Fighting the (financial) flab – costs that creep up (almost) unnoticed

on 1 April, 2013 Email this Email this - Print this Print this

 When you’re running a business the costs can creep up when we’re not looking… (a little bit like putting on weight)… the next thing we know, we’re tied into contracts and weighed down by large overheads and we wonder how we got there?!

Lisa Newton (CoreLegal founder member and founder of Boogles Ltd, the London-based specialist bookkeeping service for solicitors and barristers) offers her latest perspective on what can be the difference between profit and loss for  law firms.

 

The start of a new financial year is always a good time to review all contracts and terms and conditions. Are you on the right tariff? (phone, utilities) Are you subscribed to products / services which you don’t actually use? (magazines, info sites).

The key thing to remember is that it’s the pennies, which make the pounds. And often, we overlook the small costs, but when combined, they add up to BIG costs. It’s not about being dramatic and making people redundant, or counting the paperclips, but just periodically reviewing every single cost and asking yourself – do we really need it?

  • Is it necessary? What value is it adding? Are we on the right purchasing level?
  • And if we need it, can we negotiate a better deal? Is there an alternative?

 

FINDING VALUE

Sometimes, you might not get a CHEAPER deal, but you might get more value. There was one client who had a telephone answering service for £50 per month, they got 30 calls answered, but when they swapped to an alternative service provider, they got 50 calls answered for the £50. And because their average number of calls per month was around the 40 mark, they saved money by the fact that the £50 covered them for their needs. And instead of trying to keep to a 30 calls limit, they had the flexibility for knowing that they were more or less covered, and they could budget on £50 as being more or less fixed.

Some businesses miss the lesson. They’re busy being busy. They just want to sell more. They don’t care about doing a review. But if they just stopped, and analysed the situation for a few hours, just even once a year – they’d probably identify a few cost savings that would make spending the time to take a look at this kind of thing more than worthwhile.

 

Look for things that add cost and not value.

Likewise, as a solicitor, your time is your most precious asset. Are they some false economies happening in your business? Are you trying to do everything yourself e.g. answer the phones or divert to your mobile, when if you spent a few pounds, you’d actually be more productive, save yourself from worry and free up your time to do something better for your business ?

It’s a fine balance, but these are the types of things you that should review periodically. Think for a minute – what tasks take you ages? What do you dread doing and always put off? (Just the brain energy and time spent THINKING about doing a task, let alone motivating yourself to actually get the task DONE can waste a lot of time).

What could you outsource? For example are you using your Saturday afternoons to catch up with your paperwork? Why not let a bookkeeper take care of it, and give yourself a break?

 

Who could you have on your team who can help you look out for your best interests?

  • Do you want to spend hours scouring the market for the best deal on ‘insurance’? Are you confident you’re getting good value for money? Could you get a quote (costs you nothing) and let that broker take the legwork from you?
  • The thing with running a small business, is that it all hinges on you. And whilst you can operate on all four cylinders for a while, after some time, the pressure will start to take its toll. Self employed people have to juggle many things, and think about lots of different aspects of the business that after a time, one can become fatigued.

 

So back to the weight loss analogy…

it’s not about being anorexic to shed the weight – this would be unhealthy. As would going to the gym for 3 hours a day and becoming a fitness freak… a business, which is fighting the flab, has the same issues. So starving it of resources and cutting off everything will cause difficulties. And going over the top with everything is taking it to the other extreme, so a levelled approach is best.

And again, just like in fitness, coaching plays an important role. If you needed a coach or help with just putting it all together and finding that balance in your business, then via CoreLegal we have partners who specialise in exactly this.

The important thing is that you just aim to keep your business lean and trim at all times. Don’t let the excess unnecessary costs pile on. And just keep monitoring the expenses column because these items tend to creep on when we’re not paying attention. So make sure you pay attention to the costs, or get someone on your team who will do this for you.

 

Find out more about Boogles’ specialist bookkeeping services for solicitors at http://www.booglesltd.com/ or call 020 3371 8894

 


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Topics: bookkeeping · Law firm management · outsourcing · Professional opinion · reducing overheads · smaller law firms
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