Planning for a Successful New Year
January each year represents a new beginning. It is a time to examine your business over the previous year, assess what went right and what fell short of your expectations. And it is a time to make adjustments to your business plan and tactics to make the coming year better than the last. There are several aspects of your practice that you should examine to assess whether adjustments should be made:
- Financial performance (Revenues, Expenses and Profit) vs. Goals
- Case Analysis (Quality and Quantity of caseload)
The Essence of Strategic Planning
Whether you are doing an initial plan or fine tuning an existing plan, all strategic planning comes down to answering three questions:
- Where am I?
- Where do I want to go?
- How do I get there?
Where Am I?
All planning must begin with an evaluation of historical data to get a clear understanding of the state of your practice or the firm’s business. Establishing this initial reference point is crucial to be able to set realistic goals, and to identify tactics and strategies that are working or producing unsatisfactory results. Too often, practitioners attempt to solve problems without a clear understanding of the state of their business. In desperation, they throw things at the wall and hope something sticks. Effectively identifying what is not working (and what is) is an essential part of choosing and executing the best strategies and tactics.
Where Do I Want to Go?
This is the goal setting part of planning. Too often when I consult with lawyers I ask them what their goals for their practices are, they don’t have clear and specific answers. They respond with vague objectives like, “I want to make more money” or “I’d like to have better cases”. One of the important elements of goal setting is having specific goals. How much money do you want to make? What kinds of cases and clients, and in what practice area would you like to have them? Vague goals seldom are achieved, because you have no way to tell when you have arrived. Have you achieved the goal of “making more money” when you have made one cent more, or a hundred thousand dollars more? The goal doesn’t help you ascertain that. Making goals specific also helps you track your progress. Make sure you clarify what you are trying to accomplish.
The second critical aspect of goal setting is making your goals time dependent. Goals should have deadlines and timelines. The deadline is the final date by which the goal should be achieved. The timeline is a series of success mileposts that produce intermediate goals on the way to the final goal. So, if your goal is to reach $500,000 in revenue in three years, the timeline might be to do $300,000 the first year, $400,000 the second, and $500,000 the third.
Another important question regarding where you want to go involves your target matters. What practice area do you want to concentrate in? If you matters are already in that area, are there any types of matters you would prefer to target in your marketing efforts? Specific target client demographics? Specific industries? Be as precise as possible.
How Do I Get There?
The answer to this question will define the strategies and tactics you will use to achieve the goals. If the goal is more revenue, you would choose marketing and pricing strategies that would get you to your number. If the goal is a better work life balance, cutting your weekly work hours from 60 to 40, the strategies might involve personnel changes, hiring more staff, or improving your office efficiency through the use of new systems.
Areas for Consideration
When assessing financial performance you should start at the top line and work down. Did revenue meet your goal for the year? If you did not have a goal, you need to set one this year. How much more revenue do you want in the coming year? Were expenses under budget for the year? Again if you didn’t do a budget, do one this year. Are there any areas where you can economize next year? Finally, did profits meet your goals for the year? What are your goals for profits in the coming year?
Examine your cases one at a time. Are they in the area of law in which you would prefer to be working, or did you stray outside your target area of focus? Usually drifting away from your target area is a symptom of insufficient marketing. Practitioners are most likely to take a case outside of their areas when there is not sufficient work in their areas to keep them busy. If you see your inventory drifting away from your brand or if you have never developed a focus area, it is telling you to improve your marketing.
Another question to ask is whether the matters you are handling are of sufficient magnitude to produce the billings you need to achieve your revenue goals. If all the matters are small, or your clients are having trouble paying you, then your inventory is not leading you to your goals. Again, marketing is the issue. When there is not enough work, practitioners tend to take smaller cases and clients with tenuous ability to pay.
Clearly identify what types of matters and clients you want, and set a goal to have your case inventory filled with these kinds of matters working for clients capable of paying your invoice. The key to doing this is to have a marketing effort that brings you more clients than you can handle so you can be selective. If you are getting fewer inquiries than are necessary to fill your capacity, you will feel compelled to take them all, and some will not be desirable.
Having good staff is vital to a successful practice. The right staff will help you to be more efficient and organized. It will allow you to spend more time billing and less time on non-billable activities. Additionally, to have the time to mount an effective marketing campaign, you must be able to divert your attention away from the case work without worrying that the clients’ matters will not get proper attention. Without effective staff, this can become very difficult, or cause you to have to work unreasonable hours.
The beginning of the year is a good time to do performance evaluations. Each employee should have a performance evaluation no less than annually. Prepare your notes before sitting down with the employee as to areas where they are doing well and areas where they need improvement. Always start the evaluation with the positives. Acknowledge their strengths and show your appreciation. Then move on to the areas where they can improve. Sometimes, these improvement areas are simply a matter of communication. The employee might not be aware that you want things done a certain way, and he or she would be happy to change. At other times, it requires training.
Occasionally, a practitioner’s evaluation is that the employee doesn’t have the necessary skills, a lack of motivation or potential. After repeated attempts at training fail, there comes a point where the practitioner loses faith that training will help. If this is true for you, the best time to make the decision to replace an employee is at the beginning of the year to give yourself a fresh start in moving forward on your plan. Also, more people tend to seek jobs in January, since they wanted to make a move, but didn’t want to do it during the holidays. So, the candidate pool tends to be richer in the first quarter of the year. Finally, giving salary increases in the beginning of the year makes it easier to budget for payroll, since you have a good idea what payroll costs will be for the balance of the year.
Effective marketing is the fountainhead of a successful practice. If you have not developed and committed to a strategic marketing plan, your practice will be at the mercy of chance. The more inquiries you have, the better your client base, the more selective you can be about the matters you take, the more you can charge for retainers, and the higher your hourly rate. The more revenue you have the more you have available to pay good staff. Without a good marketing plan, you will be relegated to a threshold practice…you will take any client that crosses the threshold. This leads to poor clients, matters outside your focus area, high receivables, and low hourly rates. You will work long hours for clients who don’t pay you, at a rate where you had to compromise to get them. Don’t be a victim of marketing drift, where poor or absent marketing allows your practice to drift towards the rocky shoals of cash flow problems.
Evaluate your marketing efforts and make a plan. I recommend that every practitioner who wants to build a great practice should allocate 25% of his or her time to marketing, especially if you are a solo or in a small firm. That comes out to about 10 hours per week. Marketing efforts include:
- Having lunch with other professionals who send you work (or could)
- Going to bar meetings and CLE’s and meeting other lawyers
- Writing articles and lecturing at CLE’s to demonstrate competency
- Seeking positions of leadership in the profession to garner respect from other professionals
- Working on improving your website
- Maintaining a high profile on professional social media
- Following up with contacts to stay top of mind
Your marketing plan should include specific activities you intend to pursue. You should set goals for how many activities, how many lectures you will give, how many new contacts you will meet, how many lunches you will have this year, etc. Break these activities down by month and make sure you reach your activity goals every month.
“TEN HOURS A WEEK?? I DON’T HAVE 10 HOURS A WEEK FOR MARKETING!!” Well ask yourself, are you working too many hours for not enough money? Are you working for free because your clients aren’t paying you? Are you working on matters you don’t enjoy?
If you spend 500 hours per year on a targeted marketing effort, you will be covered up with demand and will be able to pick the best clients, with the best matters, who are willing to pay you what you are worth, and pay on time. You will be able to afford great staff and optimize your time for greatest efficiency. Now tell me again why you don’t have time for marketing? Make the time. It is every bit as important as the work on your desk, because it makes that work the best work possible. Make a plan and execute that plan to the letter every single week. If you have to hire help to free up the time to market, make the hire and go out and find work to put on their desks.
If you want to make a difference in your practice this year, the beginning of the year is the time to start. Changes you make in October will not get you back on track by year end if you have drifted too far off course. Changes you make in January can help you set a completely new direction that will result in far more gratifying outcomes in December. Do not allow your practice to drift without a plan. Set a course and hold to it. You will be glad you did.
Copyright © Art Italo, 2018. All Rights Reserved
Other Articles by Art Italo:
The Benefits of Hiring a Consultant
Marketing for the Small Firm and Solo Practitioner
Improve Law Firm Marketing Using Leveraged Networking
Art Italo is a consultant working exclusively with attorneys in the areas of legal marketing, strategic planning, law practice management and success coaching since 1992.
He has developed and refined the concept of Leveraged Networking after over 15,000 hours of individual consultations with attorneys. He has personally consulted with over 500 attorneys in Atlanta and across the U.S. with practices ranging from solo practitioners to partners with major firms. Art has more than 35 years of marketing and management experience and holds an A.B. from Brown University and an M.B.A. from Pace University.
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