Every new law practice needs a business plan. This is a guide to creating one.
Here is what should go in your business plan.
Section One: Executive Summary
This section provides a succinct overview of your full plan. It should also include the following:
- Mission statement. This statement should be one or two sentences at most, so you can quickly state it off the top of your head at any given moment. It should clearly state your value and offer inspiration and guidance, while being plausible and specific enough to ensure relevancy. For further direction on how to write a mission statement, read this Entrepreneur article.
- Core values. Your core values outline the strategy that underpins your business. When written well, they help potential employees and clients understand what drives you every day. When written incorrectly, they include meaningless platitudes that become yet another thing forgotten or ignored during practice. To pack the most punch into your core values, write them as actionable statements that you can follow. And keep them to a minimum: two to four should do just fine. You can read more about writing core values at Kinesis.
- What sets you apart. If you are like every other attorney out there, how will you stand out? This is known as your unique selling proposition (USP). What is it that will convince clients to turn to you instead of your competition? By clearly stating your USP, you identify what it is about your firm that will ensure your success.
Are you feeling slightly overwhelmed by all of this? Then write this section last, as you’ll find much of what you write here is a summary of everything you include in subsequent sections.
Section Two: Company Description
Write a succinct overview of your company. Here is what it should cover:
- Mission statement and values. Reiterate your mission statement and core values here.
- Geographic location and areas served. Identify where your offices are located and the geographic areas that you serve.
- Legal structure and ownership. State whether you are an LLC, S-Corp or other legal entity. If you are something other than a sole proprietor, identify the ownership structure of your firm.
- Firm history. If you are writing or updating a plan for a law firm already in existence, write a brief history that summarizes firm highlights and achievements.
This section is often the shortest. Do not spend much time or space here. Touch on the major points and move on.
Section Three: Market Analysis
Done correctly, a well thought out market analysis will help you identify exactly what your potential clients are looking for and how much you should charge for your services. It also enables you to identify your competitors’ weaknesses, which in turn helps you best frame your services in a way that attracts your preferred clientele.
Elements of a market analysis include:
- Industry description. Draft up a summary that encompasses where your particular legal niche is today, where it has been, and which trends will likely affect it in the future. Identify everything from actual market size to project market growth.
- Target audience. Define your target audience by building your ideal client persona. Use demographics such as location, age, family status, occupation and more. Map out the motivations behind their seeking your services and then how it is you are best able to satisfy their requirements.
- Competitive analysis. This is where you dive into details about your competitors. What do they do well? Where do they fall short? How are they currently underserving your target market? What challenges do you face by entering legal practice in your field of choice?
- Projections. Provide specific data on how much your target audience has to spend. Then narrow that down to identify how much you can charge per service.
A proper market analysis includes actual data to support your analysis. If you are unsure of where to find data, Bplans has a great list of resources for you to use. And if you would like to read further about conducting a market analysis, check out this article from the Small Business Administration.
Section Four: Organization & Management
This section goes into detail about you and any others who may have ownership interest in the firm. Do not be afraid to brag a bit!
- What is your educational background?
- What experience do you currently have?
- Why are you the right person to run your firm?
If there are other individuals involved, it is a good idea to insert your organizational chart here. Visuals help quickly convey information and break up otherwise blocky text.
Section Five: Services
The Services section is the heart of your plan. It is where you dive into all aspects of your services, including:
- The problem(s) you are addressing. What pain points do your preferred clients experience? What can they do right now to alleviate those pain points? Answer these questions, and then take the extra step to explain how those current solutions fail to adequately address their problems.
- The solution(s) you are providing. This describes how your solutions better resolve your prospective market’s needs. This not only includes the actual work you do, but the benefits that each client will receive based on your work.
- An overview of your competition. Describe your competition here. For instance, which other solo attorneys and firms provide the same solutions as you? What are your advantages over these competitors? What do you differently when providing your solutions? How will clients gain additional benefits by seeking out your services instead of working with your competitors?
Section 6: Marketing Strategy
Your marketing strategy section needs to address the three P’s:
- Positioning. How will you position your law firm and your services? What will you say to present your practice in the best light? What short statements can you use to entice a potential client to pursue your services?
- Pricing. How much will you charge? How does that fit within the legal industry? Within your niche industry? What do clients receive for that price?
- Promotion. Which sales channels and marketing activities will you pursue to promote your practice? Who is in charge of these activities? Even if you plan to build your law firm on the basis of word-of-mouth referrals, you must remember that most referrals will still look for information about you before contacting you. Know where they will look and ensure you are there.
Section Seven: Financials
Last comes the financials section. It is the key component to your plan if you are going to seek funding to get your practice off the ground. It is imperative that you complete this section even if you are not seeking funding, however, as you need to paint a clear financial picture before opening your doors.
Two main items make up this section: budgeting and forecasting (sales and cash flow). Answer these questions to help you address these items:
- How much starting capital do you need?
- How much money will it cost to keep your practice operating on a month-to-month basis?
- How many cases will you need to close each month to break even?
- How many cases would you need to close to make a profit?
- What is your projected profit and loss for the year?
This section often incorporates graphs and other images, including profit-and-loss and cash-flow tables. The more specific you get with your numbers, the more likely you are to succeed!
One final note: If your goal is to submit your business plan to potential funders, you want to do everything you can to make sure your plan stands out. One good way to do this is to work with a designer to artfully format your plan. Great presentation can take you a long way.