Every new law firm needs a business plan. This is a guide to creating one.
The following should be included in your business plan.
Section one: summary
This section provides a brief overview of your full plan. It should also include the following:
- Mission statement. This statement should consist of at most one or two sentences, so that you can quickly turn it upside down at any time. It should clearly state your value and provide inspiration and guidance, while being plausible and specific enough to ensure relevance. For more instructions on how to write a mission statement, see this article for entrepreneurs.
- Basic values. Your core values describe the strategy that underpins your company. When well written, they help potential employees and customers understand what drives you every day. If misspelled, they contain meaningless platitudes that become another thing that is forgotten or ignored during training. To get the most out of your core values, write them as actionable instructions that you can follow. And keep them to a minimum: two to four should work well. For more information on writing core values, see Kinesis.
- What distinguishes you? If you're like any other lawyer out there, how will you get noticed? This is referred to as your unique selling proposition (USP). What will convince customers to turn to you instead of your competition? By clearly stating your USP, you identify what will ensure your company is successful.
Do you feel a little overwhelmed by all of this? Then write this section last because you will find much of what you write here as a summary of everything that you include in the following sections.
Second section: company description
Write a brief overview of your company. The following should be covered:
- Mission statement and values. Repeat your mission statement and basic values here.
- Geographical location and served areas. Identify where your offices are and which geographic areas you serve.
- Legal structure and property. Indicate whether you are an LLC, S-Corp or any other legal entity. If you are anything other than a sole trader, identify the ownership structure of your company.
- Company history. When you write or update a plan for an existing law firm, write a brief history summarizing the firm's highlights and achievements.
This section is often the shortest. Don't spend much time or space here. Touch the key points and continue.
Third section: market analysis
When done correctly, a well-designed market analysis will help you identify exactly what your potential customers are looking for and how much you should ask for your services. You can also identify your competitors' weaknesses, which in turn helps you design your services to attract your preferred customers.
The elements of a market analysis include:
- Industry description. Create a summary that shows where your particular legal niche is today, where it was, and what trends are likely to affect it in the future. Identify everything from actual market size to project market growth.
- Target group. Define your target group by building your ideal customer personality. Use demographic data like location, age, marital status, job and more. Identify the reasons for searching for your services and how you can best meet their needs.
- Competitive analysis. Here you dive into details about your competitors. What are they doing well? Where are they staying How do you currently undersupply your target market? What are the challenges you face when entering legal practice in your chosen field?
- Projections. Provide specific data on how much your target audience has to spend. Then narrow that down to see how much you can charge per service.
Proper market analysis contains actual data to support your analysis. If you're not sure where to find data, Bplans has a large list of resources you can use. If you want to learn more about how to conduct a market analysis, read this article from Small Business Administration.
Fourth section: organization and management
This section details you and anyone else who may be involved in the company. Don't be afraid to brag a bit!
- What is your educational background?
- What is your experience at the moment?
- Why are you the right person to run your company?
If other people are involved, it is a good idea to insert your organizational chart here. Graphics can be used to transmit information quickly and otherwise block-like text can be resolved.
Fifth section: services
The Services area is at the heart of your plan. Here you can immerse yourself in all aspects of your services, including:
- The problems that you address. What weaknesses do your preferred customers have? What can you do now to relieve these pain points? Answer these questions and explain in an additional step how these current solutions do not adequately solve your problems.
- The solution (s) you provide. It describes how your solutions better meet the needs of your potential market. This includes not only the actual work you do, but also the benefits every customer gets from your work.
- An overview of your competition. Describe your competition here. For example, which other solicitors and law firms offer the same solutions as you? What are your advantages over these competitors? How do you differentiate in the provision of your solutions? How can customers get additional benefits by using your services instead of working with your competitors?
Section 6: Marketing strategy
Your marketing strategy section must address the three Ps:
- Positioning. How do you position your law firm and services? What will you say to present your practice in the best light? What short statements can you use to convince a potential customer to provide your services?
- Pricing. How much do you charge? How does that fit into the legal industry? In your niche industry? What do customers get for this price?
- Promotion. What sales channels and marketing activities will you pursue to promote your practice? Who is responsible for these activities? Even if you plan to build your law firm based on verbal referrals, keep in mind that most referrals will still look for information about you before contacting you. Know where to look and make sure you are there.
Section seven: finance
Finally comes the finance area. It is the key component of your plan when looking for funding to get your practice on the road. However, it is imperative that you complete this section even if you are not looking for funding as you will need to draw a clear financial picture before opening your doors.
This section consists of two main elements: budgeting and forecasting (sales and cash flow). Answer these questions to answer the following questions:
- How much start-up capital do you need?
- How much money does it cost to keep your practice running month by month?
- How many cases do you have to close each month to break even?
- How many cases would you have to close to make a profit?
- What is your forecast profit and loss for the year?
This section often contains graphics and other images, including profit and loss and cash flow tables. The more precise you become with your numbers, the more likely you are to be successful!
One final note: if you want to present your business plan to potential donors, you want to do everything possible to make sure your plan stands out. A great way to do this is to work with a designer to artfully format your plan. A great presentation can do a lot.
Originally published on 09/23/2017. Newly released on October 23, 2019.
Cari Twitchell is a contract writer and editor at Lawyerist.com and "Chief Word Nerd" at Custom Content Solutions. Since 2007, she has been helping lawyers create web content that will attract and transform their ideal clients. She has an affinity for making copies that actually sound like her clients, and loves to talk about everything related to marketing, business development, and Disney.
last update May 8, 2020.