Any fan of The Office remembers the “Michael Scott Paper Company.” Michael, in his desperate attempt to remain in the paper industry after quitting as Regional Manager at Dunder Mifflin, started his own paper company with the help of Pam and Ryan. As fans know, Michael is an incredible salesman and had no issue finding new clients. What he did have problems with, however, was his cash flow. Because Ryan miscalculated the company’s growing expenses, the Michael Scott Paper Company had no way to afford increasing costs of a small business, such as additional employee overhead.
While The Office is at its heart a spoof on modern-day workplace life, some real lessons can be learned from Michael’s gaffe. It’s entirely possible for a solo practitioner to grow too quickly and run out of cash quickly. Here are some factors you can keep in mind to ensure you don’t pull a Michael Scott and lose your small law firm due to over expansion.
Track Your Income Carefully, And Track By Source
How will your firm know when it’s time to grow its caseload when you’re unable to accurately determine which marketing campaign brought in more clients? At eGenerationMarketing, we like to use cost per case (CPC) to evaluate marketing channels on a level playing field. CPC is easy to calculate—take the total spend from one campaign and divide it by the number of new clients you signed up. You should find that you’re spending no more than 20% of your expected new revenue on a single client. This means that if your PPC campaigns are yielding Social Security disability clients at a price higher than $640, you’re spending too much.
Calculate An Accurate Budget, And Stick To It
Budgeting is one of the biggest challenges for solo practitioners looking to grow because there are so many unexpected factors that increase as your firm takes on more cases. Obvious examples will be new employee salaries, but you’ll also have to factor in any benefits you’re able to offer. Another consideration that’s often left to the wayside is your time in training.
For example, it may be a fiscally wise move to hire intake staff with work experience as opposed to someone fresh out of school. While you may need to spend an additional $10,000 in yearly salary, you’ll know that the employee you’ve hired is experienced and will help you vet Social Security or personal injury cases accurately. At the same time, you’ll save thousands in your own billable hours by cutting down on training time.
Identify Low-Cost Options, And Consider What’s Free!
Your first marketing campaign probably should not be a nationwide television commercial. TV commercials are notorious for being expensive. While you’d likely get a lot of calls, consider the cost of screening the leads yourselves. Lead generation is an inexpensive way to start signing cases quickly. At eGenerationMarketing, our Social Security and personal injury clients also have the option to create customized lead packages to cut down on time vetting leads further.
Finally, one of the best ways to ensure you keep your budget in line before expanding is by utilizing all free resources available to you. For example, why pay for Photoshop when there are dozens of free, open-source photo editing software available? Your firm could pay a monthly fee for lead management software, but most lead providers offer a similar resource. We created eLuminate, our proprietary case and lead management software, with our attorneys in mind. eLuminate helps you cut down on time spent sending emails, updating leads, and managing the client-end of your law firm.
Time To Grow?
Whether you’re expanding to a bigger office, hiring a second attorney, or simply upping your legal staff, you’ll need to increase your caseload to be able to afford additional expenses. Legal lead generation is one of the fastest options when it comes to signing new clients at a low rate. We currently offer nationwide Social Security disability, personal injury, workers’ compensation, and FDCPA legal leads. Give us a call today at (617) 800-0089 to learn more about our pricing and lead availability.