|Centurion Consulting Group||
|Market and Communicate to Grow Your Firm|
The end of the year is the time when most companies undertake their annual planning process. However, law firms, in general, appear reluctant to use a technique that has proved reliable and profitable for many businesses. In a survey that Centurion Consulting Group conducted among law firms, only 20 percent had written marketing plans, 10 percent had business plans and probably less had strategic plans. In another survey of small law firms, Centurion Consulting Group discovered that not one of the firms had a budget. Yet, if you asked business owners about a budget or a business plan, most would say that they have these tools in place.
The adage, "If you fail to plan, plan to fail," is true. Plans are the blueprints for starting, managing, growing, financing and operating a business. You wouldnt build a house without a blueprint, neither should you operate a law firm without a plan. There are several types of plans that enhance success:
This is the big picture of where you want to go within a three to five-year time frame. (With the speed that the internet is changing business, sometimes strategic plans are for a year or two.) The strategic plan, which is the foundation of subsequent plans, includes the mission (where you are today); the vision (where you want to go); the S-W-O-T Analysis, which examines Strengths and Weaknesses (internal qualities that you have control over) and Opportunities and Threats (external qualities that you have no control over); and goals.
The real estate law firm that developed a plan in 1988, which identified the threat of an economic downturn predicted by the UCLA Anderson Forecast, tooled-up for workout matters and rode out the recession unscathed.
There are three types of business plans: the summary plan, with 10 to 15 pages, is developed for raising capital; the standard plan, which is twice as long, is also used as an external document for capital; and the operations plan, which can be 100 pages in length, is an internal document used to run a business. The business plan is divided into two sections: the marketing analysis and the operation analysis.
As half of a business plan, the marketing plan is, oftentimes, a stand-alone document. The plan includes an analysis of your services, the marketplace (to whom are you selling your services), your competitors, your competitive advantage (why will a client select you) and the techniques you will use to obtain new business. A segment of the plan is devoted to an analysis of your historical data: client industry, referral industry, matter type and size, size of client, etc. The data is analyzed over a three-year period to identify trends.
A firm with no industry specialization that was "a jack of all trades," developed a marketing plan, which identified a growing segment of clients in the post production industry. The firm had relocated to an area surrounded by studios that were attracting production companies. Once the post production businesses were targeted, the partners began a concerted effort to attend and speak at industry events, write for post production publications and develop relationships with referral sources within that industry. What began as a small group of clients has blossomed into a large practice area through implementation of a marketing plan.
The budget (estimate vs. actual); cash flow (revenues, profits and margins), fees and time; and account receivables tracking (30-60-90+ aging) are three of the most important components of a finance plan.
The robust economy has stimulated high growth in law firms. But growing too fast can backfire. A growth plan ensures that hiring additional people is not the only solution for growth (especially during low unemployment, when the cost of hiring is rising). A growth plan examines the "capacity" of a law firm and its partners and staff. Using a workflow analysis, tasks are segmented by level of responsibility to determine who has extra capacity. Workflow analysis also highlights inefficiencies.
The law firm that was swamped with work and wanted to hire additional attorneys discovered through a workflow analysis that partners were performing 20 percent secretarial work and secretaries were performing 35 percent clerical work. When the work was properly aligned with standard procedures in place, the profit margin tripled, with no additional hires.
Law firms like to plan from the bottom up instead of from the top down. A firm may create a brochure or a web site first; then write a marketing plan and, finally, develop a strategic plan. However, the information in the brochure depends on the strategy where the firm is going. The brochure should be an action of item of a marketing plan and should be written for the target audience while underscoring specific services for that audience.
Oftentimes, plans are developed, read and shelved. The ideal plan is a working document with an Action Plan that converts the recommendations in the plan into action items with a timetable for completion.
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