Starting a solo law business may seem like such a small enterprise that actually sitting down and writing a business plan would be overkill. You’ve passed the bar, you have a computer and a home office, your friends and family have promised to send you referrals…why would you need to take the time to write out a business plan?
Because you need to start treating your law business as a business from the very beginning. What I described above is at best a part-time, less than serious enterprise and at worst, a “hobby” that’s never going to pay you enough to pay rent, much less pay off your student loans.
The very act of writing out a business plan will make you take a hard look at your goals, resources, expenses, strengths and weaknesses and force you to plug any gaps you find in the process. It will give you a map for reaching your goals and a timetable for getting there. You’ll be able to measure your results and make sure that you’re staying on track with what you wanted to accomplish when you first started out.
And as an added bonus, creating your business plan will make you look at issues and potential problem areas that you might not have considered without putting the plan down in writing. This way, you can fix these problems or find a “work around” solution before you even open your doors. And that can save you a lot of time and, more importantly, keep you from wasting resources (i.e., money).
Now, just in case you’re thinking “I’m in the middle of starting a law practice here. I don’t have time to sit down and write out a business plan”. Let me tell you this. That’s like saying “I’m in the middle of planning a banquet for 500 United Nations dignitaries. I don’t have time to plan a menu”. You have to know where you’re going from the beginning or you’ll never get there. Don’t let the idea of sitting down and writing your business plan overwhelm you. There are lots of resources available on the internet to get you started and loads of free “sample” business plans. They give you really good starting point for writing a good plan.
For a start-up solo practice, here are a few things you want to include in your business plan:
1. Timetable
An effective way to break down your timetable might look like this:
a. Before you open your practice
b. First Month
c. First Quarter
d. Second Quarter
e. Third Quarter
f. Fourth Quarter
g. Second Year, Third Year, etc., up to the first 5 years of practice
Plan for a review/revision of your business plan at least every 6 months for the first 5 years. Your plan isn’t carved in stone and can be modified to suit whatever your circumstances happen to be at the time.
2. Clients and Marketing
Where are your clients going to come from? Do you have a strong referral network? How do you plan to market your practice? Social media has made it much more affordable to market but you have to understand exactly how to use social media and the internet for marketing. If you’re not really clear on that and don’t really have the time to spend on it, make room in your business plan and budget for outsourcing it.
3. Office Location
Where are you going to locate your office (i.e., home office, virtual office, office suite, office share agreement with other lawyers, etc.)
4. Legal Structure of Your Practice
Are you going to be a sole proprietorship, form a professional corporation?
5. Other Business Alliances
You need to find a cooperative banker, a good accountant, an insurance agent, etc.
6. Computer hardware and software needs, Office Equipment and Supplies, Reference Materials, Website Design and Maintenance, etc.
Sit down and decide how you’re going to structure your physical office and what you’ll need in order to make it work. A laptop may be sufficient but make sure you have a good practice management/timekeeper and accounting software package (with technical support), a good printer/copier, access to the reference materials you’ll need for research (both paper and electronic access), a good desk chair (you’ll be spending a lot of time in it so make sure it’s comfortable), a reliable internet connection, an ample phone system, etc. Keep a good handle on what you can spend and don’t go overboard. Shop around and compare prices.
And I’m putting this in a separate paragraph because I really want you to think about this – you have to have a website. Websites are no longer a luxury item. They’re a necessity. Most of your potential clients are going to look for you online. You can build a very professional site in WordPress that is very client friendly and easy to maintain and keep updated.
7. Personnel
Are you going to hire staff (i.e., a secretary and/or receptionist), go the virtual route or just go it alone? Starting out, a virtual assistant and a pay by the call receptionist service is probably the more cost efficient way to go. If you can possibly avoid answering your own phone and doing your own word processing, you will give yourself much more time to get out and market and build your practice.
8. Annual Budget
You need not only a cash flow budget but a profit and loss budget. Make sure that the accounting software package you decide on has the capability to track both. Remember that you have to budget for your own living expenses as well which means a salary. Think about what you can realistically live on for the first year.
9. Insurance, Licenses, Permits, Bar Dues, etc.
Make sure you include these items in your business plan for budget purposes, especially professional liability and personal medical coverage. These can turn into significant expenses.
These are just a few of the things you might want to consider when writing your business plan. Remember, the plan is fluid and can be adapted to whatever your personal needs are. This just gives you an idea of where to start and what you need to think about when setting up your practice.
I’ve been on the ground floor of starting two multi-million dollar litigation practices so I’ve done the leg work on most of this. If you have any questions or comments, drop me a note in the Comments section below. I’d love to hear from you and I’d love to help you get your business started.
I hope you found this post helpful. If I left anything out that you’d like to talk about, let me know.
And, in the meantime, have a great Labor Day weekend!