Time tracking is one of the biggest challenges for small agencies. Although it is one of the simplest and most effective ways of making a profit, many agencies don't like or don't want to measure time. Some rationalize this by saying that they sell their services not on an hourly rate, but on a fixed/project, value-based, or monthly basis.

This is a big error, but it is not the only mistake that small agencies make. There are other project management mistakes that can get a small agency owner into trouble. It is time for some honest talk about these mistakes and the results they can generate.

When a hard-earned new client arrives at the agency, they may get plenty of attention as the newest kid on the block. But before long, they enter the "grinder" in which insanely busy agencies live. From that moment on, even the newest client's project will be just another task to be done quickly because there are 10 more in the queue for that day. Nod if that's the case for you!

There is no problem with having a lot of work, it means there are a lot of customers, right? The mistake is not with having lots of projects, but with the way projects are managed. And those kinds of mistakes come at a heavy price.

The five project management mistakes that many small agencies make are:

  1. Not knowing where the time goes
  2. Failing to manage every client, old, new, or current
  3. Failing to plan all costs in advance
  4. Lack of transparency and measurability
  5. Not reporting to clients at the end of the month

Let's take a look at what these mistakes can cause and the benefits of doing the right thing.

1. Not knowing where the time goes

"The important thing for me is that the task is done, I haven't got time to fill out boring timesheets or measure my time!"

Sound familiar? Most small agencies are very familiar with this excuse, but:

  • Without time tracking, you won't know how much time it takes to complete a task.
  • You won't know how busy your people are or whether some team members are ready for additional tasks.
  • You will not see potential problems ahead of time (e.g., you'll miss deadlines because of delays in the execution of tasks).
  • Without time tracking, you won't even know how long your working day lasts.

Even in cases where someone's services are not billed on an hourly, fixed/project, value-based, or monthly basis, there are still good reasons for everyone in your agency to track their time.

  • You will be able to develop very accurate estimates because you will know from past jobs how long every aspect of a project takes.
  • You will be able to assign tasks rationally, and rest easy knowing there is enough time to complete each of them.
  • You will understand where even non-billable time goes.

There are more and more small agencies that can price customers on a value basis but are billed with staff on an hourly + bonus basis. There is a place for timesheet and project management software in such cases.

2. Failing to manage every client, old, new, or current

When the agency wins a new client, they wake up the next day after celebrating, needing to need to think about what to do next. For large agencies, these are well-established processes, often backed up by software. For small agencies, the situation goes roughly as follows:

  • Small agency owner: "John, here are the contact details for the new customer. You know, we talked about what to do for them and how often, remember?"
  • Project manager: "Oh, yes, I remember. I only have to finish the tasks of our three other clients first, and then I can deal with that. I can deal with this on Monday next week."

Well, there is no one on Earth who can remember the great deal of information he received by the time Monday comes around. The couple of e-mails that can be found here and there do not help the situation either...

Used properly, an effective project management system will help keep everyone on the same page. Once you have a new client, it takes little time to enter all important data into the system, and assign the role of Project Manager, including all written and other materials related to the engagement and project objectives. From then on, the project manager can take over the case in the following days without fear that something has been forgotten. The PM can start work planning tasks, meetings, and milestones for the new client.

3. Failing to plan all costs in advance

After the lack of a timesheet, perhaps the biggest mistake is that small agency owners don't plan for all the costs involved in each project. They add approximate amounts that act as placeholders or guestimates, but which often have little to do with reality.

After the work hours on which project costs are based, you need to plan for the approximate number and type of meetings (both online and offline). You can then plan Milestones which should be approved within the agency and then with the client (additional working hours may occur here); now it is time to add additional costs such as suppliers, travel, and accommodation, etc.

Of course, it is not possible to plan 100% accurately in advance but trying to determine a realistic estimate of costs is very important because the very existence of the agency depends on it. The worst-case scenario is that, as we approach the end of a project, we find that there is hardly any budget left for execution — not to mention profit.

4. Lack of transparency and measurability

Small agencies that were still working in person from offices before 2020 have been forced into the home-office world since the advent of COVID. Those who were not prepared for remote work had no idea whether their people were working at home or not. If they were, it was unclear to their management how many hours they were spending and exactly what they were doing.

The importance of project management software has grown across the globe since 2020. Only software can effectively keep track of the daily, weekly, and monthly work that remote workers put into projects. Transparency and measurability mean that we manage clients in a whole new way:

  • Hourly fees and costs are recorded and measured remotely.
  • Tasks are planned, delegated, undertaken, and evaluated in real time.
  • The whole project process is clear and easy to modify at any point.
  • Reports are easy to produce whenever they are needed.
  • Billing is an easy process rather than an onerous task.

5. Not reporting to clients at the end of the month

If you don't have project management software, it's hard to keep track of everything you've done for the client during the month and what you should send as a month-end statement. Just getting team members to complete their timesheets in a timely manner has been a nightmare for many agency managers.

Yes, there are small agencies whose clients don't require monthly reports. And yes, there are clients sometimes don't even read these reports, preferring to call and ask for a summary over the phone or Zoom.

But part of our professional work is to document what happened, among other things, because that is the only official and accurate information. The report should be kept with your invoice, ready to present to the client online or in person. If we are not keeping track of the time we have spent on projects, who will do this essential work? Documenting our processes can also play an important role in protecting us from potential legal issues that may arise with our clients.

No one likes unnecessary administrative tasks. But they are especially damaging to smaller Agencies, and not how agency owners' time should be spent. Agency owners ought to be out scouting new clients, coordinating existing projects and people, and completing other high-level CEO tasks.

Modern software, on the other hand, has become not only useful, but downright essential in managing projects. You need to spend very little time to reap huge benefits:

  • Invaluable knowledge about your team's productivity.
  • Helpful information about previous similar projects.
  • Accurate, flexible reports whenever they are needed.
  • Easy-to-develop estimates and invoices.

Everyone makes mistakes, but removing administrative tasks from CEO desktops can be a huge help to creative businesses. Take advantage of this and finally eliminate the many unnecessary and ridiculous mistakes that steal valuable time from management, and you will soon recognize the enormous value to be found in project management software.