I just received a bill from my lawyer today in which he itemized his time spent on my file last month. He spent four-tenths of an hour on an e-mail to a colleague and one-tenth of an hour leaving me a voice mail.
I have found billing by the hour to be a liability in trying to build a sellable business. Years ago I owned a small design studio that charged by the hour. We had $750,000 in revenue, of which more than 20 percent was flowing to the bottom line, yet the business was worthless because we were simply four people hawking hours.
Billing by the hour reinforces that your firm is just a collection of people and, therefore, that future profits (what acquirers pay for) are contingent on your sticking around. That’s one of the reasons firms that bill by the hour rarely get acquired, and if they do, their owners are bound to sign on for a torturous three- to five-year earn-out, the equivalent of selling their ownership status in return for a glorified job.
To read the full, original article click on this link: 6 Reasons to Stop Charging by the Hour | Small Business News, Tips, Advice - Small Business Trends
Author: John Warrillow
