We are often asked why law firms, percolating along for years and making a fair amount of money for their shareholders, should devote time and money to writing a marketing plan or having their current business development efforts formally reviewed.
We’ve found some data answering those questions.
PLANNING IMPROVES PERFORMANCE
A study in the Journal of Business Venturing aggregated research on the business growth of more than 11,000 service companies and found that planning improved overall business performance. Interestingly, this same study found that planning benefited existing firms even more than it benefited startups.
Why are existing firms able to derive more benefit than start-ups? Blogger Noah Parson writes: “The answer most likely lies in the fact that existing businesses know a bit more about their (clients) and what their needs are than a new startup does. For an existing business, planning involves fewer guesses or assumptions that need to be proven, so the strategies they develop are based on more information.”
EXISTING FIRMS BENEFIT THE MOST FROM PLANNING
Whether new or existing, another study in the Journal of Management Studiesfound that companies that plan grow 30% faster than those that don’t plan.
Of course, a proper plan is requisite, too. It should be conducted by an experienced law firm marketing consultant. It should examine your law firm’s internal situation, your external relations with clients and referral sources plus the efforts of competitors. You need a legal industry expert because your firm needs someone who understands the issues inherent to different types of law firms: a boutique, the local full-service King of the Hill, the category killer, or other types of firms commonly found in the marketplace.
Most importantly, your law firm marketing plan must not become a document put up on a shelf and forgotten. It must be organic, regularly amended to reflect current market and internal firm conditions. Overall implementation should be critically reviewed at least annually.
All of this goes to the heart of an issue raised by the Small Business Administration (SBA), that being most small and middle-market businesses “take a disorganized or haphazard approach to their marketing efforts; as a result, they fail to capitalize on opportunities”. Something else to face is that planning commonly goes against the grain of a firm’s rainmakers, who are entrepreneurs viewing “planning as a non-active effort,” the SBA writes.
HOW MUCH PLANS COST – A FORMULA
Finally, law firms often avoid planning or reviews because they have no idea what is a fair fee. “A strategic plan for a still simpler organization with sales of $10 million might be $25,000 (again, 1/4 of 1.0% of revenue),” writes management consultant Peter McCann in this article.
The available data indicates that law firms with a business and marketing plan are more likely to grow faster than their competitors. And, established law firms are more likely to benefit from marketing plans than new law firms.
