When does your time become billable?

When does your time become billable?When do you go “on the clock”?

Most of the articles I’ve come across on billable v. billed hours — regardless how the work was quoted — relate to time spent during a project. Some provide useful suggestions to track your time effectively and ensure the hourly rate you charge is actually the hourly rate you earn.

Investing time to network, promote your business, and explore mutual interests with a prospect is not only normal but essential.  Yet what is the best way for a small business put a limit on the hours given away (free) to land new clients and interesting projects?

When do you go on the clock? And how do you broach that with your clients?

Different situations

My business has three main components:

copywriting and adaptations
intercultural management and communications consulting and training
and strategic marcomm advisory and coaching to French businesses wanting to conquer the US market.

Each has its business development rhythm to transform a prospect into a signed client.

Copywriting and adaptation clock

This is straight forward (even if with some clients the touch points can stretch over a few months, the overall investment remains manageable). The prospect’s need is specific and the deliverable identified. The details just need to be fleshed out, the contract signed, and the project kicked off.

Intercultural consulting and training clock

The prospect’s need is fairly specific (a workshop, some coaching sessions). Translating that into a coherent program with clear goals, defined participants, and an action plan often requires (protracted) exchanges. I can spend hours on the phone, on email, or even in person discussing plans for an intercultural workshop, helping them structure it, figuring out who should participate and why, submitting draft programs and cost estimates and so on.

The time is unbillable. Or let’s say I haven’t figured out how to make it billable yet. I feel it’s part of the cost of doing business; sometimes it can represent several days of work – or at least reserved attention. When the workshop is delayed a quarter or two – or the objectives change – one has to start much of the process over.

[I wish independent professionals could run their businesses more like lawyers. The Bar and Grill Singers acapella group’s song “Billing Timesays sings it all!]

Conquering the US market

The toughest situations, though, come up when preparing to provide strategic advisory services to (young) French companies aiming to head across the Atlantic.

They are typically at or near ground zero, save for perfecting their product or service. The thrilling challenge of working with these clients is that I can really leverage my experience and my creativity.

I’m passionate about international business development. Getting a joint-venture or new business off the ground and humming makes me leap out of bed in the morning (that I still treasure my grad school Garfield coffee mug that warns “I am not a morning person”, despite being an early riser, just underscores the point). Managing what exists doesn’t make me thrive; working with a team to launch something new does.

There are two main challenges for the prospect and consultant:

  • What is the available budget to accomplish what is legally required to kick off v. what is needed to generate revenue down the pike? In other words, can they afford your services? Can they afford to go without?
  • What is their marcomm and business development strategy (or do they need still to define it)? What are its tactical components? “We have some ideas, but where do we start?” is a question I often hear.

Exploring these two main threads takes time. So does developing mutual trust. Neither party can afford to make a mistake casting error. It is wise to invest in this mutual discovery process.

If you submit recommendations or a proposal too early, you may not have enough information to hit the mark or the prospect may not yet be ready to “buy”.

If you invest still more of your time and expertise to help them brainstorm and define needs/objectives, you are in a better position to lay out a strategy and implementation plan and budget that the prospect could sign off on. Yet in the process, you are acting as a strategic advisor, giving away your time and expertise for an uncertain outcome.

I have two such prospects in the pipeline right now, with a third coming up around the bend.

I’ve travelled to meet with them, exchanged many emails, researched their industry, and thought a great deal about the value I could bring them and the transatlantic rockin’ team I could put together.  

The relationships are progressing.

It’s time to “formalize” (as we love to say in France) something as a sign of mutual goodwill and professional recognition. And this is the part I hate having to deal with, no matter how many years of experience I have.

[Intercultural note: Blame my French upbringing for this discomfort. It’s easier to bite the bullet with American clients, most expect it: it’s business, not personal.]

When do YOU decide your time becomes billable? How have you opened the conversation with your prospect? How have they responded? What would you do differently the next time around?

I look forward to hearing your thoughts.

 

 

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Comments: 3

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  • Hi Patricia,

    Thank you for this well thought-out post. It’s a challenge that I have faced through the years as a communication specialist, creative director and cross-cultural consultant. The bottom line in these areas – which are all service-based and which, in order to deliver a good solution, require initial conversations to pull out the precise needs and challenges the client faces – is that the pre-proposal time you spend is essential for you give a thorough proposal.

    In my humble experience, I have found two ways to manage this:

    1. In the case where the situation requires a couple of calls to pin down the requirements and develop a proposal, after which time is billable, I add a percentage to the total project estimate for “project and account management”. Sometimes I call this out explicitly, sometimes not. I learned this tactic when managing international projects and usually used a factor of 15% to cover my time. For clients who are clearly going to be a challenge – sometimes because there are 15 stakeholders instead of 1, sometimes for other reasons – I increase the percentage to ensure that I am covered for the inevitable back-and-forth conversations.

    2. If, after an initial call, I realise that the client has only a vague idea of what they want, I give them a pre-proposal for consulting time, usually on a time and materials basis capped at X hours, to help them define what they actually need. As part of this work, I deliver a simple report outlining my understanding of the challenge and my suggestion on how to tackle the challenge (this latter being my proposal). This means that the client then has a clear brief should they wish to put the work out to tender, as well as direct experience of working with me and a proposal. In return, I have been paid for (most of) my time to work out what they need and to draft a proposal. Sometimes I win the work, sometimes not and sometimes I choose not to submit a proposal after assessing and defining the challenge. If I do submit a proposal, I still include a percentage for project management / account management to give me some wiggle room for unexpected time.

    Like you, I wish that other professions had the same status of “time is money” as lawyers do, but with that come all the negative connotations too. I feel a balance is needed and my strategies above give me the balance I need, most of the time.

    Thanks for making me think about this again!

    Best wishes,

    Suzanne

     
     
     
  • Suzanne,

    Thank you for your long and thoughtful comment readers will benefit from as much as I did.

    Some projects I have done in the past included a project management fee, when I was leading a team of several professionals on projects lasting a few months, typically for a major account.

    Today, given the economic climate, I find many clients/prospects strive to eek out some sort of discount or commercial gesture. I rarely encountered that in the past. The negotiations usually work out well, as I aim for a solution where both parties ‘win’ something and feel comfortable with the outcome.

    Working with start-ups is thrilling, but the real pay-off is down the pike, when they start earning a ‘real’ turnover. Adding a PM fee or pitching a pre-proposal for consulting time is unlikely to fly with that segment.

    Final thought I need to ‘put a think on’ touches on rates. When I started consulting many moons ago and was trying to set my day rate, a wise pro told me I had to choose between two strategies:
    – a mid-market “juniorish” day rate where, say, prep time to deliver a training workshop was billed (in addition to workshop days), or
    – a higher expert rate in my areas of specialization where the prep time is not invoiced — the client is buying the expertise, not the time.
    The positioning is radically different. The starting point in the relationship with the client is different. I opted for the latter and have stuck to that. It comes out in the wash (what one invoices ends up about the same), but the perception is different.

    Unless I am coordinating a team – or unless, as you wisely noted, there are many stakeholders to interface with on the client side – I’d have a hard time legitimizing (to myself!) adding a PM/admin fee. Perhaps that is my own blockage and I should go have a talk with the three invisible senators who sit on my left shoulder as I make these choices :)

    Interesting discussion….

     
     
     
  • […] Intercultural Zone | Cross-cultural corporate communications … Investing time to network, promote your business, and explore mutual interests with a prospect is not only normal but essential. Yet what is the best …  […]

     
     
     
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