fp. eBook How Creative Agencies Can Accurately Manage Resources & Time

Creative Agencies How to accurately manage your time & resources

AUTHORS

Isabelle Almeida is responsible for Marketing and Social Media at Function Point, focused on blogging and creating a community around the creative industry. Before Function Point, Isabelle developed branding and web content planning projects.

Isabelle Almeida

Tate Lillies Tate Lillies is the VP of Marketing and Business Operations at Function Point. Tate is responsible for Marketing, Customer Retention, Product Development and Strategic Planning at fp.

Introduction………………………………...…5 Allocating resources & Being accurate.……………………………10 Top 3 reasons to track your creative time.…………………………...16 How to Get staff buy-in to time tracking………………………………19 How to manage your time…………………..24 Conclusion..………………………………….27

SUMMARY

Introduction

Why should you care about accurately measuring your time and

resources?

What is Function Point and how can a project management

software help you?

What you are doing wrong?

There are approximately 32,000 advertising agencies (both large and small) in the United States according to Second Wind, an agency network. This represents approximately 431,000 people working in an industry that brought in $171.7 billion1 in revenue in 2011. "

Given the economic importance of advertising and the creative industry in general, competition is intense. Each agency, especially small and mid-size, has to continuously look for ways to improve on internal workflow to keep the business going.

To become more efficient and guarantee profitability, agencies must be able to accurately control time and other resources. For this reason, we, at Function Point Productivity Software, have created this eBook to provide you with some tips on how to be precise in estimating and time-tracking, and how doing these things will result in increased profitability.

HOW TO ACCURATELY MANAGE YOUR TIME & RESOURCES

“Agencies must accurately control time and other resources.”

www.functionpoint.com

1.  MagnaGlobal; May 2012

Why Should I Care?

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Function Point’s all-in-on web-based workflow software offers to your creative agency:"

These features are integrated to help you to run a successful agency: !

!  Customer Relationship Management

!  Creative Briefs, Estimates & Proposals

!  Traffic & Task Management !  Job & Project Management !  Scheduling & Calendar !  Timesheets !  Resource allocation

!  Media Insertion Orders !  Invoices & Profit Analysis !  Staff, Client & Vendor

Collaboration !  Client Extranet / Portal !  Digital Asset Management !  Financial & Management on-

screen reports !


Improve your workflow!

• Define resource availability!

• assign tasks to the right people!

• have easy access to all information you need!

Increase your productivity

• Save time & focus on your creative work

• Manage briefs, estimates, jobs, tasks & resources all in one place

Emphasize relationships

• Easy to collaborate with clients, vendors and staff

• Provide valuable real-time job & project information

Maximize your profitability

• Control deadlines and expenses

• Keep track of time

• Create and send invoices

What is Function Point?








!You and your team have spent way too much time over the past couple of weeks working on a major project or initiative and you don't even know whether it will be profitable at the end. Does your team feel overloaded? Did unexpected events make you over-run your budget? Were other projects delayed because of this?

If you answered yes to any of these questions, understand that these are

typical challenges within the agency world. You are not alone!

Reviewing how your agency manages time is essential.

Even if you don’t like to admit it, the product you are selling is your time, so proper management of this resource is critical if you want to run a profitable business. Determining what your pricing strategy is, estimating accurately and assigning the appropriate responsibilities across each department in your organization can mean the difference between a successful business and one that is toiling on the verge of bankruptcy.

What am I doing wrong?








!The lifeblood of any advertising or creative agency is winning new business from both existing clients and new clients. To achieve this it is not only necessary to create fabulous campaigns and creative design or ads, but you have to ensure that the work you do results in profit for your agency. "

The purpose of this eBook is to give insights on how you can make your workflow faster and maximize your profitability. The tips presented in this whitepaper will help you:

"1. Create accurate estimates

2. Manage and track your main resource - time

“ Ensure that the work you do results in profit for your creative agency.”








3 tips to create estimates

How to measure the actuals

Type of costs and expenses

Allocating resources

& Being accurate

In a competitive business environment, creative agencies of all types (new media, digital, advertising, branding, marketing strategy, design etc.) need to ensure that they efficiently allocate their resources and accurately build estimates for new projects. This will help you both increase your profitability and build a good reputation at the same time.

Being accurate means determining the right number of hours that will be spent and an appropriate rate to be billed. A precise budget will help protect yourself against any unexpected events that may delay a project or cause budget overruns.

How do you tackle the task of creating an estimate when there are so many unknown variables? We all know that last minute client changes come up frequently, staff may not be available, you may have to outsource work you didn’t plan to or other additional expenses pop up. We do have some suggestions for you though.


“ Being accurate means determining the right number of hours that will be spent and an appropriate rate to be billed.”







!

1. Start with your timeline or schedule: Factoring in all of the time that you anticipate spending on internal to-do items/tasks for every step of the job will help you calculate the total number of hours that will be spent on the job. Often the items shown on the client facing estimate are the big picture buckets of time or steps to complete the work. So, putting together a timeline or schedule that shows all of the internal to-do items will help you calculate the total number of hours at each step. If you have information from previous similar jobs, it can be used as a start point to create the new schedules/timelines, which makes the process easier.

2. Role rates: Have different rates and estimate your work according to who will be doing the work. You might not know which designer or developer you will have working on a component of a job, but estimating whether it is a junior or senior person will have a huge impact on the estimate total. A project management software can help making all these calculations quickly.

3. Terms: Whether you invoice your client based on the estimated amount of time, the actual amount of time spent on the job, or a combination of both, it is important to include appropriate terms and conditions that will protect you from inevitable over-runs and scope changes. Include the time period the estimate is valid for and details about how variations or scope additions will be determined and priced. Lastly, it is advisable to include the estimate total is "subject to change".

3 tips to building accurate estimates








To have a good estimate you have to understand the rhythm of your business. For this reason you need to look at past jobs and projects to analyze what your agency can do in a certain period of time and what you can promise to your clients. You already know that not living up to your clients’ expectations will make them unhappy.

Therefore, it is important to compare your estimates with your actuals to confirm that you will really succeed in achieving the expected profit. This data will be required to help you build better estimates in the future as well. For example: if you assume that a task takes 2 hours, when it really takes 4, that could mean thousands of dollars each year never being realized, making a potentially profitable account into a money losing relationship.

“You need to look at past jobs and projects to analyze what your agency can do in a certain period of time and what you can promise to your clients.”



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The first step is understanding your agency’s true costs and expenses. You can make this much easier on yourself by keeping them all organized in one place. At Function Point, we classify expenses and costs in three ways: "1. Internal Services: These are fees that you typically charge an hourly rate for or at least track time against. Even if you do not bill your clients based on time, each internal service should have a billing rate to match the value of your time and effort. Keep in mind that you should always be justifying the rates you charge (even on flat rate jobs) based on the amount of time that the work takes. Otherwise, you might end up spending many more hours than you are charging for, resulting in very low overall profitability. 2. Internal Expenses: These are items that you purchase as inventory and sell back to your customer, generally at a fixed price per item. This can be with a flat rate mark-up or at cost. Internal expenses usually apply to a physical item, but can also be used for things like mileage that get charged at a flat rate to a client. 3. External Expenses: These are expenses that you incur and charge back to your client, such as printing or courier services which have been outsourced to an external vendor or supplier. You can charge your client a percentage mark-up on the amount you have to pay your vendor.

So, how do I measure actuals?








So far you will notice that the main expenses that you have in your firm are employee salaries (since intellectual capital – the creative work - is your biggest asset). Herein lies the importance of time tracking – you need to know which jobs or projects make money (and alternatively, which one’s don’t), and which clients are the most profitable to you. The analytical data that a workflow management tool can provide (if the information is being entered properly) about different elements of your work will be invaluable in increasing your agency profitability. You will be building better estimates and charging your clients much more accurately.

There’s nothing like time sheet data to better scope out your future work. You'll see rapid improvement in accurate milestone setting, and put yourself in a position to meet and even exceed client expectations.









Reasons to track time according to different perspectives

The Top 3 reasons to track your creative time

We see plenty of agencies and creative businesses who do not see the benefit of gathering, storing and using the data from time sheets and how precious this information is, even though it is extremely easy to record your hours using a time management software. " ""


Next we will present the top 3 reasons to push yourself and your team to use a system to track time. !

Timesheet window on the dashboard of Function Point Productivity Software, an easy and accessible way to enter the time spent while working on tasks








Finance • Even if your creative agency charges a flat fee for jobs, it is essential to

know for sure if you’re charging enough, and consequently, how profitable you are. Your business makes money by selling creative time. Tracking how much time is spent and how much you actually charge per hour of work will ensure that you know exactly how close your price-point is to your break-even. This will give you the proper insight into developing better pricing strategies and a competitive edge when positioning your agency in the market. Remember going above and beyond client expectations is part of your survival, but money is king. Tracking time is the most informative indicator of how to better operate your business.!

Management • Do you need more staff? As a department head, or traffic manager, how

will you show that you are overloaded, without a pile of time sheets to back you up? You need to have a clear understanding of your team's availability for the next few weeks in case a new job comes on board and make more precise decision about hiring. Resource management is crucial in answering a simple question "Who is available next week to create the artwork for our new client?". Knowing that, we will have the right information to know how many projects you can handle without compromising your quality standards and budget.!

People Management • Enable your staff to shine. The data you can glean from time sheet

reports will enable you to see who excels where, and who might be your best choice to assign certain tasks to. Get your team working smarter, not harder. Moreover, if your team becomes better manager of its time, it will also be more focused. Knowing that at the end of the day you need to account for what you’ve been up, you’re much less likely to get off track with legitimate tasks like research, or with other distractions..."!








What you should know about timesheets

What makes the process of getting

timesheets from the team easier

What constitutes a good timesheet

How to Get staff to track time

The ultimate guide for time-tracking

buy-in

Working with creative agencies, fp. staff often come across the fear that proper planning and time-tracking will kill a culture of creativity (or at least make it seem like that’s what management is trying to do). “We sell our expertise and the final product, not the amount of time that it takes us to produce it” is a standard argument that we have been hearing. Nobody wants to feel like “big-brother” is watching.

Getting into the habit of tracking time and using this information to plan future projects should be about teamwork and building your agency to focus on your core competencies (i.e. what are you best at, what do you enjoy doing, and what types of work are most profitable for your agency).








Be clear when communicating with your staff about time sheets

and ensure it does not become a harsh task. Take some time explain that: 1.  Tracking time allows you to focus on client work and does not

necessarily equal payroll hours. It gives you the opportunity to analyze each job you are spending time on, who your profitable clients are or what type of work you are best at – these are the keys to long-term success.

2.  Planning and tasking does not have to mean micro-management. Make it clear to your staff that tasks are meant to ensure that each individual has the time to be creative. Creating project or job schedules and tasking work out means giving your agency resources (i.e. staff) enough time to focus on their deliverables and do their job well.

3.  Focus on the quality of work that your staff does and not on the amount of time it took. Time tracking does not mean judging staff performance by time spent on task. Your goal as an agency is to get better at estimating how much time quality work will take and bill accordingly.


“Tracking time allows you to focus on client work and does not have to equal payroll hours.”








The most important thing is for the CEO and/or upper management of the organization to do timesheets and to believe in the importance of tracking time. If this is not the case, the battle is already lost. Once the CEO and management start doing their timesheets on a consistent basis, the rest will follow. There has to be an easy mechanism to do timesheets and also for management to easily audit timesheets by date / employee / project / company etc. Having this will allow the management team to “remind” employees about missing timesheets. It is all about having proper data. !

What makes the process of getting timesheets from the team easier?


Timesheet Find mechanism in Function Point Software. Function Point is a company where the owner of the company believes in timesheets and understands their importance. We have been doing timesheets since day one (February 17th, 1997). !








! A time-sheet should include the description of the work

done and the duration. Start times and end times are optional. It is not just important to enter work time, but vacation time as

well since when someone is out of the office, your team’s capabilities will be reduced. Most agencies have a process in place for the submission of vacation requests. We recommend creating a budget of paid time off that represents the number of vacation hours. For example: if a person has 2 weeks of vacation time available in the year and they work 40 hours per week, the task should have a budget of 80 hours. When the staff person goes on vacation, they enter 8 hours against the budget for each day that they are gone. This helps both administration and the staff person to know how much vacation time has been used and how much is still available. Days off should also be entered in the agency’s calendar, since you don't want a traffic manager accidentally assigning tasks to a designer who's going to be away, particularly at a key time in a project. !

What constitutes a good time sheet?


TIP Having a vague timesheet description such as “Made changes in sample” does not help anyone. A better example would be “Made changes in sample A for logo 1, client X”. Although having the description of those tasks may be considered going overboard by some, it is important information when someone wants to further investigate how time is spent and get more precise metrics about the work.








3 time saving tips for the busy advertising or creative agency

How to manage your time

Tracking time is not enough, you also have to manage the hours you have. Professionally and personally, time management is an issue, especially these days with so much going on that can distract you and make you lose your focus. As hard as we collectively wish for more of it, there will only ever be 24 hours in a day. The good news is that there are a few simple changes that any agency can make to free up valuable time and, more importantly, cut down on frustration.

Next: 3 time saving tips for the busy advertising or creative agency









Have priorities and set goals

•  Tasks have different degrees of urgency and importance. We usually do not have enough time to complete them all, so prioritizing them according to your established goals is essential. Get your essential admin tasks (required but unbillable) out of the way quickly to give yourself more time for billable creative work. Ensure that you have the tools available to make these admin chores as efficient and useful as possible. Remember, billable time is where you want to be!

Have a single source to capture all job information.

•  If your desktop is a mess, it is time to look for a more efficient way to manage projects. One of the biggest time wasters is chasing and waiting for information. Add having to go through multiple sources for simple job information, and you are probably two clicks away from a nervous breakdown, plus you haven’t even “checked-off” any items in your to-do list! Not having access to current account information can negatively impact every decision you and your colleagues make. So, what is the solution? Have one system in place that the entire agency uses to capture job information from proposal to invoice. Workflow management software will allow you to cut down on time wasters and have all the account information when you need it.

Minimize the gaps between one phase and other

•  Some tasks or jobs need to get approval before going any further. Waiting for permissions can delay your work, particularly if you need to set a live meeting. Each person has his/her own schedule to adhere to, and waiting for a meeting to (possibly) get an approval disrupts the workflow. We strongly recommend using available online tools to promote collaboration amongst both clients and staff.







The importance of what you learned reading this eBook

Conclusion

Efficiently allocating and managing your resources is key to running a successful agency. Monitoring these resources (i.e. planning and tracking time) will help you ensure that you are working on billable items and creating more accurate estimates in the future. This will allow you to build consistent price models and, ultimately, improve your profitability.

Poorly managed agencies are generally far from being productive. Surprisingly enough, we still find many types of creative agencies managing their projects manually, which contributes to a lack of control and project visibility. Timesheets, often regarded as an annoyance that disrupts the creative process, are a valuable (we would say essential) source of information. Don’t worry though, the dreaded time-sheet can be completed quickly if you have a user-friendly way to do so (such as an integrated project and timesheet management software system).

Finally, remember to keep your focus in the creative process, but never forget how the bills are paid and where paychecks come from. Planning activities may not be the fun side of the business, but you need to have control of your estimates and time to ensure you are able to focus on your core competency of creative work. "








If you’re interested in learning more about how fp. can help you improve your workflow process please request a demo and one of our knowledgeable account executives will be in touch.

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Documents

fp. eBook How Creative Agencies Can Accurately Manage Resources & Time