I am totally guilty of focusing on revenues at the expense of profit. I’ve always believed that all problems could be solved with climbing revenues. For years, I have run around ranting about marketing as the cure for everything that ails us.

I still believe that revenues are an important piece of the puzzle and that marketing is the activity that drives revenues. Let’s not go crazy and lose track of the importance of driving revenues. It matters.

However, the recession has really helped me focus on profits. When revenues aren’t growing at 20+ percent each year, it’s harder to ignore mistakes. Suddenly, it’s really important to focus on management decisions and getting them right. If we don’t get them right, profits suffer.

Recently, I’ve learned three things about profit.

1. Hiring matters. The most important management decisions we family law practitioners make involve hiring. A good hire can make our year. A bad hire can suck the life out of our practice and kill our profits. I’m more focused on getting hiring right than I have been in the past.

2. Variable expenses are critical. I remain focused on the variability of expenses. I want to be sure that expenses move up and down with revenues. I don’t want to be locked in to long-term, inflexible financial commitments. We’ve created variability in nearly every piece of our expense structure, from payroll to marketing to leases.

3. Small projects matter. I’m learning that high profits can come from low revenues. As we experiment with products and virtual services, it’s important to remember that a relatively small sale can create substantial profits. For example, an e-book selling for $90 might result in $85 of profit. That stands in stark contrast to a sale of $500 in legal services that might only result in $75 in profit. In the past, it has been easy for me to walk away from a project that might, best case, generate $100,000 in revenues. Now I’m starting to appreciate that the $100,000 project might be more profitable than a $1,000,000 project. The revenues aren’t all that matter.

I suppose most of my observations are second nature to anyone with an MBA. Unfortunately, I don’t have an MBA, and I only learn about business from the school of hard knocks and the occasional business book. For me, the best teacher has been this period of slower growth. I’ve learned many lessons, and I hope they’ll be useful to you.