As you can see from the title of this post, I've got a few things I want to talk about today related to starting a law firm. The first is whether or not you should be working toward profits or growth. The second is a lesson I learned from Monopoly this last week while I was at home visiting family. The third is a true breakdown of my professional goals for this coming year.
Profits or Growth
I read a lot of stuff. I read books, I read magazines, I read articles on the internet, and I read blogs. One of the blogs I read is called "A VC." It's written by a guy who's a venture capitalist in New York. As you might guess, this is one of the business blogs that I read.The other day I was scanning through my blog reader when I came upon a post on A VC called "Profitable: To Be or Not to Be?" It was a great read and it got me thinking a lot about my law firm and the decisions I need to make moving forward to get to where I want to go. You can read the post here.
The paragraph that got me thinking was this one:
Many high growth companies can be profitable. They have enough revenue to cover their essential costs and could easily decide to show a profitable income statement. But they don't make that choice. Instead they invest heavily in the business with the expectations that those investments will produce more revenue (by hiring salespeople), or additional products (by hiring engineers and product managers), or additional geographies (by hiring an international team), or any number of other value enhancing aspects of the business. The result of that decision is that the business loses money or simply breaks even (I prefer the latter approach)Sure, it's geared toward high growth companies and larger companies, but it also applies to businesses like yours and mine. At some point hopefully the money we are bringing in is more than the money that is going out. At that point we have a decision to make: do we put the money in our pockets or do we put the money back into our business?
Now, I know it's not an either/or decision. The answer is probably a little bit of both. But you can definitely skew that one way or the other depending on what your business philosophy is. The important point I'm trying to make here, I guess, is that whichever way you decide to go, make sure that it's at least a conscious decision. If you take all of the money out of your firm you're going to feel like you're spinning your wheels when it comes to growth. If you leave it all in you may feel like the business isn't reaching its true potential (because you're broke).
What's my philosophy? We're going to talk about that next.
Lessons Learned from Monopoly
I love the game of Monopoly. I've been playing it for about as long as I can count money. What I love about monopoly is that it has rules, but those rules include the ability to negotiate just about anything you want. It's kind of like real life in business - if you can get someone to take your offer, then you've got a deal.Although I love the game of Monopoly a lot, I don't actually get to play it that much. First, it takes forever to finish a game. Second, there just aren't a lot of people around that really want to play. But, over the Christmas holiday, I found a few willing players, and I learned (or was reminded of) some great concepts related to starting a law firm, including the idea of growth or profits. I'm not going to tell you who won the game, because it's not important. But I will tell you I had a blast playing.
The game started out like many games do - everyone is trying to grab as much property as they can, hoping to either get enough properties of one color to expand, or to put together a portfolio big enough to make some deals and then expand. Over time it worked out where one player had all of the railroads and utilities plus Park Place and Boardwalk, the two most expensive properties on the board. One player had many different properties spread throughout the board, including one entire side of the board (minus the railroad, utility and chance spots), one had two properties on opposite sides of the board, and one didn't have much (worst luck rolling the dice I've ever seen).
At this point people have options on what they want to do. They can try to get more properties from people, the can expand their existing properties, or they can do nothing. We'll call the first two growth strategies and the last one a profit strategy. For about an hour I was probably in the profit strategy camp. I'd just go around the board biding my time, hoping to put together enough money to someday expand my existing properties. I wasn't active at all. But I stopped that once I saw what was happening as a result of that - I was spinning my wheels.
I wasn't losing money, but I wasn't really making that much either. People would land on my properties and pay but then I'd land on one of theirs and have to pay. Sort of the same way you get money in from clients and then have to pay it out to vendors or for other expenses. It was frustrating for me because I was eager to get ahead of the game but I just couldn't.
It took me an hour to realize I'd been employing the wrong philosophy.
After that hour I started investing my money in growth. When I had extra money, I bought a house or put up a hotel. There was some worry about landing on Park Place or Boardwalk and having to pay a big rent (incurring an unexpected large expense) but it happened so rarely that I had enough money to take care of it. And if I didn't then I knew I could leverage some of my property to take care of it (credit card - line of credit). All of a sudden my profits started soaring. By putting the money back into the business, in places that yielded good returns, I was the benefactor of those returns. A little aggressiveness went a long way.
It was during that game (and later while reading a book I'll talk about later) that I realized I needed to employ some of this in real life. I'm a growth guy. I want this business to grow, and the best way to do that is by reinvesting in the business, by being aggressive in specific, calculated ways that I'm confident will help increase business (yes I'm talking about law firm marketing, but I'm also talking about other things).
Which brings me to my goals for 2012.
Goals for 2012
I know I've already talked about some of my law firm goals for 2012, but they were really just fly by the seat of pants. These are still kind of just coming out of my brain as I type, but I'm going to try to break them down a little bit more.1. Gross Revenue of $300,000
I think in my last goal projection this number was higher, but this I think is a good goal for the year. It's $50,000 higher than my goal for 2011 and a little bit more than that for actual increase.
Breaking that down I need to make $25,000 a month. Just looking at that it seems like quite a bit of money. But, in reality, it's only about 8 cases a month (2/week). That's only a slight increase over what I'm doing now.
2. Hire an Associate in January
This is where that "growth" strategy comes into play. Right now I'm simply wasting too much time going from courthouse to courthouse doing the procedural dance that is a DUI defense practice. I need someone to come on board that can not only cover those hearings but learn DUI defense from the ground up. I need to invest in the future of the firm.
This is not just a 2012 goal but a January 2012 goal. I plan on posting the job tomorrow on the law school job listserves and see what's out there. There's no reason to put it off anymore. Once I get someone helping me out I can devote more time to reaching goal number 1.
3. Join Toastmasters
Yes, I know, this was a goal for 2011. I don't have any excuses for not making it happen. It just didn't. But it is this year.
Why? You might be asking? Simple - communication is the lifeblood of my work. If I can't effectively communicate, particularly through the spoken word (think jury trial) then I'm not going to get the results I want. Toastmasters helps you work on those skills.
4. Redesign My Websites into a Coherent Whole
This one speaks for itself. My websites right now don't share the same message. That needs to change. I've already started working on it, but I want everything to be set in place so no matter which one of my websites you land on you're getting the same message (that we'll do whatever we can to win your case).
5. Satellite Offices in Nearby Cities
For the last year I've been expanding my internet presence by spidering out to the surrounding communities. For example, if I'd started with Salt Lake City DUI attorney or Houston Criminal attorney, I'd now be focusing on West Valley City, West Jordan, Sandy, or Missouri City, Pasadena, Aldine, or Sugar Land. But now that I have an internet presence there I need to have a satellite office there - a physical address I can use to meet clients, conduct meetings, and put on my website. So I'm going to do that. I think I've got one place I can use for super cheap, and finding another shouldn't be too hard. As I expand in other ways I'll add satellite offices there too.
6. Finish the Office Design to Project Our Core Values
In a business like ours, first impressions mean a lot. There are at least 10 other people out there competing with you for business, no matter what city you're in, and if you don't make people feel safe and exude a sense of confidence you are not going to win those potential client battles.
One way to do this is to have an office set up that projects what you are selling. You are successful or will be successful, so make it look that way. Make sure your office is clean. Make sure it is well lit. Make sure your artwork projects the feelings you want it to. Make sure your office set up makes sense.
Right now my office looks nice, but it could be so much better. I'm going to stop thinking about it and start doing some things to change it up. And I'm going to do them sooner rather than later.
Okay, that's it for goals for 2012. What do you think? What do you think about growth versus profits? What do you think about Monopoly? What are your goals for 2012? Let's talk about it. Send me a message in the comments.
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