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This spring, Karli was able to take her family on the vacation of a lifetime — all thanks to cookies! Find out how on pg. 3
INSIDE THIS ISSUE 1 When Persistence Meets Purpose 2 How Ron Chose Growth Over Survival Calendar of Events From Debt to Dreams: A $2M Milestone 3 What Are You Doing for Your Team? 4 The Assessment Every Law Firm Owner Should Complete
I’m Evelyn Aucoin, the financial strategy and literacy expert at How to Manage a Small Law Firm. I specialize in helping our advisors become financial experts as they help law firm owners. When I started at How to Manage, I realized we had incredible data from law firms, including financial information, metrics, and financial statements. I looked at 50 consistently profitable firms and 50 that weren’t across all billing models and practice areas, looking for fundamental things they were doing differently. RESOURCE OF THE MONTH FIX THE 3 PROFIT LEAKS COSTING YOU MONTHLY
That search revealed key areas where there was “daylight” between the metrics. About 95% of the time, the profitability issues were tied to one of three key metrics. That’s how the three profit leaks concept was born. So, I created a free resource that introduces how to think about these metrics, helps you examine your performance, and defines the healthy ranges we see in consistently profitable firms. It’s like a blood test; it doesn’t tell you everything, but illuminates where to start if there’s an issue. I took this type of assessment into a law firm doing over $2 million and, within six months, got them their highest revenue month and highest profitable month ever. We bumped their profitability up by an additional $400,000 in a year. I did the same thing in a law firm doing $20,000 a month. The beauty of these leaks is that the methodology has proven itself, fixing profitability issues in hundreds of law firms. If your net operating profit is less than 10%, you are doing a disservice to yourself by not investing the time to figure out what
is happening. Anything less than 10% is operating at a subpar performance level. Your target should be an operating profit of 20%– 25% and a total owner benefit of 25%–30%. If you look at your revenue number and multiply it by 25%, and that’s not what you’re earning as the owner, invest the time to figure out where your opportunity is because it’s costing you time and money. You’re potentially wasting dollars that could be reinvested in your firm or invested in your future. The faster you invest the time and energy to do this assessment, the sooner you will understand where to focus to improve things. The profit leak assessment is the first step in addressing the issue and taking the ownership you need as a business owner to
make things right. Scan the QR code to download it. –Evelyn Aucoin
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