Look around your house after work today. I’m sure you’ll be able to spot at least one thing you regret spending money on. If not, then hats off to you. As for the rest of us, it’s easy to convince ourselves that we absolutely must have (insert random thing you regret buying), only to realize that we didn’t need it after all.

Just as these unnecessary expenses take a toll on your personal budget, so too can they impact your firm’s budget. One way to boost profitability is to keep overhead low by ensuring your expenses are more “investment” than “spend.”

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.

For the last few weeks, we’ve been using the analogy of your business operating like an airplane. Well, your overhead is the body of the airplane, and it should be as light and lean as possible.

This week’s tip is to do a regular review of your expenses. You may not be able to do much to lower fixed costs like payroll, but you CAN take a hard look at your other expenses.

Does an individual expense help you retain employees?

Does it help you deliver your legal services, or improve your marketing or sales?

If yes, it’s an investment in your business. If not, it’s just a spend. Your job as the business owner is to minimize expenses that are purely spend.

If you aren’t already doing a regular review of expenses, it can be hard to know where to start, We recommend you pick a category of expenses and look at everything that falls into that category.

Your action item this week: Start by reviewing your technology expenses.

Most firms we work with have a lot of excess spending on tech. Technology changes quickly, which means you may be paying for new technology without retiring something you no longer need. Even worse, you may buy a system without realizing you’ve already got an existing system that offers you the same functionality. Most of us rarely use all the functions in our existing software!

Ensure that you’re not carrying extra licenses, subscriptions to systems you're no longer using, and paid content no one is reading.

Key Questions to Ask:

Am I using it?

Do I need it?

Could I live without it?

Are there other ways to get the same function or information for free?

Legal professionals who make overhead audits a regular part of their practice management process waste less money and optimize their resources. They develop a culture of discipline that increases profitability, because they filter every expense through the optic: is this an investment in my business?

After tackling your tech stack, download this Overhead Audit checklist by Business Made Simple to continue the process or for your next audit. 

Join us next week for the final post in this series and for more on building a profitable and productive law practice.