5 Areas of Your Firm to Evaluate Before Year End
If you slacked in the goal setting area this year it’s alright, it’s not too late to gain some insight about how your firm performed in 2018.
Check out Clio’s newly released 2018 Legal Trends Report to see how you compare.
Also, consider calling a company wide annual meeting where you solicit feedback, insight, and suggestions with your team. They experience and observe the firm from a different perspective and their insight can be powerful in your law business.
Financial Growth: Revenue % increase/decrease
There is a handy report you can find in (most) accounting software that will assign a % of increase/decrease year over year to each line item on your Income Statement. Give you accountant a call if you can’t find it, or, simply calculate the difference. (2017 Total Revenue – 2018 Total Revenue = Year over year difference, then, year over year difference / 2017 Total Revenue * 100 = % of increase/decrease).
HOPEFULLY your numbers increased in 2018? Now do the same calculation with your total expenses and your Net Profit/Loss.
What the heck does this all mean?
Understanding how to translate your financial indicators will give you the insight you need in order to predict the future of your firm. If you know that in order to increase Revenue by 20%, expenses will increase by 15% leaving a net profit which has increased by 5%, that makes for a much clearer picture of what financial growth looks like in your firm. This is part of the big picture of your financial future. Check out 3 Major Things Lawyers Should Know About Retirement Planning (Before It's Too Late).
Client Base Growth: # of new clients
Not only the # of new clients but the type of clients, where they came from, how they heard about you, and the list could go on. The more you know about the people that are coming to your firm and how they noticed you, the more power you have to transform your entire firm (and life). An example of a software designed to track this information for law firms is Lexicata. Clio has also added this feature to their lineup.
Transform my firm, huh? HOW exactly?
When you learn the details about how your clients are learning about you, it’s an opportunity to build your marketing funnel into a vending machine of potential new clients. Vending machine funnels should be the goal of your marketing efforts. What’s that mean? In marketing it’s easy to throw money out there with no return on your investment. Might as well have flushed that money down the toilet. This is the slot machine method of marketing. Opposite of this is the vending machine method. This method identifies and improves a proven marketing effort that continuously generates new leads for your firm.
Knowing how many new clients lead to a specific % of increase in revenue also helps with future financial forecasting.
Returning Client Growth: # of returning clients
Equally important is why those clients came back to your firm. If you’re not asking them, you absolutely should be. Install a process be it software automation or a manual checklist. When a client comes to your firm for a second (or more) time, enthusiastically express your appreciation for them choosing you again and ask what they enjoyed most about working with your firm.
One of the biggest success factors is in what your clients experience when working with you.
The client experience starts the first time a person ever hears about or sees your firm. It’s what they hear about your firm’s reputation, it’s the way your staff talks to them, and the way working with your firm left them feeling.
Knowing how many of your clients are returning clients tells you how effective your client experience is. Understanding how to make that experience even better can lead to a higher rate of returning clients which is easier than getting brand new clients when you think about it!
Internal Growth: Top 3 mistakes (& how to learn from them)
“The successful man will profit from his mistakes and try again in a different way” – Dale Carnegie
Mistakes offer up some of the biggest and most innovative changes your firm may ever see.
Allow me to provide an example:
A client is yelling out front, so loudly that you can hear them from your office around the corner. Once your receptionist attempts to rectify the situation, the client leaves. This instance made it to your annual meeting under the mistake’s category. Your receptionist states that the client was upset with the fact that it had been 3 weeks since she heard from anyone in the office. She complained about having given the firm so much money and hasn’t seen anything for it. After some quick research, the receptionist explained that the process required for her case takes anywhere from 8-10 weeks turnaround time.
Here’s where the learning come in…
This situation tells you (at least) two things. Her expectations were not met, and she does not see the value in what she paid for. This is one of the biggest issues that clients have with law firms and yet one of the easiest to solve. This is a case of uncommunicated expectations and a missing process. Clarifying a timeline to every client and providing regular updates on a slow-moving case can solve this issue and at the very same time, provide value to your client beyond the money.
Internal Growth: Top 3 victories and how to replicate them
See the Top 3 mistakes in reverse.
Ready to take your firm to the next level? Contact us here to see if we’re a good fit.