Tracking Project Profitabilty
With today being the last day to file taxes here in Canada, I had the enjoyment of going over all my financial information for last year. It's been enlightening to say the least and has reinforced the fact that I really need to get this under control.
First and foremost my biggest mistake is not keeping track of things. For each project, this is what I should be tracking:
- Time. All hours on a project should be tracked. Even if it's a fixed-price for a project, I need to be tracking my time.
- Sub-contracting. How much are I'm paying people to do work for me.
- Related to sub-contracting, track how much time I'm spending to manage sub-contractors.
- Expenses. My expenses tend to be pretty minimal but sometimes I buy fonts, photography, or involve travel. This this be tracked against the project.
The other thing I should be doing is regular reports — preferably on a monthly basis. As it is, I've gone over a year without really understanding how profitable I might be. Sure, my bills are getting paid and I have a general sense of where things are at but I don't have any concrete proof.
As it turns out, I spent a lot more on sub-contracting last year than I thought I did. But were the projects that I did that on profitable? Were they more or less profitable than other projects that I worked on? I honestly can't say because I wasn't keeping track.
So, while I've made it through my first year of freelance relatively unscathed, I'm heavily reminded that I need this information if I'm going to successfully run and grow this company.
And if you're curious, I'm actually using a quickly-built application for time-tracking now where I can log time for myself and subcontractors on all projects. I built it late last year but hadn't really been using it religiously. That's got to change.