Revenue Declines Somewhat Helped by Cutting Expenses
Many business owners today certainly don’t need to open a newspaper to see what’s going on in the economy – they are experiencing it for themselves! However, there are a lot of business owners who have been able to weather the situation and keep afloat.
What sets them apart?
Is it luck? Absolutely not – in fact, those that are holding their own have one main accomplishment in common: They know how to cut expenses.
And the good news – it’s easier than you think! We’ve got some great tips for you on how you can do just that. Keep reading…
According to The Survey of Law Firm Economics, a joint project of ALM Legal Intelligence and The National Law Journal, small and midsized law firms were battered in the economy, as were many small and midsized firms in other industries. The most common ways these firms fought back was by cutting expenses:
…law firms countered last year’s sluggish revenues with a far more aggressive cost-cutting campaign. Expense per lawyer declined by 5 percent in 2009 after dropping 2 percent in 2008. A 5 percent cut may not sound like much, but it’s the largest-ever in the expense-per-lawyer figure and the first time that expenses have fallen two years in a row. More often, a decrease in expenses one year has been followed by an even larger increase in expenses the next.
Cost-cutting helped profits rise. Net income was up 2.7 percent.
Florida was included in the South Atlantic states in the study’s regional analysis, with the following findings:
SOUTH ATLANTIC
• Average gross receipts per equity partner: $982,000
• Average total expense per equity partner: $590,000
• Average firm income per equity partner: $392,000
• Median hourly billing rate, equity partners: $350
• Average total compensation, equity partners: $367,000
• Average total compensation, nonequity partners: $211,000
• Average total compensation, associates: $139,000
One of the most important – and often overlooked – ways of cutting costs is to utilize virtual support services for administrative (or other) staff. When you go this route, you can literally eliminate office space – and decrease your rent – when your assistants are “virtual.” You can also eliminate your payroll expenses, insurance and other benefits – and even what you would normally spend on office equipment for these staff members. Our sister firm, Tri-OritySM, offers a full array of back-office outsourcing solutions for law firms, medical practices, and for the the administrative offices of virtually any industry. For more information on this service, please contact the Tri-OritySM team.
If you want to work with in-office staff, consider temp-to-perm solutions, or interns. A reminder – don’t discard the value of an older intern. Many people who were laid off in the economy have chosen not to wallow in self-pity (and unemployment benefits), but have chosen to take on a new career, learning it by going back to school, and taking unpaid or low-paying internships to get in the door. They should be praised, not scoffed at, for their efforts.
Other ways to keep costs down include:
Get a cheap (but not cheap-looking) website with WordPress. With this incredible platform, you can update the content of your website yourself. Also, don’t forget to utilize the power of social media to promote your products and services. The Internet allows business of all sizes a more equal playing field in terms of generating “buzz” for the business.