Most people don’t think of law or financial advising as seasonal businesses, but every lawyer we know has a busy season and a slow season. This varies a lot depending on the type of law in question, but it always has the same result: Uneven revenue that makes you want to tear your hair out!
Other small businesses have this problem too. In busy times you’re flush with cash, and in slow times you have to tighten your belt. But what if I told you that you don’t have to live that way?
You can even out the peaks and valleys of your cash flow with these six steps. They’ve worked for Spotlight Branding and dozens of firms we market for.
1. Clean up your accounts receivable (ARs)
If your clients aren’t paying you the money you’re owed, of course you’ll have revenue struggles! You can invoice tens of thousands of dollars a month, but it won’t do your business any good if you aren’t collecting it.
To get your ARs in order, create a follow-up system that keeps your clients’ bills top of mind for them and consider bringing in an outside vendor to help enforce deadlines. If you regularly have clients who avoid paying for months, you can even build out a system that will send them to collections and get you the cash you need.
2. Plan ahead
You know when your slow season is—so plan for it! Make a full-year financial plan rather than budgeting by quarter, then stretch your savings to where it’s needed. If you’re a family law attorney, put money aside during the bumper months of January and February to cover costs during November and December. Pay bills early if you can, and if you can’t, divvy up your extra revenue by month.
3. Negotiate with your vendors
The rates you pay your vendors are not set in stone, and sometimes all it takes to negotiate a better deal is a phone call. For example, you can try reaching out to your credit card merchant and negotiating a lower processing fee. That small change can save you thousands of dollars over the course of the year! You could also do the same with your cybersecurity company or even negotiate service swaps with other vendors.
4. Hack your cash flow
Many vendors like accountants or software providers will give you a discount if you pay annually instead of monthly. You can pay that lump sum every year and apply it to your balance sheet, and then set aside the monthly amount on your profit and loss report every month. This will keep you organized and ensure you don’t overspend because you think you saved money when really, you just paid in advance (or you’re recouping an advance payment).
5. Create new revenue streams
If your lean months are still lean after those first four steps, get creative to fill the gaps! Maybe you can offer a one-off service, like a low-cost estate plan review or a business audit, to generate fresh revenue. During your slow months, double down on improving and marketing this extra offering.
6. Don’t stop marketing!
All too often, we see firms take “marketing breaks” during their busy months. On the surface this seems logical: Business is booming, so why look for more clients? But it’s actually one of the worst mistakes you can make! If you don’t market while you’re busy, you won’t have any new cases coming in when you finish your current docket. This will make your lean times even leaner. To even out your cash flow, you need a consistent, ongoing marketing strategy that will fill your case pipeline year-round. When you’re ready to create one, just book a call with us.
If you follow these six steps starting right now, 2022 and 2023 will be your most consistent cash flow years yet!
Spotlight Branding
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