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Cash Flow Management

Hi Friends,


As a solo practitioner who has been in full time practice for just under
three months, I am starting to run into some cash flow issues (both with the
business and for my family's income). So I was wondering if anyone has any
systems to manage cash flow, or if you set a regular payment amount (per
week, two-weeks, month, etc.) and do what you can to ensure you hit that.


Perhaps more importantly, though, what happens when you can't keep up with
your income--either for your business or personally? What's the first thing
to go?


I kind of feel like I'm operating payment to payment right now, and would
like to get out of that rut and see if I can find a more regular and
comfortable pattern of income and payment...or at least keeping a balance of
either a certain dollar amount or percentage of income.


Any thoughts that anyone has would be really helpful.


Thanks. I hope you are well.

Graham

Comments

  • It depends on what kind of projects your tackling Graham.  What's your niche?

    In my small business practice (helping creative people with start-ups,  contracts, IP, etc.) I found it very helpful to eliminate hourly  
    billing and move everyone to either a per-project fee, or better yet,  a year-long flat monthly fee structure.  This allowed me to actually  
    project income for months in advance and actually PLAN.  In my mind,  it's the difference between running a "practice" and running a  
    "business."
  • samgloversamglover Minneapolis, MN Admin
    Woo, that's a big question.


    I have always operated on a regular payment schedule with irregular
    payments. Currently, I pay myself monthly, but I like to be at least one
    month ahead, so I leave that much money in my account. Anything after paying
    my bills and keeping that minimum in my account goes into my pocket.
    Sometimes that is a lot, sometimes that is nothing.


    Soon I will be switching to a salary. I think paying yourself a salary gives
    you something to aim for every day, so you can look at your month-to-date
    income and know that you need to come up with a way to make X dollars before
    the end of the month. Motivation helps drives results.


    Also, be impatient to get out of that rut, but recognize that it takes time
    for your marketing to snowball and drive a steady stream of clients to your
    door.
  • AaronStreetAaronStreet Minneapolis, MN Admin
    Sam,


    We need to get you a copy of Dan Pink's book Drive"<http://lawyerist.com/dan-pink-.....interview/>if you think

    that financial incentives will correctly motivate you to do the creative/innovative things necessary to find and sustain new clients.


    -Aaron
  • That's good to be reminded of, Aaron. Thanks.


    I am still interested in what anyone in the LAB has set up in terms of systems (formal or informal). I kind of feel like I'm just shooting blindly
    and don't have an overall plan for my cash flow, which seems less than
    sustainable (or smart).


    Thanks.


    Graham M. Martin

    Attorney
  • Graham & other Lab members --


    I second that, as I'm just jumping into this boat. I'm currently working on putting together what I hope will be a somewhat cohesive business plan. In
    SC, we are required to have another attorney mentor us during our first year
    of practice and I'm lucky enough to have another solo practitioner agree to
    be mine. She calls herself a "not-by-choice solo", as when she entered the
    market a few years ago, she came from out of state and local firms were not
    jumping at the chance to hire "an outsider". (Charleston, SC is known for

    hospitality, but this doesn't always extend to the job market.)


    She has even agreed to arrange an office-sharing plan with me that includes
    the occasional client referral. We are actively seeking the ideal space, but
    as this is only an office-sharing plan, I'm on my own for my business
    expenses (minus the lease, which she will cover initially until I have some
    steady cash-flow).


    Having just graduated with what feels like a million and a half dollars
    worth of education debt, I'm not interested in overextending myself anymore
    than absolutely necessary, so any tips at all from the Lab would be much
    appreciated.


     

    ***************************************

    Jenny R. Moser

    Attorney at Law
  • samgloversamglover Minneapolis, MN Admin
    You have to set a budget. I recommend deciding what you *need *to pay
    yourself each month, and pay yourself no more than that. Give yourself a
    bonus once a quarter, or once a year, when you have extra in your account.
    This is the only way to get ahead, at least while you are starting out.
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