Auditing Your Time and Calculating Your Capacity

I’m a big HGTV fan.

Fixer Upper, Flip or Flop, Love it or List it… I’m hooked! 

Every time they effortlessly take a house from “drab to fab” in under 20-minutes flat I am left in complete awe!

It lights a fire in me to finally tackle my own projects around the house. I run out to Home Depot, grab my materials, and get to it…

Only to find the “quick” project Joanna Gaines did in mere minutes is ACTUALLY going to take me weeks (that is…if I work through the night, drop the kids off with my parents, and bring in all my friends and neighbors to help).

Why?

Because what took Joanna 5 minutes only comes naturally to her because she’s done it…a lot!

PLUS

She has the right team, the right tools, the right budget, and the know-how I don’t have yet.

Too often, home improvement shows don’t show us the nitty-gritty stuff that goes on behind the scenes. They present the starting point, a little montage of the process, and the final result without teaching us how. 

So, while these shows inspire me and allow me to see what’s POSSIBLE, I definitely need a little more support.

It’s the same for you and your business money goals! 

In last week’s blog, I walked you through a scenario with one of my clients. I explained how I helped her restructure her time, capacity, and offers to support her business’s financial goals. 

I hope it inspired you to unearth the POSSIBILITIES in your creative business!

If you haven’t read it yet, you can click here to get the scoop!

While it’s always encouraging to see how others have found success, you also need the right tools and assistance to help YOU get there for YOUR unique needs.

THIS blog will provide you with the actionable information you need to take your business’s money goals from dream to reality. 

After reading this blog, you’ll be able to:

• set meaningful, realistic financial goals
• audit your time
• calculate your capacity
• estimate your max revenue per offer
• enhance your earning potential with capacity levers 

I’ll provide questions, reflection prompts, and options so that you can make the right choices for your one-of-a-kind business.

Stop passively gazing at your vision board and start making real strides towards your money goals as a creative entrepreneur!

What’s Your Goal?

You have to SET your money goal before you can understand if your financial goals make sense. It’s time to get crystal clear about what you want and why you want it.

It can be easy to throw a number out there. But, often, those random numbers are more about vanity metrics, what you believe others expect of you, OR what you think you SHOULD want. 

If you’re anything like me, you created your business to do things YOUR way and on YOUR terms, and your money goals should be no different.

Define Your Money Goals

As you define your business’s financial goals, take some time to reflect on the following:

1. Consider your 9-5. What was (or is) your salary? Would matching it help you feel secure? Or, did you start your business to expand your income potential? Use your past salary as a starting point to help you gauge your goals.
   
   
2. Are you saving for something specific like a vacation, college fund, or home renovation? These goals require a particular amount of money. They can be an excellent foundation to build upon when setting your broad financial goals.
   
   
3. What’s your “enough” point? Take a look at your personal finances and recurring expenses to get a clear understanding of what “take-home” number would help you and your loved ones live the lifestyle you have in mind and avoid the trap of mindlessly striving for more, more, more.

Set Your Goal

Once you’ve weighed these options, set a precise number. In the upcoming steps, we will work with this number and explore various factors to make sure it all adds up. Your number should be your PROFIT or your “take-home” amount. 

Your PROFIT is the total amount you “take home” after expenses. Profit is often confused with your business REVENUE, but revenue is the total earnings for your business before costs.

Entrepreneurs often share their REVENUE in the online business space because the number sounds impressive. Why settle for sharing you’ve earned $80k in PROFIT when you could tout $100K in REVENUE and claim your business hit the highly-coveted six-figures?

It’s crucial that when you set money goals, you know what it’s going to look like at the end of the day once expenses are accounted for! Knowing the difference between profit and revenue helps you be transparent with YOURSELF. 

Numbers can be deceiving. Make sure you understand yours. 

COO Tip: If you’re new to your business, estimate that about 20% of your revenue will go to expenses like fees, materials, education, etc. If your business earns $40k in revenue this year, you’ll likely “take home” about $32k in profit after everything’s said and done. Talk to your accountant to gain a better understanding of your business expenses. As a bonus, they can take it a step further and help you plan for your taxes which vary widely by state, income level, industry, country, and more.

Does it add up?

With your meaningful money goal clearly defined and set, it’s time to look at your work schedule and your capacity. We’ll do this by conducting a 7-day time audit and then completing a capacity calculation for each of your offers. 

Time Audit

A time audit is an opportunity to see where your time is going within a week. Then, you can make adjustments, notice trends, and optimize your time wisely. It helps you be more productive within your working hours to maintain your boundaries while working towards your financial goals. 

1. Carve out seven consecutive days to track your time. You can start anytime, so don’t put this off! There is ALWAYS a reason why this week is different from a “typical” week. Ditch the excuses (this may be especially hard for my fellow recovering perfectionists)! 
   
   
2. Document where you spend your time. You can use a simple notebook, an app like Working Hours, project management tools like ClickUp and Asana, or communication apps like Slack. Whatever platform you choose, find something easy for you to manage. If you’re not sure where to start,  I’ve GOT you covered! I created a FREE time audit tool with you in mind. Snag it here!
   
   
3. Track your professional and personal time for these seven days. Include things like time spent on client work, back-end business tasks, CEO responsibilities, time with family, creative time, and “downtime” (aka Netflix, games, scrolling social media).

Your Time Audit will provide you with an estimate of how many total hours you work in a week as well as how much time you spend each week on personal time. My clients are always surprised by what they find! 

Assess Your Capacity

Now that you have a good idea of how and where you spend your time, you can see the impact on your capacity. 

Capacity is how much you can take on or produce: 

• how many projects or offers you can feasibly handle at once
• the number of products you can create in a set amount of time
• how many hours you can dedicate to a specific client

When you DON’T know your capacity, you are more likely to overextend and overbook yourself. 

Sound familiar?

We’ve ALL been there!

On the other hand:

When you already know where your time is going, you’re better able to consider what new projects or opportunities you can (or can’t) take on. 

It reminds me of this phrase,

“Every no opens the door for an even better yes.”

When you are on the pulse of your time, you can better prioritize your commitments and conserve your energy for the projects that matter most to you. All while actively moving towards your financial goals.  

Capacity Limits

You are human.

You have the same 24 hours in a day as everyone else! Your capacity is not boundless. What I mean by this is, you’ll never be able to sell 100% of your working time.

Why?

You cannot reserve all of your work time for client projects or product creation. 

As CEO, you have responsibilities that aren’t billable.

You have tons of other tasks on your plate, like managing your team, finances, marketing, sales calls, and more. 

What often happens is…

Entrepreneurs aren’t aware of how much time and energy they spend on these business tasks. 

The result?

They overbook, overburden, and overwhelm themselves by overcommitting.

Assessing your capacity and understanding where your time is going will help you determine how much time is available for your client work. In turn, this will help you calculate how many offers you can take on or how many products you can create. You’ll have a system in place to make sure you can sustainably uphold your commitments.

The 80:20 Rule

The 80:20 Rule is my rule of thumb when estimating your capacity or time available for client projects and offers.

The rule states that you should dedicate 80% of your work time to working IN your business (client-facing tasks).

You should dedicate the remaining 20% of your work time to working ON your business (internal tasks).

An example: Imagine your Time Audit revealed you work 30 hours per week. To apply the 80:20 Rule, take 30 hours x 0.8 = 24 hours. This means you have 24 hours (80% of your time) available for client projects and offers in your week. 30 hours x 0.2 = 6. That represents 6 hours (20% of your time) each week that you will want to reserve for back-end business tasks.

The ratio of time you spend working on your business or in your business will fluctuate from one season to the next. Nonetheless, this is a solid place to start when estimating how to work towards your profit goal.

Estimate Your Max Capacity & Revenue

Now it’s time to connect your time audit with your capacity to determine your weekly SELLABLE hours (also known as “billable” hours in the corporate world) and your maximum annual potential revenue.

Pre-Work

Here’s what you’ll need to have handy before we crunch those numbers:

1. Choose one offer to focus on at a time (a service, program, product). For this exercise we’ll refer to this offer as “Offer A” going forward.
   
   
2. Use your Time Audit to define your current working hours.
   
   
3. Use your Time Audit to determine how many hours you spend on Offer A in a week.
   
   
4. Document your current pricing for Offer A.

Crunch Those Numbers!

Now, you’ll estimate your max capacity (total # of offers per year) to calculate your potential revenue. To keep it simple, I will guide you through calculating your capacity and max revenue for just ONE offer at a time. Right now you’ll only focus on Offer A.

In reality, your business is multi-dimensional with lots of factors and offers. But for instructional purposes, we’re going to work through these numbers in a “vacuum” of sorts so you can confidently apply the concepts.

I support my 1:1 Coaching Clients by diving deeper. Together, we explore how to optimize their time and offers strategically. Working with an experienced business coach can help you estimate your revenue and capacity more accurately. Click here if you’d like to learn more about my coaching packages. 

Your Step-by-Step Guide

For each step, we’ll work with some fictional numbers for reference. These are highlighted in blue so you can see each formula in action!

In this scenario, the business owner is working a 25 hour work week and their “Offer A” is priced at $5k. Their Time Audit revealed they currently spend 5 hours per week on “Offer A” over the course of 3 months (12 weeks).

Step 1: 

Find Your Weekly Sellable Hours.

Weekly Hours Worked x 0.8 = Weekly Sellable Hours

(assume 80% of your time for working IN your business and 20% for working ON your business)

In our example:

25 Weekly Hours Worked x 0.8 = 20 Weekly Sellable Hours

Step 2: 

Calculate Annual Sellable Hours.

Weekly Sellable Hours x 50 = Annual Sellable Hours 

(There are 52 weeks in a year, so we multiply by 50 to factor in 2 weeks vacation) 

P.S. ALWAYS take a vacation!!!

In our example:

20 Sellable Hours x 50 = 1,000 Annual Sellable Hours

Step 3: 

Find Total Hours Per Offer A.

Hint: Use Your Time Audit to determine how many hours you spend on Offer A each week. Please note that this is a very general estimate. Tons of factors influence how much time you spend on an offer, but I suggest you use this tool as a starting point. 

Weekly Time Spent On Offer A x Offer A Duration (# of weeks to fulfill Offer A) = 

Total Hours Per Offer A

In our example:

5 Hours Spent Weekly on Offer A x 12 Weeks to Fulfill Offer A = 

60 Total Hours Per Offer A

Step 4: 

Estimate The # of Offer A You Could Fulfill Per Year.

Annual Sellable Hours /  Total Hours Per Offer A = 

# of Offer A Per Year (how many of this offer you could fulfill)

In our example:

1,000 Annual Sellable Hours / 60 Hours Per Offer A = 

16 Offer A’s Per Year (rounded)

Step 5: 

Find Your Max Annual Revenue.

# of Offer A Per Year (how many of Offer A you could fulfill) x Price Per Offer A = Max Annual Revenue

In our example:

16 Offer A’s Per Year x $5k Per Offer A = 

$80k Max Annual Revenue

Add it up!

The number you have in front of you is the MAX amount of revenue you could earn in a year, before expenses, if you book out all of your sellable time with Offer A. As we’ve noted, this is not realistic, but gives you a picture of how likely you are to achieve your financial goals.

To get an idea of how much you would “take home,” multiply your Max Annual Revenue by 0.2. Then subtract that amount from your Max Annual Revenue to find your Estimated Annual PROFIT. This accounts for about 20% of your revenue going to expenses.

Max Annual Revenue x 0.2 = Estimated Annual Expenses

Max Annual Revenue – Estimated Annual Expenses = 

Estimated Annual Profit

In our example:

$80k x 0.2 = $16k

$80k – $16k = 

$64k Potential Annual Profit in this scenario

Does it add up?

1. If your potential annual profit is MORE than your profit goals, congratulations! It adds up! You may still want to explore if there is space to go further. You may even be underestimating your annual capacity! 
   
   
2. If your potential annual profit is LESS than your profit goal, no worries! This next section is especially for you! 

COO Tip: Hint-hint! Now is also a great time to look back at your goals and values. Capacity is where most plans fall apart in business!

Then, remember to complete this exercise for the other offers in your business (i.e. Offers B, C, or D…)!

Read on to the next section and learn about how “Capacity Levers” can help you restructure your pricing, offers, time, and energy. 

Capacity Levers

So…

What can you do if you’re at max capacity and not on the trajectory to meet your money goals?

Remember, these are ballpark numbers. We’re humans, not machines. However, it helps to have a general sense of your capacity and potential revenue at this point.

You’d like to find a way to increase your income without working double overtime.

Instead of kicking out tasks like a lifeguard at an overcrowded pool or saying no to projects like a popular girl turning down dates to the prom, you can explore other options!

Look for ways to reclaim your time and lighten your load so that you can sustainably scale your business.  

I call these options: CAPACITY LEVERS.

You can adjust capacity levers to optimize time, energy, and revenue potential. 

You can move a lever up, down, and within a range. It’s more like a sliding scale than something you turn on or off. The objective is to line up all of your levers in a way that supports your goals.

A word of caution before we jump in: every time you manipulate a “lever,” there is a benefit and a sacrifice. 

Essentially: something’s gotta give. 

Each lever you manipulate may also mean you need to adjust other things such as your marketing language, your ICA, or your expenses.

Okay, with that out of the way, let’s dive in!

Types of Capacity Levers

Pricing Levers

Increasing your pricing can be a tangible way to move towards your financial goals. While this might be a good choice for you, don’t blindly increase your rates without doing a bit of reflection and research first. 

Why?

Because “increase your rates” is advice that many coaches in the online space throw around like confetti!

Unpopular opinion: increasing your prices isn’t a surefire way to reach your money goals. 

It isn’t a cure-all for every money challenge you have. If and when you increase your rates, do so mindfully.

If you blindly increase your rates, you risk:

• Pricing your ideal clients out of your programs or services
• Not aligning with market norms in your niche
• Selling fewer offers (which could mean losing revenue instead of gaining)

Instead, when you increase your rates STRATEGICALLY, you CAN:

• Work less (or the same amount) and earn more.
• Ensure your offers strategically meet your ICA (ideal client avatar) where they are.
• Continue to overdeliver in a way that makes you feel proud.

Questions to consider when adjusting your PRICING lever:

1. Have you already increased your rates recently? Raising your rates too frequently can diminish trust and reliability with your clients. If you increase your rates, I suggest doing it no more than once per year. 
   
   
2. Can your ICA (ideal client avatar) bear this price increase? Does this price make sense in your niche or current market? Doing some market research can help. Note: sometimes, you may need to change your ICA as a reaction to adjusting your pricing lever. Redefining your ICA can be okay. But move forward carefully because this will change your business strategy and directly impact your sales and marketing. Weigh the pros and cons of making this change so that you can respond mindfully.
   
   
3. Can you add on to your offer? Are there additional, low-lift deliverables that will add value to this offer and justify the price increase while serving your clients even better? For example, a copywriter may already do brand voice and ICA research for their client projects. Without any extra work or time, they may choose to include a bonus client-facing Copywriting Style Guide that summarizes these details for their client to use in the future.  The goal here is to add value to your offer (real or perceived) without increasing the time and capacity it takes to deliver the offer (unless it makes sense for you). Be careful not to unintentionally limit your capacity and move further away from your financial goals. 

Offer Levers

The next area to explore is your offers. You can change the scope of your current offerings, add on new options, or get rid of offers that aren’t working for you!

Adjust Your Offers

If you don’t want to increase your prices, you may scale back your offers instead. This strategy may allow you to reduce turnaround time and diminish the energy you’re putting into each offer. Consider how to streamline your deliverables, features, and bonuses without sacrificing the ultimate transformation or high-standard client experience.

Add offers

You’re probably familiar with the cliche, “don’t put all your eggs in one basket.”

This expression is relevant to many situations in life, and now it also applies to your business offers! 

Suppose you are relying on only one offer to bring in revenue. In that case, you’re probably going to stall out or limit your revenue potential and growth in the long run.

Aside from adjusting your current offers, consider ways to diversify your revenue streams. If you offer 1:1 coaching, you could consider building out a group coaching program that would allow you to serve more people at once. 

Maybe you’ve been thinking of offering a product or selling a self-paced course. These passive options may be a lower investment to your audience. Still, if you sell several, you can increase your revenue “while you sleep.” Yes, this requires upfront work (creating the product, developing the course curriculum, marketing the offer to your audience). But do it once, and it’s ready for your clients to access on-demand! 

A final note about your offers:

Don’t let lower-ticket offers deceive you. Often my clients think the key to success is selling high-ticket offers. While this CAN work, it isn’t a guarantee. Frankly, sometimes selling several low-ticket offers can provide more revenue than just a few high-ticket offers! Plus, they typically require less effort, involvement, and scope in the long run. Take some time to crunch those numbers and see what’s possible for you and your unique business!

Remove offers

Stop promoting that offer that barely ever sells or the service that becomes a massive drain on your time and energy. If an offer isn’t working for you, you don’t have to keep it! Don’t be afraid to cut these offers loose and make space for something better.

Questions to consider when adjusting your Offer Lever:

1. What are your current offers? List each of your products, services, courses, retainers, or packages.
   
   
2. Which offers are the most popular? Take a look at which offers have historically sold the best in your business.
   
   
3. Which offers provide the most revenue in your business? The highest revenue may or may not come from your high-ticket offers. Look at the revenue potential of your low-ticket offers too!
   
   
4. What offers might you consider adding? You might do some market research to see what your competitors are promoting. Get inspired to create new offers and bring more value to your clients.
   
   
5. Do you enjoy all your offers? Is there anything that no longer lights you up? You might decide to get rid of these altogether. Remember: you’re the boss, and you get to determine where you focus your energy.

Expense Levers

Increasing revenue doesn’t only come from generating more sales. You can also increase revenue by cutting down on expenses. Just be careful here. Cutting corners is never a good business strategy. Instead, take time to streamline your costs, look for more inexpensive materials (without sacrificing quality), or reduce what your business spends money on in different, creative ways.

Questions to consider when adjusting your Expense Lever:

1. What are your expenses? Familiarize yourself with what you’re spending money on and where you’re spending it. It’s all too easy to set auto-pay and forget that money is being drafted from your business checking account each month. Stay on the pulse of your regular and unplanned expenses so that you can better predict your profit.
   
   
2. Where can you cut back? Is there a subscription you’ve been paying for that you don’t need anymore? Can you find a more affordable way to source materials for your products? 
   
   
3. Will cutting back on expenses cause you to sacrifice or go against any of your values as a business? If you’re a sustainable product-based business, there may be cheaper ways to produce your product. But if they’re not environmentally conscious and go against your beliefs, they’re not a real option. Get clear about not just where you’re spending your money but why. Scale back without sacrificing your values or the quality of your work. 

Capacity Levers

Although I know you don’t WANT to work more, this lever is an option to an extent. If your current capacity isn’t aligning with your revenue goals, you may consider building more time into your schedule. 

For example, let’s say you’ve been taking Fridays off (like my client did in our last blog post). Maybe adding that extra workday back in will give you the time you need to scale without changing the details of your offer or pricing. 

Questions to consider when adjusting your Capacity Lever:

1. How many hours do you currently work per week, and how many hours would you like to work per week? Are they aligned? Why or why not? As you define your profit goals, decide how your working hours can support your goals.
   
   
2. What is your ideal schedule? Do you want to work longer hours but fewer days? Are you okay with a “traditional” workweek? Only you can decide what fits your lifestyle and preferences. 
   
   
3. Why does your workweek and schedule matter to you? Is it about spending time with your kids? Prioritizing self-care? Traveling more often? Back up your choices with meaning, and you’ll find clarity as you explore capacity levers, make decisions, and set goals. 
   
   
4. If your working hours and preferred schedule don’t offer the capacity you need to meet your money goals, are you willing to compromise? Or, perhaps you’d like to adjust another lever to see if that can help you expand your revenue potential without changing your work hours or schedule. 

Team Levers

Outsourcing or bringing on a team member is an effective way to expand your capacity. Instead of trying to squeeze more hours into the day or carry everything yourself, you can lean on support. Hiring can allow you to serve more clients and justify increasing your rates. 

When hiring, evaluate the impact this will have on your business. 

• While you won’t be the only one working on client projects, you will have to take on new CEO responsibilities to manage your team members.
  
  
• Sure, your business revenue may increase when you take on your new team member. But more REVENUE does not necessarily equal more PROFIT. Make sure you understand how much your new hire will cost in annual wages AND added expenses so that you can set realistic profit goals. 

Questions to consider when adjusting your Team Lever:

1. Have you streamlined your systems and operations? Automate anything you can. Remember, optimizing your capacity first will help you bring on the right team member and delegate tasks that will genuinely impact your workload. 
   
   
2. What SOPs (standard operating procedures) can you document for future team members? SOPS should outline the who, what, where, why, and when of any recurring task. While everything is locked up tight in your brain now, having things written out clearly and specifically will make onboarding a new team member more manageable. 
   
   
3. Have you considered the cost of hiring this new team member? You might “shop around,” and interview potential hires to get an idea of what pricing looks like in that industry. Get clear on the investment to ultimately make sure it fits into your plan to hit your profit goal.

Goal Levers

You can always reconsider or re-evaluate your goals. 

Okay, okay… 

You’re crunching the numbers and realize, “maybe $100k isn’t in the cards this year.” 

That’s okay, and you can still work towards this goal eventually. 

For now, think about setting a new objective that is still ambitious but more realistic based on your business’s current capacity and state. Steady, consistent revenue growth takes time and patience.

Ultimately, consider what each of these levers will provide for you while being realistic about how they could require some sacrifices.

Questions to consider when adjusting your Goal Lever:

1. Are your money goals the highest priority for you and your business right now? Remember, wealth comes in many ways, shapes, and forms. During certain seasons of life, money may be your priority. At other times you may want to prioritize time freedom. Your prerogative will fluctuate, so allow yourself to be flexible while also getting honest about what matters now.
   
   
2. What is your “enough number”? Evaluate your cost of living and lifestyle preferences. Knowing how much is enough will ensure that your profit goals (aka what you’re “taking home”) are practical. Plus, knowing what you need will help you avoid just setting goals for the sake of setting goals. 
   
   
3. Are your profit goals aligned with what you’re willing to do? In most cases, your profit goals CAN be realistic if you’re ready to adjust your capacity levers accordingly. But if you’re not willing to make certain sacrifices, you may need to table those money goals for now.

I encourage you to experiment with these levers and plug them into your max revenue formula! 

What different combinations of offers can you book each month? Which combination maximizes your capacity best? Which maximizes your revenue potential best? Play with the numbers to see what’s possible! It might surprise you!

Capacity Rhythms

If you’re a regular here on the blog, you know rhythms are, well, kinda my thing!

And while capacity levers aren’t part of the eight foundational rhythms I preach, they are significant too!

Establishing your capacity is not a one-and-done process, and it will change over time. 

You might complete business tasks quicker with more experience under your belt, or your offers may change, altering your capacity. It is an ongoing process of staying on the pulse of your capacity throughout the seasons so that you can make aligned decisions for your business. 

Plus, your money goals will continue to change as you find more and more success! 

Check-in on your capacity at strategic milestones throughout the year so that you can pivot, readjust, and continue to set new, aligned goals for your business in the future. Capacity needs to be a rhythm whether you check in on it monthly, quarterly, or annually. 

Pulling it all together

Setting and reaching your financial business goals isn’t as simple as throwing a number out there, getting to work, and waiting to see what happens.

It also doesn’t have to be that difficult. It just needs to be strategic.

Don’t leave your goals or your business up to chance! Make sure they add up.

• By setting meaningful, realistic, clear money goals, you’ll be able to plan how you’re going to get there. 
  
  
• When you understand where your time is going, it’s easier to optimize your working hours, maintain boundaries, and mindfully commit to projects.
  
  
• As you adjust your capacity levers, you can meet your financial goals without burning out or missing the mark altogether!
  

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