It\u2019s not easy to make money; and, it\u2019s even harder to predict how much money you will make when you start a business, especially if it\u2019s the first business you\u2019ve started.<\/p>\n
Since this can be a frustrating task, it\u2019s tempting to just throw up your hands, and tell yourself that, truly, you\u2019ll know what you\u2019re going to make when you make it.\u00a0 The downside of that approach is that it\u2019s difficult to make any plans that way, and to begin to define a strategy for business growth.\u00a0 Without revenue goals, there are no targets to hit.\u00a0 You won\u2019t know whether to judge your year as a success or a setback.\u00a0 Establishing revenue markers is a method for implementing steady (not overwhelming) growth) \u2014 and, it doesn\u2019t mean that the overarching goal is no longer to make as much money as you can.\u00a0 If you hit or exceed your goal, be more aggressive about establishing next year\u2019s goal.<\/p>\n
These are some basic tips for developing revenue projections for a new law firm:<\/p>\n
Start with Your Overhead.<\/strong>\u00a0 At a very basic level, you need to meet your expenses to stay in business.\u00a0 So, start there.\u00a0 Figure out what you need to meet your personal and business expenses, and then build revenue goals on top of those.<\/p>\n Ask Around.<\/strong>\u00a0 Lawyers hate to share information about their rates.\u00a0 But, for almost every other category of law firm business management, you won\u2019t be able to stop them talking.\u00a0 So, find a mentor in your practice area, and have her review your financial projections, to see whether what you\u2019re thinking jibes with her experience.<\/p>\n Create Three Test Cases.\u00a0<\/strong> If you\u2019re having difficulty deciding on just one revenue model, try out different test cases.\u00a0 Create an aggressive financial model, a moderate one and a conservative one.\u00a0 See which one you nail, and then you\u2019ll have a better idea about your growth pattern for year two.<\/p>\n Don\u2019t Get Too Far Ahead of Yourself.<\/strong>\u00a0 It\u2019s likely not valuable for you to project too far ahead, especially as a new business owner.\u00a0 While you might feel some comfort running out financial projections to year five (which will be far rosier than what you would have developed for year one), so much will change in your business by that time, that that projection is likely garbage as soon as you mark it down.\u00a0 Consider developing financial projections for the first year of operation a victory.<\/p>\n Simple is Best.<\/strong>\u00a0 You needn\u2019t go crazy trying to find a financial projection model that suits you.\u00a0 Just create a spreadsheet.\u00a0 List your expenses, including line items.\u00a0 List your projected revenue, including total matters and hours.\u00a0 There is no prize for the prettiest financial modeling.<\/p>\n . . .<\/p>\n If you want to start your own law firm, join me for an exclusive workshop, coming up in Boston (August 24-26) and New York (September 7-9).<\/p>\n For more information, visit the official site:\u00a0www.buildyourownlawfirm.com<\/a>.<\/p>\n Social media hashtag:\u00a0#BYOLF<\/a>.<\/p>\n Visit our Sponsors:<\/p>\n