What You Need to Know About Bookkeeping for Your Law Firm with Danielle Hayden
Dec 15, 2022
Running a law firm is no easy feat. If you aim to grow and scale, it’s not really something you can do alone. Imagine catering to your clients’ inquiries and taking on cases, all while trying to crunch the numbers and make sense of your bookkeeping systems. It sounds tough because it is, but it doesn’t have to be that way. Law firm owners should not shy away from getting the necessary support to achieve their business goals.
In this episode, Danielle Hayden joins us to discuss the significance of accurate bookkeeping in making sound business decisions. Likewise, she shares various systems and services for implementing profitable financial strategies. Finally, she emphasizes the need to seek help to save time and keep your firm running smoothly.
If you’re a solo practitioner or law firm owner learning the ropes of bookkeeping and other accounting systems, this episode is for you!
Here are three reasons why you should listen to this episode:
- Discover the importance of bookkeeping as one of the financial strategies for a successful business.
- Understand the common cash flow errors business owners commit.
- Learn why you should ask for help and outsource to build a thriving company.
Danielle, The Entrepreneur
- Danielle became interested in accounting after working at a hair salon.
- She always knew she wanted to be an entrepreneur.
- Danielle is on a mission to support businesses in developing a strategic framework for bookkeeping, dealing with backend clients, and collaborating with customers, among others.
Danielle: “We quickly realized that most entrepreneurs actually don't have bookkeeping in place. So thank God I was willing to pivot and understand what the market needed. Fast forward, we put together a system where we can apply our strategic framework to entrepreneurs.”
On Moshe’s Journey in Starting His Firm
- Moshe couldn't find work after completing his accounting degree. He then decided to start his own company.
- He expanded his clientele through networking.
- Moshe noticed that most of his clientele couldn't cover their rent and payroll despite the appearance of success.
- Create a system for serving your clients or a brand guarantee.
- Make wise business decisions by providing reliable bookkeeping and financial statements.
- Firm owners who lack accounting experience can employ accounting experts.
- Tune in to the full episode to hear Danielle and Moshe about setting up and tracking your goals through Quickbooks.
Danielle: “You can apply this to your business by thinking about: what are your goals? Where do you see your firm going? What do you need to track in order to get there?”
- Group your accounts to track your spending and budget allocation.
- Classify the accounts accordingly to see if you are overspending or seeing returns on your investment. Danielle gives an example using marketing costs.
- Budget allocations are subject to change depending on the season of business you are in.
Danielle: “Once you have a hit in maintenance mode in your business, say 10% overall. However, [you’re] always honoring that we’re going to have a season in our business.”
- Entrepreneurs will experience various seasons in their business.
- In startup mode, the company is still developing its operations and creating its identity.
- Once the foundation is established, it enters the growth phase. This is where the entrepreneur focuses on swiftly expanding the company.
- Business owners reach maintenance mode after building a well-oiled system.
Danielle: “There can be a time in your business where you feel satisfied… You have what I consider maintenance mode.”
The Law Firm Growth Framework
Moshe: “We have a framework called ‘The Law Firm Growth Framework,’ and there are three components: plan, grow, and scale.”
- When a company is growing, it is filling a capacity that has already been created.
- Scale mode refers to creating capacity that needs to be filled.
- However, there will come a time in a company’s life when it no longer needs to add or fill capacity.
- Understand your firm’s current situation to operate in the right place.
Danielle: “We have to put our big boy pants on, put our big girl pants on, right? The day that we set out to be a business owner, we have a responsibility to our clients, to our staff, to our vendors, to stay in business and to be sustainable.”
- Bookkeeping allows us to understand business expenses and make better decisions.
- Business owners need to comprehend financial reports and outsource necessary services for company growth.
Common Cash Flow Errors
- Cash, income, and expenses are not the same.
- Common cash flow mistakes include charging too little and failing to use a functional invoicing collection system.
- Law firms rarely monitor their mid-month work.
- Business owners must remove themselves from the billing system and delegate the task to others.
- You need to identify your cash flow inconsistencies and make the modifications as needed.
Advice for Law Firms & Other Businesses
- Don’t be afraid to get help.
Danielle: “I wish I would have gotten more help in my business from day one. Just because it’s a team member that got me to where I’m at today doesn’t mean it’s a team member who’s going to get me there.”
After spending more than a decade in the boardroom as a Corporate Finance Officer, Danielle Hayden is on a mission to help rule-breaking female entrepreneurs understand their numbers so they can develop financial strategies and the confidence needed to build sustainable profits.
Today, Danielle is the CEO of Kickstart Accounting Inc.,where she helps business owners with bookkeeping, financial analysis, and financial education, among others. She is also the author of the Profit Planner book series.
When she isn’t crunching numbers for her clients or designing the next version of the profit planner, you can find her hanging out with her two kids, inspiring them to live their best lives or taking part in nearly any fitness-related activity, from Spartan Races to Pilates.
You can connect with Danielle via email or through her social media channels: Facebook, Twitter, Pinterest, and LinkedIn.
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