HOW TO DESIGN A PRACTICE
The other day, as I was cleaning out all the things in my office that didn’t get done because of urgent priorities, I got to thinking about the disorganized law and accounting practices I’ve come across over the years.
Some practices grow like wildfire, some are perpetually stagnant, and of course, some decline. Most just grow or not randomly, often without perceptible rhyme or reason other than an aggressive partner or two. It’s easy to credit or blame one thing or another – the economy, lack of marketing effort, even luck. But the decline or growth of any practice is never more than one or two things. It’s really a combination of things, and sometimes all of the following dozen.
- Lack of planning. A practice is not a weed. Lack of planning means arbitrary growth, with only random effort to chart a course.
- Choice of market. Only the largest firms – law or accounting – have the option to serve many markets at once. The smaller the firm, though the smartest choice is to segment your practice by the size of a potential market, and your ability to srve that market.
- The current business environment. What this recent economic downturn showed was that an overwhelming number of legal and accounting practices had no idea about how to cope. They cut people and expenses with no thought of alternatives. They merged with one another, when they couldn’t find solutions. The did very little self-examination. For many firms, the downturn became a rout. Some firms had no choice, but many could have survived and thrived with a little planning and foresight.
- Too little talent for the market. There are a lot of exceptionally talented professionals in the legal and accounting fields, but nobody is expert in all fields. This is particularly true in today’s economic environment, which can be highly technical and complex. Your staff should be the best you can find for the market you serve. And focus as well on staff compatibility. Think in terms of David Maister’s concept of the one-firm firm, as opposed to a collection of internally competing partners and staff.
- Serendipity. The great philosopher, John Lennon, said: “Life is what happens when you’re making other plans.” Nobody can see around corners, but bright professionals should be able to see trends, and expect the unexpected, and have plans for “What if...?”
- Competition. If yours is not the only firm in your geographic or practice area, then you have to run your firm with the competition in mind. This means you may have to learn to do things you hadn’t planned on (as long as those things are neither unethical or illegal).
- Marketing. If you don’t have a marketing program – with either staff or outside consultants – or don’t know how to do it yourself (it’s a craft that must be learned, but it’s not nuclear physics – you can do it), then you’re going to lose the competitive battle.
- Governance. This is the 21st Century. In light of today’s economic, social, and international environment, even the smallest firm has to build staff on talent, not on the old fashioned top-down hierarchy. Governance for firm economics is one thing, governance for better ability to serve the clientele is another. Today, the successful firm puts the client at the core of the practice, not the other way around.
- Competitive intelligence. In today’s competitive environment, you have to know what other firms are doing in such areas as marketing, governance, staffing, and the like. Not by spying, but by watching. By reading the trade press. By attending meetings. Life in the marketplace is moving fast – you have to keep up.
- Available capital. Watch your capital and cash flow. Debt is tight right now, and capital is harder to come by. Maybe someday professional firms will find a way to finance growth by going public, but not this week.
- Technology. We are living in an era of technology innovation and proliferation. A lot of great stuff that can improve firm management and client service. We now see the beginnings of the mobile office. But the stuff is expensive. Buy what works for you and improves productivity, not for technology bling. And make sure that what you buy really contributes to your practice.
- The personal passions of the partners or owners. Build a firm that you and your partners and staff are comfortable with. Professional services – its practices and pursuit of clientele – is often complex and difficult. If you aren’t happy in your work, do some soul-searching. Unhappy partners and staff foreshadow disaster.
There really are more than 12 factors to the successful practice – but these are the basics. As the philosopher George Santayana said, the unexplored life is not worth living. That’s true about the unexplored practice, too.
Bruce W. Marcus is a Connecticut-based consultant in marketing and strategic planning for professional firms, the editor of THE MARCUS LETTER ON PROFESSIONAL SERVICES MARKETING, (www.marcusletter.com) and the co-author of CLIENT AT THE CORE (John Wiley & Sons, 2004). His e-mail address is email@example.com. Copyright 2010 Bruce W. Marcus. All rights reserved.