Happy Holidays!

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Abak Wishes You Happy Holidays And A Successful New Year!

One fewer stamp, one more breakfast!
Again this year, we chose to send our Holiday wishes electronically, and use the stamp money on a donation to the Quebec Breakfast Club (Club des Petits Déjeuners du Québec), an organization that provides breakfast to children who otherwise would go to school hungry. This year, the club has served 2,100,000 breakfasts to 16,000 kids from underprivileged families, throughout Quebec. Learn more about the club here, or make a donation too!

Holiday Office Schedule

Our offices will be closed between December 24 and 27, and December 31st and January 3rd, 2010.

5 reasons data is better than your gut feeling

Card Puncher, an Integral Part of the Tabulation System Used by the United States Census Bureau to Compile the Thousands of Facts Gathered by the Bureau

Ah, data. In our world of social media and relationship-based selling, it sometimes feels like data is the black sheep. Even though it’s never been so widely available as today, we still rely on our gut feeling and our intuition to know how our business is doing.

  1. Data has no feelings.  Data doesn’t try to see the positive in everything, or hope for the best. Data simply gives a picture of how things stand now, and how they have been in the past.
  2. Data doesn’t lie. What is, is. How much has been billed is not something that can be fudged easily. It’s black and white, right there on the computer screen.
  3. Data has no excuses. Data is not about the why, but about the what of things.
  4. Data is the same regardless of who’s looking at it. It doesn’t matter how optimistic or pessimistic I am, if the report shows that we’re losing money on a project, there is no argument to be had there – well except about why we’re losing money, and that is a whole other ballgame.
  5. Data gives a true picture of the present and the past. It may be cold-hearted, but is it really a bad thing? We do need a cold shower every once in a while.

Get training and make peace with invoicing

AbaKast training sessions

Do you feel like invoicing is difficult in Abak? Do you feel lost when it comes to invoicing? Then this month’s AbaKast is for you!

AbaKast 103: Invoicing for beginners

Tuesday, December 21
1h30 – 3h30pm, Eastern Time

Get acquainted with the basics of invoicing: from the time sheet to a finished invoice in just a few minutes.

  • Time and materials billing
  • Fixed fee billing
  • Manual transactions

Only 99$

Register now!

Also, check out the full training schedule here

About Gut Feelings, And Why You Need Time & Billing Software

Learning how to determine latitude by using a sextant is Senta Osoling, student at Polytechnic High School, Los Angeles, Calif. Navigation classes are part of the school's program for training its students for specific contributions to the war effort (LOC

We had a client who signed on to us because he and his associate could not agree on what was most profitable in their business. While one thought one type of contract was most profitable, the other associate believed it was something else entirely.

The problem was: they were both basing their conclusions on their gut feelings, their instinct. And while instinct is indispensable in business, it may not be the best guide to assess business performance. Why? Because our gut feeling does not have a 360-dregree view of the business. It only has access to the data we pay attention to.

Sales Myopia

From the sales perspective, we’re focused on sales contracts. How much one client signs for over another. However, once the contract is being executed, it’s often out of our hands. Hence, we may not know that the client requires a lot of non-billable work, which drives profitability down faster than a mortgage crisis.

Project Manager Myopia

From a project management standpoint, we see how projects go: how fast we get approvals from the client, how well the project is scoped and how many (or how few) change requests we get. If the project budget and timeline are respected, then the project seems successful. However, if this client takes 90 days instead of 30 to pay invoices, and requires a lot of legwork to get contracts signed before the project can start, it may not be as profitable as it seems.

Administrator Myopia

From an administration standpoint, what makes a good client is accounts receivables. However, the speed at which a client pays does not necessarily mean profit. What is this client generates too much non-billable work? What is this client’s projects consistently go over-budget?

Our gut feeling doesn’t see straight

Because our personal perspective on the business is not as accurate as we would all like to believe, we need data. Cold, hard, heartless data.

Billable time: how much is your time worth?

Snorkeler at John Pennekamp Coral Reef State Park near Key Largo. At the Time of This Picture, Water Clarity Was Good, But Experienced Divers Say Clarity Is Far Less Than It Was 20 Years Ago Because of Dredging and Filling Operations by Land Developers.

Deciding how much to charge for our time is always a tricky thing: if we charge too much per hour, we will lose clients. If we charge too like per hour, we won’t make enough to cover our costs.

Too often, we choose how much to charge for our services based on industry standards, our previous job, or the competition. While those are worthy benchmarks to gage our pricing against, they may not be the best factors to use in building our rate sheet.

Here are a few questions worth answering before choosing a rate:

  1. How much revenue do you need? Work up your costs, such as office rent, administration expenses, wages, etc. Then, add your target profit before taxes. This should give you a good idea of the amount that must be billed in a year. Knowing your costs will also allow-you to compute your break-even rate – the rate at which you’re not losing money.
  2. How many billable hours can you and your team work? It’s naive to assume 100% of work time is billable time. Previous years can give a good idea of how many billable hours can be expected by a person and the organization as a whole.

Revenues

Once you know your revenue needs and your productivity, divide one by the other and we get our billable hourly rate. For example, let’s say we have the following costs:

  • A team of 10 employees that cost us 500 000$ per year in wages.
  • Office rent, equipment and administrative expenses cost us 60 000$ per year.
  • We aim for 15% before-tax profit, which amounts to 98 823 $

Our revenues should be at least 560 000$ per year (to break even), 658 823$ to make our target profit.

Now, let’s look at our productivity:

  • Out of our team of 10, we have 7 consultants who can produce billable time.
  • We estimate that our consultants should bill about 70% of their hours, which is 28 hours per week per consultant.
  • We estimate that each consultant will work about 48 weeks per year, leaving 4 weeks for vacation, holidays and other absences.

Our total productivity is

7 consultants
x 48 weeks
x 28 billable hours per week
= 9408 billable hours per year.

How much should we charge per billable hour?

To attain our profit goal, we need:
658 823$ / 9408 hours = 70.03 $ per hour

To break even, we need:
560 000$ / 9408 hours = 59.52 $ per hour

Can this work?

Once we’ve  made those calculations, the question remains: is this realistic?

  • Are those rates in line with your peers in the industry?
  • Are you more or less expensive than your competitors?
  • What happens if your team’s billable hours ratio is 60%?
  • What happens if your expenses go up? If one of your consultants leave the company mid-project?

Today’s economy has taught us the importance of hoping for the best while planning for the worst.