How to measure productivity if you’re self employed

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Hi there accounting fans! Today’s blog post has been generously contributed by the folks over ath ViAGO international. This particular piece has been written by a ViAGO team member, Gemma Mckenzie!

Self-employment brings the freedom of being your own boss – there is no management oversight, no one telling you what to do or when to do it. After the honeymoon phase of being their own boss, many self-employed contractors realise that having no oversight also means there is no one measuring how productive you are. The buck stops at you. If you are productive, great. If you’re not so productive, this will likely be reflected in your work-life balance and / or revenue generated. 

Why productivity matters when you’re self-employed?

One of the challenges of being self-employed is that income is often not guaranteed (e.g. salary or wages) and it is reliant on you going and getting the work and then getting it done as efficiently as possible. Since self-employed contractors often charge a per contract or project rate, the more time spent on a project the less they earn. For those charging hourly rates, there is pressure to get the work done within a certain time frame to keep the costs within what was quoted and ensure you can get all your clients’ work done. 

Self-employed contractors who have low productivity levels often work longer hours and earn less for the work they do or cannot take on as much work as they need to reach their desired income. That’s why measuring your productivity levels is important so that you can spot when you are working longer but not achieving results to reflect that.

So, how do you measure productivity if you’re self-employed? Try these two simple ways to track your productivity levels:

  • Total billable cost / time spent completing work

If the work is charged as a flat fee (per project or fixed cost) then once the work is completed, divide the total fee by the number of hours worked. The longer the project took, the lower the value you receive for your time will be. If you’re earning very little for your time this means you’re either spending too much doing the work or the prices are too low. Assuming that your prices aren’t too low, this indicates some of the time you spend working might not be productive. Look for ways to streamline the process and ensure you’re using your time efficiently. 

  • Variance of average time spent completing the same type of work

Keep track of the average time spent completing jobs or tasks of the same type. Where there is an upwards shift in the trend this may mean you are not being as productive or are encountering unforeseen challenges that if addressed could save you time. Where there is a downwards shift in the trend this may indicate you have become more efficient or effective at completing the task.

But, what about tasks that aren’t billable? E.g. working on your business (marketing, sales, admin)

There are a number of tasks that won’t generate revenue but lead to future revenue (marketing and sales) or allow you to collect money owed (invoicing). These are all important and valuable tasks. So, how do we measure the productivity of these tasks in combination with tasks we do working ‘in’ the business? 

One interesting way is to think about the elapsed time and the touch time of all the tasks you do. That is, measure how much time each day you spend working on your tasks and how much time each day you spend doing other non-work-related things e.g. personal social media, Netflix, procrastinating… This will tell you how much time you are spending productively in relation to your business. If you’re spending too much time on non-work related tasks, this might transfer into low productivity for your business. However, if you’re spending long hours on work-related tasks you may need to investigate further to see if all of that time is actually touch time or if with some process improvement you could be more productive.

Ultimately, measuring productivity when you’re self-employed comes down to making sure you deliver your customer’s work on time, the hours you do work are productive, and that you have enough time to spend working ‘on’ your business as well. 

Since joining ViAGO International in 2018, Gemma McKenzie has had the privilege of learning an abundance of useful tools and knowledge to analyse systems and processes, helping business owners and managers transform their business from “Chaos to Calm”. 

For more tips on improving productivity, from sales to project delivery, head to ViAGO International’s new FAQs page:

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