Author Topic: Running a Small Business -- Balancing Mustachianism vs. Pursuing Growth  (Read 459 times)

ReadySetMillionaire

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I recently opened my own solo law practice.  After a lot of reading a lot of advice (both in books and on this forum), I learned the dumbest thing to do was to have high overhead early on--high rent, buy a bunch of new furniture, buy the greatest technology ever, sign up for useless subscriptions, etc.  So my business is incredibly lean and already profitable at this point:

Rent: $400/month (includes office space, receptionist, two conference rooms, copier/scanner/fax)
Malpractice Insurance: $97/month
Website: $18/month
Google Suites: $5/month
Marketing (Meeting for Coffee/Drinks): $50/month
CLE/Dues: $100/month (average)

And that's it.

But, that lean budget means I'm doing everything else on my own: building my own website, designing my own business cards, tracking my own invoices, doing most of my own accounting (expense tracking), making my own copies/letters, etc.

All this costs time.  Right now, I have the time to do all this because I just started my practice and don't have too many clients, but eventually this may need to be outsourced.

So my question is this: how do you properly apply mustachianism to a small business?  I can obtain subscriptions that will outsource most of these non-legal tasks, and while that would increase fixed expenses, it would hopefully be worth it given increased productivity.

So how do you make that calculation? When is the right time and place to start outsourcing?

Calvawt

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You can use things like Fiver and the gig economy to help with some of those easy tasks (website, designs, etc).  Virtual assistants could help manage an email account or do invoice tracking.  I think online bookkeepers are an option, too.  Most of those are incremental and without contracts, letting you adjust easily.

skeptic

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It's great to hear that you have started lean, and it's great to hear you are seriously weighing the pros and cons of increased outsourcing.

The most important activity for your business right now is finding and closing with paying customers, and the second is providing great service to existing customers. Marketing/sales will probably provide a huge ROI (per hour invested) over the long-term, but in the short term they may get you nothing, whereas the time you spend making copies and keeping the books has a definite, but small, short-term savings: it keep the cash in your account.

As a general practice, for a service business, I think it is a good idea to fund increased expenses out of profits. That is, don't increase expenses until you have the revenue to support it. My guess is that even after you take care of minutiae, there will still be huge percentages of the day and week to give to your key activities (finding clients and serving clients). Once you have so much business that you are finding it difficult to do those other things and/or you clearly have the cashflow to fund them, then it's a good time.

That said, if you are working in an area of the law where it is completely reasonable that you could find enough work to fill up your day billing high rates, then it will probably maximize your profit if you do more outsourcing early on and spend your time on the key activities. This only works if you have the cash and the stomach to run in the red for a while as you discover your business model. But it's usually safer to fund increased expenses through cashflow.

Here's a couple other random thoughts as well:

-I find some startup business owners spend time on many of the ancillary parts of the business because they feel safer and easier than what truly needs to be done: get out there and drum up business. I'm not accusing you of this in any way, but just be on the lookout in case you ever find this resembling your pattern. "I don't want to call potential clients until my web site is updated" or "I don't want to recruit a network of referral partners until I've finished writing my business plan" can be signs of avoiding the key thing.

-do you know your customers? Do you know where they are, what they value, and who influences them? If not, you can try to fill in some of these answers while you are prospecting.

-do you have a niche?

A solo law practice with a clear niche in a location with lots of potential clients sounds like an awesome business to me. Congrats on taking the step, and have fun on this adventure!

robartsd

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But, that lean budget means I'm doing everything else on my own: building my own website, designing my own business cards, tracking my own invoices, doing most of my own accounting (expense tracking), making my own copies/letters, etc.
Building the website and designing business cards can essentially be thought of as a one time startup cost (time or money). I'm guessing you're probably done with these now, but if not - just outsource to the gig economy and be done with them (you can choose to revisit them when business is humming).

The other items are ongoing operating expenses. You should carefully weigh the cost of your time to do them vs. the cost of your money to outsource them.

Marketing (Meeting for Coffee/Drinks): $50/month
Don't be afraid to increase this if you need to in order to build up your practice.