The Mighty Business Plan: Part One
In the June WSBA Legal Lunchbox CLE, a poll was taken. One of the questions was, “How many of you have a business plan currently?” After 495 people responded the numbers were tallied. Less than 20% of the viewers had a business plan.
Some of that could be attributed to the viewership not all being business owners of their own firms, but it comports with my experience in talking with solo and small firm practitioners. Many lawyers do not create a basic business plan when starting a law office (at least, not formally) or never revise the initial plan made at the firm’s inception. Sometimes I sense an actual aversion to the business plan, for whatever reason. I hear things like, “That’s for business people. I’m all about intellect,” or, “I’m all about being of service to others, not making money,” or, “I just don’t need a business plan for the tiny firm I’m envisioning.”
Those responses may be true, but I’d like to make a case for this smart, multi-disciplinarian tool that can work wonders. Here are six reasons to develop a business plan:
- Get up and running. The most important part of starting a solo practice in my opinion is knowing thyself. After all, you are the intellect. Your firm’s #1 product is your brain. The business plan will help you ferret out your talents and strengths — and your weaknesses, so you can decide how to strategically counter them. If you feel shaky and unsure about how to start and make it successful, then try a two-page business plan for your eyes only. See if you can’t muster a little courage from putting down why and how you will be successful at this new endeavor.
- Take it to the bank. Lenders want to see a plan that will work before they lend you money to build your business. A well-developed business plan can result in a small business loan to buy a practice, get started, or build your book of business. This is the classic use of a business plan. Usually, this requires a medium-sized plan — seven to 15 pages.
- Make it magnificent. A business plan is not just for the lenders. Building a business plan tests your assumptions and ideas; it helps create and hone your elevator pitch, vision, mission, and brand. It helps you find and flesh out those ideas that are feasible and financially viable, creative and shiny. Rewrite your plan regularly to glean more insight and make your business more profitable and attractive. (Or, you can substitute “earning a living wage and making your firm more client-centric so you can be more profoundly of service,” if that sounds better to you!)
- Solve a problem. If you find you have an issue with how something is going in the business, creating a business plan can help you drill down on the matter (e.g., staffing, cash flow, policies and procedures, vendor relations, time management). For example, if you need more clients, you develop a plan that a) determines more referral sources, b) talks with current clients about where they found you, c) investigates the competition, d) conducts research into solutions, and e) devises a solution to reach more potential clients. If you need more organization, create a business plan that a) researches methods of being organized, b) creates a plan for policies and procedures that work, and c) implements and trains everyone on the new methods. Maybe software is included, maybe it isn’t. Your business plan, your way.
- Unite the team. A business plan shared with associates, partners, and staff can help align everyone’s efforts toward a shared purpose and direction. Getting everyone on the same page can be a major victory that will reap rewards in client satisfaction and financial profitability.
- Become more competitive. Only a fraction of the lawyers watching the WSBA Legal Lunchbox CLE had a business plan. If you create one and they don’t, you have a leg up on your competition. Being a lawyer used to require a deep knowledge of the law and that was it. But that era is over, and the new one requires a smattering of knowledge in a wide array of disciplines. This is a discipline that you do not need to be perfect in, but you should have a smattering, a basic grasp, and a bit of work towards it if you want to own a firm.
We are here to help. The Law Office Management Assistance Program recently created a business plan template or you can use the Small Business Administration’s business plan creator. For further reading on how to create a business plan, look at the Small Business Administration’s resources, or use LOMAP’s Business Plan Template [link to LOMAP biz plan temp]. You can also check out Business Plans That Work: For Your Small Business, Biz Plan Builder, or The Reluctant Rainmaker: A Guide for Lawyers Who Hate Selling from the LOMAP Lending Library.