherrilynne
sherrilynne

Of course this makes perfect sense. However, I've worked in five different agencies during my carreer and getting people to use thier time tracker is always a challenge. #lapluscachange

Emily Gest
Emily Gest

I'm fine with math, it's the time tracking that is a thorn in my side. Haven't found an easy method/approach yet. Fodder for another column, perhaps?

RobBiesenbach
RobBiesenbach

So, SO important! And this is one of my biggest peeves about the client side of things. When you're in an agency you pretty much know how much time should be spent on a given task because you know what it's going to cost the client. So spending, say, 20 or 30 hours drafting and revising a press release? No client's going to pay for that. But then you go over to the client and see them spending hours, days in meetings hashing and rehashing things and you think, "These people have no sense of the value of time."

Tracking your time is a really important way to figure out just how much time you're wasting!

lauraclick
lauraclick

One word - HARVEST. It's a brilliate app for tracking time and invoicing. It also has a handy dandy desktop timer, so you can easily start and stop it as you're working on something. LOVE IT. It also breaks down the percentages for you so you can easily see where you're spending your time. It's WAY better than that darn Access database I had to use at the agency years ago. 

KensViews
KensViews

Gini, I'm honored that you felt my presentation was worth a post! Please note: The StevensGouldPincus numbers cited were averages for firms billing $4MM and under. They're averages, but definitely not best practices. Firms MUST do better than that if they want to generate profits of 20% or more. And the $150/average AE billing rate I used in the presentation is on the low side. I just used it for illustration purposes. Thanks again!

DebbieAndrews
DebbieAndrews

Great post and I agree 100% about the value of time tracking.  It helps a business owner to monitor productivity; price proposals more efficiently; realize when you are under or over scope with a client.  But almost most importantly, it ensures you get paid!  If a client ever has a question, you have all the answers in your T&B system.  In 9 years of business, Marketri has never not gotten paid in full and I attribute that to being very diligent about time tracking.  Thanks Gini for your post!

belllindsay
belllindsay

I have to say, tracking time (for me) is so hard. I dip in and out of things all the time, pop onto Skype for unexpected chats about a client, switch from Spin Sucks work to Client X work almost hourly. Maybe it's the nature of my work, or the fact that I can't add two+two. But I agree 100%, it is crucial for planning and pitching. I learned a lot from this post G! :D 

ginidietrich
ginidietrich moderator

@3HatsComm I bill about 50% of my time so don't be so hard on yourself. We wear many hats. The 94% is for those who only do client work, which tends to be junior and mid-level employees. You don't do much new business or P&L work at those levels, which is why you bill so much time.

KensViews
KensViews

@MikeSchaffer  Exactly! And if an agency's not tracking time, it risks something far worse: Repeating the error!

KensViews
KensViews

@sherrilynne It's a challenge, but always worth it. The  key is letting people know that tracking time doesn't equal billing time, and that tracking time is the ONLY way we can learn if the budgets that the higher-ups propose to clients are realistic, and that proposing realistic budgets is in the team's best interest--that's what assures that we have enough team hours to get the job done.

ginidietrich
ginidietrich moderator

@Emily GestYou know what I do? I learned this trick very early in my career. I keep our time tracking software open all day. If I'm working on something for client A and I get interrupted by client B, I jot down the time I worked on client A in there and then move to client B. When I finish that, I jot that down and go back to client A.

If I had to do it at the end of the day or week, I'd go nuts.

ginidietrich
ginidietrich moderator

@RobBiesenbach I also think when you don't track your time like that, you don't understand the value of it. I've seen people freak when I say I have a hard stop at a certain time. Dude. I have stuff to get accomplished and sitting here drinking coffee with you for three hours ain't gonna do it.

KensViews
KensViews

@lauraclick  HARVEST was mentioned at that same conference by a PR agency owner as one of the tools she used to get more serious about running her agency like a business.

KensViews
KensViews

@DebbieAndrews "Never not gotten paid" is one use of the double negative I wholeheartedly endorse!

photo chris
photo chris

@belllindsay Lindsay- when you figure it out, can you write a blog post on it?! LOL. I work like that all the time!  I'm always wondering what the heck I DID at the end of the day. If I know that while I didn't finish something, I made progress on 12 things- that would help me feel better about the day. We're not a PR firm, but in a small business you wear a lot of hats, and I always feel like I'm spending 75% of my time working on things that are outside of my "title" and core focus of responsibilities.  

KensViews
KensViews

@belllindsay I hope not inappropriate of me to to state this, my FB buddy, but might spending 15-20 solid minutes on a task be more helpful? Not because it would make tracking easier (that's just a side benefit) but because it might lead to greater focus and effectiveness.  That's what the leading time management experts encourage us to do. That's  because it takes our brains quite a lot of time to "recover" from shifting between tasks.  Uni-tasking works!

3HatsComm
3HatsComm

@ginidietrich I know, I know. Just even as an intern, a junior - the one looked down upon b/c I didn't chat enough at the coffee machine, didn't do enough after hours schmoozing - just too many hours in the day that were at work, on work, yet not really work work aka billable. 

Plus w/ design being one of my hats, those hours are so fluid; I charge for concept and creation but not necessarily the hours of trial and error to get it right, on things that don't work. Sigh. I'm working on it, looking closer at hours and minimums as I rethink my biz. Thx.

Tony Felice
Tony Felice

@ginidietrich @Tony Felice Not us, we get paid for original blue-chip media placements, not repurposed press releases ever. That would be unethical. Any good PR firm should be able to land between three and ten original stories, interviews or expert commentary per month depending on the level of retainer. 


KensViews
KensViews

@ginidietrich @sherrilynne  I believe in many states that is illegal. That's why agencies find it so tough to get compliance. I think explaining the notion of profitability to the team can help enormously. Or just hire angels!

KensViews
KensViews

@ginidietrich @RobBiesenbach Time management tips: When your phone call is over, get off the phone! If you have a coffee, book it for an hour, walk in with three goals in mind, and when an hour's over, shake hands and get back to the work!

DebbieAndrews
DebbieAndrews

@ginidietrich @DebbieAndrews I would love to draft a blog post for Spin Sucks!  We have a few things that we do that ensure we always get paid - time tracking being #1 and most important but there's more.  Sorry you didn't get paid and had to sue - YUK!

belllindsay
belllindsay

@photo chris See, I love the whole "wear a lot of hats" thing - I think that's why transitioning to this world after 20 years of TV was relatively easy for me. It's a little bit chicken and egg I think: I was drawn to TV because of my skitziod way of working (which is actually very efficient, I might add) - or, TV trained me to work this way because of ITS skitzoid way of functioning - either one, I ended up who (and where) I am today. I think people like me and thee can actually accomplish a great deal. I'm not good at juggling two things at once - which is why I think I've evolved to be so good at the instant switcheroo! 

photo chris
photo chris

@KensViews @belllindsay oh- I'm glad you brought this up- I actually lost focus mid-reply above to Lindsay,  lol. Why? Because I'm also watching new comments pop up and a client email "ghost in" at the bottom of my screen thought I KNOW that uni-tasking is better (and that I always feel better at the end of a day when I do it.)

belllindsay
belllindsay

@KensViews Not inappropriate at all - but as I mentioned, it's more of an hourly or half hourly thing (not every other minute! LOL ). I can quickly get a post formatted for SS, then flip and do same for a client, then edit the remaining posts for another client, then get asked to pop onto Skype for a quick strategy chat, that sort of thing. It's also the nature of MY particular beast - when you work in daily TV long enough, you get used to (and very very good at) stopping on a dime and changing gears. It's not hard for me to do that, it's hard for me to TRACK all the incremental bits of time spend on XY and Zed clients. :) 

Word Ninja
Word Ninja

@ginidietrich @belllindsay I find tracking time to be a challenge, too, except for those obviously larger chunks when I'm writing a case study or interviewing. I saw @cspenn uses Outlook. What other methods of tracking do people use? Those spurts of times--answering email, quick calls, etc.--are the ones that can be difficult to track. I guess I would have liked math a lot more if you had taught it, Gini. (Of course, that means I would have had like a 5-year-old high school math teacher...)

KensViews
KensViews

@3HatsComm  Two thoughts in response, if I may, which you may already know: : 1) Internal/external networking critical, because they help you achieve organizational and career goals, and make you better at what you do. I spent the first 14 years of my career NOT networking, thinking doing great work was enough. It's not! 2) Important to track all the time, including trial & error.  You then know how long it takes you to deliver a product of which you're proud.  You can then choose to bill the client what you think is right.

photo chris
photo chris

@belllindsay @photo chris LOL! I like the figurative hats; I'm just awful at telling others how long of a period I'll be wearing, or have worn, them! The one I seem to be wearing the most right now is the "fireman's hat with Octopus arms" It's QUITE the costume!

KensViews
KensViews

Hourly or half hourly easy to track, since most time trackers do so in quarter-hour segments. And although you were required to flip much more rapidly during your TV days, that doesn't mean that your brain was giving it its deepest focus--Near impossible to go from deep focus in Project A to deep focus in Project B, because the brain requires recovery time after each interruption or shift. It's just the way the brain is wired. We may think we're doing deep focus, but the scientists tell us otherwise.

KensViews
KensViews

@Word Ninja  GREAT idea! When we do that, we not only get more accurate reports, than when we guess at the end of the day, or worse, at the end of the week, but we are often surprised at where we actually spent our time, which programs we under budgeted, and which clients require a lot of time

ginidietrich
ginidietrich moderator

@Word Ninja A five year old high school math teacher. LOL!!

You know what I do? I learned this trick very early in my career. I keep our time tracking software open all day. If I'm working on something for client A and I get interrupted by client B, I jot down the time I worked on client A in there and then move to client B. When I finish that, I jot that down and go back to client A.

Trackbacks

  1. […] Dietrich is founder and CEO of Arment Dietrich, Inc. and blogs at Spin Sucks, where a version of this article originally […]

  2. […] AirPR: Is this the Beginning of PR as a Commodity? The Four Different Types of Media The Importance of Tracking Time and Other PR Firm Essentials Entrepreneurs and Intrapreneurs are America’s Future B2B Sales? Do Your Homework! […]