Episode 435

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If there’s one word that will send any agency owner or employee running for the hills, it’s timesheets. Although one of the most universally disliked words in the agency world, timesheets are still the number one way to detect and diagnose problems within the agency before they become catastrophes.

Essentially, they’re your best friend whether you like it or not.

Timesheets, especially when completed daily by all agency employees (including the agency owner), will give you invaluable data about your agency’s day-to-day operations and where there’s room for improvement.

For agency owners, daily timesheets will show you inefficiencies, areas where more staffing is needed, needs for more training, and so much more. For agency employees, this is your ticket to job security, bonuses, promotions, and recognition for excellent work.

Tune in to learn more about why daily timesheets are essential for agency owners and employees and how to get everyone on board with the practice this year.

For 30+ years, Drew McLellan has been in the advertising industry. He started his career at Y&R, worked in boutique-sized agencies, and then started his own (which he still owns and runs) agency in 1995. Additionally, Drew owns and leads the Agency Management Institute, which advises hundreds of small to mid-sized agencies on how to grow their agency and its profitability through agency owner peer groups, consulting, coaching, workshops and more.

A big thank you to our podcast’s presenting sponsor, White Label IQ. They’re an amazing resource for agencies who want to outsource their design, dev, or PPC work at wholesale prices. Check out their special offer (10 free hours!) for podcast listeners here.

daily timesheets

In This Episode:

  • Why early detection matters for agency operations
  • The diagnostic warning signs that your agency isn’t running effectively
  • What daily timesheets show us about our agency
  • How timesheets and time-tracking metrics can boost our profitability
  • Why do them daily vs. weekly?
  • Why timesheets are a good thing and help agency employees defend themselves
  • How to get your team on board

“No one is excited about doing a timesheet. But it's also not like giving yourself a lobotomy. It is manageable. And the benefits of it far outweigh the inconvenience of doing it.” @DrewMcLellan Share on X
“Imagine having more information so you could make minor tweaks and adjustments to double your profitability and your team's efficiency, know who to hire next, and know who needs the training or who's phoning it in.” @DrewMcLellan Share on X
“The most important element of daily timesheets is accuracy. It is not about being punitive. It is not about looking for ways to beat up on your employees. It's looking for ways to improve the agency's systems, processes, and people.” @DrewMcLellan Share on X
“Timesheets are an employee's best defense and the best tool for demonstrating they are doing a great job.” @DrewMcLellan Share on X
“Timesheets are 67% less accurate when they aren’t done every single day.” @DrewMcLellan Share on X

Ways to contact Drew:


Hey everybody. Drew here. You know, we are always looking for more ways to be helpful and meet you wherever you’re at to help you grow your agency. It’s one of the reasons why we’ve produced this podcast for so long, and I’m super grateful that you listen as often as you do. However, there are some topics that are better suited for quick hyper-focused answers in under 10 minutes. That’s where our YouTube channel really comes in. For quick doses of inspiration, best practices, tips and tricks, head over to youtube.com/the at sign agency management Institute. Again, that’s youtube.com/the at sign or symbol.

And then agency management Institute, all one word. Subscribe and search the existing video database for all sorts of actionable topics that you can implement in your shop today. Alright, let’s get to the show.

Running an agency can be a lonely proposition, but it doesn’t have to be. We can learn how to be better faster if we learn together. Welcome to Agency Management Institute’s Build, a Better Agency Podcast, presented by White Label, IQ Tune in every week. For insights on how small to mid-size agencies are surviving and thriving in today’s market with 25 plus years of experience as both an agency owner and agency consultant, please welcome your host, Drew McLellan.

Hey everybody. Drew McLellan here with another episode of Build Better Agency. Super glad to be with you today. If you’re listening real time, early February, if you’re listening later than that, whenever I catch you, I’m happy to be with you. Today’s episode is one of my solo casts, so as you know, if you’re a regular listener, that means no guest today, just you and me talking about something that I think needs to be on your radar screen or I want you to be thinking about, or I wanna do a course correction or do a little teaching around. And today’s topic is one that Danielle and I talk to agency owners about almost every day, and actually employees as well. So it feels fitting that this is worthy of a solo cast episode.

Before we talk a little bit about what we’re gonna talk about today, a couple things. First of all, as you know, on every solo cast, we give away a seat to one of our live workshops. So how this works is super simple. You a listener leave a review. You could leave it at Apple Podcast, you could leave it at Google Podcast, you could leave it on iHeart, where wherever you download this show, you can go and you can leave a rating and review. And what we need you to do is go there, leave your rating and review, take a screenshot of it and email it to me at Drew at agency management Institute dot com.

I know longest email on the planet Drew at agency management Institute dot.com. And the reason why I need you to email it to me, we go to all the sites and we read all the reviews and and I, I do wanna tell you that it is, it is educational, it’s heartening, it is gratifying to see that you find the show valuable and to hear what you want to see more of. Always open for that too. You can always email us and say, gosh, I wish you’d do a show on and then fill in the blank for us. But the reviews are great and they’re very important for us in terms of getting in front of more and more agency owners and leaders. But however, to put you in the drawing, we need the screenshot.

And the reason we need the screenshot is because all of those different platforms ask you to create some sort of user ID when you create your account to download podcasts. And very few of you use your email address or your full name. It’s really like, you know, baseball Lover 92 or you know, cats make me sneeze 27 or whatever name it is that you use, but I don’t know who you are. And so if we draw your name and we’re like, oh, Katz, make me sneeze 27, I have no way of letting you know you’ve won and you have no way of coming to the workshop for free. So screenshot, email it to us, full name, agency name, and that’s it. You go in the drawing and you will stay in the drawing until you win.

So last week or last month’s winner, I think his review was something he posted during Covid, so you know, several years ago. So I promise sooner or later you’re gonna win. There’s not that great a universe of people out there. So sooner or later you’re gonna get a free workshop. So that feels like a worthy reward for five or 10 minutes of effort. So this month’s winner is Andre Hughes. Andre is the president of Proactive Agency, Andre, I’m gonna shoot you an email and let you know that you won and then we’ll talk about which workshop is best for you. Okay. Alright. So with that business outta the way, I also wanna remind you that one of the, our internal theme for 24 is all about leveling up how we serve all of you and looking for new ways or enhancing the ways we already show up.

So one of the things we’re committed to doing is once a month holding two standing meetings, one at these are live on Zoom, one is a what is a MI? How can a MI help me meeting? So for a lot of you, your podcast listeners, you might be in the Facebook group, but you’re not really sure how you could interact with a MI. And there’s lots of ways. There’s lots of freeways, there’s lots of ways you can pay to get services. So once a month, we take about 10 minutes to walk you through kind of the service offerings of a MI and where you might plug in. And then we spend the rest of the hour just answering your questions about what might be a good fit for you. So the meeting in February for that particular meeting or that topic is February 12th at 9:00 AM Mountain Time.

So I’ll tell you where to get the Zoom links for both of these meetings in a second. The second meeting that we’re committed to doing every month in 2024 is live q and a. So that’s just what it sounds like. No presentation, no guest speaker, just show up and ask us questions. So we might be talking about billable rates, we might be talking about staff utilization, we might be talking about a financial metric. You might have questions about niching, you might have read the book, sell With Authority and have questions about that. Whatever, whatever question you have around running your business, we’re there to answer your question. Most cases, we can answer it on the fly. In some cases we’ll have to say, you know what? I think I have a tool or a checklist or a thing for that, let me email it to you.

But in the most case, Danielle and I are pretty good given our seasoned level of experience. It’s a nice way of saying that we’re old. We can answer most of those questions or do some coaching on the fly and ask a couple questions and help you get some clarification. So that next meeting is February 15th at noon mountain time. So where do you find the Zoom links? So you can attend these meetings and where do you find out about the meetings if I’m not talking about amount of solocast, we announced these meetings and share the Zoom links in two places, well actually three. The first one is in our weekly newsletter. So if you’re not a subscriber to the weekly newsletter, head over to agency management Institute dot com and you can either scroll down to the bottom of the footer and there’s a link that says sign up for the newsletter, or you can just go to agency management Institute dot com slash newsletter and you just give us your first name and your email address and then once a week you’ll get the newsletter.

The second place you can always count on us sharing this information is in the Facebook group built for podcast listeners. So if you’re not a member of that group, head over to Facebook, search for Build, a Better, Agency Podcast, you’re gonna have to answer four simple questions, email address URL of the agency. And honestly, the reason we ask that is because we do not allow any vendors into that space unless they’re one of our preferred partners and we know that they’re not gonna sell inside the group. So it is pure agency owners and leaders and anybody who tries to sell gets booted outta the group. So it’s a really great environment to connect with other owners to connect with us. But it’s also a great place for you to get the zoom link for these two meetings. So would love to see you with us in February.

If those dates don’t work, guess what? We’re doing it again in March and we’re gonna just keep doing it all year until we think it’s not helpful. If it’s not helpful, then we’ll stop doing it, but in the meantime we’re just gonna keep showing up and we hope that you show up as well. Alright, so let’s talk a little bit about the topic for today. So I wanna tell you a story about my dad actually to start off with and I promise it relates directly to the, to the the work topic we’re gonna cover today. So my dad was a very typical guy. He did not enjoy going to the doctor. And his model was, you know, if it’s not broke literally then there’s no reason to go to the doctor and get it fixed.

And so he very rarely got an annual checkup. And my dad was for the most part in pretty good health. He had some episodic things that happen, which are irrelevant to the story, but for the most part he successfully avoided doctors for most of his life. And he felt great and he felt fine and my, he was fit and pretty healthy. And, and then in his mid to late seventies, he started having some TI symptoms that he just couldn’t ignore anymore. And so finally he went to the doctor and in a series of blood work and some other tests, what they discovered was that my dad’s left kidney was dead.

It was not producing anything, it was absolutely inoperable. And his right kidney was down to 20% production. So my father’s entire body was working on 20% of a single kidney. And what that meant for him was a pretty dramatic change in lifestyle. He had to go on a very restrictive diet and the whole goal of the diet was to delay, not avoid, to delay having to go on dialysis that at a certain, when his kidney got to 10% functionality, he would have no choice but to do dialysis.

So the the, I guess the happy news of the story, If, there is happy news to the story is my dad is a very disciplined guy or was a very disciplined guy. We lost him a few years ago, but he followed that diet to a tea. But it was miserable. I mean he, he all the things he loved to eat, he couldn’t eat anymore and it was very restrictive. It, it meant he was really hard for him to go out for dinner, he had to cook for himself. When he’d come to visit us, we had to cook a very prescribed diet for him. So it was not the way you wanna live your life. And what the doctor said to him was, if we had caught this earlier, if we had been doing routine annual checkups, we would’ve seen your kidney functionality beginning to wane.

And we could have fixed this in a lot of different ways that would not have been this dramatic. So fast forward to now here’s my dad on this restrictive diet. You know, they told him that at the most he was gonna avoid dialysis for a year. Good news is for him. He avoided it for several years, but he did eventually have to go on dialysis, which was miserable. I wouldn’t wish that on my worst enemy. And eventually it’s what he died from. So why am I telling you this story? I’m telling you this story because diagnostics matter, early detection matters, warning signs matter.

And in our world, the foundational tool that is your early warning sign that is diagnostic in nature, that tells you how healthy you are early enough that you can make course corrections that you means you don’t have to go on. The agency owner version of dialysis is timesheets, daily timesheets. Now I know two things. As soon as I said the T word, you had two concurrent thoughts and if you’re an agency owner, you had three concurrent thoughts. The first thought was timesheets suck. The second thought was, if you’re an owner, timesheets are great for everybody but me.

And the third thought was, but Drew, a lot of other agency advisors say timesheets aren’t necessary if we bill, if we value bill, we don’t need to do timesheets. And so we don’t do ’em. So I’m gonna answer all three of those. Number one, timesheets do suck. I’m not gonna sugarcoat that nobody is excited about doing a time sheet, but it’s also not like giving yourself a lobotomy. It is manageable and the value of it, the benefits of it far outweigh the inconvenience of doing it. And if you do it daily, it’s just not that big a deal. Number two, agency owners don’t need to do timesheets because they’re not billable or whatever your excuse is as both.

I cannot tell you how often when we help an agency owner do timesheets, they very quickly realize that they are not spending their time the way they thought they were and they are not actually doing their job. They’re doing other people’s jobs. Number three, with all due respect to the other advisors in the space, they’re freaking wrong. It’s not about billing. timesheets are not about how you bill, very few of you bill time and materials anymore. So yes, you’re right. timesheets are not always about the billing and if you value bill or flat fee bill, a retainer bill or what, however you bill timesheets, are not why our billing is not why we do timesheets.

S timesheets are a diagnostic tool and they help us know so much about our business. And if you’re an employee listening to this, I’m telling you one of the most important things you can do is do your timesheets daily. And I’ll talk about why daily in a minute. But it is your job. It’s one of the reasons you get paid is to track your time. And here are all the ways, think about all the things we know when we’re doing timesheets. Imagine you’re running a factory and the factory is not outputting either the quality of thing of items or at the speed that you think or the volume something is wrong, but all the lights are off in the factory.

And so you have no way of knowing if there’s a machine broken, if someone’s standing in the wrong spot in the assembly line, if you have the wrong person in the wrong spot, if there’s oil leaking from a machine, you have no way of knowing why something’s broken, but you know something is broken. So here are some ways that you know that. So there’s something broken in your factory, you’re not dropping 20% profit to the bottom line, no matter how busy you are, no matter how big you are, no matter what year it is. That’s diagnostic warning sign number one. Number two, your people’s billability and utilization are not where they belong.

They’re 30% billable or 40% billable. Number three, we are writing off a ton of time on projects and I’m just giving you the top level of the diagnostics di diagnostic problems that we see every day in agencies. And when I say, show me your timesheets, and the agency owner says, yeah, we don’t do timesheets, or you know what, we have 50% compliance and we only require them to get ’em done by the end of the month. We are literally in the dark. And now we have to start guessing and experimenting rather than having data that shows us in a heartbeat what is broken and how to fix it.

So there are a lot of reasons why timesheets really matter. And some of the things that timesheets show us daily timesheets show us are, our estimates are wrong. It doesn’t take 10 hours to do that thing. It consistently takes us 20 hours. And so we’re giving away, we’re writing off 10 plus hours every time we do this sort of project, we are writing that time off and losing that profitability. It might be that our workflow isn’t effective, that we have systems or processes or, or a lack thereof that makes us take longer than we need to or put more time into certain tasks or certain deliverables.

Then it makes sense again in the dark, we don’t know that. But when we flip the lights on and we watch, we can see, oh my gosh, why is he holding that for 10 minutes? We don’t need to hold that for 10 minutes. It runs through a cooler. It’s not hot to the touch. Like whatever it is. I don’t work on factories. So some of my factory analogies may be a little loose, but you’re gonna stay with me and you’re gonna get it right. It may be that the team mix that we have isn’t right. We need somebody more senior on the front end or the back end, or we don’t need all these senior people, these highly expensive people to do this kind of task that when we look at it, it’s actually the more junior employees that are more efficient and more effective or they deliver just as well as the senior people do.

It might be that somebody needs more training. Boy, when I watch Drew on the factory line and I watch the way he does his part of the assembly, I can see that he’s slower than everybody else with his job title. I can see that he has a confusion look on his face. He’s, he’s not sure, he’s not confident, he’s missing a skillset. He, he doesn’t know who to ask for help. There’s all kinds of things we can see. It might be that you know what, we just shouldn’t do websites. We can figure out how to do these profitably. These are not core to our business and we absolutely lose money every time we do this.

And I, again, I’m just scratching the surface of why timesheets matter so much, but when we see how everyone is spending their time, we can also figure out, okay, you know what, we’re not staffed appropriately. You know, Mary is slammed with work because she has a skillset and babbette, you know what? She’s billing 20% and I have no idea what she’s doing the rest of the time. Because by the way, we’ve also violated one of the most important time sheet rules, which is we have these big black buckets where people can stick their time and we have no idea what it means, which we’ll talk about in a minute. So this is all about staff efficiency.

This is about estimate accuracy, it’s about workflow, it’s about team mix, it’s about training, it’s about the staffing ratios. Can I afford another staff person? What kind of staff person do we need? Where do we need to beef up our freelance bench? Because these, this people with this skillset are slammed all the time. People with this skillset really we have a hard time keeping them billable and busy. All of these things, all of this data, all of these insights come from daily timesheets. There’s no other way for you to know all of those things no other way.

Now you may say, well I know those things. I’ve been running an agency for 20 years. No, you think you know that’s very different than knowing you think, you know, your gut tells you. And you know what? I am a firm believer that in many cases your gut is right, but when it comes to metrics and data, we get it wrong more often than we get it right? We talk about this in our Money Matters workshop all the time. Everybody, when they learn the right metrics, when they look at the right data, everybody underlined emphasized, everybody is surprised at something. And you know what? You probably run a pretty good agency and hopefully you are at least profitable if you’re not 20% profitable or double digit profitable.

But imagine having more information so you could make some minor tweaks and adjustments and double your profitability, double your team’s efficiency. Know who to hire next, know who needs the training, know who’s phoning it in. And you think they’re super awesome, but really they are phoning it in. I’m telling you, the only data source for much of this insight, much of this knowledge, much of this data, much of this fact is daily timesheets. There’s just no other shortcut to get to it. All right, so we’re gonna take a quick break and then we’re gonna come back and we’re gonna talk about the best practices of timesheets.

I’m hoping by now you understand the importance of timesheets and that this is not, by the way, employees are always like, this is you tracking me and then I’m gonna get in trouble. The most important element of daily timesheets is accuracy. It is not about being punitive. It is not about seeing that somebody is a slacker. It is not about looking for ways that you can beat up on your employees. It’s really looking for ways to make the agency’s systems and processes and people better. It is really about looking at workloads more accurately.

You know, if your employees are coming to you and they’re saying, oh my God, when you, if you win a new piece of business and your employees are like, oh my God, how are we gonna get that done? We’re slammed without timesheets. You have no way of knowing if that’s accurate or not. And by the way, most of the times it’s not inaccurate. It’s something else that is making them feel like they don’t have capacity. When they do, when you can diagnose where that capacity is, then you can fix it for them. So they’re as excited about new business as you are. And guess what? Nobody gets raises or bonuses or any of the other things. Promotions if we can’t grow the business. So timesheets are actually an employee’s best defense, best tool for demonstrating that they are doing a great job.

That demonstrating that we could get even better in other ways that would help me do an even better job that are demonstrating I really do need help. So timesheets are accurate. timesheets are an employee’s best friend. So an employee should be excited about doing their timesheets every day because it opens up conversations that they can have with their boss about how they can be even better at their job. All right, now we’re gonna go take a break and then I’ll come back and we’ll talk about how to do timesheets better, how to look at t