Latest / Wealthy Woman Lawyer Podcast, Helping you create a profitable, sustainable law firm you love / 187: 7 Actions to Improve Cash Flow When Money is Tight
Transcript
- Solo7ActionsImproveCFAud-revised === Davina: [00:00:00] Hi, and welcome back to the Wealthy Woman Lawyer Podcast. I'm your host, Davina Frederick, and today I wanna talk about seven actions you can take. If you are struggling right now with cashflow in your business, it happens to the best of us. Uh, if you're an entrepreneur and you own a business, there may be, um, a point where you don't have cash flowing in your business the way you need it to, to pay all of your bills. And perhaps with it's, it's common with attorneys because sometimes we get in a feast or famine cycle with our business where we get a bunch of work, we do the work, and then we're not doing the marketing. And so that's one of the reasons that we can sort of fall into this feast or famine cycle. Another. Thing that can happen is if you're a contingency attorney where you work based on contingency, then you may get lump sum cash and you get it. You spend it and you don't save enough or allocate for those potentially slow months. [00:01:00] But I wanted to address this topic because I've been having a lot of conversations lately with women law firm owners who are just suddenly feeling cash strap and. In the coaching world that I'm in, it's very common for coaches to say, if you are feeling cash strap, you need to go. You're not making enough offers. You need to be making a lot more offers to people so they can take you up on the offer to work with you. Um, but when you're working in a law firm business where you are not, uh, you're ethically obligated to not solicit clients, um, in a certain way. And you may not be able, it's not as simple as you just putting offer out there. Hey, come work with me. Um, so you need to get a little bit more creative and think about how can you get more money coming into your business. So these ideas, I hope will help you do that. The first idea is to reach out to past leads and ask if [00:02:00] they've hired an attorney yet to solve their legal problem. Alright, so for the last 90 days, you may have gotten some consultations and. Perhaps some of those people did not sign up with you at the time. There are many reasons why people don't sign up with us at any particular given time. It may be that they, they didn't realize how much it would cost, and so they weren't prepared. Or it may be that, you know, in the, let's, let's use family law as a, as an example. It may be that they were thinking about getting divorced and they just weren't sure, and so they went back to think about it some more. But reaching out where, do check your ethical guidelines and make sure within your practice area, within your jurisdiction that this is something that you can do, but you can reach out to past leads. The, obviously, the very first thing you need to ask them is have you already hired an attorney? Because if they've already hired an attorney, you just need to say, great. I'm glad to hear it. Hang up and move on with your day, because we're not allowed to go and solicit business out from under another attorney. But reaching out to past leads. [00:03:00] This can be, doesn't have to be you who does this. It can be someone on your team, your client care specialist is a great person to do this. Pick up the phone call people who've met with your office in the last 90 days, uh, the last six months, however long, uh, is a, is a normal lead time for you and say, Hey, we just wanted to check in on you. Make sure that you found a resolution to your legal problem. If you've already hired another attorney, that's great. If you haven't, would you like to talk with us again about how we can help you? So this is one way that can help with your cash flow in your business. Number two is collect what's owed to you from slow payers. Uh, ask for the money, offer payment arrangements if you need to, to help get them back on track with paying. I recently was in a discussion with a woman, law firm owner who found out that one of her employees had not been, um, getting [00:04:00] money into the trust account. It was her job to get money into the trust account, and she had not been doing that job. She, because she was being kind of a softie and she was buying into other people's stories, their, their broke money stories. And not collecting it. So unbeknownst to the law firm owner, the attorney who was working hard on these people's cases and trusting her, um, her person to collect that money and get it in the trust account, that wasn't happening. So here she had been working on cases where there wasn't money to transfer because her, one of her staff members wasn't doing her job. So collect what is owed to you. If somebody else is responsible for getting money collected from clients and into trust, um, as a part of their retainer agreement, then you need to sit down and follow up that person to make sure that they're doing that job and that you are aware and tuned in to that process. Because [00:05:00] if you find out that there's, that people are not paying. Adding money to their trust account for you to bill against, then you need to stop all work. And if you let that go too far, you might get so far into it that you can't stop work because the judge won't let you. So you need to stay on top of that yourself and make sure that you're communicating regularly and you're got your eyes on yourself to make sure that that money is being collected. Number three is put in the extra work and bill to access trust funds. So, uh, that can be transferred to operations. So if you have a trust account. You wanna put in the extra work and you want to make sure that everybody on your team who's a biller is actually billing the requisite amount of hours that you have set out for them to bill. Um, because sometimes what happens with our team is they may not be billing as much as we expect them to bill, as we require them to bill, to make the kind of salary they make. And so this is a management issue where you need to get on, get on this. [00:06:00] Make sure that everybody is actually doing the work and getting that money transferred over, and that you have created a system for seamlessly transferring this money into operations after you, uh, have done the work. Um, I've spoken with many women, law firm owners who, when they're kind of in that solo stage where it's them and a, a team of people and they're trying to grow and maybe they haven't hired an attorney yet. They can get so caught up in doing the work that they don't stop and do their billing. They don't have a billing clerk to help them. They don't have a bookkeeper to help them. And so, and they're, maybe they're not entering their time contemporaneously. Maybe you know what this is like, maybe you're not entering your time contemporaneously, and so you put off billing and then you make it all big one headache. We have one big headache that you do, you know, at the end of the month, sometimes two months go by, or three months go by and you fall behind. I'll tell you right now, the further you [00:07:00] move, remove your work, the work you're doing from a client, from the billing process, the grumpy your, your client is gonna be about paying your bill. You wanna make sure when a client is, uh, enthusiastic about hiring you, they know they need you. They know you're gonna help solve their problem. This is why you'll hear so many people say, get as much money up front as you can. But it's the same way as you're doing the work. You need to be doing the work and you need to be reporting to them so that they see the work as being done and then send the bill, uh, within a short period of time. After that, if you let that billing hang out for months and months and months, then you are, you're gonna have some very grumpy clients who aren't gonna wanna easily pay your bill. So staying on top of that is number three. Putting in that work, getting it done, and making sure you're doing the billing. Number four is reach out to referral services, influencers and connectors. Ask about their businesses and offer your help to [00:08:00] them, and then share what you're wanting to achieve. So if you have referral sources and influencers and connectors, people within your network that you haven't spoken with lately because you've had your head down grinding and you have forgotten that you need to be. Staying active within your network of, of connections. People who refer business to you, people who influence your, uh, prospective clients and people who connect you with other people. You wanna sit down and really think about who those people are for your business and who potentially could fill that role that you haven't tapped into yet, and you wanna make it a point to reach out to them and schedule meetings and conversations and ask them about their business. This is a. Givers gain philosophy straight out of business Network International, BNI. If you've been in BNI, the idea is you talk with other people and ask how you can help them, and it is human nature for people to respond. For most people, there are [00:09:00] exceptions to the rule, obviously about asking you what you want, and then that's an opportunity for you to express to them what you want. Or perhaps they pay it forward to somebody else and somebody else will ask you what it is that you want. It's all just good karma out there. Number five is plug unintended leaks in your bucket. Now, I, you know, I am all about when it, when it comes to, uh, revenue. I believe that revenue is a driving factor. The more revenue we have, the more, uh, resources we have to work with to invest in our firm. Higher people set up systems to grow our business. And I fuss at attorneys law firm owners many times. Because they get so focused on the expenses and they are constantly worried about spending money, investing money in their business because they're so focused on the expenses. They are focused on the lack what they don't have to pay bills, so they cut the bills back instead of focusing on going [00:10:00] out and making more money. So there's ample money to pay bills and, and invest in your business and do all the things that you need to do. That is my general philosophy. What I'm talking about here in number five though, is plugging unintended links in your bucket. So go through and check for things like auto paste for software that you no longer need or use subscriptions that you thought once thought you had to have and then you never used. Uh, investing in what advances your goals and growing your business is good, but wastefulness is not. So periodically just go through. I do this in my own business. I just go through and I look for those things that I wanted to try, that I signed up for, and then either never got around to trying or I tried it, I didn't like it didn't work, but I didn't go and unsubscribe at the time. Going through with your bookkeeper and looking for the, for those, um, you know, just those needless waste of money is always a good thing, and [00:11:00] that's gonna help improve your cash flow by cutting, cutting down those, that wastefulness. Alright, number six. Examine your marketing strategy to determine what's working and what's not. So you really wanna go and take a look at your marketing strategy because things are always changing and evolving in this crazy world we're in right now. And what used to work for you as a marketing strategy might not be working for you any longer, and it's important for you to go back and look at your key performance indicators. Look at what your data is telling you about your chosen marketing strategy. Help you determine what's working and what's not. Now. Uh, one of the things that I often see, uh, law firm owners do here is that they, they might have a marketing strategy, but they don't effectively track data for that strategy. It is not a perfect science. It is never going to be a perfect science because some things that you might not be able to track anytime there's a human [00:12:00] element involved. So, for instance, if you are asking your. Clients, you know, how did you hear about us? And they say, oh, the internet, you know? You know that eyewitness testimony, right? Self-reporting is not very reliable. So they may have followed you for months on Facebook, or they may have followed your Instagram account, and then one day they had a need, and then somebody, they asked a friend, that friend recommended you, they said, oh yeah, I've heard of her. And then they go to Google and look you up. So where did this client come from? Right? So that's not going to be. Uh, it is not gonna be an exact science. Your marketing stra your marketing data, but where you do have data, you wanna go take a look at it, and you really want to consider whether or not your marketing strategy is still as effective for you as it always has been, and where you can make some tweaks to improve it. One of the things that you can do to improve your marketing strategy is you can look at what is working, what is working, and do more of that. [00:13:00] Go, go there more and participate more in that marketing strategy. Alright, number seven is improve your close rate on sales. This is a part that we often don't think about because we don't like to think of legal services as sales, right? But the fact of the matter is, if you have people who are coming to meet with you, or they're meeting with you over Zoom or whatever, virtually over the phone, and they are reaching out to you and saying, I have a legal problem. You are not closing, uh, you know, 90% of those that are a good fit for you, right? Then there's an issue with your, your ability to close and actually make a sale. And this is common if you're, so, a lot of solo attorneys do, you know, do sales themselves, and what they do is they misunderstand the consultation, the purpose of the consultation. The purpose of a consultation for the law firm, for the [00:14:00] solo attorney, for the the law firm business is to ascertain whether or not this is a right fit client for your law firm. Whether or not you can help them, whether or not they meet your criteria of an ideal client, whether or not they have, um, the funds to pay you, all of those things, it is your job to ascertain that it is not your job to give free legal advice in a consultation. Your job in a consultation is to make that determination, and then part two of that is to help the client make a decision to hire you to help solve their problem. Now, if they're doing a paid consultation, then there may absolutely, you can give some legal advice, but what you don't wanna do is you don't wanna give them all of the how to answers You want to. The how you want to, you wanna go over the what and the why, what the problem is, you know, why we have this situation and then you, the how is hire [00:15:00] us and we'll help you solve the problem. So you wanna make sure that if you are not closing the majority of your sales, perhaps you have a client care specialist who's sitting in that position, go and look and see how many calls are we getting. What, how, what percentage of the calls are being closed and what are the reasons for not closing? If you don't have a method for tracking those prospective client calls and they're not writing down or taking notes somewhere in the system about why they didn't close a particular client, then you're missing out on some data tracking. Um, and you'll wanna do that because you really need to improve your close rate so you can get more clients in. So these are seven, uh, actions that you can take now. To help improve your, um, your cash flow in your business so that you can meet your obligations, um, to your creditors and to the people that you've made commitments to. You wanna make sure that you're payable to pay your, pay your [00:16:00] team and pay your vendors and all the obligations that you so do not get discouraged and overwhelmed when you have a cashflow problem and throw up your hands and say, I can't pay. I can't pay this. Instead, get creative and start thinking about what you need to do to improve cash flow, to honor your commitments, and to become a profitable, sustainable law firm business because you'll very quickly ruin your reputation if you allow yourself to fall into those too many times. Right? A lot of people can be understanding. Um, once or twice, but you know, if you can't pay your employees, they're gonna go look for other jobs, right? So you really got got to get creative and think to yourself, what can I do to improve my cash flow? I'll also tell you, if you have a contingency business, then when you get that check, you need to set aside that money and allocate it toward, [00:17:00] toward upcoming months. So that you can have even out, even out your cashflow instead of taking that saying, oh, Bonanza, we have all this money. Let's go upgrade all the software. Right? Unless it's something you desperately need to do, stop and think and just kind of get your emotions in. Check around that and say, okay, how? How do I need to allocate this out so that I can even out my business? I also advise people who are doing contingency work. To have some sort of transactional work that they do something else, or litigation that they do, where they are bringing in steady cash flow in addition for kind of these big payday sorts of things. So those are my tips for you to help you to, uh, get more cash flowing into your business. I am so glad you're here and that you listen to the Wealth Woman Lawyer Podcast. If you enjoy it, you find it beneficial, please leave us a review on Apple. Uh, podcast. Uh, we so appreciate it. It helps to boost our ratings so that we can get other people [00:18:00] listening to the podcast and help them as well. Thanks again for being here, and I will talk to you soon.