Edward Poll
Dolan Media Newswires
Figuring out what to do to be a financial success is important, but figuring out what NOT to do is really just as important. The following are fifteen financial faux pas that will derail your train ride to success.
Failure to Plan
Walking a long time to get to an undefined destination is a recipe for disaster. The path to nowhere in particular is the path to failure. Any journey should include a plan.
Failure to Market
Marketing is the process by which a firm defines itself and differentiates itself from its competitors. There are a lot of lawyers out there; if you want business, you need to go out and get it.
Failure to Purchase Technology Wisely
Technology is a major financial commitment. Make sure that the return on the investment of the purchase is worth the purchase itself.
Failure to Establish a Relationship with Your Bank and Banker
At some point in your career, you will likely need a loan. Even if you are fortunate enough not to need a loan, you will certainly need banking services for your firm’s accounts. Establish a good relationship with your bank and your banker so that you get the best and most personal banking services.
Failure to Negotiate Prices
There are ways to save money. Rent is often negotiable. Check out all options.
Failure to Budget
Clients want budgets. If lawyers want to keep their old clients and add new ones, they will need to think about budgets.
Failure to Recognize That the Client Is No. 1
Without clients, you have no income. Treat your clients as the valuable commodity that they are.
Failure to Understand Cash Flow
A cash flow plan is an ongoing tool to help you manage your finances. It helps you understand what monies you have coming in and whether and by how much those monies exceed the monies going out.
Failure to Manage Risk
There are type types of law firms: those that have experienced a disaster and those that will. Whether it is a hurricane, a disease epidemic, a burst water pipe, or a computer system meltdown, every law firm must manage such risks by assessing insurance needs and purchasing adequate insurance.
Failure to Keep Track of Time
You need to write down your time when you spend it. It is difficult to remember even later in a day what you did and for how long earlier in the day.
Failure to Bill
The most important and obvious fact about getting paid is that you cannot get paid until you send a bill to the client. Make sure that you have a procedure for sending out bills so that this task does not fall by the wayside.
Failure to Collect Fees
It is not enough to bill clients; you also must make sure that you collect your fees. If you don’t you will experience disaster in your bottom line. Make sure that you have a collections policy, and move quickly on overdue accounts.
Failure to Recognize When to Downsize
Part of being profitable in any business is recognizing when the economy has taken a sharp turn south. Pay attention to the economy so that you know when to downsize and thus increase your financial efficiency.
Failure to Hire Support Staff
Lawyers are independent and often feel that they can do everything themselves. However, it is important to recognize that support staff are essential. The cost will be more than offset by the fact that you will have more time to do lawyer work that will be billed at your professional rate.
Failure to Recognize the Value of the Practice When Selling
When you are ready to retire, don’t make the mistake of thinking that your practice has no value. Event he smallest and most personal practices may be salable for the right price and under the right terms. Recognize, too, that goodwill has value.
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Edward Poll is the principal of LawBiz Management. He coaches lawyers and is the creator of “Life After Law,” a program that helps attorneys plan for profitable exits. He can be contacted at edpoll@lawbiz.com.
