If you’re a consultant, non-billable time (the time you spend doing things that you can’t actually bill for) may be the biggest drain on your cash flow. Here’s a few suggestions on how to minimize this hidden expense.
What is Non-billable time?
a) Marketing (as in personal networking, preparing and mailing direct-mail letters, writing proposals for new business, phone solicitation, etc.)
b) Bookkeeping and record keeping
c) Office maintenance (filing, cleaning, organizing, etc.)
d) Taking care of customer questions, issues, etc.
Although important, non-billable time can eat into your profits. For instance, if you spend 40 hours a week “working” at your place of business, and you charge $30 an hour for your services, you have the potential of making$1,200 per week. However, if you spend 10 hours a week performing non-billable work, you’ll be able to bill for only 30 hours. That means you make $900 instead of $1,200 — a $300 dollar difference. Over the course of 50 working weeks during the year, that would mean the difference of $15,000 in your total income!
There are several ways to eliminate or at least minimize this reduction in your income.
1. You can simply raise your fees, based on how much non-billable time you spend. For instance, if your rates are $30/hr. as in the example in the previous point, raising your rates to $40/hr. would mean that the 30 billable hours you spend each week would result in a total income of $1,200 — the same amount you would make if you didn’t have any non-billable hours.
2. You can hire assistants or contract outside help to take care of the non-billable tasks, allowing you to get back to what makes you money. The assistants will, presumably, be paid less than you charge per hour, letting you make up the difference.
3. You could look into ways to speed up the time you spend on non-billable projects. Perhaps a new computer program could help speedup your bookkeeping, or help you organize your schedule. Look for ways to streamline your activities in every way possible.
4. (Most effective overall) You can become more aware of the non-billable time you’re spending each week. Try to cut down the time you spend on such tasks, or bite the bullet and take care of them after work hours or on weekends when possible. Often, simply becoming aware of how badly non-billable time is eating into your income can help minimize the problem.
Do you have any tips or stories about how you saved money or increased your take home pay? Let me know.