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?

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.”


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.
Looking for a
tool?

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

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