I have to commend Brian for starting his recent Business Briefing with the key business message that everyone needs to hear at this time of the year. It’s unpalatable for some but I know that those people who do make plans, continue to do so, year after year, so there is something in it. One tip that I have learned over quite a period is similar to the ‘keep it real’ message — especially if you are just starting out setting objectives — keep it really achievable! Planning for law firms follows this mantra.
It is awfully tempting to push and aim too far. If, for example, you have sat down and looked at your Net Profit Percentage for the last 3 years and seen it drop from 30% to 15%, don’t set an aim to get it back to 30% this year. It would be nice, it would be more than nice! But, truthfully, it ain’t gonna happen. Go for something more graspable — like 5%. You can work with 5%; you can plan strategically and tactically for a 5% gain in profitability, because profit is influenced by two factors—income and expenditure and you have a good deal of control of the first and a lot of control over the second.
This is a classic example of working ‘on the business’ (rather than ‘in the business’) and before you say it; I know it is difficult to tear yourself away from dealing with clients and case files that are, after all, earning the fees that create the income that pays the expenditures – but you must. Also, there is more to looking back than just picking over the bones of last year. Think about how the legal landscape is changing, and how this affects you — positively & negatively. Brian illustrates the SMART technique below in order to test an objective. I’ll introduce SWOT analysis — Strengths, Weaknesses, Opportunities & Threats with which to consider your firm and the environment within which it operates. Its not a science, there are no black and white answers, but it is useful to pose these questions periodically: –
What Strengths do you have? Why is this? How can you maximise these? – What Weaknesses do you have? Why is this? How can you minimise these? – What Opportunities exist or could be created to do more or be better? – What Threats exist or could appear and what would this mean?
A firm I know started last year as normal (no plan), along came an opportunity to hire some staff, they did so, it cost a bit but the prospects looked good. Those staff left 2 months ago and set up their own firm. They agree that they failed to plan properly and now the reality is that they are struggling to pay wages. Who sees this as an opportunity? Now you’re thinking! Have a more prosperous and Happy New Year.
Take a reality check!
Jack Welch, the famous former CEO of General Electric used to start every meeting with a question—”What is the reality?” He would remind his executives that before setting any objectives it is essential to establish a true picture of the current situation. If one of your objectives for the coming year is to increase your business, a good starting point would be to look at the total number of cases you did last year—and then calculate the average number of cases you did per month.
Based on that, set the additional number of cases you need to do every month to achieve your new annual target. This works hand in hand with the total amount of fees you generated last year — and again, work out the average fee per case. Once you’ve got your fee figure, work out the average fee per case and multiply it by the number of additional tools and cases you expect to do this year. Did the results surprise you? Much about planning for law firms will.
Setting the “SMART” Challenge
When setting any objectives, it is essential that they meet a tried and tested criteria. To achieve this, use SMART principles to set up and manage your Objectives. Planning for law firms depends upon this.
Each objective must be specific. There is little point in setting an objective to fee “more” in 2017 than in 2016. That could mean anything from £1 to £100,000. So, the more specific you are the more likely you are to achieve the objective.
Establish a firm and clear criteria for measuring progress toward the achievement of each objective you set. When you measure your progress, you stay on track, reach your target dates, and experience the thrill and satisfaction of achievement that spurs you on to continued effort required to reach your objectives.
When you identify objectives that are most important to you, you begin to work out ways you can achieve them. You develop the attitudes, abilities, skills, and financial capacity to reach them. As you focus on your objectives you begin seeing previously overlooked opportunities to bring yourself closer to their achievement. If you set an objective that you have no hope of achieving you will only demoralise yourself and erode your confidence.
An objective must be relevant to what you are trying to achieve. If it’s not, it will simply distract you. At worst, de-motivate you and divert you from achieving any other objectives you may have. Set widely scattered and inconsistent objectives, and you’ll fritter your time away.
An objective should be grounded within a timescale. With no timescale there’s no sense of urgency. If you want to achieve something, when do you want to achieve it by? “Someday” isn’t good enough and won’t work. But if you anchor it within a specific timescale, you have a focus to begin working on the objective.
Finally, write down what it will mean to you if you achieve your objectives in the current year.