Practice director Mike Gorick answers your questions. This week: how do I write a business plan?


It is not in the nature of lawyers to plan for business reasons, yet lawyers often plan their cases extremely well. So what is the difference? Amazingly, not much.



A legal transaction requires a beginning, middle and an end. Transfer this to business-plan speak and you get objectives, action and outcome/review.



So what are the main ingredients in a business plan? Mission, goal, vision, objective, result; use whatever word you like, it is impossible to start a plan unless you know where you want to be in the short, medium and longer term. There has to be an attitude of buy-in and acceptance from all the firm’s partners and managers.



What next? In any business, the following are always key areas: people, training, finance, marketing, information technology, communications and services/products.





Marketing

How can you differentiate yourself from competitors? Marketing is identifying customers’ needs and meeting those needs. If you have a mission statement, it should distinguish you from your competitors and help staff to appreciate the common goal.



Which markets are you going for? How will you be affected by competition? What kind of marketing are you going to do? Do you have a website, or a public relations section? Think about how you are going to get new business, and where it is coming from for each department. Most importantly, how are you going to retain existing business?



Be aware that the majority of new business and growth comes from existing clients. Be aware that client care is extremely important for your reputation – one bad transaction will lead to the negative message being delivered to at least ten other prospective new clients.





People and training

Find ways to foster team support throughout the practice by involving staff in some decisions. Ensure that there are good lines of communication. This can be done by departmental meetings and reporting. Define in your plan how you think you are going to make staff and partners feel valued. Look at where the skills gaps are.



Define the management and structure of the firm, who reports to whom, and who supervises whom. If people know where they stand within an organisation, they feel better motivated. Work out how many people you need and when.



In terms of training, people within a firm need to have the relevant skills to do their jobs. If they cannot do those jobs, stress can occur and standards can fall; in a worst-case scenario, claims can be made for negligence. It is essential that the plan includes what relevant training is going to be carried out. Once again, good training ensures motivation is maintained.



Do not just think of legal or secretarial skills – think of IT. It is usually much underused. The best use of IT obtains optimum results for efficiency and quality standards. In training, you must include risk management, understanding the Solicitors Code of Conduct, how to bill and collect payments, IT training and use of your in-house systems, and understanding appraisals – all apart from the more obvious lawyers’ training to comply with continuing professional development (CPD), though the above may also be eligible for CPD.





Information technology

IT costs a lot of money. Proper use of IT can save a lot of money and this is a good place to start in business planning for IT. What is it you really need? Are you buying some IT because the firm down the road has?



Make up your own mind about the use of IT and what you are going to use it for. The bigger the firm, the more sophisticated the systems tend to be. But these systems also equally tend to be unnecessarily fragmented, when full integration is far more productive. So you might well say in your business plan that the firm will upgrade its hardware and software, introduce a case management system, or make the conveyancing department ‘more electronic’, but you must state how it will be done and why.





Financial

The ingredients for financial business planning should include: target turnover, individual departmental and fee-earners’ targets, anticipated profit, cash-flow forecasting and budgets for expenditure. Use the Law Society’s Benchmarking Survey.



With regard to budgeting, look at each heading within your profit-and -loss account and forecast what you think it ought to be for the forthcoming year. It should not be broken down too much or be too detailed. The more detail you have, the more you have to manage it.



Getting the basics right makes a big difference. So, you might say: ‘We are going to increase our turnover to £X’, and various departments might decide to have an increase in their fee income of, say, 10% to 15% for the forthcoming financial year. In budgeting, you might decide that to increase profit you are only going to increase the budget for expenditure by 10%. In other words, lower than the expected increase in turnover. The better firms achieve a net profit of 25% of turnover.





Comms and department plans

Ensure that good communications are maintained throughout the firm by putting into the plan how communications should occur from top to bottom and from bottom to top. Where meetings occur, for example, and how and what they are for should be put into the plan.



Taking into account all the above, each department needs to prepare its own sub-plan within the main plan. Department heads, managers, or whatever they are called in your firm should prepare their own plan with the same headings. Accountabilities should be clear. Do flow charts. Ensure that there is a structure for regular reviews.



In brief, keep it simple. Keep the language clear. Do not be verbose, and make the objectives S.M.A.R.T. – simple, measurable, realistic and time-bound.



Mike Gorick is practice director at Marshall Galpin and a member of the Law Society’s Software Solutions Guide panel