Avoid post-recession complacency

The most dangerous
period for any business is post-recession. The fact is that as many businesses fail after the recession as during it, which seems almost incredible when a business has been able to come through the fallow years to see the light at the end of the tunnel.

Confidence is a fickle thing: one day we ride into work full of optimism for a brand new day, only for the next day to shatter that illusion. The reality is that having come through the last seven years and survived, now is not the time to think all is rosy in the garden; now is the time to focus even more on service levels, process efficiencies, cost control and income generation.

Solid indicator

The positive side is that in most parts of the UK there has been a very real and welcome upturn in property work in both residential and commercial arenas over the past 18 months, to the extent that a large number of firms are starting to consider investing in more resources and better systems
to cope with current demand
- a precarious thing to do
given the competitive nature of conveyancing. What is surprising is that traditional firms are holding their own against new entrants and volume providers, suggesting that price isn't everything.

Company work is also showing signs of life, another solid indicator that confidence among small and medium-sized businesses is improving with increased investment in growth, acquisition and start-up opportunities.

'Make hay while the sun shines' is a favourite saying in business and, at the moment, the sun is out for many. There are a number of things that firms can do to take advantage of post-recessionary growth and position themselves for success in years to come. These include:

• Reduce borrowing and business debt: through improved cashflow and prudent, robust management of capital, now is an ideal time to reduce borrowings and debts. For many firms, the recession meant items like VAT, corporation tax and practising certificates were funded by banks and specialist lenders, often at interest rates significantly above the Bank of England base rate. While these were, and are, attractive options in times of low interest rates, this isn't healthy in the long term. Similarly, don't take a chance by adding more borrowing now that finances are improved and funding is more readily accessible. It's not the time for over-ambitious investment.

• Reduce costs and overheads: every firm will have costs it can shave and efficiencies it can make that will improve the bottom line. If you are going to invest, then this is a key area to look at, especially around systems and processes. Another common failing is complacency with existing contracts for items like phone lines, copiers and stationery, for example. Far too many firms have expensive legacy contracts with suppliers that are costing thousands more than they need to.
  A particular niggle of mine is rollover agreements, or contracts that ask you to sign up for three years for the same price to avoid future increases. Get the best deal you can and don't be pressured or held to ransom.

• Talent management and education: find the time (and money) to invest in people and skills that will help your firm thrive and grow. Spending on training and skills development falls during times of austerity and financial belt-tightening; you should always look to the future. When recruiting, ensure you seek out the best talent to fit your firm's ambition and culture.

• Focus on client acquisition and retention: by nature, legal services can be transactional, but they don't have to be. Clients come to traditional law firms through trust, relationship and value: it's not always about cost. If the first discussion is about price, you have lost that client. Now is the perfect time to win and retain new clients in a long-term relationship through improved client experience at the 'first-touch' point.

Efficiently managing your business is even more important when the economy is doing
well to avoid post-recession complacency. It can be all too easy to overspend without careful planning and invest where it is not necessary.

Caution: make hay by all means, but grow steadily and invest wisely to tackle tomorrow and whatever that brings. SJ

Tony Brown is the founder of law firm consultancy AGB Legal 

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