Practice Management

This probably goes under the topic of work-life balance or blending (or the lack of work-life balance or blending).

BusinessWeek is reporting that a study by Experian of small business owners found that they protect their companies at the expense of their homes.

Having represented many in bankruptcy back in the day, I would have told you that.  And, the reason is not surprising.  Business people (and this includes attorneys in private practice) do not want to not pay anything.  They want to be current on everything, but if they have to make a choice it will almost always be to keep that current which generates money for them.  Besides, there are many assets in a business that they also use personally, such as their cars, their health insurance, their life insurance, and their protected retirement.  Income and these things are just as important as a house.  Then, of course, there are the employees, the staff, the rent on the office to keep the whole thing operating, which does not make a lot of sense to me.  It never has.

The perspective of BusinessWeek and Experian was that small business owners are typically good business lending risks even if they are substantially behind on their personal mortgages.  They will make the decision to lose out in this regard than to let their income machine go, regardless of how sorry that might be.

My perspective is different.  These are choices that often time do not have to be made if the initial planning was correct.  If your home is your workplace, there would be a better reason to save it as well.  If you had less debt (which you really can call any obligation that you have to pay each  month regardless of its classification), such as office leaseholds, equipment leases on computers, fax machines, copy machines, employee salaries, toll tags, phone book advertising, and the like, it is less likely that you are going to find yourself in the position to make such a terrible choice.

It is not that I have not had some hard times doing what I am doing.  Last year in particular was extremely bad in that as lawyers fled the bankruptcy profession and the number of cases continued to fall dramatically, the referrals slowed substantially.  That meant substantially less income at a time when my monthly costs was increasing due to tuition necessary to keep my older children in school.  I had to draw on savings.  Almost all of it to get things back on track.  But, the point is really that I could hold it together because I had no debt but my house, and my expenses, most of which are also used for my household needs, were low enough that I could scape by.  When the situation turned around this year maybe I was starting off at zero, but at least I was not starting off in the red.  It is easy to recover from zero.  That is still on solid ground.  It is hard to dig yourself out of hole.  Any of you try to come up with three or four mortgage payments.  It is not easy.

So, for me the option is to keep it simple, keep the overhead under control, and do as best as I can, with no outside office space, no staff, no commute, no office equipment leases.  Just me, my family and those things that are truly important.