Week 2: Finishing Strong and Building Momentum
Introduction: Taking action to build momentum
By Micky Deming, Kahuna Accounting
You’re here to create a simple plan for your business. This is one of the most important steps you can take in business or in life – to set aside time to create a definite point of where you are now and where you want to be.
The act of defining a goal and a plan on paper in itself is one of the most powerful things you can do.
But in the end, a plan won’t bring success.
The true final determination of your success comes down to one thing above all else.
Our goal in helping you define a plan is to ensure the action you take has purpose behind it. But the most important piece is to always be taking action – always moving your business forward.
In week 1, we took the important steps of defining the big picture in your law firm. In case you missed it, or still have some catching up to do – you can check it out here.
This week we are moving forward and looking at how we can finish this current year strong and build some momentum heading into 2015.
As a business owner, you constantly have to balance between seeing the big picture and coming down to the practical day-to-day work – between the macro and micro. Between the strategic and tactical.
Today, our aim is on the present, but has an eye toward the future.
In the book SmartCuts (highly recommended), Shane Snow points out that the greatest predictor of success in business is momentum.
Like Newton’s Laws of Motion tell us – an object in motion stays in motion…The more small wins we can get, the more we can parlay those wins into bigger and better wins. The more we take action to move things forward, the better chance we’ll have to build on our success.
This week, keep your big picture from last week in mind as we dive deep and look at ways to create momentum in the final months of the year. Then in the final two weeks, we’ll take a more in-depth look at creating a plan for next year.
“Planning without action is futile, action without planning is fatal.”
A Fresh Look at Year End: It is Full of Opportunities to Make Money and Start the New Year Off on the Right Foot
By Peggy Gruenke, owner of Legal Biz Success
Find her on Twitter @PeggyGruenke
It’s the mid-November – yikes. Two thoughts may come out of your mouth: Where did the year go and I need to get more money in the door to pay for these upcoming holidays? The other thought that may cross your mind is the hectic schedule, holiday parties and short workweeks coming up.
The holiday season can be extra hectic for lawyers as they try to scramble to get checks in from clients before year-end. Most law firms operate on a calendar year and are run on a cash basis, meaning work isn’t counted as revenue until clients pay their bills. If you are a solo, you know all too well that your compensation is directly tied to how much you collect on invoices.
The other thing that happens during these last few months of the year is the number of new cases slows down for many practice areas – divorce, bankruptcy, estate planning, real estate – as people begin to prepare for the holidays and put personnel and business matters on hold.
Sounds like a kind of gloomy picture for a solo attorney trying to make ends meet in the business and make money. But if you approach this time of year with the right mindset and accept the fact that business will be slow, you will see two opportunities to finish the year strong and set the stage for a more profitable 2015.
Opportunities in front of you
First, all these upcoming holiday parties are prime time to make fresh connections to start the New Year off on the right foot. You never know where your next client will come from. During the upcoming holiday season, you may not enjoy going to that holiday party in the neighborhood or the family get together. You may even dread it. But in actuality, this is perfect time to get ahead. While November and December may be a slow time of year for your business, they are a great time of the year to do some business development.
With all the holiday parties, events, and family visits, the holiday season provides some of the best networking opportunities of the entire year. So make sure you have a stack of business cards on hand. Make sure that whoever you meet knows what you do. You never know where your next client will come from.
Second, now is the time to look at your past due accounts and see what money is being left on the table. The result is a kind of collections sprint as the year closes. I am sure this is not a new problem.
You may remember dealing with this last year or you may have erased all those memories along with goal of doing a better job on your billing and collections. It’s a repeatable cycle and as a result, a large percent of revenue is collected in the last three months of the year. Obviously, better collection procedures need to be put in place during the year to avoid this year-end ritual.
We will be establishing a yearlong collection procedure in part 3 of your new “game plan for a more profitable 2015.” In this article, we will focus on some tips to create a plan to get money in before this year-end.
Your accounts receivable
The tool you have to assist you is your aged accounts receivable report that, after looking it, might generate one of the following interesting emotions/reactions from you:
- Crap, I don’t have this kind of report!
- Panic, when you see you have little money in the bank and very little past due amounts to collect
- More frustration because you never got around to setting up credit cards for client payments – eliminate this right now. Here is a link to get this done today
- Disappointment that you let the past due accounts get to his point
- Relief, that you have money to collect!
o Add to your Christmas list “Buy practice management software”
o Be happy the clients you have paid you. Next year, get more clients
Putting these emotions aside, here are a few things you can start on this week to boost your year-end revenue number:
1. Pick the fruit that is already in your hands:
Current clients with invoices 30 – 60 days past due. Your current clients that have unpaid invoices are going to have your highest return on investment for the time and energy you spend in these last weeks of the year.
First, since they have active cases, you will be having conversations with them anyway. Be sure to ask them about the recent invoice you sent. Did they see any problems with invoice regarding time entries, expenses or did they have sticker shock? Don’t be afraid to ask these questions. Avoiding it will lead to writing it off or heavily discounting these invoices 60 – 90 days from now.
Second, since they are receiving value from your services so their desire to pay is higher. If you are not sure if they are happy with your services, ask them. They will appreciate your concern and you can proactively avoid non-payment or even a possible negative online review! Kill two issues with one question. If they say they are happy and the next day you send an invoice, they should feel pretty bad about ignoring it since you just had this conversation.
Third, bill these clients every 2 weeks until the end of the year. This will let you use money sitting in the client’s trust account. It will also keep the bills smaller and the checks easier to write.
Implementing these three tips should not only get you more money faster, it will also start you down the road of better habits for 2015
2. Identify the low hanging fruit
This would be accounts that are 60 – 90 days past due. These accounts are still ripe for paying but they need attention. Identify clients that were making payments but the payments stopped coming. You can setup a collection procedure to try to get this money collected. The goal of such a plan is to touch base four to six times over the next six to eight weeks.
Start with getting these clients into a spreadsheet like this one (I pretty much think most things can be solved once reduced to a spreadsheet.) Keep this spreadsheet up-to-date as calls, emails and conversations take place so you always have current information and can easily delegate any portion of this task.
Now the hard part. Pick up the phone and start with a simple phone call. You may find that your client has not been receiving their past due notices. My experience is that, for the most part, clients want to pay their bills for the work you have done. If you were inconsistent sending bills and past due notices. It will be revealed on this first phone call. Once you have them on the phone, offer to setup a payment plan to get the debt paid off over some specific number of weeks. Offer a discount to get the account paid in full and make sure you allow them to pay with a credit card, now, while you are on the phone with them.
Next steps after this first phone call, can include the following process:
- If the payment plan option was selected, confirm this plan in writing with a letter or email detailing the amount of each payment and date due. If mailing a letter, consider sending self-addressed/stamped envelopes with a payment sheet.
- Make it easy for them to adhere to the payment plan. You can even get in writing, pre-authorization to charge their credit/debit card a set and agreed upon amount. Be sure to send the client an updated statement reflecting every payment applied and amount remaining due with a hand written note of thanks.
- You don’t get a response from the first phone call, start in on the spreadsheet plan to send emails/letters and make phone calls weekly until you have either received payments or arranged a payment plan.
This may seem like an overwhelming task, but just keep in mind how much money is at stake. Need a little incentive? On a big sheet of paper write down your total amount past due and invoices and put a picture of your family next to this number. Then tape that piece of paper somewhere where you will see it every day. As payments come in, reflect it on your piece of paper to visually keep an eye on your progress (or lack of progress.)
3. Stop wasting time and energy on the unreachable fruit.
Get off the ladder and don’t waste any more time trying to reach it. Write it off, kiss this money (that you’ll never get) good-bye and use it as an opportunity to learn for the future.
Don’t just sweep it under the rug. There is good data here to use in creating better habits and procedures for next year. Set these accounts aside for now but over the holidays spend time looking at what went wrong, asking yourself these questions:
• Did you ask for and get a retainer?
• Did you get enough of a retainer?
• Did you bill regularly?
• Did you send statements of account to clients with open balances?
• Did you acknowledge the fact the client wasn’t paying and address this issue head on or did you choose to ignore it?
• Did you have a process in place to collect on past due accounts?
If this whole process is something you just have no patience for or time to do, don’t throw up your hands or throw in the towel. Consider using your secretary to assist you or even outsource this task to a virtual assistant or local bookkeeper. If it’s painful, maybe that’s a good thing and it will force you to put better collection procedures and habits in place for 2105.
Use this spreadsheet to get some momentum going and find some additional income to finish the year strong.
Tomorrow, Wednesday, November 12, we’ll be hosting a webinar with some “Back to Basics” strategies for your law firm, along with tying together some of what we have learned so far.