Taking the leap to scale your business is a huge decision for any small law firm owner. Not only do you need to have a strong grasp on the resources you’ll need to make the transition from solo to staffed; you must also be business savvy and have the drive to properly execute an expansion.
It can be challenging to know exactly how and when to scale, but fortunately, tracking key metrics can help. Here’s how:
Metrics Help You Determine Ideal Timing to Scale
Choosing the right time to scale can make or break your small law firm. If you decide to scale when you’re about to hit a slow period, you could find yourself needing to let your new employee go before they’re fully trained. On the flip side, if you make a move to grow when you’re too busy, you might not have the time to properly onboard your new employees and set them up for success.
But with a strategy for keeping track of your small law firm’s key metrics in place, you can take the guesswork out of the timing equation. Tools like Smokeball Activity Intelligence (Ai) provide your firm with invaluable information on work patterns and workloads, so you never have to make scaling your practice a shot in the dark.
Metrics Help You Understand Frequent Firm Tasks
It’s next to impossible to make the right hire if your firm doesn’t have the capability to track exactly what team members are spending their time on and what tasks they may need additional help with. While writing down each individual task and keeping track of day-to-day work manually can help remedy this situation, it can be a major time suck, and can also be inaccurate. Instead, we suggest using Smokeball Ai to automatically track work patterns month-over-month and identify gaps. Then, when you get new hires in place, keep an eye on key tasks and their associated numbers. Are they shifting how you expect them to? For example, if you’ve hired a junior level attorney to take some of the busywork off of one of your partner’s plates, are you seeing that partner’s time free up considerably for higher level work?
Metrics Help Track Profitability
Scaling a business comes with overhead costs and countless unexpected expenses. While your firm may have the desire to take on more cases, it’s critical to figure out exactly how much you can spend on staff while still remaining profitable. Establishing key profitability metrics and goals, such as gross profit margin, net profit margin, profitability by client and profitability by practice area or type of work is a must. Track them over time to get a sense of when you can hire and how much you can spend.
Scaling your firm is exciting. By taking key metrics into account and planning accordingly, your firm will be in a much better place to grow without losing the things that once made you great.
Are you looking to improve tracking metrics at your small law firm? Take a look at our recent blog post: Three Metrics Every Small Law Firm Should Track Monthly.