Business growth is not a luxury option for law firms, it’s a necessity if you want to survive. But there’s a big difference between non-strategic growth and growth that’s designed to help you thrive financially. With Smokeball’s Performance Profitability Tracking you can truly understand where your firm’s money and time are being spent each and every day, including every staff member’s day to day activities. Let’s take a look at four basic elements of a smart growth plan.
Your law firm’s infrastructure includes everything from the type of office space you work into the type of computers you’re using. You must keep control of and plan out every aspect of your law firm’s infrastructure today and in the future. What type of office will you work in? Where will it be located? Where will you move once your business doubles? What type of computers will you use? How will you store client files—in a cloud-based system or paper only? How many clients can your system manage effectively? At what point will your organizational system become unsustainable, forcing you to upgrade? Your infrastructure must be aligned with you law firm’s growth stage. If you have a short list of clients and you’re the only person working the cases, working from a single office in shared workspace may be fine. However, if you have a team of five attorneys, a paralegal, and a secretary, your workspace will need to expand to support a large team.
Cash Flow Planning
Your law firm must know where your money is coming from and where it is going at all times. Set up a cash flow plan that accounts for your receivables, monthly projected income, and unforeseen problems. Your invoicing system should be set up so that clients are billed in an efficient manner and late invoices are handled promptly. A good cash flow plan will help you pay bills on time, avoid late fees, and figure out what you need to do to boost cash flow.
No law firm can grow without hiring the right talent. As you increase your client base and income, you must put in place a hiring plan. At what point do you need to hire new attorneys to take on the extra work? Where will you put the new attorneys? How much will you pay them? How will you compete with other law firms in terms of compensation and other incentives? Your staffing plan should take into account your cash flow plan so that you know that your projected income is enough to pay for additional employees.
Taking on any work that comes through the door is probably the basic client plan for a lot of new law firms but it’s not a plan for long-term growth. Even if you’re working with low-paying clients today, you must put into place a plan for getting the type of clients you ultimately want to work within the future. Who are the clients you prefer to work with? How much are they willing to pay for legal services? How often do they need legal services? Knowing who your ideal client is and having a plan for reaching out to them is one of the ways you will grow your law firm.
Law firms who want smart growth must be willing to carefully plan the foundational elements of their business.