Welcome to part 5 of a 10-part series, Nine Ways You’re Losing Business—and What to Do About It.
Reason No. 4 You’re Losing Business:
You don’t invest in your practice.
When I was growing up, I loved a Kingston Trio song called Desert Pete, which taught me the concept of priming a water pump, or using a precious resource (water in this case) to produce more of it. The song’s narrator describes his reluctance to pour water into the pump when he’s so thirsty, but taking that leap of faith pays off.
Unsuccessful lawyers resist investing time and money into business development; successful lawyers understand that it takes money to make money and that a practice can never grow without a significant investment of both time and money. If you don’t get this lesson—if you’re tight-fisted with time and money even when using it well would lead to more and better business—you’re losing business.
It costs thousands (and thousands and thousands) of dollars and unimaginable amounts of time to become a lawyer. That education is an investment that can pay off handsomely, though law school is no longer viewed as an easy decision or a certain career path thanks to recession-era changes in the job market and in the perceived value of a law degree.
However, your investment doesn’t end on receipt of your law degree. You know about ordinary business expenses and CLE credits, but how do you look at investments required for client service and business development purposes? In fact, do you see investments, or do you only see expenses?
You’ll need to make investments of both time and money in several categories to grow a thriving practice:/strong>
- Business development activity: Whether it’s purchasing holiday cards and writing a short note in each, paying for membership in an organization and attending meetings, or hiring someone to do SEO on your website, you’ll need to invest to grow your practice.
- Business and business development education: Law schools should offer foundational classes in business management and business development, because every lawyer needs to understand those two topics. However, such classes are still infrequent. Accordingly, you’ll need to invest time and money in learning what you should have been taught in law school. Even when you get past the foundational level, continued growth requires deeper education.
- Technology and infrastructure for client acquisition and service: Technology of all kinds, from an iPad to a client relationship management system, can be useful as you seek ways to expand your practice and to better serve your clients.
To make smart spending decisions, use this process.
- Determine an annual budget for your spending. Depending on your practice setting, this budget might be set by the firm that employs you, or you might have to decide how much of your own income you’re willing to invest. Lawyers who skip this step either overspend or underspend, and each will negatively impact the business that is your practice. If your firm provides a budget for you, be sure it’s sufficient to meet your needs.
- Evaluate your potential expenditure to determine whether it’s a cost or investment. No matter how promising or enjoyable, an expenditure that doesn’t produce results is a cost, not an investment. Read this blog post to learn how to make the call.
- Be sure that you include a line item for education in your budget. Business development education can include attending workshops and conferences, hiring a consultant, purchasing books, and more. Especially when you can get individual feedback and assistance, you’ll find that investing in education will help you to grow much faster than you would if you work alone. And continued investments will help you increase the level of sophistication in your business development work.
- Be sure to track your activity and results and review your process on a regular basis. When you do so, you’re able to make evidence-based decisions to stop activities that aren’t working and to continue or even expand the activities that are working.
- Know the average lifetime value of a client so you can make smart decisions. Should you spend $25,000 for consulting or an SEO consultant if you can expect (conservatively) to gain one new client as a result? If your average client value is $5000, absolutely not; if your average client value is $75,000, you should make that investment in a heartbeat.
While each of these questions pertains to money, you should make the same evaluation to determine where to spend your time and energy.
How do you make decisions on your business development budget? If you don’t have one yet, start today. When you make smart spending decisions, you increase your chances of rapidly growing your practice.