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Gini Dietrich

The Importance of Tracking Time and Other PR Firm Essentials

By: Gini Dietrich | June 20, 2013 | 
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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, an integrated marketing communications firm. She is the author of Spin Sucks, co-author of Marketing in the Round, and co-host of Inside PR. She also is the lead blogger at Spin Sucks and is the founder of Spin Sucks Pro.

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 

PattiRoseKnight1
PattiRoseKnight1

Entering our time is how we get paid and also to put up a red flag when a client is being over serviced. It is tedious but critical to our business.

cspenn
cspenn

The way I do this at SHIFT is by living in Outlook's calendar. I block off time in half hours for everything - lunch, meetings, etc. and when a client has time block X, they get 100% of my focus for that block. When the block comes to  an end, I save all work and move onto the next block. It's the ONLY way I've found to give the appropriate time to clients and still meet all my other obligations - including obligations to myself.

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