The practice start-up check list – part I

All firms need a business plan. It is necessary to convince the Solicitors Regulation Authority of your viability. It is also a tool for you to reality check your objectives. So what are some of the critical points to consider for any would be legal entrepreneur?

Define your practice and goals

For instance:

• are you looking to build a long term business providing for you through to retirement?

• is the plan to create a firm that others may want to acquire in the future?

• is the focus more on service to the community or profit generation?

Considerations such as these can impact on how you look to build the business and what investment choices you are willing to make.

Think about the concept; 'legal expertise' and 'a client focused approach' are statements seen on almost every practice website. You need to differentiate yourself in order to succeed.

Points to consider include:

• the range of services offered and how they are delivered;

• pricing;

• additional specialist knowledge of a particular sector;

• the client "experience" and your reputation with your client base; and

• the efficiency with which you run the firm.

Think about how your idea compares to the market. Your concept may appear sound, even exciting, but before jumping in have a good look for the rocks that might scupper your new firm.

Market, competitors and clients

Understand and research the market that you are going to work in, and think about how big a share of the pie is available, and then if you can win enough of it for your firm to succeed. (An example we've recently witnessed is the SRA questioning whether starting up another personal injury firm in a particular area was truly viable when so many already existed. We had to argue clearly as to why our client would be able to make a success in such a congested market).

Market developments are also important. Think about the developing trends in your area and if they can give your business a competitive advantage. For instance, we've seen family law change significantly over the past five years with legal aid changes and increasing use of alternative dispute resolution. We also see more and more firms offering fixed price services.

When considering the competition, ask yourself:

• who else is providing these services to the sector?

• who else may be looking to enter?

• what can you learn from what others do already?

• what can you offer that's better?

• what will you need to match to be able to compete?

With respect to clients, you may be confident that you have key clients who will come with you, but it's difficult to be sure. How will you keep them with you for the longer term? While existing clients are a great starting point, even the most loyal client base will dwindle over time. How are you going to entice new clients to instruct you - this this is the starting question for your marketing plan.

Operating the business

There are many decisions with regards to how you will manage the firm including:

• what office space do you need? (If going for a virtual practice solution what's the impact?)

• what services will be managed in-house and where will it be better to outsource?

• what staff are needed and how will they be managed?

• what telephone solutions to use (such as external call answering)

• what IT solutions should be used? (While care should be taken to ensure compliance there are excellent cloud based solutions that can save on infrastructure investment and time).

• how will the accounts be managed to be SAR compliant?

• how will compliance and risks be managed within the practice?

Marketing the practice

Ask yourself: "what is my winning strategy?" Think about how the message about what you do will get in front of the right people at the right time.

Existing clients (assuming you bring them with you) are a key starting point. They are your best source of work. Make sure you are doing everything that you can to maximise the services provided to them and get them to spread the word about how good you are.

It's about making people aware of the benefits of instructing you. You need to think about how you get your message across and what of the following can be leveraged to your advantage:

• website (and ensuring that it is easily found);

• social media / e-marketing;

• literature;

• articles, journals, editorials, seminars and opportunities to speak; and

• advertising.

Spend each marketing pound as well as you can. You only have so much, so prioritise what's important.

Addressing the issues highlighted above will give you a great start in planning your success. In part II of this article we consider two critical factors facing a new firm, money and authorisation.

Alex von der Heyde is Managing Director of Esterase

www.esterase.co.uk

alex.vdh@esterase.co.uk

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