Ever budget a figure for your medical expenses and find later that you’re way off? Or, estimate the amount of time it will take you to pull weeds in your backyard or build that new deck and wind up spending far more hours than you thought?With non-routine tasks, we are generally terrible at figuring the amount of time something will take, and not much better at calculating a budget. Moreover, the bigger the task, the more problematic estimating becomes. How often does a big highway project, corporate launch of a new product, or shiny new piece of military hardware come in under budget and before deadline?
In the world of the small entrepreneur, what’s the answer? Generally, you look at estimating time and dollars in two ways:
As much as possible, consider providing services or products that you can replicate again and again. Customization is where estimating becomes difficult. If your business is such that you can do a few tasks well and efficiently, you will also quickly figure out how to price them, and how long it takes you to deliver.
If it is something that is custom, break down the task into as many small pieces as you can. It is easier to calculate cost and time for one part of a project than for the whole thing. Moreover, errors do not multiply as easily when you divide up a job.
And sometimes, simply realize that your estimates are going to be wrong. If it’s wrong dollar-wise, you generally suffer, but your customer may remain satisfied. However, faulty time estimation can lead to client unrest. Therefore, with time, best to stick with the maxim of under promise and over deliver.