Take Stock, Trim and Pivot

Even though a full month still remains in 2017, it’s not too early to start planning for the year ahead. And one of the best ways to position your firm for success in the future is to take a look back at the past. While there are plenty of end of year checklists that deal with financial matters like tax preparation, organization of records and review of profit and loss statements, the suggestions I’ve listed below are more laid back but will nevertheless produce great results:

Trim Costs

Many attorneys turn up their nose at trimming costs and instead, suck them up, believing that “it takes money to make money.” And while there’s truth to that mantra, accoutrements like high-end office space, a large staff and a $2500/month Google Ads spend won’t automatically lead to financial success and clients and in fact, they may prevent you from investing in other measures that may yield a better return.  Conversely, as I’ve written before, cutting costs can make a real difference to your bottom line and the amount of revenue you take home. Although many subscription costs or leases don’t necessarily run January to December, nevertheless, the end of year is a good time to evaluate what to keep and what to shed.

Low Hanging Fruit  The easiest costs to eliminate are the low hanging fruit described here : subscription costs for staff that no longer works with your office or for services that you no longer use and marketing tools that haven’t produced any results.  As I described, you may save a few hundred dollars a month just by making these changes alone.

Substitutes and Replacements  Sometimes, you may be able to find lower cost versions of a comparable service if you shop around. Moreover, lower cost services that as recently as 3-4 years ago weren’t ready for prime time have improved considerably. Case in point: Fastcase. Increasingly, many attorneys I know – even those who can easily afford LEXIS and Westlaw – are switching to Fastcase for the bulk of their research because they can’t justify paying several hundred dollars a month for a service that’s included in most bar membership packages. If you’re still using a landline phone, you may find that VOIP offers better and cheaper service. Sometimes, even your existing provider may have a more economical plan available if you just ask. Taking the time to cost shop can add another hundred dollars to your monthly haul.

Tough Calls   It’s always tough to let someone go, and tougher still when you have to admit that it’s at least partly for economic reasons. Likewise, for many lawyers, moving into their own office is a rite of passage – a sign that you’ve made it – and as I know from personal experience , letting it go (even because, as in my case, you’ve had kids and want to spend more time at home) can be difficult. On the other hand, making these decisions can free up several thousand dollars a month.  Moreover, there are also a myriad of alternatives to staff and office space that weren’t available years ago. Lawyers can hire virtual assistants and temporary attorneys through online services, or rent coworking space as an alternative to a traditional office. Once you avail yourselves of these services, you may never return to a traditional staffing arrangement.

Pivot If Needed

Once you’ve cut costs and freed up another five hundred or thousand bucks a month, you’re probably feeling pretty good. But cost cutting is just one part of the year end exercise. You also need to examine the sources of your revenue for the past year and determine whether you need to pivot. Here’s what I mean.

Often, when attorneys finish out a good year, they’re content to rest on their laurels and go into the next year thinking that “if it’s not broke, don’t fix it.” But your firm may indeed be broke, particularly if you discover that a large percentage of your revenue came from a single client, or an unexpected settlement. If that’s the case, you can’t assume that you can rely on that revenue for next year. So while you have money in hand, you want to invest in additional marketing efforts to bring in more of the same clients and matters – or, pivot to another practice area that has a steadier profit potential.

Meanwhile, if you struggled this year with clients, or find that each client only generates a small amount of revenue per matter, you’ll also want to review your marketing. How did these clients find you? By referral? Website? Online ads? And what’s the source of your best clients? If it’s referrals, plan to spend more time networking. If you’re noticing traffic to your website, but no further inquiries, identify ways to make it more interactive – for example, install a chat box or create an ebook that clients can download.

Both trimming and evaluating costs and planning a pivot don’t need to involve extensive time – maybe just a weekend afternoon or a few hours after the kids are in bed. But taking the time to recapture revenue and figure out how to generate more will pay off for you in 2018.

 

This post is part of the Four Actions to Take Before the End of the Year theme series.

The first post of the series, entitled Celebrate #GivingTuesday: Give or Serve can be found here.