Boosting productivity in a recession

I recently gave a presentation to a group of Essex solicitors on ways to maintain or improve profitability during a recession. The audience consisted of a number of small and medium-sized solicitor firms including some clients. There was no rocket science in the presentation and I endeavoured to keep the level of “management speak” to a minimum.

In reality solicitors are like many other business clients. There are those with a great deal of business acumen, those with some and sadly those with none. As with most professionals, just because they may be very good solicitors does not necessary mean they are good business people.

I therefore began my talk by explaining the current business situation and having lived through five recessions advised them that this one, like all the others, will come to an end. I also stressed the need to ensure their business is in a good position to benefit from the eventual upturn in the economy.

In my view it is a false economy during a recession to cut back too severely on both training and marketing. So far as training is concerned, businesses need to be in a position to ensure that their team are fully up to date and ready to take advantage when the upturn comes. They can also use the opportunity of a downturn in business to look to broaden their range of expertise and the range of services that they provide.

So far as marketing is concerned, this does not always require expenditure of money. Are they keeping in contact with their clients and servicing all of their needs? Are they looking to generate new clients, particularly targeting clients who currently feel they are not getting a service from their present advisers?

I then referred to a review of the client base. We can all categorise our clients into categories A to D. ‘A’ clients are those that everybody wants. They are communicative, appreciative, innovative, willing to accept advice, willing to pay for that advice and pay for it on a timely basis. They evangelise on behalf of the adviser. At the other extreme, D clients tell you what they are thinking about doing after they have done it, then seek your advice, they do not appreciate the service that they receive, quibble over every fee and take at least 12 months to pay. They then tell the world that their adviser does not understand them. B and C clients fit between these two extremes. It is a sad fact of life that the D clients utilise a disproportionate amount of time and effort whereas the A clients probably generate the lion’s share of the Practice fee income. Solicitors really should therefore give serious consideration to either improving the client into a C, B or A category or parting company with them.

We looked at ways to grow the business. Fundamentally there are only four ways. One is to attract more clients of the type that you want (the A client). The next is to sell a wider range of services to existing clients. The third is to raise prices (charge out rates) and the fourth is to cut costs. This fourth way of growing the business is a negative way but will produce a short-term, one-off improvement in profitability. The other three ways should produce long-term, sustainable business growth. We explored some of the ways to do this.

We then considered training and marketing in a little more depth. This included not only developing the technical skills of staff but also the softer skills and ensuring they operate as part of a fully functional team.

So far as marketing is concerned we considered image and whether they present the sort of image that clients want to use. What sort of a greeting does the client receive at Reception or on the telephone? Is their telephone answering system user-friendly or inquisitorial? We carried out an exercise, where I telephoned an automated switchboard which took one minute to deliver us to any point of human contact. We then telephoned Rickard Keen with no prior warning and on the third ring our Receptionist answered with her usual highly user-friendly response.

We then spent some time talking about budgeting and managing. I am a convert to the school of “what we can measure, we can manage”. In my experience most firms have little or nothing in the way of financial budget and management reporting.

We looked at raising fees on a timely basis and in particular using the “tart” system of billing, i.e. rendering the fee at the point of greatest satisfaction. We also looked at ways of reducing debtor levels. These areas of work in progress and debtors, which I referred to as “lock-up” because they lock-up working capital, are two areas where businesses can improve their cash flow and profitability.

Noel Kelleway
Rickard Keen
Part of the MGI association
www.mgi-uk.com