“Planning” is not a dirty word. In fact it’s liberating, hopeful, positive and action-oriented. If your firm doesn’t have a carefully considered, documented plan for 2016, you need to read this post.
My purpose is to help professional services firms do better. So you’d think that occasionally, my job would entail improving their existing business plan to make it even more effective. But that is seldom the case. Usually, my job is to create a plan. Let me make this clearer: these are multi-million dollar professional services firms that up to this point have not been run through a formal, documented business planning process. To compare this to a sports analogy, no NFL team is successful without a strategy and a game plan. Law firms have been able to operate without such plans in the past because the winds have been in our favour – over the past 100 years it’s been fairly easy for law firms to survive and make good money. But those days are quickly disappearing. To survive and thrive in this economy, we need to embrace the critical business practices that have been developed and regularly used by virtually all other successful businesses.
Sometimes, a firm doesn’t have a business plan because the partners believe that such plans are only valid for larger organizations. Or partners may believe that plans are limiting business tools, too formal and awkward for their organization. Some partners don’t support business plans because they secretly believe it will be too hard to get buy-in and impossible to police non-conformers. But mostly, firms don’t have a business plan because:
- They’ve existed without one in the past so why change now? Or
- They don’t know how to create and implement one.
Why should a firm consider developing a business plan?
- A plan establishes business goals that all members of a firm can understand and work toward.
- A good plan includes a list of actions behind each goal, ensuring that logical thought has gone into determining how best to achieve each goal so that all subsequent actions and decisions by the firm can support accomplishment of those goals.
- The development of a plan forces a firm to ask and answer questions about the career progression of various professionals, preparation for retirement and succession, and other critical planning tools that have long term consequences, and may require short-term actions.
- A plan enables a firm to develop realistic corresponding budgets (revenue and expense) so that management of the business is less of a guessing game and more of a considered strategy. Focus moves to successful implementation instead of constantly re-asking basic questions with no basis for making a determination (i.e. is our Yellow Pages advertising worth it?)
- A good planning process requires monitoring and regular reporting to ensure a firm is on track and to measure the effectiveness of the business decisions being made. This enables a firm to make logical adjustments as needed, and to do so based on fact, rather than gut feel.
- This process also makes it easier to know when to say no to an opportunity. If it doesn’t lead to the accomplishment of a declared goal, it’s probably a waste of time and money.
All of this suggests that in the absence of a plan, the opposite of the above is occurring. In such an instance, a firm is not truly being managed at all. (Even triage has rules and process). Firms may believe they are being managed because there are meetings, decisions, minutes, etc. But that’s bureaucracy, rather than management. Good management can include a degree of bureaucracy, but management defines the ultimate purpose and then ensures that bureaucracy serves that purpose. A plan is simply your management guiding document.
Does your firm have a business plan for 2016? Ask yourself the following:
- Do you have a numbered list of specific goals that every partner can name?
- Are those goals specific enough that at the end of 2016, you will be able to quickly and clearly determine if your firm achieved them or not?
- Are those goals documented and accompanied by a logical and substantial list of action items that will lead to the accomplishment of those goals?
- Are the parties responsible for each of those action items noted, with due dates identified?
- Do you have a calendar for regular reporting on those action items?
- Do you regularly refer to the firm plan when considering all new opportunities as part of your decision-making process?
In my next post I’ll walk you through a simple process for creating a business plan for your firm.