Start with the essential business plan building blocks to create an innovative law practice.
Once you have your vision developed, you’re ready start planning to get there. If you still need to identify your vision of career success, find out how to start in this recent post.
A business plan is like a map or outline that explains the big-picture perspective of how your organization will perform effectively and reach your goals and vision of success. If you’re aiming to run a law firm that makes a profit, your business plan explains how you intend to make that profit a reality instead of merely a dream. The benefit of having a business plan is to know what to do and when to do it. It’s also being able to evaluate your actions for their level of effectiveness in leading to your financial and other goals.
Law Firm Business Plan Template
So, what goes into a business plan? Below is a sample business plan template listing 8 typical content pieces in a business plan. Use it as a checklist. You don’t need everything, unless you are seeking outside investors. In general, this is what should be included and more importantly, given your thought and consideration.
1. Cover sheet
- The cover sheets should include the name of your business. If you also have a logo and/or tagline, include them on the cover sheet.
- Make this page clear, professional, and with minimal distractions.
2. Table of Contents
- After you have completed the rest of the plan, create a table of contents.
3. Executive Summary
- It may be easier to write the other sections of your business plan before the executive summary. Write persuasively, remembering that people frequently make decisions emotionally first and then justify their decisions with reason.
- Differentiation: How is what you are selling different from that which is offered by your competition?
- Describe what you will do to generate revenue and realize a profit.
- Identify any risks you expect to encounter and your plans for addressing them.
- Identify the key people involved in the business and their roles.
- Identify needed resources to run the business effectively and efficiently.\Highlight the engaging aspects of your mission/purpose and vision.
4. Mission Statement/Statement of Purpose:
- What is the purpose of your business? Why do you exist?
5. Description of the Business
- Your business description provides an overview of the business.
- What problems are you solving, for whom, and how?
- What is your vision statement?
- If you have a physical office, where is it?
- Identify your type of legal entity (sole proprietorship, corporation, LLC, LLP, etc.) and the number of partners, shareholders, and employees.
- Include financial information if you are a start-up venture.
- Starting with your mission/purpose and vision statement, identify the key points and most compelling ideas.
- What problems are you solving, for whom, and how?
- What are the most important points about your business from ownership, management, and financial perspectives?
6. Management Plan:
- How will you lead and manage your staff? What roles and responsibilities will everyone have in order to make your business work? What are the workflow processes, day-to-day activities, and resources necessary for you to create and sell your products or services?
- SWOT yourself, your personnel, and your environment to identify who has which strengths and weaknesses and which strengths and weaknesses the relevant opportunities and threats in your external environment require you and/or your staff to have.
- What salaries, benefits, and vacations will you be offering? How will you meet your staffing needs during vacations and absences? How often will you be absent from the office? Who assumes management duties during your absence?
- Describe how your personnel needs could change and how you will handle this.
- Describe your management structure and how decisions will be made.
- Operating plan. Will you need an office, manufacturing facility, or other space? What equipment and technology do you need? Will customers/clients/consumers be coming to you? If so, what do they need to get to you easily? Will you need insurance? What will it cost you to run your business weekly, monthly, annually?
- People. Who do you need to help you do everything that the business requires to be successful? What skills do they need?
7. Financial Plan:
- Set up and describe your start-up budget (business capitalization, formation, licenses, real estate, professional advisor fees) or annual budget. Loan and credit facilities arranged. Equipment and services required, and whether these are leased or purchased, e.g., software and hardware costs and supplies. Personnel costs. Deposits, permits, and office improvement costs. Accounting startup fees. Utilities, etc. Estimate all fixed and variable costs and “unanticipated” expenses. Build in all fixed expenses (rent, insurance, staff, leases) and variables (file disbursements, part-time staff, taxes and expenses that are dependent on the volume of business).
- Describe your budget by quarters, second and third years. Detail everything by month, first year. (See above—describe all costs including salaries, insurance, rent, loan payments, taxes, marketing costs, accounting and bookkeeping costs, payroll expenses, utilities, professional dues and subscriptions, repair and maintenance costs, etc.). Your salary.
- Balance sheet (assets, liabilities, retained equity).
- Breakeven analysis. Describe your sources of cash for all periods from startup up to and including your projected break-even date. What debt have you incurred? When are payments due? What capital contributions do you need? Describe how you will repay these sources of cash after your practice turns into the black. When will you break even? What profit do you expect to make each year after?
- Plan for profit and loss statements. Daily? Weekly? Monthly? Annually?
- Formally state all assumptions on which cash flows were based (to include billings, salaries, income, collections, and write-offs).
- Describe how your accounting system will monitor your budget against actual costs. Show that you understand how to use your accounting system to produce the reports that you need to manage your practice. Demonstrate that you know the key financial indicators for your practice (WIP, billings, billings per client, unbilled disbursements, accounts written off, accounts receivable, change in receivables, receivables as a percentage of total billings, etc.).
- Create a budget. Related Resources: Fund Startup Budget Worksheet and Monthly Budget Worksheet from the Oregon State Bar Professional Liability Fund
8. Marketing Plan:
- Include a market research plan if you are just beginning or your market analysis based on the data uncovered from your research.
- What are you selling?
- Describe your target market and its segments. How large is it in terms of spending on what you are selling? Do you expect any changes? How? Why?
- Describe what will attract your customers and keep them coming back. Who are the decision-makers and influencers? Who is the end user? Why will the decision-makers say “yes” to what you are selling and to you as the seller?
- What are your industry’s key characteristics and likely trends, based on your research data?
- Describe how you propose to reach your target market.
- Describe your sales funnel. How will you reach your targets? With what value will you reach them? Once you reach them, what will you ask them to do? How will you get them to buy whatever you are selling? How will you keep them returning to your business?
- Describe your lead magnets, sales platform, and avenues in.
- Identify marketing costs.
- Identify your marketing goals. What will you measure to determine the effectiveness of your marketing plan?
- Describe how you will build your customer loyalty and referral network within your target market.
- Demonstrate that you understand your competition and their pricing and how your marketing and pricing will lead to sales and profit. Who are your competitors? What are they selling? What sets you apart from them? How robust is your target market? Are there barriers to entry into the market that work to your advantage? Is it easy for your competitors to copy what you are doing? If so, how will you address that threat? How are you different?
- Complete the following: We will (describe the problem you intend to solve) with our product or service by (describe the solution you will create and deliver and to whom and how you will deliver it).
- Complete the following: To (describe your financial goal: break even, generate a growth rate of x percent per year, capture y percent of the target market) in (identify your time frame to attain the identified financial goal).
- Complete the following: To (1) target (describe your target market with specificity) (2) with (describe your marketing message for that target market segment) (3) by (identify the means of communicating to the target market identified with traditional advertising, web infrastructure, relationship management, and reputation building and the specific process you will use with each means).
Design Your Law Firm Structure for Profitability — an on demand workshop from our Innovation Series with the Mass Bar, free for members.
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A previous post on our blog titled ‘Not Your Average Business Plan’ now redirects here.