Budget Unconscious: Reducing Your Spending Is Not the Only Way to Increase Your Profit Margin
My Dad, like all dads, had some choice phrases to impart. One was that I shouldn’t step over a dime, to pick a penny. (Not sure why I would do that, but . . .) And, that you have to spend money to make money. It’s actually pretty sage business advice – especially for budget-conscious lawyers.
You see, there are a lot of solo and small firm lawyers out there, who are heavily-focused on budget management, and cutting costs down to the bone. It’s the leanest and meanest of lean and mean methodologies. But, getting lean is more about becoming more efficient, rather than trying to spend as little money as possible, to run your law firm.
The reason why lots of attorneys focus on reducing the law firm budget is so that they can increase their profit margin. But, focusing solely on that side of the equation causes many lawyers to ignore the other side of the coin, as it were, when it comes to profit margin. That is, making more money (!), against a stable budget, is a great way to improve your profit margin.
The good news is that there are a whole host of ways to make more money; and, I feel like that’s gotta be far more exciting than slashing and burning your budget to the ground, until you’re working by candlelight.
So, consider raising your rates. Or, getting more efficient, including by adding new technology. Or, hire someone, including another attorney – but, ensure that that person is a profit center for the law firm.
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If you want to launch some new revenue-generating campaigns, just call us!
The Rhode Island Bar Association offers free law practice management consulting services through Red Cave Law Firm Consulting.
To request a consult, visit the Rhode Island Bar’s law practice management page, and start running your law firm like a business.