How Do You Make Tough Financial Decisions?
Facing tough financial decisions is a critical part of steering a firm to success, so we reached out to managing attorneys and owners for their firsthand experiences. From shifting to a flat-fee billing model to pivoting to a digital marketing strategy, explore the seven pivotal choices these legal and consulting professionals made and the rationale behind them.
- Shifted to Flat-Fee Billing Model
- Chose Software Over Team Expansion
- Invested in Marketing Events
- Prioritized Legal Tech Investment
- Upgraded Email Security Software
- Implemented AI-Driven Forecast Models
- Pivoted to Digital Marketing Strategy
Shifted to Flat-Fee Billing Model
Running Hernandez Family Law & Mediation has required making several financial decisions aimed at maintaining quality and client satisfaction without compromising our firm's stability. One significant decision involved shifting to a flat-fee billing model. Traditional hourly billing often leads to unpredictable costs and client dissatisfaction. By offering flat-fee services, clients knew their costs upfront, reducing stress and allowing for better financial planning.
For example, a client facing a complex divorce with multiple disputed issues appreciated knowing the exact cost from the beginning. This approach led to a higher client satisfaction rate. It also streamlined our internal billing processes, saving administrative time and reducing overhead.
Another tough decision was to absorb routine out-of-pocket expenses such as postage and long-distance calls. While this initially seemed like a financial burden, it actually increased client trust and streamlined our invoicing process. Clients liked knowing that there wouldn’t be any unexpected charges, and this transparency significantly boosted our referral rates.
These decisions reinforced the importance of balancing financial prudence with client satisfaction. By rethinking traditional billing practices and prioritizing transparent, client-friendly policies, we fostered trust and maintained long-term relationships, ultimately benefiting both our firm and our clients.
Chose Software Over Team Expansion
In my career specializing in workers' compensation law, a particularly tough financial decision arose early on when I had to choose between expanding our legal team or investing in advanced case-management software. Despite the significant upfront cost, I opted for the software. The technology streamlined our case handling, reduced administrative overhead, and significantly improved our case resolution times. This investment enhanced our firm's efficiency and bolstered client satisfaction as we were able to handle cases more swiftly and effectively.
Another pivotal decision came during a phase of rapid client intake. We faced the dilemma of maintaining quality with a stretched team or onboarding new staff quickly. Instead of opting for rapid hiring, I focused on intensive training for the existing team and leveraged expert consultants for specific complex cases. This hybrid approach ensured that our service quality remained high. Client outcomes improved, and we saw an increase in favorable settlements and a noticeable boost in client referrals due to our robust expertise and attention to detail.
Invested in Marketing Events
As a small-business owner, most financial decisions are tough ones! It's a tightrope balance between wanting to hold onto cash and knowing that spending (wisely) can increase leverage and scalability. Recently, we decided to really double down on attending marketing events. That was a bit of a scary spend amount, but we know these events are where our clients are, and they want to see and hear us in person as thought leaders. To make this decision, we used data on typical returns from previous events and the sound advice of my business coach. On the flip side, we held off from hiring a beloved contractor because the data just didn't yet support another full-time employee (FTE). In both cases, the theme is: use data and don't get stuck in fear.
Prioritized Legal Tech Investment
One tough financial decision I faced was during my time at Moton Legal Group and revolved around protecting our intellectual property. Many startups and small businesses often overlook IP protection due to cost concerns. For one of our clients, a tech startup, we emphasized the importance of securing their IP early. Though it required a substantial investment in trademarks and patents, this move paid off when we prevented a competitor from infringing on their technology, saving the client an estimated $500,000 in potential legal battles and lost revenue.
Upgraded Email Security Software
A year ago, SH Consulting faced a significant decision regarding whether to invest in new email security software or stick with our current, reliable system. After much deliberation, we chose to make the investment despite the higher cost. Although it wasn't obvious at the time that this decision would bring the company financial benefits, it was clear that the level of email security protection for our customers would be at its best.
We were anticipating new regulatory standards applied by Google and Yahoo, which resulted in a significant increase in scams in the industry. That was a game-changing decision since the software brought our company to a completely new level in protecting our clients, resulting in more rapid company growth.
Implemented AI-Driven Forecast Models
In one of my roles as a fractional CFO, I encountered a particularly tough financial decision with a small-business client facing severe cash-flow issues. The firm was on the brink of shutting down due to misaligned cash receipts and operational expenses. I proposed implementing dynamic forecast models and scenario planning using AI to stabilize cash flow. This approach required a significant upfront investment in software. However, it helped us predict cash-flow needs more accurately, resulting in a noticeable improvement in cash management and ensuring the firm's longevity.
Another critical financial decision arose when Profit Leap was in its growth phase. We had to choose between increasing our staffing levels or investing in an AI-driven automation tool I had designed, Huxley AI. Despite the initial costs, we opted for the automation tool. This decision reduced our operational expenses considerably and increased client retention due to enhanced service accuracy and efficiency.
Pivoted to Digital Marketing Strategy
In my tenure as president of Greiner Buick GMC, a significant financial decision arose during the COVID-19 pandemic. Sales figures were plummeting, and we had to decide whether to cut marketing expenses or find a way to pivot our strategy. We chose to invest in digital marketing, despite its upfront costs, by creating virtual car tours and online sales events. This decision paid off as our online engagement increased, and sales began to stabilize much faster than anticipated.
Another critical moment was during the sale of Greiner Buick GMC to Mike Caposio Buick GMC, LLC. The decision to sell, encompassing not just financial considerations but also employee welfare and long-term business continuity, was tough. By performing a thorough financial analysis and due diligence, we ensured that the sale met our financial goals while guaranteeing employment continuity for our staff. This careful strategy preserved the legacy of the business and provided financial stability for all stakeholders.
A different kind of challenging decision materialized while serving on the board of local organizations like the Victor Valley Chamber of Commerce. Allocating limited resources during economic downturns involved tough choices. For instance, we had to decide whether to cut funding for certain community programs or seek alternative revenue streams. Opting for the latter, we secured additional grants and sponsorships, ensuring that community initiatives continued uninterrupted. These experiences taught me the importance of strategic resource allocation and leveraging community partnerships to overcome financial hurdles.
