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Business plans: Why you need them and how to create one

By: Jane Pribek//December 20, 2011//

Business plans: Why you need them and how to create one

By: Jane Pribek//December 20, 2011//

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Solo practioners say time spent in advance leads to payoffs down the road

Lawyer Jim Troupis works at his Madison office. The solo practioner said he spent a year and a half developing a business plan before opening his own firm, Troupis Law Office LLC. (Photo by Kevin Harnack)

When Madison lawyer Jim Troupis decided to start his own firm, he took his time with the decision, resisting the urge to jump right in.

Although he had 28 years of experience working as an attorney, Troupis spent more than 18 months planning for his new venture. He worked to define the new firm’s mission and estimate costs, and solicit advice from other attorneys and law professionals. When he opened Troupis Law Office LLC in Madison in June 2010, he said he felt well prepared.

“Define your objective,” Troupis advised. “Your perfect world and why you’re willing to set it up. Then you ask the more substantive questions, like what’s it going to cost to not make any money for a while?”

Taking the time to draft a business plan was an important step for Manitowoc lawyer Joe Engl, as well, he said, before deciding to open his own practice Oct. 1. Six months of advance preparation gave him the courage to take the leap, Engl said.

“It can be overwhelming when you first start thinking about everything you’ll need,” Engl said. “It’s easy to say, ‘I’m going to go out on my own,’ until you start thinking about things like the cost of copiers, scanners, etc.

“Putting it all on paper helped me organize my thoughts and ultimately it was less overwhelming because it showed me I could do it.”

A well-developed business plan also is essential for landing a loan to start a new firm, Milwaukee lawyer Jon Groth said. It’s the first document lenders require, he said.

Thinking of branching out on your own? Follow the advice on how to develop a plan for success from those who’ve been there.

Take the time

Groth said he spent one year honing his business plan before putting it into action. And though Engl said six months was sufficient for drafting his plan, he acknowledged he seriously started hatching the dream years before.

Define the firm’s mission

“The first thing I did,” Troupis said, “was define what success would mean to me; much like I do with new litigation clients, asking them what success in the litigation will look like to them.”

It was the most difficult part of the plan, he said, because it required soul-searching. Troupis ultimately decided success, to him, would be practicing with his daughter, Sarah Troupis, and potentially other family members. He wanted to do policy work that challenged him and made a difference, he said, in a business environment that was more nimble than a large firm. He also wanted enough time and resources left over, Troupis said, to give back to the profession and the community.

Define the firm’s marketing strategy

Troupis said he planned for the types of clients and cases he wanted, realizing not every case would be of the “win the lottery” magnitude. He also factored in the large number of lawyers competing for those big cases, he said. When planning, Troupis said, lawyers need to think about what they can offer that will make them stand apart from the competition.

Find a template for the numbers

Professional liability carriers often offer practice management resources, Groth said, including sample business plans. Author Jay Foonberg’s book “How to Start and Build a Law Practice” has a number of checklists and sample plans, as well. Engl said he benefitted from Foonberg’s book, which he read for a law practice management class in law school.

Troupis said he found a helpful link to a sample business plan on the State Bar’s website. A Google search results in several others.

Be conservative

Overestimate costs, Troupis said, to avoid unpleasant surprises later.

“It’s not an easy equation for a lawyer right now,” he said, “because the costs are high, much higher than I thought when I started the process.”

Troupis said he quickly realized personnel would be his largest expense. Top-notch legal secretaries in Madison command larger salaries than new lawyers, he said.

Technology also was a large investment for Troupis, he said, because he wanted to be able to offer tech capabilities comparable with big firms.

Planning ahead helped Troupis realize where money could be saved, he said. He decided he didn’t need law office billing software, which cost about $6,000, when Excel could satisfy his needs, he said.

To keep his initial costs down, Engl said, he opted for a shared office. By sharing space with another, well-established bankruptcy lawyer, he said, he has someone down the hall to bounce ideas off of and, perhaps, help land some referral work.

“My biggest concern about going out on my own,” Engl said, “was I’d buy the computers, create a really nice website and get everything set up, and then I’d just sit there with no clients for six months.”

Since opening his doors this fall, however, he’s had a steady workload, he said.

Don’t be afraid to ask for help

Pick the brains of other lawyers and entrepreneurs, Troupis said, and, if you can afford it, hire an accountant who’s experienced with business planning.

Groth said he relied upon advice from a friend in banking who’s familiar with what it takes to get a business loan and used Business Plan Pro software. The $99.95 it cost was a smart investment, Groth said, because he got a loan using the plan it helped him generate.

“It was helpful to put down on paper all the certainties I knew would be there,” he said, “when I had so many uncertainties in my life at that time, like the costs I’d incur if I suddenly got more cases.

“It was helpful to know how much money I’d need for the first six months and year, at the very least.”

Let the plan evolve

Once the firm is up and running, Troupis said, the business plan should not be shelved. He said he reviewed his plan every couple of months with his accountant to make sure they were on track and to plan for growth.

“Success comes from planning, being realistic and taking the time to figure it all out,” Troupis said. “Be prepared for leanness in the first year.

“And don’t judge success in the law profession by money. Do what you love; the money will come.”


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