With the last of the optimists throwing in the economic towel last week, we appear to be heading to zero growth at best or a double-dip recession at worst. And much like the strange relief brought by the authoritative diagnosis of an illness after a period of anxious uncertainty, we can now focus on what to do next.
Trite as it may sound, it’s important to keep a consciously positive attitude about your particular situation. If your practice is slowing down, you’ll need to stay focused on making sound choices in the months ahead.
Responding to a recession successfully requires taking action on both the expense and revenue sides of the ledger. We’ll look tomorrow at how to actually grow your practice during a recession. But here are some ways to cut your expenses without sacrificing your people or your client service.
1. Ask for better terms from your lenders and vendors. It’s truly amazing how few people make such requests. And it’s equally amazing how often you’ll get a Yes just because you asked. Your lenders and vendors don’t want to lose you as client. So be firm and ask for lower rates, better terms, and other ideas they have for helping you. This one strategy can have a major positive impact. Here are some targets:
a. Banks (for loans and lines of credit)
b. Credit card companies
c. Rent (if not reduction, ask for early renewal at a lower price)
d. Supplier prices (everything from storage fees to computer paper)
e. Web hosting and other tech fees
2. Conduct an operations audit to look for where you can cut back on infrastructure (phone lines, square footage, etc).
3. Use technology to cut down on a variety of expenses (examples range from using FreeConferenceCall.com to save time and travel expenses for group meetings to using the toner-saver mode on your printers).
4. Implement energy efficiency savings (all power companies have incentive programs for small businesses).
5. Bring in your accountant to make sure you’re taking advantage of ALL allowable deductions and that these get recorded throughout the year. Don’t settle for a cursory review of the usual deductions such as mileage. If your accountant does not bring a fine tooth comb to this process using the most up-to-date and detailed allowances, get a new accountant.
6. Hold business development meetings in the morning or later afternoon to cut down on lunch expenses.
7. Ask your staff to identify savings and offer them incentives to share in any achieved savings.
Remember: in every recession, a small percentage of businesses – including law firms – actually improve their profitability, their market share, their reputation. These firms aren’t reactionary. They don’t panic. Rather, they reduce expenses and conserve resources in creative and thoughtful ways. And they seize the opportunities that most of their competitors overlook in the midst of the doom and gloom.
