One of the most important skills in life is to notice when you are in a bubble of your own beliefs.

I found myself in one recently, and getting out of it taught me something important about running agencies. Thanks, brain. #blessed for how interesting you are.

Through a back-and-forth on the cauldron of ideas that is Reddit (it me btw) I was initially stunned that when one agency founder admitted they struggled to get their team to track time, everyone else said that they didn’t track time at all.

In fact they thought the idea was stupid.

Whatever your reaction to that, whether you are in my bubble or not, this article will hopefully teach you something about how to run your agency.

So the consensus was: tracking time is a waste of time.

Initially I went into ‘someone is wrong on the internet’ mode because I’d always tracked time. At first to do billing, and later to do fancy graphs around where our profit was coming from so the leadership team could make very important strategies.

But these people are no mugs. They are running successful agencies.

When everyone is saying the opposite, find out why.

The reasons people don’t track time

You aren’t billing time and materials.

Needing to time track to bill is the primary reason why people start time tracking. Naturally this is a decision taken quite early on.

You’re not particularly sophisticated around internal rates (the amount that your team cost you per hour), nor do you need to be. In fact the whole financials thing is less important. It’s you, a bank balance and a focus on getting some clients. Profit ratios can wait.

Even if you do track time at the start, you’re making up an external rate (what you charge clients per hour) on vibes. So the whole profitability side of things is still a guess.

So why doesn’t this lack of financial detail come back to bite you?

Because the guess is easy.

You’re likely to be doing smaller projects, with a smaller team, on salaries you can afford.

If the effort required for a project is fairly consistent, people’s salaries are fairly similar, and you’re charging a similar price each time, then you have just got one piece of maths to do.

You end up with one sum.

Because your costs aren’t fluctuating wildly either that sum is actually quite functional as a way of making sure you make money.

If any of those factors slip:

  • a project is going to require a lot more effort,
  • a project is of a lower budget,
  • or you hire someone for a significantly higher salary

you know that you need to adjust your price.

At first, you can probably make those adjustments on vibes too.

The tricky bit comes when those factors slowly start drifting. When the amount of work something takes changes, or the price you can charge is challenged, or people’s salaries start broadening out.

But what if you avoid the tricky bit?

Not all of the agencies that were anti-time-tracking were new or unsophisticated.

Some have found a way to have good visibility on what they’re doing and to remove the overhead of timesheet tracking and analysis.

They’ve done that by making their services productised.

If effort, salaries and price stay about the same on every project, your profit is predictable. And if tracking would find you less money than it costs in time and hassle, skipping it is a fair call.

If you deliver a known scope, with people on stable salaries, and at the same price each time, tracking won’t tell you much more than your one big sum.

As well as delivering the services you also need to know what it costs to sell them. If you are selling the same thing each time this number could stay stable too.

Of course, there are other benefits of being productised. You’re easy to buy. You can value price. You can build a reputation for that one thing. We’ve all read that book, but who knew it included not needing to track time?

The strengths and weaknesses of an untracked life

The productised, timesheetless agency is perhaps having a moment because efficiency is its game. Right now, we’re all becoming more efficient.

By being productised, you price on the outcome. Agencies billing by the hour are under pressure because clients know AI makes the work faster. You aren’t.

In fact AI is going to allow you to decrease the time to deliver, so without doing any calculation at all, you know that your profit’s going to go in the right direction (as long as you keep the cost of delivery stable, ie wages remain the same and token cost is negligible).

This is a business set for scale, repeating that outcome, adding more people, and winning more clients. Its drawback is that it’s not built for change. New services, bigger clients, more strategic engagements. Anything which makes your levers volatile is going to leave you in the dark around how much money you make.

Hire a senior person, and the projects they’re on will make less money. Do a job where scope is uncertain, and that fixed price may be too low.

This was my agency as we moved from websites and generalist work to product UX for bigger and bigger clients. The cost of delivering those changed a lot. The cost of selling them too. We needed to know where we were with profitability and many times the analysis told us we were in the wrong place. Our biggest client was sucking up resource and not delivering the money.

It’s hard to change so it had better work

This exploration left me thinking.

What I learned is that it’s not just early-stage and solo founders that don’t see time tracking as valuable.

There are people who have got at least as far as I did, if not further. Not on vibes, but by setting up their business so every project makes a predictable profit. They made it so it just worked.

I think I’m still in the track-your-time club because, as someone clever once said to me, “our people’s time is our inventory, and we track inventory”. Tracking time also doesn’t stop you being productised and taking advantage of that. You can have both.

Whether you track time is also a decision that shapes your business, and it’s hard to change. Getting a team that has never done timesheets to start would be a big ask.

There’s something even harder to change.

Harder than changing process is changing beliefs. And that applies to anything about your business.

Clearly there are successful agencies tracking time and successful agencies who aren’t.

Whichever you are, you can point out what the other is doing wrong, or you can try and understand what works. You can steal from the business you don’t want to be.

Getting out of your bubble takes effort.

And…

(urge to ruin nice ending rising)

And if you don’t track that effort…

(he’s back in the bubble)

… if you don’t track that effort…

(here it comes)

then how do you expect to know how profitable it was???!!!

(take him away)