Let’s face it…. there’s nothing very sexy about financials. It’s a topic that most business owners roll their eyes at and resist having to deal with. Admittedly, if I were in the accounting department of any company, that company would be in serious trouble. I hate numbers so much that I’d do anything to avoid them.
It wasn’t until about 15 or so years ago that something changed for me. I started looking at the P&Ls for Academy Members on some of our coaching calls. Turns out those conversations weren’t about the numbers – they were about the reason for the numbers. The entire conversation made it possible to “zero” (see what I did there? I can even have fun with numbers now) in on whether or not certain numbers worked or needed to change and what behaviors, pricing, marketing or overhead had to change in order to see the numbers move.
It. Was. Fascinating.
Over the years there were a few secrets we discovered. There are very specific, easy to figure out, metrics that can tell you what the health of your practice is at any given time.
One of about 15 metrics we look at is the Revenue Per Person On the Payroll. It’s one of the quickest ways to see if your pricing is right, if you’re over or understaffed, or if you have some systems missing that would allow the work to flow efficiently through the law firm.
It takes roughly 2.3 minutes to figure it out with these three easy steps:
- Add up all the bodies on the payroll, including yours and any other partners. (If you have a 20 hour / week person, count that as a 1/2 person.)
- Grab the TOTAL GROSS REVENUE for a 12-month period.
- Divide the revenue by the number of people on the payroll.
If your number is under about $175,000 per person, you have a couple of things to look at:
- You could be overstaffed for the work your office is generating
- If your staff is dying of being overworked and you’re under the mark, you might have some opportunities to tighten up some workflow systems.
- You might be underpriced
- Perhaps you introduced a service that doesn’t yet have traction.
There are a wide variety of ways that each one of these “reasons” can be addressed. But the one thing that is absolutely true is that nothing can be addressed until you take a quick look under the hood to see if the numbers you have are the numbers you want. The hard part is knowing what some of these numbers should be.
If you’d like a closer look at some of the other metrics, I’m conducting a webinar. Feel free to join me, there’s no charge, the webinar is coming up on October 13 at noon Pacific time. We fly through some examples like this and dig into how easy it is to pick out a couple of numbers to change almost immediately. It’s a fun conversation and it usually only lasts about 45 minutes.
Click here to register for the October 13, Noon Pacific webinar and I hope to catch you later!
Jennifer Price
Chief Operating Officer
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555
www.aaepa.com
- Give Away the Credit! - August 27, 2020
- Build Your Team of A-Players - July 30, 2020
- Creating a Purpose and Profit-Driven Practice - July 9, 2020
