Starting your own law firm can be exciting and terrifying at the same time. It gives you ultimate freedom while making you ultimately responsible. While many will say it’s the best decision they made, running your own practice isn’t for everyone.
If you’re thinking about hanging your own shingle, here are ten questions you’ll want to answer to help decide if it’s the right choice for you.
1. Is becoming an entrepreneur a good fit for me?
Starting a law firm can be fun and rewarding. It can also be challenging and stressful, and it is not the right fit for every lawyer. Being an entrepreneur and running a profitable business requires certain traits, characteristics, skills, and passions. Among others, you need to be able to take calculated risks, cultivate creativity, lean into uncertainty, and push past naysayers.
2. What are my life goals and how will starting this business help me achieve them?
Yep, it’s time to get deep. The most successful business owners use their businesses as tools to achieve certain life goals. Those goals could range anywhere from creating a nest egg for retirement or building generational wealth to using the business as a force for good and having a positive impact on their community. What are your life goals? And how would your law business help get you there? There is no wrong answer here, other than to forgo answering this question and proceed rudderlessly. So take time to answer it before taking any further steps. You won’t regret it.
3. How will I support myself financially in the early stages as the firm is getting ramped up?
Generating enough revenue in your first month in business to cover business and personal expenses is highly unlikely. While it can happen, it typically takes between six and twelve months to generate enough revenue to sustain the firm. How will you support yourself financially during that ramp-up period? Can you save enough money to cover your business and personal expenses for at least six months before you open the doors? Can you take out a loan? Will you work a second job? If you plan on working a second job, be realistic about how much time you can work while also devoting the time necessary to launch your business. The less time you spend launching your business, the longer it will take to reach sustainability, and if you spend too little time, the business might never get off the ground. There’s a balancing act here, but it’s important to have a plan in place before you start to give yourself the best chance of success.
4. Do I have a supportive community in place?
There’s no way around it: starting a business will be challenging and stressful. Running your own firm can also feel lonely and isolating. During difficult times, having a community you can turn to for support and encouragement is vital. A community can come in many forms, and you really can’t have too much of it. Some examples include participating in an incubator program, joining your local bar associations, maintaining close relationships with friends and family, reaching out to colleagues, and of course, being a member of the ADP community. Find your tribe and make time to cultivate those positive connections. They will be a lifeline.
5. What is the mission of my business?
The mission of your business will serve as the guide for everything you do. We recommend writing your mission statement down and putting it somewhere that you’ll see it every day. Your mission statement should explain what you’re trying to accomplish through your business and what would happen if you don’t. To learn more about writing an impactful mission statement, check out this video by Donald Miller at Business Made Simple. Once you have a mission statement, consult it before making any business decision and ask yourself if the decision is aligned with your mission. If it is, fantastic. Feel confident in your decision. If not, even as much as you may feel compelled to make it, your business will ultimately suffer if you don’t stay aligned with your mission.
6. How am I going to make money?
If you aren’t making money, you don’t have a business. It’s pretty simple. So you want to get clear about what you’re going to do exactly that people will pay you for. For most law firms, we generate revenue through providing legal services, but that is too generic. You need to be specific about what types of services you are going to offer. Will you offer full scope, limited scope, or both? What will be the specific service options within each category? Will you offer any productized services? What value will you provide through these services? What price does the consumer place on that value and will it work for your business? These are all questions to think through before hanging your shingle. Need help getting started? Our free Pricing Toolkit provides you with a four-step process that will help you profitably price your services.
7. How much revenue do I need to cover expenses and earn a profit?
What is the overhead cost of your business? How much income do you want to earn? What will you need to set aside for taxes? What is your profit margin? These are critical numbers to know before you launch your firm. Want to know exactly how to calculate your expenses and profit? We give you the exact steps to follow in The Pricing Toolkit.
8. Who is my target client?
If you could serve a particular client every day, who would that client be? Where do they live? What do they do? What problem do you solve for them? How do they approach the legal process? Where are you most likely to initially come in contact with them? The more you can understand and define your target client, the better you’ll be able to reach your target market. Consider creating a buyer persona for your target client, and if you’re trying to serve more than one, create one for each.
Create your own buyer persona by downloading our FREE template here!
9. How will I generate leads?
At the end of the day, if you don’t have clients, you don’t have a business. It used to be that law firms would hang a shingle and clients would find them. That’s no longer the case. In our ever-expanding and digital world, you need to create a targeted, clear message to attract potential customers and then share that message in the channels where your target client can be found.
Because marketing can get overwhelming quickly, it’s best to create a plan and stick to it. Figure out what your message will be and where you will share it. Lean on existing relationships to spread the word. Let friends, family, and colleagues know what problems your business is solving so that if they come across someone with one of those problems, they will know exactly where to direct them. Create and launch a website. Use it as the central landing spot where everyone will go to contact you or book an appointment. Get a plan together for how you’ll use social media. Create relationships with organizations or communities where your target client is involved. Do they congregate at a place of worship? Do they frequent a particular library or community organization? Consider what type of media your target client consumes. How can you show up there?
Marketing will be something you will do so long as your firm exists, so get comfortable with it. In the beginning, you’ll do a lot more as you’re trying to build up your pipeline. Once you’ve reached a steady stream of new leads, you may scale back, but you’ll always be marketing so it’s important to have a plan.
10. How will I measure success?
What does a successful business look like to you? How will you know when you’re “successful”? There is no wrong answer here. The definition of success is a personal one. While it may be tempting to only define success financially (by earning a certain amount of revenue), we challenge you to think about what that revenue really means for you. Is it giving you the freedom to plan for your future or get out of debt? Is success not having to ask for permission for how you spend your time? Is it the ability to make more memories with family and friends? Is it turning off the light each day knowing that you made an impact on someone’s life? Whatever your definition of success is, write it down and put it somewhere that you’ll see it every day. Then determine how you’ll measure it so that you’ll know when you’ve achieved it.
You might be thinking, “Wow. This is a lot to think about.” You’re right. It is. But so is starting a business. It’s one of the most rewarding and challenging things you can do. While we believe in you, we also want you to set yourself up for success. Taking the time to really answer these questions in detail will give you a clear picture of whether starting your own law firm is right for you. If it is and you want even more practical tools for optimizing your firm for growth and enjoyment, subscribe to our monthly newsletter.
