Keep Your Business Plan Under Regular Review – The Future of Your Business May Depend On It
Many law firms make the mistake of thinking that writing their business plan marks the crossing of the finishing line and the end of the business planning process – the truth is, it is only the beginning!
Once the partners have decided on the way forward for their firm, and a business plan is in place, the critically important stages of implementation and review should follow.
It is crucial that the business plan is kept under regular review to ensure progress is on track and whether any adjustments need to be made to the agreed strategy.
Too often law firms approach business planning as a tick box exercise, with the business plan only seeing light of day at the annual Lexcel audit. Such an approach to business planning is likely to only have limited success when it comes to delivering sustainable growth for your firm.
With financial commentators predicting choppy waters ahead for the UK economy, law firms may find that they face a perfect economic storm over the coming months as clients look to tighten their belt and reduce legal spend whilst overheads spiral upwards causing a squeeze on profits and cashflow.
Leaders of law firms both large and small, should grasp the economic reality and stay ahead of the curve by conducting a thorough review of their business plan to ensure it remains relevant given the economic forecast.
Law firm leaders should review all current and planned areas of expenditure in their business plan. Inflation is running at record levels, meaning costs will increase sharply. Therefore, firms need to be run with maximum efficiency and minimal waste.
Staff costs are likely to be the most expensive item of expenditure for most law firms. Recruitment decisions should be reviewed – Are your current lawyers fully utilized? What is the pipeline of work likely to look like in 6 months’ time? Is there a genuine need for further recruitment? These are the tough questions that law firm leaders should be asking themselves.
In addition to scrutinizing each item of expenditure law firm leaders should also ensure that WIP is billed promptly, and debts collected proactively.
The old saying that “cash is king” will never be truer than over the coming 12 months and it is those firms that are professionally managed, mean and lean that will thrive in the challenging economic climate ahead.
If you would like to discuss any of the themes raised in this article, please contact Ian Hopkins by phone on 07916669095 or email ih@hopkinslegalconsulting.co.uk.