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.
I;ve had to be pretty rigorous about tracking my outgoings etc as in the UK, the tax returns are, shall we say, taxing. If you don't have a receipt, you can't claim a purchase against tax, if you have a payment coming in that doesn't match an invoice you can't include it, it's all very confusing.
With regards to time tracking, may I recommend the basecamp time tracking functionality, works very well for myself.
Like you I filed my taxes last Friday after a few phone calls and meetings with my accountant.
I still have not found a piece of software which can track expenses and purchases incurred whilst being self-employed that is easy to use. For Invoicing/Time Tracking and Reporting I am using Billings from MarketCircle.
I originally created an internal app for this as well, then I re-did it when I had more time. I wanted software to track everything from leads, clients, projects, estimates, invoices, payments, expenses, etc. I still don't track things to the finest detail I would prefer to, but I do enough to give myself some decent reporting.
I agree with your ideas - you do need to do each one. I do a monthly business report where I outline my estimated income for the month versus actual, total expenses, total profit, goals and estimates for the next month, etc.
It really does help.
Ha seems like everyone is doing it at the moment. In Australia we have to do a BAS every three months and I am using a program that I am still learning and the learning curve is huge...
I pity with you mate and even though I would be on a smaller scale to you, I know how hard it is :(
I recently (about a month ago) came across a different way of time-tracking. Rather than force yourself to continuously manage your own time and mark it down as-it-occurs, you can do it once, or a few times during the day at interspersed break periods (because according to good health, we know we shouldn't be at the computer all day long!).
Either way, there's both a retail version of this application and an older free version, but I really like the idea behind this tool...and you could still use your own applications, but have a better way to track things you might have otherwise missed (or forgotten about).
You are so right. I recently also decided to be more disciplined about tracking my time. I'm using Basecamp's time tracker but it isn't perfect for my requirements.
No plans to release your app? I suspect there are a lot of other freelancers around like you who need it.
George has it right - do what everyone else does and build an app for yourself that is so good you end up releasing it and making piles of money!
I think that is every freelancers dream - do clients work during the day and then build a world conquering web app at night. Much like all the other super hero's.
@George/Stewart: no plans to release my app. It's pretty rough with much of it still using the CakePHP scaffolding (an automated way to generate screens). I wouldn't mind building a number of small business tools but it'll have to be added to the queue of other applications I'm trying to get out the door. :)
I track my hours in Google calendar and then pull them out using google's API with a homebrew application. That way i can use google's perfect interface for data entry.
I rather like that solution and it was quite easy to implement with Cake.
I use OfficeTime to track my time.
I don't agree with Brendon Kozlowski (comment 5) - I prefer to track my time continuously, otherwise I always seem to put it off for days, which means that I can't remember a lot of what I spent my time on.
I've been using SideJobTrack.com to track my projects. Free, and definitely not perfect, but it's worked OK. I'll have to check out some of the other ones mentioned here.
This is precisely why I'm not currently working freelance. I can handle estimating and time-tracking, but I'd much rather put in my 8 hours a day and go home. Perhaps someday I'll grow up and start doing the freelance thing again - at least part time.
You should try Dot project,
hope this helps.
I've been using the time tracker from 14dayz.com lately to figure out how much time I'm spending on my so-called "side job", turns out on a busy week I put as much time (35-40 hours) into it doing little things like updating products or analyzing my analytics, as I do at my real full-time job. Which means I make about .01/hr on the side business.
Love your new design!!
I wrote this free timetracker last year. Its named Worktimer and can be downloaded from www.gersh.no/worktimer Its a local application for mac.