Tuesday, October 31, 2006

Your Time May Be Worth Nothing

If you're a sole proprietor (or have ever been one), then you know that sometimes your time is worth nothing.

By that I mean that you can give away your time with no ill effects on your business. The most common scenario is when something goes wrong. Suddenly you're on the SS Minnow and your three hour project goes on for a long, long time. You might give away ten or twenty hours in order to make the client happy and "do the right thing."

Companies with employees can't do that.

If I send a tech out to do a one-hour job, it needs to be a one-hour job. If it takes two hours, I'm barely ahead. At 2.5 hours I'm losing money. At three hours, we have a serious problem.

In addition to the cost of labor (including workers comp, medical, dental, etc.) you also have lost availability. If a tech takes three hours and we bill one, we have also lost the ability to bill at least one hour to another client.

Do that every day times X number of technicians and you'll go broke in no time.

So we have some hard, fast rules about time.

1) You never work on any project for longer then the allotted time without contacting your manager.

2) You never troubleshoot unproductively for more than 15 minutes without calling someone (manager, another tech, etc.)

3) After 30 minutes of troubleshooting (even if it's productive) you start a troubleshooting log. The log is simply a notes page with 15 minute increments. Stop every 15 minutes and write down what you've been doing. We need to know where you've been and need to be able to document the process AND make sure another tech doesn't come in and duplicate your work.

4) After 60 minutes of troubleshooting, we call the relevant vendor (Microsoft, Veritas, etc.).

5) Some jobs we know we eventually fix, but we set limits in order to be as productive as possible. For example, in a data recovery project. Client is willing to pay for two hours. Do what you can within the limit. But do NOT put out ten hours of heroic effort. The client has already determined the dollar value limit for that data. If you hit a dead end, go back to the client and discuss.

Our business tends to be dominated by bulldogs -- we sink our teeth into a challenge and don't let go until we've wrestled the problem to the ground and we come out victorious. Great. Go buy yourself a cape. But just stop losing money. If the client isn't willing to pay more than $300 for a project, stop, bill the client, and move on to the next project.

YES it is very dissatisfying to leave a series of un-done challenges behind you. Go to therapy if you need to. But get over it. You don't have to win every battle at any cost. Because the cost might be your business.

Sole proprietors take note. You think this time is free, but it's not. In addition to being a really bad habit, you are also giving up the opportunity to make money with the time you've been giving away.

We all know that somestimes you don't make money. Fine. Actively work to keep those times to a minimum.


  1. Anonymous8:21 AM

    Karl- Wow you really hit the nail on the head here with this free time issue and how much it really costs. I struggle with two other factors in my head while giving that 'extra free time' to a client. 1. I am still new and am trying to get my name out there. I justify my extra time (to myself) by hoping they will 'like me more' and give me more business in the future AND pass my name on to other clients. 2. I am a nice guy and HATE to either leave a project/issue unfinished or feel like I am taking advantage of a client because I couldn't resolve an issue in a timely manner. (And hence, I allow the client to take advantage of me by giving so much free time!!)

    Where do I sign up for that therepy you mention?

    Keep up the great blog thoughts, I have really enjoyed the "running an IT business" related thoughts.

    Brian Keith

  2. Anonymous11:46 AM

    So true, been in business 16 years and have only in the last year started to get rid of the dead weight customers.
    The best thing I ever did was to implement a help desk software program, which highlighted the amount of time wasted on those customers.

    If they want if for free? send them to the chain stores, if they want service, then pay for it.


    Great blog, found you by accident..


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