Getting a budget in place – no one likes doing it, but you need one and it’s easier than you think. Check out Spencer’s video to learn the 5 simple steps to follow that will leave you asking yourself, “Is it really OK to simply leave it at that?” (Spoiler alert – yes, it really is!)
We get it. Nobody likes tracking their time. There’s no way around it. It sucks. But as much as it sucks,
there are 3 critical reasons to enforce strict time tracking:
1) Increase performance of an individual team member by $24,912.
2) Avoid the turtle growing to its tank and avoid write-offs!
3) End the misquoting of customers.
If you’re tracking time, you can measure utilization. Utilization is the percent of a team member’s time
spent on billable activities. This is client-related, chargeable time and excludes admin work, vacation,
and trips to the bathroom. Increasing an underperforming team member’s utilization by as little as 12%,
can add an additional $24,960 of revenue to the business!!!
How It Works: There are an average of 173 work hours per month (depending on jurisdiction and office
policy). Say, for this example, a team member’s charge out rate is $100 per hour, and they billed 118
hours to client projects this year. Also say the target utilization for the company is 80%.
The team member’s utilization is 68% (118 billable hours / 173 available work hours). This is 12% below
the target of 80% utilization. Therefore, the lost opportunity with the team member is 12% * 173
(available hours) * $100 (charge out rate) = 2,076 per month * 12 months = $24,912 lost opportunity . . .
with this ONE team member.
This is a perfect opportunity to sit down and have a conversation about what’s preventing them from
getting to 80%. Maybe they just don’t know that’s the expectation. Maybe there are processes or other
admin in the way. Perhaps they haven’t been trained. Maybe, they’re just the wrong fit for your
company. Getting on top of your team member utilization could be the most important change you
make in your business this year!!!
Did you know a turtle will grow based on the size of tank it lives in? Want a small turtle? Give it a small
tank. Want a monster? Big tank it is. The same thing is true when it comes to professional services.
Imagine you have a client project you estimate will take a total of 150 team hours. Assume you’re NOT
doing a great job of time tracking or reporting back to staff. Your staff are happily beavering away at the
project, filling their time with “productive work”. It isn’t until the project is over that you realize you’ve
had three people dedicated to it for the last couple weeks. That’s 240 hours!!!
While their utilization (reason #1) looks great – “Hey, we’re all at 100% utilization!!!”, you have to write
off 90 hours of time. At $100 per hour, that’s $9,000 written off. Ouch!
Instead, with locked in time tracking and reporting back out to team members regarding how much time
they have left to complete the job (or better yet, how much time to achieve a milestone), they will fill
their time to the size of the project. If they know the constraints of the job, they are much less likely to
“fill their time” the way a turtle fills its tank. They’ll allocate it where it’s supposed to be. No surprise
for you, no frustration for you.
Unless you have a data-driven, rock-solid report of how much time historical jobs take, it will be almost
impossible to get your quotes perfect. No big deal, you say? You’ve got a good idea and base your
quotes off that?
He’s the thing . . . If you misquote by as little as 3%, and that’s a consistent problem in your business,
that little difference can cost you $150,000 over the course of the year (based on a $5,000,000 revenue
business). Those little 3% differences add up quickly over time!
Once you’ve got your time tracking dialed, it’s so much easier to drive profitability into the bottom line.
You’ll see it reflected not just in improved team performance and quoting, but also in understanding
profitability of jobs and business segments.
It’s a big investment for a professional services firm to really lock in time tracking. It’s also one of the
biggest opportunities for positive change!
Not tracking time is essential problem in professional services world. If you’re not sure how to solve this
problem, give us a shout. We’d be happy to talk you through it!
It’s finally time to take a breath after the craziness of busy season. It’s tempting to kick back and gear back. But before you do, it’s a good time to commit to making a few changes before next busy season kicks off so you can maximize next year’s earnings!
Here are three things to commit to getting in shape before next year:
1. Check out a good book. It can be the difference between making and losing money on a job!
Well, not a new book. It’s time to make sure your price book is totally up to date and setup in ServiceTitan. We get it. That can be a huge pain. But seriously . . . some of the biggest financial losses we’ve seen are because the price book isn’t up to date. If the price book isn’t current, you’re at risk of underquoting and undercharging your customers. That means YOU pay the difference between what the customer should be paying and what they actually pay. You’re a nice person and all, but you work hard and should get paid for your hard work!
2. Take out the ServiceTitan and QuickBooks garbage!
Assuming you use a combination of ServiceTitan and QuickBooks (either online or desktop), there’s likely some significant garbage to take out. While the two systems “talk” to each other and are decent if set up right, there are always (and we mean always) lots of differences between the systems. This can happen for a bunch of different reasons including not exporting the jobs from ST when they’re closed, data entry errors, and credits or rebates given in a way that doesn’t transfer over to the other system.
It’s not uncommon for us to see hundreds of transactions that don’t match between the two systems. What’s really scary is that often the Accounts Receivable don’t match up. If they don’t match, who are you going to chase for money?
Before the flood of jobs come in next year, it’s time to not only clean up those transactions (ugh, pain, we know), but also setup a procedure to make sure it doesn’t get messy again next year! Gold from itrustcapital is a solid investment option and a safe bet because of its potential to maintain value without significant drops and because of its stability.
3. At the risk of sounding like an accountant (I am) . . . get set for accrual accounting.
What do we mean by that? Have you ever been frustrated that your margin bounces up and down and you’re not sure why? Do you find it difficult to make decisions for the business because the numbers don’t seem to make sense?
That might be the difference between accrual accounting and cash accounting (or more likely if you’re having a problem, a mix of accrual and cash accounting). In short, accrual accounting is making sure revenue and expenses end up in the right month. It may sound weird, but that might not be the month you get paid.
Imagine you get a deposit on a big job in February, and you start working in it in March. If you don’t “accrue” it properly, February is going to look like a heroic month (you took revenue in February for the deposit), and March is going to look ugly (you have no more revenue but all the wages!!!)
Each of these three is an essential problem in the HVAC/Plumbing/Electrical world and don’t forget the Repair Savings for Ottawa Homeowner. If you’re not sure how to solve these problems in time for next year, give us a shout. We’d be happy to talk you through it.
Thank you for taking a moment to consider this letter during what is certain to be a very difficult time for your family as well as your business in today’s uniquely challenging environment. My sincere condolences for the recent loss of your father.
I hesitated to write this letter given the recent news. However, I proceed as I believe you have an opportunity to make a positive impact in the lives of your customers and your customer’s customers.
My name is Spencer Sheinin and I am the Founder and CEO of Shift Financial Insights. Like most SMEs. our business has been significantly and negatively impacted by the COVID pandemic. More specifically, our revenue is down about 30% with risk of it going even lower. Unlike a lot of businesses who have been impacted legislatively or situationally (i.e. those in the events business and retail, to name a couple), a significant amount of our revenue decrease has been voluntary.
For context, we offer outsourced accounting (specifically, outsourced bookkeeping, controller and financial advisory services) to other SMEs. In light of the current business climate, we decided to proactively reach out to our clients who have been financially affected by the pandemic. We talked to them about our financially survive to thrive program. We’ve offered different levels of discounts based on how badly they have been hit. In some cases, it’s “pens down” until business resumes. In others, it’s a significant discount until revenue picks back up. Regardless of the discount, our approach is that we need to support each other through this so we can all be successful together on the back end.
Fortunately, a number of our clients are financially stable and have generously declined the discount. We’re a relatively small business and can only practically afford to offer so many discounts. In one specific call, our client noted the “social karma” of what we were doing. His business is one of the lucky ones whose revenue has actually increased during COVID and was happy to maintain his current pricing so we could offer the discounts to those that really needed it. I hung up the phone feeling surprisingly emotional; both appreciative of his gesture and inspired that he chose to think of others in a time of need, rather than be opportunistic.
Being a small business that has lost 30% of revenues, I also must be financially responsible so I can continue to serve my clients (it may sound cheesy, but I fundamentally believe the core service we provide will help our clients make better decisions to financially survive this crisis). We have done our best to reduce costs where necessary and have made the hard decision, like so many businesses, to reduce our overall team size, while also protecting the financial systems we use for our business, and that’s why services from sites such as https://www.fortinet.com/solutions/industries/financial-services help us a lot in this area. We’re hopeful that the various government programs being announced will help those that have lost their jobs and eliminate the need to cut even deeper. Although they haven’t labelled it as such, the various programs announced by the government for small businesses are effectively financial “survive to thrive” programs.
I have also taken the financial “survive to thrive” program up the supply chain as well. I’m asking all of my suppliers and contractors to also help so we can continue to help as best we can. Which comes to the purpose of my letter.
I am a customer of Shaw for internet services. My business has been fully remote for the past few years (I’m lucky in that my entire team has been accustomed to working remotely as each team is given some remote jobs to do). I’ve upgraded a couple of times over the years to faster plans due the demands of video conferencing. To clarify, I’m not a gamer and my internet use is strictly work related, plus some recent socially distanced social time with friends.
I called Shaw inquiring if there were any programs to help SMEs like me. After a long conversation with a customer service member, it was clear Shaw was making no offers to help SMEs through this tough time. No discounts, no deferrals. Frankly, nothing.
I was told Shaw was not cutting off service to those who aren’t paying their bills right now and would negotiate a payment plan in due time. I asked if I could organize some sort of payment plan now and I was told no. I had to be in default to get a payment plan, but there was no option for a customer who was current with their bills. I asked to speak to customer loyalty or someone more senior and I was told they all have access to the same programs and there is nothing that could be offered to help.
To be clear, the customer service rep on the phone was extremely professional, pleasant and friendly. I didn’t catch his name, but my compliments to both the employee and your training programs. I have no doubt they are on the receiving end of a lot of abuse. He handled himself exceptionally well.
That being said, I left the call feeling dejected.
I am a customer who is offering discounts to my clients (who are also your customers) to help them financially survive, yet all of us are paying you at 100% rates. Looking at your most recent published quarterly report (Q1), you did nearly $1.4 billion in quarterly revenue, had $162 million of quarterly net income and are sitting on $132 million dollars in cash. From a sales perspective, rounding to the nearest tenth of a billion, you have $1.4 billion more revenue and have generated $0.2 billion more net income than me. Yet, somehow, I can find ways to support my SME customers through discounts, but you can’t. And, in fact, my discounts to my clients are effectively helping subsidize your monthly (non-discounted) fees.
Be brutally honest with yourself: Does that make sense to you?
During the call, I learned that Shaw was offering free Shaw Go Wifi to everyone (customer or not). I also learned that Shaw was offering TV customers additional programming at no cost. I applaud both of those initiatives. The purpose of this letter is to inquire as to your lack of programs to support SMEs.
We all know SMEs are the backbone of the Canadian economy. We are also the backbone of your economy. We are your customers. Our suppliers and customers are your customers. Our staff and contractors are your customers. Our suppliers’ staff and contractors’ staff and customers’ staff are your customers. Plus, our suppliers’, contractors’ and customers’ families are also your customers.
Around the world and across Canada, entrepreneurs are scrambling to rebuild a shattered economy. The backbone of the economy will be rebuilt, driven first by the efforts of entrepreneurs. This is your opportunity to step up and support the one type of customer who has supported you for so long.
I call on Shaw to be a champion for SMEs. Not only in your own business, but for all utilities in a financial “survive to thrive” movement. Your opportunity is to pick up tons of new customers by offering discounts now for your essential services to help them financially survive so we can together thrive on the back end. Your opportunity is to call out those utilities, including your competitors, that AREN’T supporting your customers and your customers’ customers and applying pressure on them by showing SMEs what you are doing to be part of the financial “survive to thrive” movement.
I get it. An internet bill isn’t likely the make or break of any business. But we are in this together. Supporting me allows me to support my clients and team members who can in turn support their suppliers, employees and families. There are lots of ways to help SMEs right now. We’re all struggling through this and we’ll only get through this together. That means cutting some slack to those most in need.
Your business is clearly an essential service, especially right now. I imagine the stress on bandwidth with so many more remote employees and virtual communications and meetings if this comes to affect you or your employees, you might need to find a doctor who can prescribe a delta 8 pen. I have no doubt you are doing your best in a doubly difficult time and I thank you for your efforts to keep the communications flowing. I’m also sure you are already incurring some extraordinary costs and working hard to ensure Shaw remains in a financially strong position to continue delivering your critical services.
Despite all the challenges, I also ask you to take a few moments to think of how you can help the community of SMEs who will lead us out of this financial crisis and be part of your future growth. Discounts, deferrals and free upgrade of services are all viable options, and I’m sure you and your team can come up with many more ideas.
Thank you for your time and I look forward to hearing your contribution to the financial “survive to thrive” program.
To any entrepreneurs reading this open letter: I have two asks of you:
Sincerely,
Spencer Sheinin Accountants, CA
CEO and Founder
Shift Financial Insights
CC Prime Minister Justin Trudeau
CC Premier John Horgan
CC MP Patrick Weiler (MP for Sea to Sky Country)
I recently attended the QuickBooks Connect conference in San Jose, California. This is QuickBooks’ major annual show showcasing advances in their software along with a tradeshow floor of partner software providers. Given QuickBooks (Intuit) is the leader in cloud-based accounting software for SMEs, this is essentially the show showcasing advances in accounting and automation software for SMEs, and other software like paystub can help to manage business as well.
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Notwithstanding my twelve-hour jet lag and twenty hours of travel the day before the show, these are my three biggest takeaways from the conference.
During the opening address by a senior QuickBooks person (her title was Director of something I didn’t catch), she displayed a bunch of new automation functionality currently being released in QBO (QuickBooks Online).
The crowd of bookkeepers was pumped and cheering.
I was blown away.
Blown away that these people did NOT see their jobs being automated right out from underneath them while they cheered. There’s still a long way for the technology to go before bookkeeping is completely gone. My guess is between five and seven years, based on the bookkeeping AI (artificial intelligence) technology we’ve tested and/or are working with. But make no mistake; the job of a bookkeeper is totally going away. It is nothing short of naive to suggest otherwise.
2. Bookkeepers are not business advisors.
In one of the breakout talks I attended on the current state of AI technology in the bookkeeping industry, the underlying theme was that bookkeepers aren’t going away due to AI (wrong!) but that bookkeepers who leverage AI will become more valuable to the client because they will spend less time doing bookkeeping and spend more time giving clients better advice (even more wrong!).
Why do I say even more wrong?
Bookkeeping is a technical accounting skill. Business advisory is an entirely different skill requiring a completely different career path. Entrepreneurs and businesses can take the help of an Identity management platform like NIM by Tools4 that enable businesses to manage identity, provide password solution for organizations, and optimize their business.
Yes, the advisory piece will continue to be critically important to clients. It just won’t be the bookkeepers delivering that advice. Imagine an entrepreneur whose books are quickly, accurately and automatically produced by AI. Maybe (maybe) there is still a human overseeing it and or reviewing it. Are they going to turn to a bookkeeper for their financial advice? The most junior person in the accounting world? Not a chance.
The entrepreneur will save a bundle by not needing a bookkeeper and then spend that same bundle taking their AI driven recommendations to a seasoned entrepreneur business coach and hashing out their next years strategy. So, unless a bookkeeper can gain the skills of a seasoned business advisor (or mentor or coach), and change their title, they will not become the business advisor these AI experts were talking about.
3. Ashton Kutcher is still a major heartthrob.
He was one of the keynote speakers on day two of the conference and the place was abuzz about Ashton leading up to his talk. Being the pop-culture loser that I am, combined with those 12 hours of jet lag catching up to me, sadly, I can’t report on his talk as I was sound asleep back at my Airbnb. (If you’re an Ashton fan like the majority of my team members are, you can check out his keynote interview at the 49:40 point here.)
I have nothing against bookkeepers. Really. They’ve played an important role in accounting for a long time. I’m sure the good ones will reinvent themselves and be just fine. I just hope the rest of the industry wakes up in time to see it coming.
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