Saving money usually sounds like a good idea to most people. You work tirelessly to stay in the black and it’s painful to part with your hard-earned income. But as much as we talk up frugality, we often overlook the value of spending money.
This is especially common for small and mid-size firms, where penny-pinching is easy to confuse for a business strategy. However, spending money (sometimes an eyewatering amount) in a strategic way can actually be the smarter thing in the long run. How do you know where to invest and where to scrimp? Take the following categories into consideration when making your decisions.
Unless you’re living out your dreams of starring in Lincoln Lawyer, you have certain overhead expenses. You need an office. You need a computer. You need a website and phone line. You need marketing.
How do you decide which of these things is worth spending money on? Depending on the focus of your practice, it may make sense to save money on lower-cost office space – or it may be better to shell out for a pricier location. If you’re courting high net worth divorces, it makes sense to set up in a posher office suite. If you’re focusing on legal aid, an office in a local coworking startup might provide you more value.
Even if your potential clients don’t carry a big price tag, invest some money in your professional set up. Think of it as the office equipment equivalent of dressing for success, helping your clients feel confident in your ability to handle their case.
Investing in workplace technology shouldn’t be underestimated. Money saved can quickly turn into time wasted. That $400 laptop you picked up because it was the cheapest option may run agonizingly slow and then fall apart in the next two years, but that sleek updated version with the heavy-duty processor will last 7-8 years if cared for – and will run smoothly and efficiently the entire time.
You’ll also want to consider which software products can benefit your firm. There is a range of options on the market that deliver a lot of value. Legal practice management software. Research database subscriptions. Office productivity solutions.
The technology costs of running any kind of business can really add up, but they also allow you to organize your client and caseloads, track your work, and communicate efficiently. In short, they allow you to do your job more effectively.
The best configuration of computers, office hardware, and software will differ from practice to practice. However, the biggest financial drain is investing in technologies and then never using them. It can take up to two months to form a new habit, so when adopting a new platform, anticipate taking some time to integrate it into your workflow (and know the investment will be worth it in the long-run).
Networking and relationship building
It’s true that you never know where your next client will come from. They could appear at a PTA meeting or a visit to the dentist. Public events, non-work social gathers, happenstance, your next best client could be anyone. Baseline networking happens constantly and it’s mostly free as long as you’re ready with a business card and a good introduction.
But meaningful networking opportunities also occur through local and regional conferences, seminars, and other gatherings – and these opportunities do cost money. However, a $30-50 ticket to a lunch or a $200 fee for a workshop is worth it if you consider the income potential of attending.
Another cost is that of building and maintaining relationships. It takes work to nurture professional connections. Coffee meetups with colleagues, client dinners and holiday gifts all have a time and cost investment. Making the effort to maintain relationships is good, but doing it in a generous and thoughtful manner is even better.
Think through what value you’ll get out of each and every event and then invest accordingly.
Outsource your least favorite work
DIY always sounds like the best way to save money, but is it really? Think of it this way: everything that you do has a cost, whether it be money, goods, or energy. Where is your time really best spent?
Yes, you could schedule a few hurried tweets during lunch. You could constantly rearrange your schedule to accommodate court appearances. You could hammer out all the legal briefs after dinner.
Or you could outsource these tasks!
How do you know what to outsource? Consider if your nonbillable tasks taking up more time than your billable ones? If so, it’s time to bring in help. You don’t have to let it all go if you’re concerned about the cost. Identify the least enjoyable, most time-consuming and start there. Additionally, any tasks that always end up on your backburner are top candidates for outsourcing.
As the saying goes “You need to spend money to make money”. Parting with your hard-earned dollars, especially when you’re in the early growth stages of your firm, can be difficult, but you should do so knowing investment in the right tools and tactics is actually going to benefit your firm in the long run. Take some time to be strategic with your budget and put money where it’s going to help your efficiencies, client attribution and overall peace of mind so you can keep on growing your firm for the long haul.