In an effort to post more on starting a law firm, I wanted to let my readers know that I was recently featured in a nice article on Minnesota Lawyer’s solo and small firm website: Solo Contendre.
Reporter Dan Heilman contacted me several weeks a go to do an interview. He was looking for my thoughts on solo and small firm business plans. I gave him my thoughts. I won’t rehash too much of the conversation here, you should go read the article.
ARE BUSINESS PLANS REALLY NECESSARY FOR STARTING A LAW FIRM?
My two cents is that you probably should create a business plan for your law firm, but it doesn’t have to be all that intricate. (Then again, I’m just starting out and I could be wrong – I certainly don’t feel like I’ve “made it” yet).
My general thought is that rather than call something a “business plan” it should be referred to as a marketing plan.
Below are my answers to Mr. Heilman questions:
– Is it always necessary for a solo or small-firm lawyer to have a
business plan?
I don’t think so. I think you need to know who your client-base is and how to reach them. More important, to me, is having a business marketing plan. The financial projections, overhead, billing-practices, mission statement, funding, etc. are all things that can planned-out fairly easily. My question: what happens when there is no money coming in the door? I’ve read that to be a solo or small firm lawyer, you need to love marketing. If you don’t, I think it is tough to make it. If you are very careful and you plan-out all your expenses over a year-long period, how does that help you generate revenue and bring in clients?
Again, my thought is that a solo or small-firm business plan should be minimal and should focus on marketing. I think lenders are more interested in seeing a nice looking business plan so that they can feel comfortable lending money. Otherwise, I think they are generally over-rated.
– What’s a good first step in developing one?
There are a lot of resources. The small business administration has a wealth of information (
www.SBA.gov). In Minnesota, SCORE (
http://www.score-mn.org/ ) has some great mentoring and business plan resources. Local chambers of commerce usually have some kind of class on these subjects. A good online source for business plans is
www.Bplans.com.
For my business plan, I went to the bookstore and looked at sole proprietorship and small business books. Each of the books has more information than anybody could possible read on creating a business plan.
– What ingredients should a good business plan have?
Business plans should have a mission statement, an overhead estimate, some annual projections for the first five years, and a strong marketing focus. Again, a good business plan should focus on marketing. To be sure, estimating overhead and costs associated with running a practice is very important. However, thinking hard about how you plan to get clients in the door is the key.
Therefore, the plan should have detailed information about the what, where, when, why and how you plan to generate revenue. What is your budget for generating that revenue once you have figured out your overhead? How will you ensure that you stick to a marketing plan? Are there going to be some ways to check your progress so that you know you are sticking to your goals? If your plan isn’t working, what else can you do?
Some lawyers get very detailed with this information and others (like me) use it as a platform to keep focus. I don’t want to get too detailed on things that I can’t really control.
– Should it stay static or evolve over time?
I think a business plan should absolutely evolve over time. For instance, I am focusing mainly on family law in the beginning because it is easier to generate revenue in a field like family law or criminal law. As time goes on, I plan to diversify into trusts, estates, and probate. Along the way, I know there are going to be ups and downs. I may find myself doing a lot of work in an area of law I had not planned on. That hasn’t happened yet, but you never know. A business plan is simply a goal-setting platform. We all know that goals change somewhat over time. So, be flexible with the winds of change.
– Any other tips for solos on creating a sound business plan?
Get as much information as you can. Read a lot. Don’t necessarily put anything on paper until you feel like you have a firm grasp on what you want to do. For me, I researched as much as I could about starting and running a successful law practice. Then, I created a relatively simple plan with some financial benchmarks. I think setting a marketing and a revenue goal has been key for me. It gives me something to shoot for and measure myself by. Other than that, you don’t need to take making a great business plan too seriously unless you are looking for some start-up funding. Of course, I am also cognizant of the fact that I could be completely wrong.
This blog post was written by Joseph M. Flanders, an Apple Valley MN lawyer.
