TLH Ep. 44 From Chaos to Clarity: Rethinking Law Firm Finances with Ben Hockema
Hello, Legal Helm listeners!
Today, we’re thrilled to welcome Ben Hockema, founder and lead financial advisor at Illuminate Wealth Management. Ben works closely with entrepreneurs and small business owners—especially law firm leaders—to help them achieve financial clarity, sustainable profitability, and long-term growth.
At Illuminate Wealth Management, Ben combines strategic planning with proven systems like his Profit First model, guiding clients to shift from reactive bookkeeping to proactive financial leadership. Acting as a virtual CFO and accountability partner, he helps business owners align their firms’ success with their personal life goals.
In this episode, we’ll dive into how law firm leaders can take control of their financial future, build smarter strategies for profitability, and develop a healthier relationship with money. Stay tuned for an insightful and practical conversation!
Your Host
Bim Dave is Helm360’s CEO. With 20+ years in the legal industry, his keen understanding of how law firms and lawyers use technology has propelled Helm360 to the industry’s forefront. A technical expert with a penchant for developing solutions that improve business systems and user experience, Bim has a knack for bringing high quality IT architects and developers together to create innovative, useable solutions to the legal arena.
Our Guest
Ben Hockema CFP, is the Founder and Lead Financial Advisor at
Illuminate Wealth Management, where he helps small business owners
-especially law firm founders—create financial clarity and long-term
profitability through virtual CFO services rooted in the Profit First model.
At Illuminate, Ben partners with entrepreneurs who are excellent at
their craft but want expert guidance on building a thriving business that
aligns with their personal goals. His work blends strategy and systems,
helping clients implement consistent cash flow habits, reduce tax
surprises, and finally pay themselves what they’re worth.
Bim Dave: Hello everyone and welcome to The Legal Helm where we explore the evolving intersection of law, technology, and business leadership. I’m your host, Bim Dave, CEO of Helm360. Today’s guest works with entrepreneurs of all types, but his insights are particularly relevant. For law firm leaders looking to take control of their financial future, Ben Hockema is the founder and lead financial advisor at Illuminate Wealth Management, where he partners with small business owners, especially law firm founders, to create financial clarity, sustainable profitability, and long-term growth.
His work blends strategy and systems, often using his Profit First model to help clients move from reactive bookkeeping to proactive financial leadership. Ben doesn’t just crunch numbers. He acts as a virtual CFO and accountability partner helping businesses, and their owners align their firms with their life goals.
Ben, welcome The Legal Helm.
Ben Hockema: Thanks for having me on.
Bim Dave: So, I thought, Ben, it would be great just to kind of start setting the scene with a little background on how you ended up, um, founding your company.
Ben Hockema: Yep. Great place to start. Start. So, um, I worked for another independent, um, really investment advisory firm for about 15 years, uh, and was a lead advisor and a minority partner in that company.
And I felt like that we had a lot of business owner clients that weren’t getting. Uh, the full picture, they were really just getting investments and maybe some insurance and, and other small, uh, pieces that don’t, just don’t have the full picture from finances. And so I said, uh, I always wanted to be an entrepreneur.
I left and, and started my own, and, uh, just kind of developed from there. So I started in what I’ll call traditional wealth management. At the very beginning of Illuminate Wealth Management, but quickly that translated into it. I had a few clients that I’m trying to work with their accountant or their CPA, and we’re just not getting anywhere.
We’re not looking ahead. Everything is backward looking and there’s not a lot of proactive planning. And so we just kind of took over the, the bookkeeping, the business strategy, the tax strategy, and, and move forward on how that translates to personal as well.
Bim Dave: Amazing. I, I speak to a lot of, um, young people starting out their careers, um, at this point and really thinking about like, kind of the, the trajectory of like, which career they want to go into.
I’m really interested to learn like, what made you go into finance in the first place? Like was there something that led you there? Um, or just you just had a particular, um, interest in, in the numbers?
Ben Hockema: Yeah, good question. So we, I started, um, what’s interesting, if I go back to, um, like high school, I had. I’d gone to a career counselor who said, you really, no matter what you do, you should be an entrepreneur.
And I didn’t know any entrepreneurs and so I didn’t know what that meant and didn’t really pursue it right away. Uh, my father was an oral surgeon and so I actually started pre-med and was gonna go to medical school. Uh, but he said, most doctors that I know don’t know anything about finding. So do the pre-med route, but also do some business, uh, as well so you understand how to run a business.
And that’s how it started. I quickly, uh, after going to the operating room with my father and saw him break someone’s jaw and reposition it, I said, this is not for me. And I do not, I do not wanna pursue this path. Uh, and so I actually met with his financial advisor, personal wealth manager. And that turned into an internship that turned into a career.
So, I, I kind of lucked into it. I think I had the general direction and then I didn’t realize what it meant to be an entrepreneur until I, until I left and started Illuminate Wealth Management. And really that everything clicked in place at that point that, oh, this is what I should have been doing the whole time.
Bim Dave: Amazing. What, what an interesting, interesting route into it. That’s, that’s, that’s fascinating for sharing that, for sure. Not,
Ben Hockema: Not the direction most people think. Um, and I did for a while, thinking about going to law school. And I, I still think that’d be a fun retirement. Uh. Job for me. Mm-hmm. Uh, just because I, I love to learn.
And, and I think that would be an interesting, uh, time at that point, at least to audit a class or two.
Bim Dave: Absolutely. Absolutely. So, and, and I’ve, I think I’ve read somewhere that, that you mentioned that your business should serve your life, but not the other way around. I’m interested to, to hear your view on that.
Ben Hockema: Absolutely. I, I think if we, if everyone thinks about their life, nobody says, on my deathbed, I’m gonna be very excited about what I accomplished in my job. They’re gonna be excited about maybe what they did, who they served, who they took care of, but also their family or their hobbies or whatever it was that brought purpose.
And for most people, it, it really isn’t about money. Money’s just a tool to help you get to where you want to go and your business should be the same. I work with a lot of entrepreneurs, a lot of lawyers, physicians, um. And they love serving people. But then in the business side it becomes, oh, I need to grow the business.
I need to do this. If only I can get the business to this point, whatever that point is, then I’ll be okay. Then I’ll have time to do the things that matter. And inevitably, you start going down that path and you never get to do the things that matter until you look back and go through a midlife crisis or upon retirement.
And you say, I didn’t. Do the things or, or spend the time with the people that mattered. And so I look at it as business should be only as involved in your life as you need it to be, to have your life, have the purpose that you want. So we talk a lot to business owners about what’s the purpose of your business, but also what’s kind of your life purpose, what’s our goal for the whole life?
So that we make sure they’re working together and not, um, opposed to each other.
Bim Dave: Yeah, no, I love that. Long, a long time, long term view is, um, is always better for planning, I guess. Yeah,
Ben Hockema: and I would say we also, um, I, I’m in a unique position where I’ve worked with clients all across, um, the spectrum of, of careers, but also age.
My youngest client’s 25, my oldest client passed away last year. He was 97. And so we got to see the entire life and, you know, the 97-year-old client. We, we would talk towards the end of his life. He would call me about every other week and we would just have a conversation. It wasn’t about money, but, uh, I’d worked with him my whole career and, and talking to him, you know, the conversations are about he wants to spend more time with his family, or he wished he would’ve gotten to see more things, travel more, uh, whatever, whatever that is.
Uh, you know, before his wife got sick, he wanted to spend more time with her, those sort of things. He was very successful in his career. But it didn’t matter that he was a physician. It didn’t matter what he did. It mattered the relationships that we had. So that, that gives, uh, I think my, me and my team a perspective on what we need to be in a position to help our clients with, because that’s really what matters is, is life, not your business.
Bim Dave: Absolutely no wise, wise words. Um, what, so when you look across like some of the businesses that you work with today and maybe that you’ve worked with in the past, what’s some of the common financial blind spots that you see occurring there?
Ben Hockema: Number one, I would, I would say who we work with are what we call reluctant entrepreneurs.
So they are, maybe they’re, they’re law firms, uh, physicians, uh, a couple therapy o offices we work with. They love their craft. They’re excellent at what they do for their clients, but they’re not, they didn’t go into their business to be a business owner. That just is the, the way that they’ve approached their career is they’re a solo business owner, whatever else.
And so by working with the reluctant entrepreneurs most know. Surface level about their business, their business, finances, business strategy. They’re not excited by it. So they don’t spend time on it and they know just enough to be dangerous. And then they wake up three, five years later and say, I’m spending all this time.
And it’s not translating to personal wealth or personal freedom or personal balance. Uh, I just keep getting bigger and have more responsibilities, not less. I thought if I got bigger, I would be here. So from a financial blind spot, I think it’s, it’s an ignorance, uh, not intentional, but just an ignorance because they’re so good at what their profession is.
There’s an ignorance to the business side, and that’s where I think we can come in and help.
Bim Dave: Yeah, no, ma makes sense. And what, when you, when you look at some of the, the law firm owners in particular, um, there seems to be a, a theme that you talk about, um, a bit, which is about them paying themselves last.
Could you dig into that a little bit and, and help us understand, uh, what you’ve seen there?
Ben Hockema: For sure. It, what you’re taught, what everyone has taught is the, the way a, an income statement works is you have sales or revenue at the top. You pay all your expenses, you pay your people. You pay your taxes and then, then you get what’s left over.
And that’s how almost every law firm owner naturally works. Because that’s what’s been taught, that’s what’s taught in accounting courses. I took plenty in college accounting courses. That’s what’s taught. It’s, um, you pay yourself last. And what I, what we try to tell all of our law firm owners is your business is only sustainable.
If your personal finances can support your business the way that it’s meaning, you need to make enough to be your best self at work. So you’re not worried about the personal side, and we need to right size the business. That might be in cut expenses, it might be increased sales, whatever it is, but let’s pay yourself first.
Just like personal finance says, pay yourself first. When you get your paycheck, you should save. That’s what every personal finance person says. The business should be the same way. Pay the owner first. And uh, and so we use, um, I did not come up with it. We used the Profit First Model by Mike Malowitz. I think it’s a great book that every entrepreneur should read.
It’s an easy read. It’s written for people who don’t like numbers. So, uh, that’s a lot of lawyers I I work with. Um, don’t like the numbers. Well, that’s fine that, that can work. And so the whole idea is pay yourself first. Set aside money for taxes. Yeah. Then, uh, pay your people and you have expenses and, and so, um, that gives you more of a budget that you can operate your business from sustainably.
And, you know, if things don’t go as well, maybe it takes a little bit longer for, um, for you to get paid. Something like that. You know, you’ve got enough money built in, you built a business sustainably.
Bim Dave: And what, what, what do you see happens? Like what changes within a business when, when you see that kind of script being flipped and, and building that sustainable pay model?
Ben Hockema: So the most recent one, it’s not a law firm, but I think it’s really relevant. It’s the same situation. It’s a therapy office. And so, uh, I’ll give you a quick background. This is therapist, um, has six therapists that work for them. They all have their own bills, uh, billable hours that they have. So just like most law firms, uh, and, and so they pay themselves.
They have some expenses, but not a lot of overhead and. The owner came to us and said, I don’t know why our business looks great. I don’t. I just feel stressed all the time. And she didn’t know where the problem was. Is it the business? Is it the personal? Um, it kind of was both, but really it’s because they were operating their business in a way that seemed reasonable compared to their peers.
Because they saw the revenue. They said, oh, this revenue’s enough. To pay for the, this staff, this size office, all of those pieces. And it didn’t though translate into, um, enough going to the personal side. And what I, what I would say to that is part of it is they didn’t value their own time enough. Um, I think law firm owners should get paid as both a lawyer.
And as the owner, you should get paid in two ways because you’re doing two jobs. If you’re the main rainmaker, maybe it’s three. Uh, so you should get paid in multiple ways, be compensated for what it is. Um, and with the therapy office, with most law firms that I work with, they do not treat themselves like an owner as well.
And so they just don’t get credit for it. And then it ends up being there’s not enough money on the personal side. So now we’re only a couple months in. We’ve reset the, the budgets. We’ve said, this is how much you can spend. You need to grow your business to this point. Maybe you need to renegotiate your contracts with some, some of your clients, they need to pay a little bit more.
But at the end, now we know exactly how much is coming over the personal side and they’ve gotten out of debt that they were in in three months. Uh, they know when they can expand. They, they delayed an expansion on their office because we said, you’re not sustainable. You’re just gonna add more stress to your life.
Now they’re at the point where they. Are happy. I just got a note last week about, um, this, the first time we felt like we can tread water for a while, uh, we’ve been drowning.
Bim Dave: Yeah. That must, it must be an amazing feeling just to be back in control. Right. Of the, of the business that, that, that you are running and, and they, that they’re clearly passionate about, uh, for sure.
Being successful. Yeah.
Ben Hockema: Yeah. They put, they put their clients first. They put their, you know, their staff first and pay themselves last. That’s, that’s consistent with most entrepreneurs. That I see, I fall into that trap myself. Um, I thought for my business, oh, I, I don’t need to do profit first. I’m, I’m above that.
Uh, I know what I’m doing. That’s how I started the business thinking. I know that process. It works for my clients, but not for me. And I fell into the same traps that every other entrepreneur does. Uh, oh, well, we can just, we can just reinvest that. That’s not profit. This is reinvesting in expenses. Um, I will take care of my people.
I’m gonna pay my people really, really well. So that they’re happy and they’re fulfilled and they’re in the spot. And then you come to the personal side and my wife says, you know, why can’t we take that trip that you, you talked about, why can’t we do that? And so, uh, we now use Profit first. I’ve, I’ve come back around and said, okay, let’s put our ego at the door and use the, use what works.
And, uh, it, it’s freeing to the business owner to know you are building a business that can last, uh, long term.
Bim Dave: Yeah, no, absolutely are. Are you? So how, I’m really interested to understand like how do you, how do you get from. The focus on profit, right, as being like the first kind of catalyst to change. And then there’s the reinvestment piece and the personal wealth piece, which is kind of like a bit of a balancing act I would imagine, because I guess you have to deal with like the personality and ego aspect of, of a, of a law firm leader as well in terms of, they may be focused on actually personal wealth is, is priority, but then that leads to, you know, negative things happening in the business.
But then equally you could have the opposite where you’re reinvesting everything and not actually like. Dealing, doing the, the personal side of things. How, how, what is the method to that madness to kind of find the balance?
Ben Hockema: Uh, that’s, that’s a fun, that’s a fun part of my job is that we can, we can work through that.
And so a lot of it, it goes back to the business for most owners is just an extension of their own. Um, the way they look at the world, the way they look at their, their life. I, I haven’t met an owner, uh, a business owner that is able to leave work and completely shut off that side of their brain until they go back and step back in in the office.
It just doesn’t happen. Um, I know I do the same thing, watch a movie, and I think about a client situation that came up, or, or whatever it is, or, or some employee that we have a new, exciting thing that we’re doing for them. Whatever it’s, and so. So Mo, what I’ve found is most owners have multiple professionals.
They’ve got the CPA or the accountant. They’ve got a tax preparer, they’ve got a personal wealth, but no one’s connecting those dots. And so we start at the high level of, if you had a billion dollars tomorrow, what would you do differently in your life? Do you still work at the same job? Does you, does your business change?
Would you hire more people? Would you retire and go, uh, live on a sailboat? Whatever it is, let’s talk about what life could be if, if you take money off the table, and let’s see how that affects not just your personal life, but your business too. Because now we can help together. We, we strategize together, build a strategic plan.
On, this is where we want to go with your business. And then I run the numbers and we talk about it from the personal side. And let’s also do the same thing. Plan your life. How do those connect? Where are the, where are the points where you have to make a decision? Am I gonna pursue the business side or am I gonna pursue the personal side?
There’s definitely a conflict there, but it changes for every client. The last thing I’ll say on, on this, ’cause I feel like I’m rambling, is um, I find spouses really. If, if you’re married, I find a spouse needs to be involved in that conversation because they’re, even if they have their own job or they’re staying home or whatever the situation is, they’re bearing the brunt of you spending time on your business.
Um, always, and I, I haven’t found a lot of successful dual entrepreneurs where both are running their own business. Normally you have a, you have to have somebody else, whether it’s a more stable job or whatever. And so bringing them into that conversation and recognizing. They have a say in the business too, what the business plan is.
Having those conversations across couples is really rewarding for me because, um, I know my, my wife has, has taken a lot, uh, she’s born a, a lot of the risk, uh, that she wouldn’t have taken on her own, but she’s willing to accept because she sees what this does for me and hopefully does for the family.
It’s really nice to be able to connect the dots for. Clients, um, in their relationship as well, so that you don’t have, you know, you’re divorced three times ’cause you spent all your time on your business and you didn’t focus on what you said was important to you.
Bim Dave: Yeah, that, that’s actually a really interesting point.
I’ve not considered that, but you’re absolutely right. I think there’s, in any relationship, um, there’s always, well, there typically is one person that’s kind of bearing the brunt of, of, of the other person doing what they want to do and what they’re passionate about. I know, certainly from my perspective, my wife does a lot of the stuff that I probably take for granted in terms of just basic things like school drop off and pick off.
So, pick up so I don’t even have to worry about those things. Right. But it’s something that she, she commits to and, and, and does. So yeah, you are right. They, they do have a voice and, and should be at the table. So that’s, that’s a very interesting thing. So the, so you really, so much more than, um, there’s so much more than just numbers, right?
Um, the, the way you kind of articulate it, because really there’s a big people aspect to what you do, right?
Ben Hockema: I, I would say pretty much all that I do is people, and the numbers are just. Part of the facts that go into just like, uh, you know, what is your job and, and you wanna retire at this age, the, the money you earn now or could earn in the future, or the wealth that you’ve accumulated.
Those are all just factors that go in. Um, what I like to help clients think is bigger than. I, I get a lot of fulfillment when clients are able to think bigger than they were when they showed up, because I can come in as a third party perspective and say, okay, here’s the blind spots that you have. Here’s what you’re doing great at.
Here’s some missed opportunities that we can help on, whether it’s taxes or, you know, you’re, you’re spending too much on this in the business. Let’s cut this back. It’s not gonna really matter. Um, oh, you are really profitable. When you spend time in these areas, so let’s free up your time to spend more time there, which will then translate into the personal side.
Uh, they’re all just numbers. It’s, I, it, I don’t want to lessen it too much, but it kind of is a big game where they all work together, but the game of life is what we’re playing, which is at the end, you’re fulfilled and happy and, and you’ve pursued the life that you want. That’s, that’s our end goal.
Everything else are just factors into it.
Bim Dave: Yeah. No, absolutely. Um, so, so I, I want to dive a little bit deeper into, um, what you touched on earlier with regard to this Profit First system. And I think it’s, it can be described as a system, right? So I just wondered if you could kind of break, break that down for us and, and the audience a little in terms of what, what does it actually mean and what, what, what is the system that is Profit First?
Ben Hockema: So Profit first, um, uh, again, go back to the how we are all taught Sales Minus Expenses is profit. Those are the three things that matter. And so if you aren’t getting enough money out as a business owner, you gotta decrease expenses or increase sales. That works. Sometimes. Profit first model switches that and says we’re going to intentionally, depending on the size of the business, we’re gonna intentionally go in and have targets.
So, every dollar that you receive, every, everything that goes into the bank account. We allocate between, really it’s five accounts. And so those accounts in in order are profit first. So we intentionally take your money and we set aside what should be profit. So if it’s 20%, 20% of every dollar that hits the account, we move to a new account, call a profit account.
We keep it in there for three months. Just to make sure everything’s working the way it’s supposed to. Then we distribute that. So we set it aside first. Now you’ve got 80% left and we allocate the next one to owner’s compensation. You gotta pay yourself first. Um, as the owner, you’re the founder, you’re the leader, whatever it is.
So, what’s your salary? Normally it’s what that would come up with. Then we have to pay the rest of your people. So we have that number. We have taxes. So we calculate what the business should pay on behalf of you for taxes. So. Here in the US us we don’t have, most, most businesses I work with are pass throughs, so the taxes are paid on the individual.
But what I find is most business owners don’t know how much to allocate to those tax numbers until we do the tax return. So what we do instead is actually take the money, set it aside before you can spend it. So what, what you’re left with is, let’s say 30%. After you’ve paid all these people, 30% is operating expenses.
So now you as a business owner, you know how much you have for just those things, and you’re able to really, with scarcity, be more creative on how can I stay within budget? How can I make sure that we’re there? And so by having these targets, you’re able to, as, as you have higher revenues, you allocate the profits the same way into profit and.
Owner’s comp, all the different buckets. You’re setting aside more for taxes. If you are more profitable, great, or if the business slows down for whatever reason, you know how to cut back across the board. So you’re just applying percentages. And where the power really comes in, in my mind, is for people who don’t like numbers.
By having multiple bank accounts and actually having each of those in their own account, I know that most business owners look at their banking app. And see how much is in the account to decide can I afford to do this or not. So we just tell them, okay, your O operating expense is this account. That’s the account you look at.
Don’t look at the whole picture. ’cause some of that money’s for taxes and some’s for profit and some’s for something else. And so by doing it that way, you’ve got clarity on exactly what you can afford, and then you budget to that number rather than just kind of let the expenses fall where they may. And what you’re left over with, you take home.
Bim Dave: I love, I love that. That’s a very smart way of, of doing it because the psychology of looking at the big number in one account goes away and you’re just focused on what you actually have available for sure. That’s cool. And
Ben Hockema: I, I’m a big proponent of, you know, pay down debt, whether it’s business or personal, uh, don’t, don’t have as much, uh, fixed expenses if you can avoid it, those sort of things.
And so we do allocate for, for clients that have, whether it’s business or personal debt, uh, that profit number goes to pay down the debt fast. So you don’t actually get to keep it. But once that’s paid off, now you get to keep all that mon that, that money that’s coming in. And, and that helps, uh, accelerate the timing too.
You know, you’ve got the money set aside. You know your business can afford it, you’re paying it down faster, and that just snowballs from there.
Bim Dave: Yeah, ab, absolutely. So, so when you’ve got this, um, system in place, presumably the system is only as good as the habits that then support it. So I, I, I think I’ve heard you talk about, um, rhythms, financial rhythms.
Um, I’d love to hear a little bit more about that and how that kind of ties in to that profit first, um, execution, I guess.
Ben Hockema: So I think every family and business at a minimum should look at their finances once a quarter, but really it should be once a month until, you know, you’ve got the systems and the, uh, the disciplines in place.
So at least once a month, I recommend. You look at your finances, you look at using our Profit First model. What are the percentages that you were targeting? And did we, did we stay on track? Um, there are times when unexpected expenses come up and you do have to take a little bit bit of money from the profit number.
That should be a trigger to say, okay, this is not sustainable. Something happened. I gotta plan ahead. I’ve gotta make sure that this doesn’t happen next time. Uh, because I had to pull from that account. I’m eating my own profits. We don’t want to do that. So at least once a month, look at where you are.
Hopefully you’ve got an accountant or somebody internally that’s putting all the numbers together so you don’t have to do that as well. And, but then also translate that to the personal side. I personally don’t think most people follow budgets well, unless they’re the type of person that are just disciplined and will follow the numbers every time.
But you need to have a check-in, even if you’re not gonna follow a strict budget day after day so that you know you’re still okay or on track and you don’t have the lifestyle creep or don’t have something else go up. So I recommend business owners sit down if they’re married with their spouse, and hopefully with.
An advisor of some PO of some sort to look at both the business side and the personal side all together. Once you’ve done that for, let’s say six months and you’ve been pretty much on track and you know what needs to happen, you can switch that to quarterly, but just that conversation. I know, I know.
Again, bringing back to my family, what, my wife doesn’t wanna deal with the numbers at all, if she can. Uh, she doesn’t wanna see ’em, but the discipline of spending a few minutes to look together and say, here’s where we are. Here’s what’s working the way we expected. Here’s what needs to change. Gets us on the same page so that three weeks later when we have an idea, Hey, let’s go buy this for our kids, or go to this experience, or whatever it is, we know.
Does this work? Does this fit into the plan?
Bim Dave: Yeah, that’s really good advice. Um, are there things you, you mentioned like keeping on track and, and staying on track. So from a business perspective and maybe focusing on the law firm side of things, are there specific KPIs that you recommend, uh, measuring against to make sure that you know you are tracking correctly?
Ben Hockema: So it depends. It, it definitely depends on the type of, the field of law that you work in, because there’s different ways you get paid and some are on retainers and, and some will get paid three years from now. Right? And so we, we really have to look at that. So each one’s got their own. I think that law firm owners need to know as much as they can about what drives revenue.
So, each one’s got their own, but, but where are you getting new leads from? And. What activities are you doing? So it might not even be a number, it might just be activities. What activities are you doing that are gonna generate this so that we can plan out, oh, you’re gonna have a lull in income nine months from now?
What do you need to do today to build that up? So we work with every law firm owner to come up with their own KPIs. Normally it’s four or five, and it’s gonna be, maybe it’s activities, do these activities because we know it’s gonna translate over time or it’s, um. We know that you have to spend X number of dollars on, on advertising, and we have to make sure you do that.
So how much revenue do we need that you can pay that off? All those different pieces. I think for each cl each law firm’s gonna be different on what works for them, but we want, it’s like every other business strategy, you want your activities and your spending to be. The most profitable that that’s going to translate to the most, um, from an investment perspective.
And so don’t just spend money to spend money, let’s have a KPI that we determine for you and your business that works for you.
Bim Dave: Mm. Yeah. Ab absolutely. So, so, um, men, I think you, you kind of touched on the fact that many professionals, um, particularly some of the lawyers that, that I speak to don’t think of themselves as numbers people, right?
They’re, they’re there to practice the law. That’s what their focus, um, is. Um, but obviously like there is a big aspect of the financial discipline that we kind of just talked about that they need to be aware of. So, what, I guess, what does it mean to. To kind of take that step forward to start, to begin to think like A-A-C-F-O, um, but not necessarily drown in spreadsheets.
Right? Like what, how, how, how does that kind of, that that kind of stage, stage growth happen in terms of a, a law firm leader?
Ben Hockema: So number one, I would, I would read the profit first book. Let’s just start there because that gives you common language that whether it’s you doing it yourself, you’re doing it internally, or you’re working with an accountant or a bookkeeper or somebody in your office that’s, that’s doing the, the books, it’s all gonna be consistent.
You’re gonna use the same language. So I think that’s, that’s a good way to start. Uh, and I’ll give you an example. A lot of people say, I am really profitable. I just choose to reinvest in the business. I would not say you’re profitable, then you have more operating expenses. That’s the way that I would approach it.
That’s the same way that would go across in the book, because if you’re not taking it home, if it’s not leaving your business and going to you personally. You’re spending the money. There may be good tax reasons to do that, but you’re spending the money, let’s not make up some other other things. So let’s get our mind in the right spot of what actually is happening.
And it, you don’t even have to get to a spreadsheet to see that. We just need to have common language. So let’s start there, then know what your targets are. So, um, determining maybe backward looking again, just in those categories, what have I spent the last four quarters on these? Let’s allocate those.
Lemme just see where I’m at. What do I normally operate under? And that can just give you some clarity. We’re talking high level. I’m not having to go in every line item and say, okay, is this one reasonable for an expense? We’re not there yet. Let’s just look at the high level. Are you generally healthy or are you not?
Um, and so then as you go through, I recommend having a third party, at least initially. Doesn’t, doesn’t have to be me. It could be any accountant that’s versed in profit first that can help you understand the numbers, can make sure it’s set up correctly, can check in, occasionally, call you out on your blind spots that you have help you focus on the right thing.
You can maybe go execute after you’ve had that third party, but because most law firm owners don’t. No finance, you, you don’t know what you don’t know. So bringing that, that expert in can be super helpful. Um, and then again, just whether it’s by yourself or with with another professional, think about what this means for you personally.
Where do I need to get to? What? And so maybe it’s make a list of the things personally that matter to you. I wanna pay for my kids’ college eight years from now. Okay, here, here’s how much it’s gonna cost. Now I have a target. At least write that out. I, I see so many that just live day to day. They love what they do.
They love serving their clients, and they have no idea how they’re gonna pay for any of this stuff. Let’s at least write it down. At least you got a goal to build for it.
Bim Dave: Absolutely. Yes. Um, so, so one of the things that, that I think I read that you do is, is a, a concept called virtual CFO. And I’m wondering if you could just explain what is the difference between that versus owners getting help from a bookkeeper or an accountant?
Ben Hockema: Mm-hmm. So I, I think our big thing for a virtual CFO, some of the industry call it a fractional CFO, it’s really somebody who’s not just doing the books. Um, as someone who’s good at that is, in my opinion, also providing some strategy, some forward-looking guidance. So, uh, a big thing for most bookkeepers is that they tell you what happened last month.
There’s nothing about what’s happening next month or next year. And so a good, uh, CFO is gonna look from a tax perspective, how do we set this up for taxes so that you’re not paying more than you have to? Um. Let’s do some forward projections. Let’s help you align with your strategic plan. So you want to be here in three years.
Here’s what you need to do. Here’s your KPIs we’ve worked together on to go there. So, uh, I’ll give you an example. We’ve got a, um, a law firm owner and they work with us. And what we do on a quarterly basis is not just look at the numbers, which we do, the bookkeeping. But we also, uh, connect it to the long term, uh, on their business, but more importantly their personal side.
So how does that all work together? What are you paying in taxes? What’s our quarterly tax payments? We file the tax returns for them as well, but it’s also I want to expand or I wanna hire somebody, or I, I want a bigger office, whatever that is. Um, we’re forward looking to say, okay, if you do a great job for the next three months.
And you hit our per percentages, you’re gonna build up enough extra in your operating expense budget that you can afford that higher rent six months from now, or three months from now, whatever the time period is. Um, so let’s build that up. Now again, most bookkeepers are gonna tell you, well, here’s your balance sheet.
Here’s how much you have in the bank. Here’s what you spent last month. Uh, they’re not forward looking and strategizing with you, so I’m not gonna make the decisions for our client, but I expect if it’s a big expec decision, they’re gonna call me and get my opinion, because we’re gonna know everything about the business.
We’re gonna know the goals and my job’s, not just to say yes and uh, to push back a little bit, and then they can make their decision with all the information available.
Bim Dave: Yeah. No, absolutely. And when, when, when you are, when you’re sitting down talking to a business that’s kind of looking to grow in the year ahead, for example, um, obviously forecasting plays a big, big role in in how that plays out.
What, what would you say are kind of the starting points or the key, key principles behind putting together a forecast that’s not just kind of finger, finger in the air right. Um, guesswork. Like how, how do you advise law firms on that?
Ben Hockema: So I, I love the idea of having. A super optimistic projection and a very conservative one just to give you, here’s the sandbox we’re playing in.
Here’s what could happen. Here’s all the different paths. Because I find a lot of business owners, law firm owners, they want certainty. And we know you forecast, there is no certainty, but they also want to do as little work as possible to have that certainty. And what I instead want to do is say we understand probabilities, probability, that even if.
Even something that’s a very high likelihood of happening. When you add 10 things that have high likelihood of happening altogether, the probability of all of them happening is actually very low, that every single one happens the way that you expect. So let’s make sure we know the game we’re playing.
What’s the worst case scenario? Let’s make sure we got a plan for that. So don’t do anything that’s gonna commit your money or commit to a long-term lease or something that if all the bad things happen, you can’t survive. We want a sustainable business. On the optimistic side, let’s imagine what’s possible, knowing that’s probably super optimistic.
It’s not gonna happen the way that you described, but what would you have to do in your business if you’ve tripled in the next 12 months? What changes happen in your business not to do ’em now, not to commit to it, but know as you start seeing with that cadence of looking at the numbers, oh, I’m headed towards this path.
Now we know in advance sort of what we’re doing, but you end up somewhere in the middle. So most forecasts, then you kind of have a median between all those. And you say, okay, how? How do I have to commit to this? What do I have to see? What has to be proven before I commit more money? So let’s say you really want to grow, you know you’re gonna have to hire two more lawyers if you hit your goals.
You are gonna have to hire two more before the end of the year, next 12 months, let’s say. I want to know. Then the conversation I have with the owner is. What has to be proven to you before you hire that person. So maybe it’s, I’ve got cash in the bank to handle it, so if they don’t generate revenue, you’re fine.
Or I have to have a pipeline of these number of new clients that are gonna come in, or I have to wrap up these cases so I have the free time to train this person. Whatever those triggers are, let’s come up with what they are and then that’s super easy. Those are your KPIs. That’s how you know I’m on track and I can go and hire that person.
So again, to to recap, start with. Best and worst case scenario, find something that’s probably the most likelihood, uh, to happen and let’s plan for that. But we have to course correct positive or negative as you go through and have the KPIs to keep you on track.
Bim Dave: Yeah. So, so the, the plan part is interesting, right?
So, I think, um, it was Mike Tyson that said you can have the best plan in the world until you get punched in the face, right? That’s right. Um, and, and I was, I was thinking back to a conversation I was having with one of the law firms that we serve, and one of the things that. They had said is, is one of the challenges that they face is just being able to anticipate and handle some of the dips in the market.
So, like in their example, they’d noticed that collections had been down like for the last quarter. Um, and a lot of that was down to some of the economic instability and some of the other things that are happening, um, geopolitically. So I wondered. With regard to some of those things where you do need to pivot on a strategy or a plan that you’ve got in place, how do you advise clients on that?
And how do you, how do, how do you prepare and, and, and pivot fast enough to make sure that that doesn’t impact your business in a negative way?
Ben Hockema: So number one, that that jumps out is what we talked about before. It’s having the discipline to look at, at things in a normal cadence so that you, you recognize that that happens.
And so in that example, hopefully that was a KPI we identified of, hey, collections are not consistent. Um, they don’t always come in at the same time, so we need to be tracking that. That’s one of the numbers. We don’t have to look at every number. That’s one of the numbers we gotta look at is, is how long has it been, um, since we’ve been paid, how many are overdue, uh, past due balances, things like that.
But you can’t, I know we all want certainty. You can’t know in advance what’s gonna happen. We, we don’t, no one has a crystal ball. No one knows we’re going to be. So having the cadence, knowing your numbers. But building up that margin of safety is important. So I’m, I’m probably unlike a lot of, um, business coaches or consultants in, in, I think that’s part of my role.
I’m different in that, uh, although I personally have a very risk tolerance, I’m willing to take a lot of risks and I’m an entrepreneur. I’m also recognized, ’cause I’ve seen enough businesses fail. You’ve gotta build a margin of safety. So I advise my clients be willing to give up some upside. To make sure you’ve got enough saved up in the accounts, have have some extra saved, uh, in cash in your accounts.
That’s the biggest way to build the safety. Um. Live with, live below your means. So that person, if you have to take a step back personally, you’re gonna be fine. Maybe you’re not gonna achieve your retirement goal quite as fast. You can’t retire at 55, it’s gonna be 57. Sorry. Um, that’s just part of what happened.
Adjust from there, building the safety to begin with. And that’s where the profit first model really helps. ’cause you’re paying yourself first. You already have some, you’re not gonna go negative cash flow if you have to dip into the profit. That’s a problem. But you, you know that’s happening and it helps you correct right away.
So be, build the foundation on, on where you need to have. So I’ll give you a quick story on a personal side so it just, on a personal wealth management client, um. Um, we work with a lot of business owners and then the other group of people that come to us have stock options, equity compensation. And so we have people that have sudden money.
They’re able to get all this, but they also wanna maximize the upside. And so the conversation we have with every one of them is sell enough as soon as you can of stock to achieve all the foundational goals that you have. So whether it’s buy the house that you wanted, put your kids through college, pay off a mortgage, um, you know, help pay for mom’s, healthcare, whatever those foundational things, don’t worry about the upside.
Make sure you build that foundation and then whatever’s left over, if it’s 80% or 5% fine, we, we can maximize that. So I’d say the same thing to a business owner until you’ve built. A sustainable business that’s got enough margin of error has, uh, it’s been around long enough. You built up the cash. Don’t shoot for upside because.
It’s, it’s a double edged sword. You can get the upside or you could go bankrupt. So let’s instead have the safety, and then from there, from a, a position of strength, now you can pursue the opportunities that you see that are out there. Um, and so that’s, that’s the way we advise all of our clients is build the safety first.
And then once you’re successful and you’ve got the cash, and you’ve got the profits and you’re living within your means, take as much risk as you’re willing to take. Uh, is great.
Bim Dave: Yeah, no, it’s very, very sound advice. So, so I just wanna kind of look to the, look, look a little more to the future, um, from your perspective, and obviously with, with some of the rising costs, regulatory demands increasing, um, all of the tech disrupt disruption that’s happening across the, the globe at the moment, how do you see that impacting, um, like the world of, of professional services and how does that, how, how do we need to evolve over the next few years?
Ben Hockema: I think even the best law firm, even the best financial advisor, the best of any professionals, needs to be looking at what’s happening and, and not, not to be scared and, and be worried about it all the time, but understand the risks that are there. I, I would not be shocked if 90% of lawyers and 90% of financial advisors are out of a job within the next decade.
Would not be shuck. So what do you do in your business? Well, number one, let’s make sure you’re getting paid enough. Let’s not just plan for the future, we gotta plan for the future. But if you’ve got clients and you’re, you’ve got revenue coming in, let’s build that margin of safety, let’s have some cash.
So, it all goes back. You gotta start with a nice foundation, but also, um. We’re going to all have to move faster. I think we’ve seen that the last five years and have continued, the world changes faster than it ever has, and I think that’s continuing to accelerate that we have to be nimble and have to make changes.
And so, it is a lot of work. There’s a. My number one advice would be, have the right people, whether it’s on your team or in your cornal corner, or partners that you have that are also thinking the same way they, they’re looking at around the world and saying, oh wow, the world is changing. We gotta adapt. I don’t know what all of ’em are.
I think it’s very industry specific on what the nuances are. But you gotta get, have your team built ’cause you’re gonna need that group of people who are gonna help grow with you and, and survive whatever. It’s tough.
Bim Dave: Absolutely. And are you finding, um, like in, in the way that you kind of deliver advisory services, that technology is playing a bigger role in terms of either how, how you interpret some of the data points that we talked about in terms some of the KPIs or how you deliver services even to, to your clients?
Ben Hockema: For sure. There’s, there’s a lot of things. Um, I’ve not yet, I fully adapted them, but there’s a lot of tools that are out there that are, um, just bookkeeping tools that business owners can use that are AI driven to get some information out of there. And I think over the next six to 12 months, uh, there’ll be better tools and, and then a year later there’ll, there’ll be better ones again.
So, I think that’s excellent. I think it’s great. Um, we work. Virtually. So my teams around the country, I’m the only one in the Chicago area. I’ve got people all over the US and clients all, all over the us And, and that’s just even five years ago, uh, pre COVID would not have thought that would be the case, that that’s the way that the world is.
And though that’s the way that we work. And I think that will continue. Um, I think people expect immediacy. Now, uh, clients do on, I’ve got a question I want to answer right away. I think AI can help with that. Other tools, portals that have been developed can help with that. At the same time, it’s understanding the behavioral finance side, which is very rare, is a decision need to be made in finance today.
And so there is a benefit to pausing and taking a moment to digest. Uh, and so that’s something that we teach our clients is we will respond to you, but we’re not gonna make a decision unless it has to be made, until we’ve all had a chance to get on the same page and digest it. And I think that’s valuable for anybody.
We live in this world of immediacy that. Isn’t always the best for our mental health or, or even the best decisions. And so, uh, taking a moment is what we stress to all of our clients and we’ll just continue as the world gets busier and busier.
Bim Dave: Absolutely. Great, great, uh, advice. So I just wanna move to a couple of fun wrap, wrap up questions if I may.
Um, the first of which being, if you could borrow Dr. Hu’s time machine and go back to yourself at 18 years old, what advice would you give yourself?
Ben Hockema: Oh man, if I’d go back, I probably would’ve spent, I honestly, I would’ve taken more entrepreneurship classes, if I’m honest, because I think it took longer for me to get to be an entrepreneur than I was, ’cause I was on the wrong path there on the, the pre-med.
But at the same time, I met my wife when I was 18 and I’m very happy about that. So, I’d say just stick with that. That’s, that’s a good decision. Yeah,
Bim Dave: absolutely. Good, good. That’s a good answer. Um, and, um, what’s your favorite travel destination? Ooh.
Ben Hockema: Um, I like travel. Here’s the problem. I don’t like to go to the same place twice, so, uh, I have some great ones that we love to go through.
We just, my wife and I just went to Montreal for the first time. Loved it. It was a great time. Um, before that whole family went to Hawaii. Excellent. I mean, every place we go is great, but I don’t like to go to the same place twice if possible.
Bim Dave: Yeah. I, I love that. I mean, there’s, there’s a whole world to see, right?
So that’s, so why, why go to the same place again, unless it’s really, really good. Um, sure, sure.
Ben Hockema: I mean, we went to, uh, Ireland, uh, maybe seven years ago, and we wanna go back. That’s, that’s probably the next one that we’ll repeat.
Bim Dave: Yes, absolutely. Um, and finally, what’s keeping you inspired right now outside of the, the financial world?
Hmm
Ben Hockema: Uh, so I have a seven week old daughter. Uh, so that’s, that’s, uh, life changing in that I have two older kids and I have a bit of an age gap. And so seeing the older ones, um, and all the things they’re involved in, but also kind of this almost fresh start, uh, you know, we’re a lot older than we were the first time and, and have hopefully some more wisdom.
And so that’s just inspiring on, um, just, it’s a whole new world. And even just thinking about what she’s gonna grow up in versus our other two and how the world’s. Better or worse in, in some ways. And, uh, that’s just, that’s plenty for me to worry about outside of, uh, outside of my job.
Bim Dave: Absolutely. Well con congratulations on that.
That’s a wonderful thing. Thank you. Thank you. Yes. And good, good luck with the sleep.
Ben Hockema: Uh, you know, I’m a little tired today, so if I rambled a little, that’s, that’s what I blame it on, so.
Bim Dave: No, no, you’ve, you’ve been amazing. Uh, Ben, thank you so much for spending time with us today. There was lots to learn, um, in what you shared today, so I really appreciate you being open and, and sharing some of your nuggets of wisdom.
Ben Hockema: Yeah, this was great. Thank you very much.
Bim Dave: Thank you.