Business advisors of all stripes talk about the primacy of revenue generating activity for sustaining and growing a business. They tell you to should spend most of your time doing this because it is the only thing that brings in income.
“Everything else is an expense.”
Literally, that’s true. If you spend most of your time and resources on creating value for your clients, your business will be profitable and grow.
So, how do we define revenue generating activities?
For lawyers in private practice, anything you do that allows you to bill a client clearly qualifies. Admin tasks might be necessary for managing the people and processes for creating and collecting that revenue, but don’t qualify as revenue generating by themselves.
Okay, so you want to spend most of your time doing billable work. But how much?
If you spend 80% of your time doing billable work, is that enough? Is spending 20% of your gross income (and time) on admin too much?
Ultimately, this is the debate we have with ourselves, our partners and advisors.
But it doesn’t only come down to doing the work vs. the cost of getting it done. There are other activities that come into play.
Continuing education, personal development, and business development, for example.
These aren’t revenue generating in the classical sense, but they can create significant revenue, arguably with significantly less effort than it takes to do the billable work.
It’s true.
When you improve your marketing skills, you can get more leads and prospective clients, attract bigger cases and better clients, expand into additional markets, and increase profits by being able to hire more help and/or open more offices.
When you improve your personal skills, e.g., sales, networking, speaking, writing, productivity, etc., you can attract even more prospects and close a higher percentage of them, get more repeat business, streamline your workflows, and build deeper relationships with other professionals who can lead you to additional opportunities to develop your practice and career.
And when you improve your core legal skills and knowledge, you can increase your value to your clients, allowing you to bill higher rates.
Revenue generating activities, to be sure.
I can’t tell you how much time to spend on these activities, only that if you want to grow, you should consider spending more.
When you’re ready to take a quantum leap in your practice, here’s what to do
