You have invested so much time in completing and graduating from law school and in studying and passing the state bar exam. Perhaps you have spent years working in law firms, government, or corporate law. You are now ready to open your own business and you want to do it right to make all those years of hard work pay off. You need a law firm business plan.
But do you know where to start? What should your business plan contain? What challenges do you experience and, above all, what don’t you know?
Start with the basics. What are your values? What do you want to achieve with your law firm? What will make your business stand out?
Understanding your “why” will prepare you to open your business and establish its operations – from managing records and documentsyou to check your business growth profile. Well-defined goals, lots of preparation and the right tools can help you get answers to your business questions and create the best business plan for your law firm.
What is a law firm business plan?
A business plan is a roadmap that considers your milestones, potential setbacks, and overall brand growth. You may want to include marketing, finance, sales and partnership strategies.
Broadly speaking, this is a summary of the goals you want to achieve as a brand. If you’re not sure where to start your business plan, consider:
The purpose of your business and what you want to do
How do you see your business in five, ten or twenty years
The type of work environment you want to offer
Company management and organization
What do you want to see come out of your business financially
While considering each of these factors, keep your target customers in mind. Consider your demographics, needs and expectations. This way of thinking can help you stay focused on delivering top-notch customer care.
Why is a law firm business plan important?
Making a business plan is a guiding principle for your goals and your success. This way, you’ll be less likely to lose sight of your goal. When running a business, you need to care about yourself, your people, the brand and the business as a whole, your partners, your competitors and of course your customers. With all that responsibility, losing track of your mission seems almost inevitable. However, it doesn’t have to be. Referring to your company values, long-term and short-term goals, and financial projections can help you avoid falling behind.
Your business is a business, so you should manage it as such.
Even though you should follow your law firm’s business plan, that doesn’t mean your goals won’t or shouldn’t change. Sometimes things don’t go as planned and you have to adapt. For example, some marketing strategies may not be as popular with your target audience as expected. In that case, it’s time to go back to the drawing board and see how you can seduce them.
How to start a business plan for a law firm?
Getting started is almost always the hardest part of anything. However, if you start small, it’s easy to build.
When creating your law firm’s business plan, follow these steps:
Define your goals
Having defined goals sets the tone for how you run and market your business. It may seem obvious to you, but when prospects search and land on your website, it may not be for them. When you express what motivates you, these potential customers may be more inclined to consider what you can offer them.
If you’re not sure how to explain your goals for the business, come back to them later. Understanding your services, marketing strategies, financial projections, management, and operations can help you come to a more concise conclusion.
Whether you’re applying for funding or want to start the business from scratch, you need to figure out how to keep the lights on.
You will want to have an answer for the following:
What are the costs associated with setting up a law firm?
How many cases do you need to break even? Make profit?
What is your profit loss estimate?
Be specific with these numbers. This way, you can better gauge your success or lack thereof.
To create a full legal billing policy early on will save your practice a great deal of non-billable time and money.
First, you’ll want to clarify things like your fees. Some companies charge a flat fee. Others charge by the hour. The fee structure may vary by practice area. For example, if you work in the area of personal injury law, you can choose the contingency fee route.
Once you have determined which payment structure to use, you will want to create a process for how you will be paid. Automate your billing with legal workflow is a simple way to standardize processes. This workflow should describe things like the invoice creation process, how the invoice is sent, and how the customer will pay.
Just like the risk assessment you give your clients, the same should be done when starting a law firm. Identifying potential risks during the planning process will help inform your business decision. Although risks are not always avoidable, being proactive can limit the shock associated with the risks of surprise.
Some potential risks for law firms:
What’s in a Law Firm Business Plan?
There is no set formula for creating a perfect business plan. However, these things can put you on the path to success:
This section gives an overview of your plan. He understands:
Mission statement, noting your inspiration and drive for your law firm
Core values, describing what you will use to serve your customers
How do you stand out, discuss what you’ll bring to the table that others can’t
A description of the company, explaining how you got started in law, your educational and professional background, etc.
Refrain from making general and exaggerated platitudes. Every other company promises how they will strive to get the results their customers need. Be specific and tell them how you are going to act.
Who will you represent and how will you be paid? These questions can help you determine how you will conduct market analysis:
Target customers : What demographic group do you want to serve? Think about age, location, status, profession or gender.
Financial projections: How much would this demographic reasonably spend on your services?
Industry: What are the trends in this sector? What is the size of the market? What is its growth potential or lack thereof?
Competition: Who are your main competitors? What are their/your strengths and weaknesses?
Law firm billing and finance
What will budgets and revenues look like? Think about how much money you will need to start and run the business each month. How many crates will allow you to break even or make a profit?
Estimate how much you expect to earn this year and every year thereafter.
Now is the time to think about how you will operate. Yes, you want to create a healthy work environment, but how will you get there?
If you’re opening this business, you likely have the education and experience to get started.
However, serving customers and performing operations are two different things. Are you the right person to lead the company as a whole? It’s okay if you’re not sure. Maybe you would benefit from hiring an office manager or other employees to keep things running.
The more clients you take on, the more paperwork, documents and general support you will need. You may not need to hire an employee to take care of these matters per se. As such, you may want to consider purchasing law firm management software to track every detail of your business operations. These cloud-based solutions make it easier to work from anywhere while maintaining collaboration with staff or outsourced workers.
Your services are the bread and butter of your business. What problems are your potential customers having and how will you help them?
Here you can also differentiate yourself from your competitors and discuss the benefits of hiring you.
Law office Marketing
When promoting your business, think about how you will present it and entice a prospect to hire you. What services will you provide and at what cost? Show potential customers that your business is worth every penny and that you will go above and beyond for them.
To create a law firm marketing strategy with proven tactics and goals is key. Traditionally, businesses have relied on word of mouth. However, to remain profitable, law firms must use modern channels such as social media, paid advertising and search engine optimization or SEO.
Use your executive summary and market analysis as an initial guide for your marketing strategy, then continue to measure and adjust your strategy.
Sample Law Firm Business Plan
Organizing your law firm’s business plan can seem like a huge maze. However, if you have a document template that lets you break everything down step by step, it won’t be so scary.
Business prospects of a law firm
It’s good to have both short-term and long-term goals when developing a business plan for a law firm. Nevertheless, these plans must be flexible and adapt to the market.
Understanding how to scale and market your law firm with modern processes will ensure the overall profitability of your business.
Modern legal technology makes it easier than ever to practice and run a law firm today.