As a freelancer, being aware of your assets and liabilities is the best way to stay on top of your finances. By using a balance sheet, you know what’s coming in and what is going out. You can list your current assets, such as cash and accounts receivable, and your liabilities, such as debts and accounts payable.
Time assets and time debts
A great way to manage productivity is to adapt your life and business to-do list into a balance sheet and approach actions or choices as either time assets or time debts. A time asset is an action or choice that will ultimately save you time in the future, whereas a time debt is an action or choice that will cost you additional time.
Naturally, there are going to be some time debts that you do everyday -- because you have to. Writing and answering emails would be one example. However, you can build that into a time asset by turning your email communication into a more efficient process. For example, having a system where you only write/respond to emails twice a day at the same time for a fixed amount of time. This could ultimately save you time in the future because you won’t be distracted by your inbox all day (as someone who absolutely cannot have unread email in their inbox, this would not work for me, but it may for others).
The brain behind this productivity strategy, Patrick McKenzie, explains time assets as:
“systems and processes for doing your work more efficiently, marketing which scales disproportionate to your time, documentation which answers customers’ questions before they ask you, all of these things are assets.”
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Freelance photographer and entrepreneur James Clear is a proponent of this strategy, and goes into more detail about creating processes instead of making goals. He explains,
“Goals can provide direction and even push you forward in the short-term, but eventually a well-designed system will always win. Having a system is what matters. Committing to the process is what makes the difference.”
How to implement this strategy
Brainstorm all the potential processes and systems that you could implement that would make your life easier and make your business run more smoothly.
For Example: Streamline all of your time management, invoicing, and accounting into one platform, or create a boilerplate contract for jobs.
Write a list of all your daily/weekly time debts.
This should include any and all timesucks that are outside of your actual work. Email communication should be included, but your business deliverables shouldn’t be.
Create an ongoing balance sheet
Using a chalkboard or dry erase board in a place where you can easily add and subtract assets and debts will allow you to keep an eye on those long-term systems that can be worked on when you have the time.
Remember, you are trying to build up time assets in your time bank so that you break even, but also end up with time to spare. Implementing more efficient systems instead of setting short-term goals should enable you to develop a more streamlined process that ideally leads to more work and more money for the long term.
Freelancers, what are some processes that you have implemented that have helped your business be more efficient?
Ashlee Christian is from the north-side of Chicago and will never stop saying "pop" or eating pizza with a fork and knife, so please stop trying to change her. Follow her on Twitter @nomadnation