Today I talk about one of my favorite topics, Your Budget is NOT your Bible. Now, I know the title alone may be triggering for some people. So, I’m going to explain to you what I mean by this topic. I’m also going to give a shout out to all of our financial people out there in the world that keep us financially stable through budgeting and sound financial decision-making – no matter whether we are investing it or whether we are saving it.
Oftentimes, not universally, financial people tend to be somewhat of an anomaly in terms of the financial evolution and growth of a law firm. And that’s not because financial people don’t know how to manage money, but because they often think inside the box.
Tune in to see how I can shift your perspective!
In this episode we discuss:
- Having a healthy respect for your numbers while your firm is growing.
- 3 – key critical thoughts to create freedom, success and a highly scalable law firm.
- How good decision making based on a financial plan will help you create a successful business.
- Better planning by knowing the very basics of where your money is spent.
- The differentiation between investment and expense, and different types of ROI.
- Identifying shiny object syndrome while at the same time being open to opportunities.
- Creating a life that you will enjoy by conscientiously investing in yourself.
- Cultivating faith in yourself is key.
Allison Williams: [00:00:12] Hi, everybody, it’s Allison Williams here, your Law Firm Mentor. Law Firm Mentor is a business coaching service for solo and small law firm attorneys, we help you grow your revenues, crush chaos in business, and make more money.
Allison Williams: [00:00:24] Hi everybody is Allison Williams here, your Law Firm Mentor. And on this week’s episode of The Crushing Chaos with Law Firm Mentor podcast, we’re going to talk about one of my favorite topics, Your Budget is NOT your Bible. Now, I love this topic and I know before we even dive in that a whole lot of people are probably going to listen because they’re triggered by the title alone. So I’m going to explain to you what I mean by this topic, your budget is not your Bible and I’m going to give a shout out to all of our financial people out there in the world that help us to create highly effective budgets, that keep us financially stable, that help us to manage our money properly, and to help us to make wise financial decisions about how to grow our money, no matter whether we are investing it or whether we are saving it, how we are ultimately managing it. People that help us to get a rein on our money are absolutely to be loved and appreciated. But oftentimes, not universally, but oftentimes financial people tend to be somewhat of an, you know, an anomaly in terms of the financial evolution and growth of a law firm. And that’s not because financial people don’t know how to manage money, it’s because they often think inside the box. Right?
Allison Williams: [00:01:41] So a financial person looks at what the numbers are saying and the numbers tell a story and there are some very highly entrepreneurial financial people in the world. In fact, shout out to Moshe Amsel who we’ve had on the podcast a couple of times now. Moshe is the founder of Profit with Law, and he very much focuses on financial optimization with a bent toward entrepreneurial growth. So there definitely are ways that you can look at your numbers effectively to be both a successful risk-taking entrepreneur while also being cognizant of how you are spending, managing, and growing your money. But a lot of financial people and I’d say far more than not, the vast majority of financial people are the people that tell us no when we want to do something as an entrepreneur. Right? They’re the people that say this is not in the budget. So I want you to understand that your budget is not your Bible is a mantra, a mindset of how to both have a healthy respect for your numbers, while at the same time growing in your understanding of how to be a successful entrepreneur, taking risks with money, with an expected rate of return on your investment. I talk a lot on this podcast about how we should not look at every expenditure in our business as simply an expense for our business, but rather we should be looking at the fact that we are ultimately growing our businesses through making investments, that’s what you’re doing with every expenditure of resources that you have.
Allison Williams: [00:03:16] And if your expenditure is purely an expense, meaning if you’re not also thinking of it as a way to get some rate of return on what you are spending, then that does tend to lead toward a lot of unhealthy behaviors in business. It leads to a sense of lack and restriction in what you have available to yourself and to your company. It tends to create resentment that your employees become a quote-unquote expense that you have to shoulder instead of an investment that is expected to and should be generating a rate of return. It tends to lead to a certain level of irresponsibility, if anything, regarding the thoughts around you because what, what tends to happen is we either save it all, saying, I can’t spend, I can’t spend, I can’t spend because I’m in fear or we, we spend it all because we have a belief that says I have the ability to spend anything that is, quote, in the budget and if I have leftover money, if I grew faster than expected, I generated more profit than expected. That money is, quote, mine, right? And that also can lead to some problematic behaviors in business. So I want to give you three critical thoughts that you need to really dial in to understand why your budget is not your Bible and how that premise can actually create freedom and success and highly scalable law firms.
Allison Williams: [00:04:43] So the first critical thought is that you need to have a financial plan for your business. Now, you might be thinking that’s somewhat counterintuitive to the idea that the budget is not your Bible, but we always start with what is a foundational premise, right? So the foundation of a successful, healthy business is a well-thought-out, well-executed financial plan. Now, for those of you that are not members people, like you may have actually become a lawyer because you hated math, I don’t want you to think that I’m talking about you creating this on your own. You can create a financial budget on your own or you can create a financial budget with assistance. If you’re at that place in your business where you can afford anything, then getting a good bookkeeper and a good account are an absolute must for your business. But whether it is the right time for you to add those players to your business or not, you can certainly create one on your own. Right? You know what your rent is every month, you know what your utilities are, you know, generally speaking, or you should be able to pull what you spend on average in basic office supplies. You know what you spend on average in payroll and what those payroll components are comprised of. Right? There’s probably some base salary, maybe commissions, maybe bonus money, there could be benefits. Then, of course, you have taxes. You know, all of those things need to be factored into your budget.
Allison Williams: [00:06:10] And if you have challenges creating that on your own, but you are using some form of software, there is a budget to actual feature in most financial planning software, so you can get it in QuickBooks, it’s available in Xero, it’s available in Quicken. So if you look at just the very basics of where your money went, right, like if you’re not a good planner for the future, if nothing else, and you look at where your money went in the past, saying I either got a great result from how I spent money last year, so I want to rinse and repeat that process, or I didn’t have such a great experience with money last year, I need to pull back some expenses or I need to make some more investments in order to get a better return on my investment. That becomes something that gives you a level of peace, because you know how much you’ve created in the past, and you should have a reasonable expectation of creating that in the future unless you are doing things to scale your income, in which case you probably be here as a client of Law Firm Mentor or maybe you’re doing things to scale back your business because you’re planning toward retirement or something like that. So there’s lots of different ways to actually create a financial plan. This is not going to be a financial planning 101 course or instruction or podcast.
Allison Williams: [00:07:24] But I do want you to consider that you need to have a financial plan as a part of your business so that you can make decisions in the future. One of the things that we talked about in a recent podcast episode, we talked about the idea of how to become decisive. And one of the real challenges with being decisive is lack of information. Right? So if you don’t know what information is going to educate your decision and you don’t know the information that you need to know, and typically information comes at you and you don’t have a way of categorizing that in your mind. So it just becomes a big cacophony of information and you kind of get stuck in the weeds swirling around. Oh, my God, more things to consider, more things to consider. So we want to avoid that when thinking about how to make decisions in business and the financial plan is one of the key components of what will give you that foundation, that education, that information that you need in order to say I can make a decision taking into account my financial plan. Now, remember, the title of today’s podcast is Your Budget is not your Bible, so we’re going to take it into account, but we’re not going to rubberstamp based on what the finances tell us, because the next key strategy that we have to understand about our financial plan is that you have to be willing to disregard it.
Allison Williams: [00:08:41] Now, again, I know that that is probably what you were thinking about when we said your budget is not your Bible. We want you to have a financial plan. We don’t want you to throw it out of the window any time you want something. Right? Because we’re going to want things every day of our existence, that’s the nature of a human being to desire. But I want you to think about the idea of having the level of faith in yourself and the level of tenacity in your decision-making to say if something is good for the business and I can find a way to make it work, I will make it work. Right? And those two things go hand in hand, right? Having faith is about putting your belief in something that’s not yet seen. But there’s also an element of if I can make it work. And here’s the thing, if you have the desire for something, the ways, and means for you to achieve that are here and they’re here now, you might not see it right now, but it’s here right now. The opportunities are available for you right now but you have to open yourself up to seek and pursue those opportunities by having faith in the idea of yourself being able to achieve the outcome that you desire.
Allison Williams: [00:09:52] So it’s very much about the idea of thinking about your financial plan as a series of investments that have a certain rate of return. So you want to be thinking about what is the rate of return that I am going to expect off of my financial contribution, right? If I take money out of business and put it into a person or put it into a software or put it into a new purchase for the business. What can I expect to receive on the other side of that? Right? That rate of return is something that you should be thinking about. Now, the fact that you have, you know, at least the possibility of getting a rate of return does not mean that you have to have a scientifically, scientifically proven valid, non-negotiable, three-point eight percent return on investment or four times return on investment. Obviously, the more you do different activities, the more you can reasonably predict your rate of return on investment, and to some degree, you can plan it, right? With, with your employees, you can plan how many hours they’re going to build and you can plan how much revenue they’re going to generate. And you can say they’re going to be paid a portion of that so the return on investment of my employee might be a three times, four times, five times or a lot, depending on what who the employee is and what their function is.
Allison Williams: [00:11:13] Right? So intellectually, we certainly can plan it but I want you to be open to the idea that things that are less quantifiable or that are more a composition of qualitative and quantitative activity and valuation, that those might not have a defined numerical return on investment, that you can say, here is what it is from a numerical perspective alone. So here’s what I mean by that. If you have decided that there is a practice area in your business that you are in love with, you love the clients, you love the cause, you love everything about the practice area and you’re going to invest in, let’s say, a marketing strategy, and a company presents you with a marketing plan where they’re going to generate more clients in that particular area. Well, part of the return on the investment of marketing is the dollars and cents that you’re able to generate from accumulating clients in that practice area. But there could also be something that comes along with going into a certain practice area. Maybe you’re actually going to make less money in this practice area than others. Right? So you might say in my estate planning practice, this is what I make. My rate of return is far greater, however, in my family law practice. However, I enjoy estate planning more, you know, I like clients, I like the work, I like the intrigue, I like not having adversarial litigation as my day-to-day experience, whatever it is, you like what you like.
Allison Williams: [00:12:41] Right? So the return on your investment of that particular marketing strategy, if they’re bringing you more estate planning clients, is not just dollars and cents it’s also the qualitative piece of creating a life that you actually enjoy. So you cannot omit that from your analysis of how successful something was, if you spent all of your time focusing on getting a better life for yourself, and yet you made the exact same amount of money this year as last year, but your life is better this year, then you actually have a return on your investment. That return is not more dollars and cents, but it’s more of what you desire in life. So it’s important to understand the distinction between return on investment and expense.
Allison Williams: [00:13:22] The other thought about being willing to disregard your financial plan is the idea that sexy opportunities come up all the time. And we oftentimes will refer to this as squirrel or shiny object syndrome. It’s important to recognize that we certainly don’t want you to get into a habit of jumping at every sexy opportunity that comes up. You’re going to have opportunities that come up as a business owner because people are always going to be trying to sell you something. And in fact, what I see a lot in small law firm owners is this visceral behemoth objection to people selling them something.
Allison Williams: [00:13:57] But everything in your life that came to you that benefits your life was sold to you in some way. You know, your house was sold to you, your car was sold to you, your, your office space was sold to you. And if you, if you take it out of just pure dollars and cents, your spouse was sold to you, right? They sold themselves to you. If you were not interested in the features and benefits of that individual, your relationship would not be what it is, right? You wouldn’t have the children that you have. So life is about salesmanship and a lot of people that have this anti sales attitude are really restricting the flow of opportunity for their life. They’re also very much living in an energy that’s incompatible with being a successful business owner, because how do you hate people selling you something when you’re in the business of selling something to other people? Right. If you have a mindset that says sales is bad, you’re not going to likely pursue it, follow up on it, engage it and be all about it in your own business. But again, another topic for a whole separate podcast. So when we are talking about your seizing sexy opportunities, it really is that they’re going to be times where things that you did not even know were opportunities become opportunities and you have to be willing to be nimble enough, be zealous enough to say, I have faith in myself, that I can make this work.
Allison Williams: [00:15:19] So if I do nothing other than invest in the possibility of something for myself, the possibility of more clients, the possibility of more money, the possibility of more prestige, the possibility of a greater outcome for a client, I’m going to do that. Right. And that doesn’t mean that you do this all day, every day, right? If you completely jettison your financial plan and have no regard whatsoever at some point, you can create some pretty catastrophic events in a business. So the goal is not to completely disregard the financial plan, you do want to consult your financial plan, but you also want to be thinking about things such as what is on the other side of this investment? What is it that I can learn from it? What is it that that that I can take from it that can make my business better? What if I’m actually successful with whatever it is that’s being presented to me? Right. And we get this a lot with coaching because there are a lot of people who will consult their accountants or their business planner or their bookkeeper or whomever and say to that person, hey, I want to do this coaching program. It cost X, what do you think? The person will come back and say, we don’t have X, so you can’t afford it.
Allison Williams: [00:16:29] And I always say to prospects and clients, because a lot of people have used that, that rationale and then become our client, so we get to have that conversation at a deeper level. But I’ll often say to people, you know, your financial planner has your best interests at heart, but they have their perspective based on their perspective. Right? If you’re not feeling well and you go to a doctor, a doctor is going to say, here, take some medicine. If you’re not feeling well and you go to the psychiatrist, they’re going to say you have a mood disorder here, take some drugs to deal with that. If you go to a therapist, they’re going to say, hey, you have some behavioral issues and some problematic life patterns, let’s talk through that. If you take that same problem and you go to a nutritionist, they’re going to say your diet is off, we have to change the food that you’re eating, right? Because that’s the lens through which they see the problem, so it’s not that they’re wrong. It could be your diet or it could be your medication or it could be your mental health or it could be your, your physical health, it could be any number of things. But the person who’s evaluating the problem is always going to see it through the lens of what they offer to the world because that’s their orientation.
Allison Williams: [00:17:36] So it’s not that financial providers, financial planners, financial people are wrong. It’s that they see the world in a very specific way and they see what you have. Right? So if we’re looking at your, your current month’s revenue, your current quarter’s revenue, your current year’s revenue, they’re doing the math and math is logical and rational and makes sense. What is not included in math, however, is faith. What is not included in that is that at some point in time, you have to decide that you are more than dollars and cents, that you are more than what is within the box, that you have potential beyond yourself that you can really only tap into when you invest the time, the energy, the motivation, the opportunity in to what it is that you want to see more of, which is yourself, really. Whenever we are looking at investing in ourselves, right? And that’s really what coaching is. I mean, we can give you all the tools, all the tricks, all the strategies, all the data, all the information, all the guidance in the world but at the end of the day, you’re the one that’s going to execute it. You have gotten yourself to where you are based on who you are being right now. So in order to get yourself to where you desire to be, you have to start to live and be and make decisions from a place of where you desire to be, which means you have to break the habit of being yourself.
Allison Williams: [00:18:57] And that takes conscientious investment in yourself but when you do that, that’s how you get scale. Right? And so what a financial person sees is X dollars in the bank right now, if you pay for something, you have X dollars minus whatever you pay. What I see and what I help my clients to see is you take what is available to you now and you invest it in yourself, and then you get a two times, five times, ten times, twenty times return on investment. And the people that start to see the world that way, those are our clients that doubled during the pandemic, those are the clients that bought buildings during the pandemic, those are the clients that are adding multiple team members and having a 100 times return on their investment. Right? They are putting zeros and zeros and zeros behind. They’re having their first month ever. Their first six figure month ever. They’re, they’re able to be away for 30 days, 60 days, 90 days with no change in the revenue that comes into a business because they made an investment in themselves. And oftentimes, people who are just looking at the budget, they intellectually understand that there is something to be considered beyond the budget, but they don’t always get there. Right? They don’t always get there.
Allison Williams: [00:20:16] So the next thing that I want to talk about, the third key strategy in understanding why your budget is not your Bible, is that you really do have to cultivate faith in yourself as a business owner, and I think a lot of people draw to the budget, they pull out the budget as their, their guidepost for what they’re allowed to do and not do. But what I tell people all the time is that this is really your business, this is not your CFO’s business, this is not your bookkeeper’s business, this is not your accountant’s business. Right? They’re there to advise you, but just as you have to consider a multitude of different advisors to have the life that you desire, you similarly have to have a multitude of different advisors to have the financial success that you desire. And when your financial person says you can’t afford until that usually means that you’re going to continue to do what you’re doing and eek ahead step by step, right? It could be 10 percent growth, 15 percent growth, 20 percent growth year over year, or you could grow by 100 percent doubling in size if you were to have made an investment. So I tell people this all the time, because we’ve had clients that will come into Law Firm Mentor and literally grow by two or three hundred thousand dollars in a year, and they pay less than 10 percent of that fee or the service that ultimately cultivated in them the know-how, as well as the dedication and accountability that was required to get them the hundreds of thousands of dollars more in a year.
Allison Williams: [00:21:45] And when they look back, they’re able to say, oh, my God, I didn’t even realize what a smart investment this was like, I should have done this years ago. But that thought that believe often derived from retrospective, right? But at some point, they had to have, if not the awareness that this is how much they were going to grow, they had to have a belief that they were going to have a better outcome by saying yes, then the other alternative, which is what led them to say yes in the first place. Right? And so if they had said, well, if I look at what’s in my bank account right now or what I’m generating month over month, minus my expenses, I really can’t afford to do this, they’d be making that decision based on today’s results. Today’s results don’t have additional money vs. making that decision based on tomorrow’s results, because tomorrow’s results can afford not only what you want to invest in today, but also what’s coming down the pike. And that really is the distinction between a person who lives in the world versus lives in the spirits, i.e., lives in the faith that they are an achiever. And in all the different ways that we make decisions in our life, we invest in law school not knowing whether or not we’re going to be a corporate lawyer making a lot of money or we’re going to be a pro bono lawyer who is basically able to pay the basic bills while making a very small impact.
Allison Williams: [00:23:12] Right? We might have an idea of what we want to do with our life. We might have an idea of how it’s going to turn out, but we don’t know. And that’s the truth. I mean, the reality is we don’t know for anything that we’re really doing, right? You don’t know when you get married that your spouse is not going to leave you in five years. You don’t know when you start a business that you’re not going to have an economic collapse and go out of business. You don’t know when you became a family lawyer or an estate planning lawyer or criminal defense lawyer or a cannabis lawyer, you don’t know that those industries are not going to remarkably change in a way that makes your service obsolete or that changes your pricing structure or that increases or decreases competition. You don’t know these things. The only thing that you ever have true certainty in is yourself. That is the only thing that you could ever cultivate, the highest level of strategic alignment and belief is in yourself because you are the only thing, the only factor that you have 100 percent control over.
Allison Williams: [00:24:15] You have control over your thoughts, you have control over your actions, you have control over who you bring into your world and who you exit from your world. You have a lot of control but the one thing that you can’t control are outside factors. And so those outside factors often take on an omnipresence and we start to believe in those outside factors more than we believe in ourselves. But when you practice the art of cultivating faith, it allows you to say, I have a budget, which is one of the things that I consider. But I also have an abiding faith in myself, which allows me to consider that if I want to create something, I can absolutely do that. And if I found the resource to help me with that, I can absolutely step into that, knowing that I’m going to get a return because I’m going to put in the work to get myself to the other side. All right, everyone. I’m Allison Williams. You’ve been listening to the Crushing Chaos with Law Firm Mentor podcast. And today we talked about how your budget is not your Bible. Now, before you go, we will be celebrating our one hundredth podcast episode on September 24th. We’re so excited about this milestone and we want to thank you for being with us on this amazing journey. So as a special way of celebrating with you all, we’re going to be raffling off three Law Firm Mentor beach towels.
Allison Williams: [00:25:27] All, all you have to do to actually get access to those towels is to leave us a review on your favorite listening app. You can do it on Apple, Stitcher, Spotify, IHeart Radio, Pandora. We’re all over the place. So you just pick your app, you leave a review, and then I want you to text a screenshot of your review by taking a picture, texting it to us at nine oh eight, two nine two, three five two four, along with the word ANNIVERSARY. Ok, this is our one-hundredth episode, so it’s our anniversary. So we want you to text the word anniversary to again, nine zero eight, two nine two, three five two four. Rewind that if you need it again, or we’re going to have that number down in our show notes and you’re going to be able to win one of those great beach towels. These are big, fluffy, plush towels that we gave out recently to our community at our legal sales retreat, so I’m really excited that we’re going to be able to give those out to the lucky winners. And we’re going to pick three winners at random and announce them in our one-hundredth episode on September 24th. So you don’t want to miss it. All right, everyone, I’m Allison Williams. Thank you for tuning in to the Crushing Chaos with Law Firm Mentor podcast and I will see you on the next episode.
Allison Williams: [00:26:55] Thank you for tuning in to The Crushing Chaos with Law Firm Mentor podcast. To learn more about today’s guests and take advantage of the resources mentioned, check out our show notes and if you own a solo or small law and are looking for guidance, advice or simply support on your journey to create a law firm that runs without you, join us in the Law Firm Mentor Movement Free Facebook group. There you can access our free trainings on improving collections in law firms, meeting billable hours and join the movement of thousands of law firm owners across the country who want to crush chaos in their law firms and make more money. I’m Allison Williams, your Law Firm Mentor. Have a great day!
Allison C. Williams, Esq., is Founder and Owner of the Williams Law Group, LLC, with offices in Short Hills and Freehold, New Jersey. She is a Fellow of the American Academy of Matrimonial Lawyers, is Certified by the Supreme Court of New Jersey as a Matrimonial Law Attorney and is the first attorney in New Jersey to become Board-Certified by the National Board of Trial Advocacy in the field of Family Law.
Ms. Williams is an accomplished businesswoman. In 2017, the Williams Law Group won the LawFirm500 award, ranking 14th of the fastest growing law firms in the nation, as Ms. Williams grew the firm 581% in three years. Ms. Williams won the Silver Stevie Award for Female Entrepreneur of the Year in 2017. In 2018, Ms. Williams was voted as NJBIZ’s Top 50 Women in Business and was designated one of the Top 25 Leading Women Entrepreneurs and Business Owners. In 2019, Ms. Williams won the Seminole 100 Award for founding one of the fastest growing companies among graduates of Florida State University.
In 2018, Ms. Williams created Law Firm Mentor, a business coaching service for lawyers. She helps solo and small law firm attorneys grow their business revenues, crush chaos in business and make more money. Through multi-day intensive business retreats, group and one-to-one coaching, and strategic planning sessions, Ms. Williams advises lawyers on all aspects of creating, sustaining and scaling a law firm business – and specifically, she teaches them the core foundational principles of marketing, sales, personnel management, communications and money management in law firms.
Textphone number: 908 292 3524
How to Be Decisive – The Crushing Chaos with Law Firm Mentor Podcast
Moshe Amsel – The Crushing Chaos with Law Firm Mentor Podcast
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00: 07: 24 (32 Seconds)
But I do want you to consider that you need to have a financial plan as a part of your business so that you can make decisions in the future. One of the things that we talked about in a recent podcast episode, we talked about the idea of how to become decisive. And one of the real challenges with being decisive is lack of information. Right? So if you don’t know what information is going to educate your decision and you don’t know the information that you need to know, and typically information comes at you and you don’t have a way of categorizing that in your mind.