Are all your matters profitable? We often work with firms that want to grow their top-line revenue by launching a subscription services product or a new practice area, but they haven’t done the hard math: what are they doing right now that’s profitable and what isn’t? Just like it’s easier to get more business from an existing client than it is to find a new one, it’s easier to get more revenue from an existing line of business than launch a new one.

This week’s tip is to do a product & service audit.

Welcome to Gimbal’s Tip of the Week, where you get practical, actionable advice you can use right away to start building a more productive and profitable legal practice.

Following the airplane analogy in our How To Grow A Business series, your products and services are the wings of your airplane. You want to build wings that are large, light and strong, because they demand less from your right and left engines (marketing and sales respectfully) and can lift a heavy body off the ground to fly far and fast. 

Obviously, you want to do more profitable work, but you also need to be willing to cut out the dead wood. You need to be willing to stop offering unprofitable services. This may be tough, especially if you’re running a small firm and feel like you need to be “full-service.” Most of the time, you don’t. The riches, as they say, are in the niches.

If your audit identifies unprofitable services that you cannot eliminate, then you need to find ways to increase their profitability. Are there ways to optimize the process? Can you delegate aspects to a lower-cost internal resource, or outsource some or all of the work? Can you automate any of it? 

Your action item this week: Set aside time this month to do a full audit of your products and services. This is especially useful if your firm's been established for a while and offers a variety of products and services.

Start by listing your practice areas and matter types, and any other products or packages you offer.

For each one, ask yourself:

•  How much demand is there?
•  How profitable is each one?
•  If it’s profitable, how wil I attract more files like it?
•  If it’s unprofitable, can I make it more efficient (to increase profit) or should I jettison it?

Use this Profit Profitability Audit Worksheet by Business Made Simple as a guide for your audit.

Armed with your completed audit, you’ll be able to make more informed decisions, not only about how you allocate your professional time as a lawyer but also how to allocate your marketing and business development resources.

Legal professionals who conduct regular audits of their products and services can focus their on their most profitable lines of business, earn greater profits, and consistently attract their ideal clients. 

Join us next week for more as we continue our How to Grow a Business series and offer more tips on building a profitable and productive law practice.