Dealing With Non-Billable Hours

Navigating Non-Billable Hours in Trades Businesses

In the world of trades businesses, where every minute counts, the concept of non-billable hours looms as a challenge that can significantly impact productivity and profitability. These non-billable hours encompass tasks that don’t directly contribute to generating revenue—activities that can often slip under the radar but play a crucial role in the overall functioning of the business. Today, we’re delving into this aspect and presenting a unique approach that can transform the way trades businesses address non-billable hours.

Before we dive into the strategy, it’s important to acknowledge that non-billable hours are more than just a minor inconvenience. They can encompass various activities, from administrative tasks and travel time to training sessions and project planning. While these tasks might not result in immediate revenue, they are undeniably essential for the smooth operation and growth of a trades business.

Reverse Thinking Strategy

Now, let’s talk about the reverse thinking strategy, a powerful concept that flips the traditional approach to non-billable hours on its head. Rather than solely focusing on the billable hours that your team is clocking, the reverse thinking approach shifts the spotlight onto the hours that aren’t billable. It’s a shift from “How much can we bill for?” to “How can we minimise non-billable hours?”

Consider the scenario of a plumbing business. Imagine there are four team members: Tim (the owner), Rob, Blake, and Luke. Instead of dissecting the billable hours of each team member, the business adopts the reverse thinking strategy to address the non-billable hours.

Tim, for instance, spends 1.5 hours on non-billable tasks. Rob’s non-billable hours amount to 1 hour, while Blake and Luke each have 0.5 hours. These hours could involve tasks like quoting, administrative duties, cleaning, or even training, which might not directly translate into revenue-generating work.

The pivotal step here is to recognize the importance of allocating a portion of non-billable hours to job-related activities. In this example, the plumbing business mandates that all team members, apart from half an hour, must dedicate their non-billable hours to job-specific tasks.

To implement this strategy effectively, the business utilises a job management system. This system not only helps differentiate billable and non-billable hours but also aids in tracking how non-billable hours are allocated.

Moreover, communication plays a significant role. The team members are educated about the reverse thinking strategy and the necessity of minimising non-billable hours. It’s a collective effort aimed at boosting productivity, enhancing the business’s performance, and ultimately contributing to its success.

Tracking The Progress

Tracking progress is another crucial component. The business employs a whiteboard to visualize and update the non-billable hours allocation on a weekly basis. This transparency not only keeps everyone accountable but also fosters a culture of productivity and responsibility.

The reverse thinking strategy offers a fresh perspective on tackling non-billable hours in trades businesses. By actively managing and allocating these hours to job-related tasks, businesses can strike a balance between essential non-revenue-generating activities and revenue-generating work. It’s a proactive approach that not only optimises productivity but also drives growth and efficiency. If you’re intrigued by this strategy or have implemented a similar approach, we’d love to hear your feedback. Let’s work together to empower trades businesses for a more productive future.

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Hugh Bowman is a specialist in business coaching for trade businesses and is a former engineer and technical expert. He has lived and worked in many parts of regional Victoria coaching tradie business owners.

Ph: 0409 402 474