Year-end countdown: individual business plans

Do partners in your firm have individual business plans?

My colleagues and I have observed that in some law firms the combined strength of the individual business plans of each partner can be more important that the overall quality of the firm's business plan.

This is not to say that firm-wide business plans are not important. Indeed, they are! But one of the most frequent reasons why some law firm business plans produce disappointing results is that there is not a well-informed commitment to specific actions on the part of individual partners.

Even the best business plan in the world is not self-executing.

Top down or bottom up?

As we approach mid-October, law firms that are on a calendar-year fiscal basis should be starting to develop their business plans for 2012. This is also the time for each partner to start thinking about what he or she can achieve individually in the New Year.

Some firms even prefer a "bottom up" approach, with the partners developing their individual plans, which in turn inform the revenue side of the firm's plan, as well as some of the investments that will be needed in marketing, client relations, and professional development.

Other firms prefer the "top down" approach, by which the firm's management team identifies tentative financial goals and projections, which they hand to the partners to refine individually or by practice groups. This approach can provide a good "sanity check" of the firm-wide aspirations. Interestingly, in about a third of the firms that I have advised using this approach, the sum of the partners' projected financial contributions have actually been higher than the original estimate in the draft firm-wide plan.

It is also interesting that, whether a firm prefers "bottom up" planning or a "top down" approach, when partners are seriously committed to the effort, each method of business planning takes approximately the same amount of time to do well.

In short, either system can work well.

Two clear points

However your firm does its business planning, there are two points that are beyond debate:

1. Well-informed individual business plans can profoundly improve the probability of a successful new fiscal year. In fact, in terms of return on investment, they are among the best possible uses of a relatively small amount of a partner's time during the last three months of the fiscal year.
2. Start now. If your firm's new fiscal year begins in January, regardless of which approach you prefer - top-down, bottom-up, or some combination of the two - you should aim at having a final version of the firm's business plan completed by 1 December and the final versions of the individual business plans by 20 December.

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