For a solo attorney who has all she can do to just successfully manage her caseload, developing and following a business plan might seem like an empty exercise. But for virtually any solo or small-firm lawyer, a business plan is a document that can be an invaluable guide to how your practice should and will grow.
“If you have your own practice, you have a business plan — whether you realize it or not,” said Daniel Van Loh, an attorney with Deckert & Van Loh in Maple Grove who has presented at CLE programs about starting a law practice. “The lack of a business plan is a plan in its own way. You might as well get your goals on paper, because it’s unavoidable that you have them.”
Most attorneys went to law school to practice law, not to run a business; the mind of a lawyer is different from the mind of an MBA scholar. But many veteran lawyers insist that a lawyer needs the ability to occasionally shift to CEO mode if he wants his practice to thrive.
“When you open your own shop, a lot of us get a rude awakening,” said Paul Floyd of Wallen-Friedman & Floyd in Minneapolis. “It isn’t just practicing law, it’s also running a business. If you can’t identify your overhead or your cash flow, you’re probably in the dark about whether your firm is profitable or even viable.”
If you’ve been contemplating a business plan and are unsure of a good first step, buy lunch for a few colleagues who are happy with theirs. That can give you insight into what you’ll want your business plan to contain, if in fact you decide you still want one.
“If you find yourself always running short at the end of the month or find that the administrative side is overtaking you, then a business plan makes some sense,” said Floyd, who has presented CLE programs about business plans. “Sit down with people who can advise you.
Also, the U.S. Small Business Administration has a number of templates and guide sheets on its website, and the Minnesota Service Corps of Retired Executives has mentoring and business plan resources. Minnesota Lawyers Mutual also offers online resources for lawyers looking to start their business.
Local chambers of commerce usually have some kind of class on these subjects, while another good online source for business plans is Bplans.com, said Joe Flanders, an Apple Valley lawyer who maintains the blog Solo in Minneapolis.
“For my business plan, I went to the bookstore and looked at sole proprietorship and small business books,” Flanders said. “Each of the books has more information than anybody could possibly read on creating a business plan.”
What should a business plan contain? There are some common elements regardless of the profession involved: An executive summary that briefly outlines your practice’s profile and goals; a market analysis; company description; outline of organization and management; a sales and marketing strategy; and financial projections for your firm.
For solos, said Van Loh, three areas need to be addressed: your practice’s sustainability, its affordability and its accessibility to clients.
“Project your cash flow and how you plan to cover your operating expenses and salaries,” he said. “And don’t forget growth: Most solo and small firms do succeed, at least somewhat. Plan on the addition of staff and the expansion of office space.”
Flanders recommended that solo business plans contain a mission statement, an overhead estimate, some annual projections for the first five years and a strong marketing focus.
“A good business plan should focus on marketing,” he said. “Estimating overhead and costs associated with running a practice is very important. However, thinking hard about how you plan to get clients in the door is the key.”
To that end, your plan should have detailed information about the what, where, when, why and how you plan to generate revenue, Flanders said: What is your budget for generating that revenue once you have figured out your overhead? How will you ensure that you stick to a marketing plan? Are there going to be some ways to check your progress so that you know you are sticking to your goals? If your plan isn’t working, what else can you do?
“Some lawyers get very detailed with this information and others, like me, use it as a platform to keep focus,” he added.
While it’s important to at least consider the advantages of a business plan, though, keep in mind that your top priority is growing your practice, either with a formal plan or without one. Flanders maintains that a solo or small-firm business plan should be minimal and focused on marketing.
“The question is, What happens when there is no money coming in the door?” he said. “I’ve read that to be a solo or small-firm lawyer, you need to love marketing. If you don’t, I think it is tough to make it.”