Allocating your time as a consultant
10/04/2013 Comments Off on Allocating your time as a consultant
In my last post, I pointed out that charge-out rates and productivity percentages are closely related. You can’t decide on a charge-out rate (or rates) without thinking about how you spend your time. So, how should you allocate your time as a consultant?
There are several broad categories of activities:
- consulting — the stuff people actually pay for. Whether it’s research or reviewing or advising, this is the billable time
- marketing — how you bring the work in. It might be schmoozing or networking or writing proposals or going to sales events or whatever works for you and your business. It’s a balance: too much fun networking, and you’re out of time for paid hours; too much reading interesting papers, and there’s no work in the pipeline
- investment — the ‘working on the business’ part. It might be improving your own skills, or focusing the business on growth areas, or re-organising processes to make them more efficient
- administrative — keeping the day-to-day ticking over. Invoices need sending out, bills need paying, papers need filing, etc. Too much, and you’re just moving paper around the office to no good effect. Not enough, and things fall apart; the centre cannot hold.
You want to aim for 70% to 80% of your time on billable work, assuming you’re a lone consultant or in a small group. A large group can take advantage of division of labour, so seniors might do more marketing and juniors do more billable work. Marketing, well, the rule of thumb is about a quarter of your time, so figure 20% to 25%. Investment, let’s give that 10% to 15%. Administrative work is probably going to take 10% (an hour a day or a day a fortnight).
Wait, what? Even doing the minimum, that’s 110% of your time. Do more and you could be looking at 130% of your time or more. Yeah, well, that’s the problem — no one said it was easy. If you do each activity to the point that it feels like you’ve ‘done enough’ or ‘sorted it out’, you could be there all night. There’s too much to do and not enough time, or, as a friend of mine used to say, it’s like putting 10 pounds of stuff in a 5-pound bag.
How do you make it work? First, avoid the easy temptations. Short-change the investment activities, and your skills get rusty or you miss opportunities. Get behind on administration, and suddenly people owe you for three months of work. Cash-flow problems kill more small businesses than anything else. Marketing is a funny one. In my area, economic research, we are mostly introverted, so anything to do with other people is a chore. It’s easy, then, to skimp on marketing until you absolutely have to do it. Then the work dries up and you have to scratch around for the next project.
The second way to make it work is synergies, which is just a fancy way of saying ‘kill two birds with one stone’. Each project (billable work) is an opportunity for marketing. Don’t just email a report — meet with the client, meet with their bosses and stakeholders. Administration should be part of the everyday work — file papers when you’re done; take five minutes to run an invoice when you send off a deliverable. Investment and marketing can be combined — a conference or workshop is a chance to learn new things and meet new people. Introduce yourself, tell them what you do, take business cards or brochures.
The third trick is the hardest: figure out how much is enough. Gold-plating every output — a old boss used to call it ‘gilding the lily’ — is a waste of time and money. Most clients don’t want it so they won’t pay for it. If that’s the case, then you’re just doing it for yourself. Is this really how you want to spend your leisure time?
Back to the question, how does a consultant allocate time? ‘With difficulty’ is the honest answer. There’s a bit of Zen involved, actually. Be mindful of what you are doing, of how you spend your time. Then, decide whether it’s helping you make progress. If it isn’t, do something that will.