Four fundamentals to scale up your law practice
Successfully scaling up a business is not simply about growing. It requires growing with increased profitability, not just size – whether that be in team members, customers, sales, or impact. So what might that actually mean if you were looking to scale a law practice, or any business for that matter?
Published May 19, 2019
Scaling Up a business is not simply about growing
It requires growing with increased profitability
Successfully scaling up a business is not simply about growing. It requires growing with increased profitability, not just size – whether that be in team members, customers, sales, or impact.
So what might that actually mean if you were looking to scale a law practice, or any business for that matter?
It may seem obvious, a critical piece is to simply make the decision that you intend to scale, not just grow. That in all elements of your practices’ processes and the way your people go about their day-to-day activity there is an awareness that it is about scaling. About getting more efficient.
Fortune released recently that Walmart, Exxon, Mobile, Apple, Berkshire Hathaway, and Amazon made the top 5 of the Fortune 500 List. Interestingly the Average Revenue/Employee of the 500 is US$477,351. This is roughly four times mid-sized firms in the US with an average of US$38,327. This represented an average profitability of 8% up from last years 6%.
As an aside, Apple’s profit/employee of US$450,992 was almost equal to the other 499’s revenue/employee.
What might be your number?
Check out a firm on the <a title=”Fortune 500 List” href=”https://fortune.com/fortune500/” target=”_blank”>Fortune 500 list</a> in your industry and see how you compare and thank Verne Harnish for sharing the Fortune data.
What do you need to address as far as your people, strategy, execution, and cash are concerned?
If comparing yourself to the Top 500 is providing some inspiration here are four fundamentals to think about to get yourself scaling.
Take a page out the parenting manual. Establish a handful of rules, repeat yourself a lot, and act consistently with those rules. This is about clarifying your core values and living them. The leadership team, Partners, need to model them at all times. If known and used effectively, these values guide all the relationship decisions and systems in the company.
In setting Strategy you can’t go far wrong being influenced by the definition from the great business strategist Gary Hamel. You don’t have a real strategy if it doesn’t pass two tests: First, what you’re planning to do really matters to enough customers; and second, it differentiates you from your competition.
In driving Execution, implement three key habits:
- Set a handful of Priorities (the fewer the better);
- Gather quantitative and qualitative Data daily and review weekly to guide decisions;
- Establish an effective daily, weekly, monthly, quarterly, and annual Meeting Rhythm to keep everyone in the loop.
Those who pulse faster, grow faster.
In managing Cash, don’t run out of it! This means paying as much attention to how every decision affects cash flow as you would to revenue and profitability.
Remember the first law of entrepreneurial gravity. Growth sucks cash!
And nothing ages a Managing Partner and his or her team faster than being short of cash.
In fact, Jim Collins and Morten T. Hansen, in their best-selling book Great by Choice: Uncertainty, Chaos, and Luck – Why Some Thrive Despite Them All, found that successful companies held three to 10 times more cash assets than average for their industries, and they did so from the time they started.
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