Starting a Practice — Lessons to grow
Recently I was honored by my selection for induction into the Million-Dollar Consultant™ Hall of Fame. I prepared some remarks on the top ten lessons I’ve learned in starting my consulting career; but it struck me that these apply equally to a lawyer starting a new practice. Since nearly 90% of the 1.1 million U.S. lawyers are solos or in small firms, the odds are high that many lawyers will be in a practice startup situation at some point in their careers. These ideas from building both my own law practice and later my coaching practice may provide some pointers for your success.
• Have a cash reserve. That means a savings account of at least 6 months living expenses, plus the expenses of operating your business. It helps to have a spouse who earns enough money to put the food on the table while you’re building the practice.
• Develop a business plan. Never incur long term commitments such as property or equipment leases without a concept of where and how the revenue will flow and when the expenses will be incurred and paid. Statistics show that more than 90% of new businesses fail in the first five years because their owners lack a vision of success. Don’t be one of them.
• Have a passion for what you do. A new practice requires at least five years of long hours and hard work. Unless you view your practice as a "calling," you will lack the needed commitment.
• Have a support system at home. The long hours and financial burdens of a new practice will inevitably create family disharmony unless everyone understands and appreciates what you’re doing. Success is most likely when the whole family supports your endeavor.
• Persistence is essential for success. Clients need to know that you have staying power, and the best way to prove it is to "show your shingle" day after day, month after month.
• Keep cash flow positive. That’s what enables a practice to stay alive, even in difficult times. Don’t make major expenditures until you calculate the return on investment, know how it impacts your cash flow, and have quantified any risk involved.
• Focus on revenue. A 10% revenue increase has a greater impact on "bottom line" net profit than does a 10% cost savings.
• Measure your business results. Understand the financial benchmarks that will tell you how well you’re doing year-to-date and year-to-year. If this is not an area of comfort for you, engage a consultant or accountant to help you understand the numbers.
• Create a legacy. Not every lawyer gets to argue a Brown v. Board of Education case before the Supreme Court. But all lawyers can aspire to a practice in which they and their family and colleagues take pride.
• Enjoy the ride. As Confucius said, "Choose a job you love and you will never have to work a day in your life."