We work with many small firms who charge for their services at hourly rates. We see amounts like $90/hr for paralegal services, $300/hr for an accountant, $800/hr for legal expertise. It is certainly nice to have a rate card and show this to your clientele. It helps set expectations and allows a client to appreciate the value of your work. But how important are those rates internally to your team?
Consequence for your hourly rate
Hourly rates help align a small firm with the value of their utilization rate, or hours spent on non-billable work. We often see that the true cost-per-hour of a teammate may only be half of the rate card’s listed amount. This is because of the volume of “other work” that needs to be performed, including administrative work. An accountant may simply need to get through emails, or brush up on the latest IRS opinion regarding PPP loan forgiveness. These are things she has no one to charge $250/hr for. But it’s still work and the accountant still earns a salary.
Facing this reality, many small firms have adopted the attitude of necessity. “It’s just a fact – that’s why I charge what I do per hour to my clients.”
Yet we like to challenge that attitude and help you win back the full value of your billable time. In the perpetual search for becoming a greater business, here’s a brief perspective on how to increase your revenue and lower your administrative costs. And it’s more than just increasing your utilization rate.
Increase your output, limit your outflow
There is a simple formula to increase your revenue. If the expenditure of work for clients (aka billable hours) increases, then revenue increases. If your ability to work for clients is limited by back office or administrative tasks, then so is your revenue. Hand over the administrative work to a competent teammate who costs much less per hour. It’s as easy as that.
Small firms need someone with reliable expertise to fulfill those tasks for them. If you, for example, charge $300/hr for your work, and you spend 4 hours a week on bookkeeping, payroll issues, and benefits admin, then this is literally costing you $1200 per week, or $5000 per month. By not spending time on admin tasks, you spend more time on billable work. This is no news to you, we’re sure.
Most of us feel resistance to spending more. Reality is: hiring a back office teammate should not eat up your revenue and profit margins. Using the example above, if you earned $5000 more per month, then a new administrative employee should not cost you $5000 per month. This would only allow you to work more to break even. Yet if you found professional administrative services to cover these tasks and give you reassurance about your firm’s compliance with employment law and accounting standards, while costing much less than $5000 per month, now we’re talking.
Transform non-billable into billable work
Suitless Inc builds on this perspective. By joining your team as an extension of your own business leader oversight, Suitless gives you the peace of mind you need in order to do more “billable work” and to search for more clients for your growing firm.
Suitless offers a flat rate for services so your firm can plan expenses accordingly. We specialize in Finance, HR and Back Office administration. This way, a 4-person law firm, as an example, can have all of their payroll, benefits administration, bookkeeping, local and state registrations, HR training and compliance, etc. for $1400 per month. Or basically the cost of a part time junior assistant. Or the cost of two hours of your senior attorney’s time. Per month.
Take the first step
You may need this change of perspective. If you are interested in exploring how to give your rate card more weight internally, and to make changes to focus your firm on more revenue and new clientele, contact us. It’s a good first step. Suitless is here to help you make the changes your firm needs in order to grow and to let you win your time back to reach your firm’s goals.