When was the last time you looked at the expense side of your bookkeeping ledger, looking for ways to reduce the cost of doing business?
Every dollar you don’t spend on overhead is a dollar in your pocket. Cutting expenses by just $100 a month increases the value of your practice by $12,000 (assuming a 10% cap rate).
Once or twice a year, schedule time to examine your expenses and ruthlessly cut the fat.
Ask yourself, “Do I really need __________?” and get rid of anything you can live without. Once you’ve done that, go back through the list and ask, “How can I reduce this expense?”
What could you eliminate? What could you negotiate? What could you replace with something that costs less?
Ask your bank what you can do to cut or eliminate fees. Look at what other banks charge and use that as leverage to negotiate with your bank or switch your accounts to the bank with lower fees.
Look at your library costs. Do you really need everything on the list or could you make do with less?
Look at your insurance expenses. Can you increase your deductibles, eliminate coverage, or take advantage of discounts? Get quotes from other carriers. You may be shocked at how much you can save by switching.
Examine your equipment costs (copier, fax machine, scanner, computers, etc.) Would it be cheaper to buy instead of lease? Would it pay to replace some equipment with something that uses lower-cost consumables?
Look at everything–couriers, interpreters, stenographers, medical records reproduction, shredding, storage, investigators. Look at the cost of apps and online services, memberships, and service contracts. Look at your office rent and utilities. Look at your advertising, websites, and other Internet expenses.
Office supplies: do you really need the most expensive legal pads?
Meals and entertainment: are you getting business out of those lunches with prospective clients and referral sources? Could you find another restaurant that doesn’t charge as much? Could you meet for coffee instead of lunch?
How might you reduce expenses for employees, virtual assistants, and freelancers?
Examine the checks you’ve written and the purchases on your credit cards. Ask your accountant to look at your expenses and tell you where you are spending more than other lawyers or professionals. Reward your employees who find viable ways to reduce overhead.
Don’t obsess over expenses but don’t ignore them either. Look at everything, so you know how much you’re spending, and on what. And when you’re done, grab your personal ledgers and have a go at them.
