How to Get Started with KPIs

My clients and I use KPIs (key performance indicators) to make smart business decisions. We don't guess or just do what we feel like doing to take those firms next level, including over the million-dollar mark.?

I totally get that a huge spreadsheet of 30 different things to track is too much to start, so today I'm sharing how to make this tracking work for you. You can do this on graph paper, in Word, or in Excel. Go with whatever you'll actually use. If that's a legal pad, that will work perfectly fine.?

Let's start you off by tracking just five KPIs. The key is to track something you either want to improve or need to know to avert disaster.?

1. Revenue. Jot last month's revenue in this space. Please note that I said "revenue," not what you're putting into your trust fund. That's not revenue yet. Add up all the money clients pay you. If you have multiple streams of income such as referral programs or affiliate fees, include those as well in this number.?

2. Overhead.?This includes all of your business expenses as well as your compensation for work provided to the firm for management and practicing law. Some attorneys who haven't worked with a law firm business strategist think they have a super high-profit margin. They don't. They're not properly tracking expenses and their firm is structured improperly.

3. Closing Rate.?Your closing rate is the percentage of potential new clients who participate in a first meeting and then engage your firm to provide legal services. For example, if you have 10 consultations in a month and 9 engage, you have a 90% closing rate. If 5 engage, you have a 50% closing rate. Divide the number of clients who engaged by the number of potential clients who participated in the first meeting during which they can hire you (i.e. consultation).??

4. Hours Worked Doing Admin Tasks.?How many hours did you work on tasks delegable to an administrative assistant?last month? You'll need to track your time, but you'll be glad you did. Break your time down into practicing law, admin tasks, paralegal tasks, and CEO/business owner tasks. In this spot, jot down the number of hours you worked on legal assistant tasks.?

5. Your Happiness Rating.?This is a metric to track your overall happiness throughout the month, not how you feel on the day you do your KPIs. With a scale of 1 to 10, where do you fall on the scale?

Once each month comes to a close, fill in each blank on your KPI dashboard.

When you're driving, you look at your dashboard to see how the car is doing. When your doctor meets you for an appointment, she refers to your medical records and test results to help her provide good advice. That's her dashboard. When you're a law firm owner, you look to your KPI dashboard to see exactly what's working and what needs to be tweaked.?

You'll immediately be surprised at something, I promise you. At three months, you'll begin to see patterns that will show you what changes need to be made. It feels magical but it's simply math :)?

You got this!

Wendy

MillionDollarAttorney.com

Wendy Witt, JD is the founder of Million Dollar Attorney?, a private consulting firm designed to help lawyers prosper.

Her guidance has been published by Forbes, ABC, NBC, CBS, Fox, Huffington Post, Experts Institute, Solo Practice University, Pennsylvania Bar Institute, Pennsylvania Bar Association, the Pennsylvania Lawyer, among others.

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