8 Guaranteed Profit Drivers for WA Legal firms
Over the last 2 weeks we have explored these 4 Profit Drivers;
- Keeping Costs as Low as Possible
- Highly Structured and Efficient Billing and Debt Collection
- Marketing and Business Development Activities
- Strong Cashflow Management
This week – let’s look at;
- Retaining Quality Staff
- Strong Financial Management
RETAINING QUALITY STAFF
- In an ideal world, you would like to have the best quality staff all around in every dept in your practice. (Cause that is what your marketing says, isn’t it?) Unfortunately, the best may be unaffordable, at a higher price tag. Compromise is necessary. It’s a balancing act between what would be considered the best by our clients, what we consider the best, and what our firm can afford. There is that Return on Investment discussion, once again.
- Productivity of staff should be reviewed and discussed at least monthly, measuring performance against targets for both billing and time charged. Are these targets based on charge out rates and hours billed expectations or on a multiple of wage?
- Monthly recognition for those achieving target is encouraged.
- Make sure these targets are kept up to date at increase time, adhoc in year increases and other changes within staff. Its important that your staff feel they are measured against accurate up to date targets.
- To help reduce staffing costs: regularly review the option of outsourcing, in the areas of Transcription, IT support, HR, Payroll, Marketing, Admin support and Finance.
- For those growing firms who do not have the need or budget for a full-time highlevel CFO person, the part time option is a viable choice.
STRONG FINANCIAL MANAGEMENT
- Strong financial management includes ticking of as much as you possible can of the 8 Profit Drivers. In some cases, even just a regular conversation on that topic is necessary. Financial management is awareness. Aware of our strengths and weaknesses which will eventually affect our bank account.
- Monthly Finance/BOD meetings should be held (after or before Debtors meetings – see previous profit driver) discussing at least:
- 5-9 KPI’s in the areas of the past months:
- Productivity for staff – Billing, Time: Highlighting high performers and concern areas
- Profit and Loss performances
- Debtors and WIP iv. Departmental performance
- Projections to the rest of the financial year and after that
- Updates / Plans relating to staff which could affect productivity, billings or efficiency of staff.
Taking steps to action these 6 profit drivers could be “just too hard” or “too time consuming”. For many these are beyond the capabilities of your bookkeeper, and may not be the area of expertise of your office manager/practice manager.
The best compromise could be a part time CFO, who specializes in customised financial support based on your budget and needs. The cost is relative to a junior staff member, and the benefit can span expertise in many areas of business finance, ranging from:
- Reporting and profit improvement,
- working capital management,
- cashflow management
- planning and systems implementation
- and maintaining or improving banking facilities.
You can find out more here: https://www.cfocentre.com.au/, where there are some great short animated videos providing additional support to grow your practice in many of the profit drivers mentioned in this series. You can also contact us for a short 15-minute phone conversation to discuss your unique situation.