In my last post, I discussed the value of planning. In this post I’ll describe how to create a simple business plan for your firm.
Step one: To quote Stephen Covey, it begins with the end in mind by considering what you want your firm to look like in ten years. Will it be the same size, bigger, smaller, dissolved, transferred to new partners, or acquired by a larger firm? Which lawyers will be practising in it? What practice areas will you have? How would you describe your client base? Will you be in the same offices or will you have moved? Ten years from now, realities like lease agreements, retirements and illnesses will have affected your firm. Change is inevitable. By planning ahead you can maintain a degree of control over the shape your firm.
Step two: By understanding the longer-term picture, we have something to aim at. Now we can do more accurate and meaningful short-term planning. Given where the firm will likely be in ten years, what can you accomplish within the next year that will take you one full year closer to that ten year picture? I generally suggest that firms consider the following areas and beneath each, I’ve written a few examples of the kinds of issues we consider:
- Revenue: Given how much revenue you wish to be producing annually ten years from now, and how much you’ve produced on average over the past three years, what should your revenue target be for the coming year? Do you have clear, assertive yet realistic revenue targets for each of your timekeepers? Are you aware of all other potential sources of revenue?
- Service Areas: In your long-term planning you will have determined those legal areas that are sunrise, sunset and sustain areas of law for your firm in the long run. Given that end picture, what shifts (if any) need to be made to your service areas in the next year? Do you have the right number and level of lawyers in each area of law? Should you be bulking up in any department, or starting to limit work in areas that are overly commoditized?
- Lawyers: Are the lawyers you have capable of producing the revenue you need? Are all of your lawyers suitably productive or are some having business challenges? Are your lawyers happy? Do they feel there is a future there for them? Are they being properly trained? Do you have succession strategies in place?
- Staff: Do you have the right staff and number of staff to support the lawyers and the firm in order to enable you to reach your revenue targets? Are there any challenge areas – where training or a change in staff is warranted? Is your staff happy?
- Technology: As law firm technology usually requires upgrading or replacement every three to five years, this can be one of your most expensive areas. Ideally you can span these upgrades over time. What upgrades will be dealt with in teh coming year? What new technologies (hardware or software) could the firm explore to increase efficiency?
- Marketing: Are you spending the right amount on marketing, and implementing on programs that are delivering results? Do you need to upgrade any of your marketing collateral (i.e. your website, logo, brochures)? Do you need to explore new marketing tools (such as social media)?
- Accounting: Is your accounting software up to date? Are lawyers properly using it? Is it producing the reports that you need? Do you have sufficient staffing in this area? Are there any process improvements that should be explored?
- Office Management: Do you have the right suppliers and supplier agreements in place? Do you have a business continuity plan in place? Are staff all properly trained? Is your Policies and Procedures manual up to date? Is there any process improvement that could be addressed this year?
- Expenses/Compensation: Do you have an accurate expense budget for the coming year? Should you review any major contracts or supply agreements this year? Does your compensation system (for lawyers and staff) require adjustment in any way?
From these reflections you will start to develop targets or business goals for the year. Remember that goals are outcomes. Ensure that they state a result and not the steps toward that result. Ideally, make those goals as specific as possible so it will be clear whether you have reached them or not at the end of the year.
Step three: Once you have a list of goals, you can move to final step: building your business plan. A business plan identifies the goals you wish to accomplish, and describes how you will accomplish each goal. So your plan will likely be several pages long, with a series of goals each followed by a detailed list of action items that will lead to the accomplishment of each goal. Ensure that for each action item, you include a responsible party and a due date.
Your resulting plan will be several pages long. To ensure you implement it, develop (and stick with) a reporting schedule to keep you honest.