Keep your business plan under regular review – The future of your business may depend on it

Ian Hopkins 15-08-2022

Keep your business plan under regular review – The future of your business may depend on it

In this article Ian Hopkins Senior Associate Consultant with cpm21 explains why law firms need to regularly review and update their business plan.

Once your firm has decided on the way forward, and a business plan is in place, that should not be the end of the business planning process. It is crucial that the business plan is kept under regular review to ensure progress is on track and whether any adjustments need to be made to the agreed strategy.

Too often law firms approach business planning as a tick box exercise with the business plan only seeing light of day at the annual Lexcel audit. Such an approach to business planning is likely to have limited success when it comes to delivering sustainable growth for your firm.

With financial commentators predicting choppy waters ahead for the UK economy, law firms may find that they face a perfect economic storm over the coming months as clients look to tighten their belt and reduce legal spend whilst overheads spiral upwards causing a squeeze on profits and cashflow.

Law firm leaders should review all areas of expenditure in the Profit and Loss Account. With inflation running at record levels costs will increase sharply so firms need to be run with maximum efficiency and minimal waste.

Commenting on the current economic forecast and its impact on UK law firms Ian Hopkins Senior Consultant at cpm21 said

If managing throughout the 2008 financial crises taught me anything it is that leaders in law firms both large and small, need to grasp the economic reality and stay ahead of the curve by conducting a thorough review of their business plan to ensure it remains relevant given the economic forecast.

Staff costs are likely to be the most expensive item of expenditure for most law firms. Recruitment decisions should be reviewed – Are your current lawyers fully utilized? What is the pipeline of work likely to look like in 6 months’ time? Is there a genuine need for further recruitment? These are the tough questions that law firm leaders should be asking themselves.

In addition to scrutinizing each item of expenditure law firm leaders should also ensure that WIP is billed promptly, and debts collected proactively. The old saying that “cash is king” will never be truer over the coming 12 months.”

Cpm21 are uniquely placed to advise both on maximizing revenue and cashflow and on eliminating waste and inefficiency and are currently working with a number of clients on related projects.

If you would like to discuss any of the themes raised in this article please contact Ian Hopkins, Wayne Williams, or Paul Jones of cpm21 direct.