The legal market is not only tough in the UK, but is the USA as well, as illustrated by this article in Fortune.
Two things stand out. One is the difficulty faced by young lawyers just out of law school (training contracts do not feature in the USA). That of course mirrors the position in the UK.
The other is the survey quoted by Steven J. Harper that found that nearly half of managing partners admitted their lateral hires only break even and do not make money for the firm. The practice also deprives junior lawyers of the chance to advance, if, indeed, they survive firm job cutbacks, as he also points out. So the idea of bringing in existing partners from other firms together with their followings may not be a successful strategy.
Interesting article in the Mail here.
Will a rise in rates cause mayhem? It depends on the business for one thing. And most of the business owners I speak to are more concerned about finding funding rather than its cost. Could an increase in rates lead to more lending? Banks potentially make more, and saving is better rewarded.
How would this impact you?
As a business coach, I am often surprised that small companies do not use variance analysis as a means of managing the firm. What is it? In effect it compares actual to projected figures in order, seeks an explanation for any differences, and considers the consequences.
Variance analysis can (and should) be applied to both income and expenditure, preferably monthly. It can be used at whatever level your figures are produced to.
Are you above or below budget? If above, is this merely business expected later in the year which has been brought forward? If so will you have a gap in income in the future? A particular product or service (or a person) may not be delivering the expected income. The reason may be seasonal, a change in the market or several others. The response may in some circumstances be additional promotion, or a sale to liquidate unwanted stock.
Similar principles apply. Differences may be explained by timing, market factors or even the weather. What are the knock on effects on your business, do you need to do something as a result, and if so what and when?
Of course, this analysis is not relevant only month by month, but cumulatively over the course of the year. This takes account of the timing differences outlined above. Thus it is worth doing a variance analysis on the basis both of the current month and for the year to date.
How would it feel to have a better handle on what is going on in your business? You challenge is to start using variance analysis from the end of this current month.
Title: Finance on a Beermat
Author: Chris West, Stephen King, Jeff Macklin, Publisher: Random House Business
Review: Taking the financial temperature of a business is one of the obvious ways of judging its health. Yet many entrepreneurs have a limited understanding of what the figures mean, nor what can be done to manage them better.
This extremely readable book is part of the “Beermat” series, and is written by an entrepreneur in partnership with two finance professionals. Thus it deals with the nitty gritty of money with technical accuracy, but in an entrepreneur’s language. It particularly explains why the various concepts are important, and the reasons why the bank or your accountant might raise them. Understanding the reasoning can help prevent questions being raised in the first place, as well as keeping the blood pressure normal if they are.
No business is static, and it is possible to plot its life cycle from birth to maturity. There are thus chapters dealing with the different stages of development of a small business.
This book will also help you manage your accountant, giving you an idea of when to listen to them, and when to probe what they are saying.
You can buy the book via our Amazon bookshop here.
Sometimes business gets to be very sensible and staid. Sometimes it pays to break out and do something a bit different, particularly in the field of marketing where the whole aim is to be noticed.
This is not to say that “anything goes” – you still represent your brand, and need to get the right message across. Turning up dressed as Elvis to an undertakers’ convention will sell the wrong message. For a coffin maker to display not only a range of traditional oak and pine, but also one in the shape of a chilli (as seen in Ghana), would attract large numbers of people to the stand.
Whatever your normal marketing channels and methods, consider making a small experiment in the full knowledge that it might fail. (Do not, of course, bet the firm). Over the next few weeks a commercial firm might invite clients and contacts to view the Lions Tests over brunch (Sky subscription). A High Street firm might hold a coffee morning for a charity, handing out free pens. A twist on something popular might work, such as a fashion and grooming event for men, or a women only session with the local car dealer. Whatever the choice, make sure you get some publicity from it.
If it works, you make more money. If it does not, at least you have tried something creating.
Whatever your views of the SRA, this is not good news. Although they say that they are being more supportive in their approach, it does suggest that more high profile closures are on the cards. This in turn means more redundancies.
How does this effect fee earners looking for a new job? Is it better the devil you know? And if you think your firm may be one of those on the list, should you look to move on before you are forced to? Time will tell.
Gazette report (and some trenchant comments) here.
Or in more common parlance: get on your bike!
Accounting ratios (see Challenges 17, 18 and 19) are brain work, so some healthy exercise in the open air is called for. Mens sana in corpore sano, and all that. (The longer Wikipedia quote sums up the life of the business owner quite well).
Why cycling? Most people know how to do it, it can be done in company or alone, and it requires limited equipment, to whit one bike. For many it removes the barrier of undressing in public at the gym or pool, or of displaying flesh while exercising. And it does not carry the same risk of wear and tear to the joints that running can. It can however damage a gentleman’s, er, equipment.
You do not have to cover vast distances, reach high speed, or ride over wild terrain. All these are possible, but equally John Major’s spinsters cycling to Evensong are cyclists too. Make cycling what suits you.
Exercise keeps weight off, reduces stress and leads to a healthy heart and lungs. So get that bike out, pump the tyres and find a traffic free place to ride.