How to Use the P.R.O.F.I.T. System to Scale Your Law Firm, Increase Profits AND Reduce Your Working Hours
John McCarthy
Helping Law Firm & Legal Tech Owners unlock ￡100K extra profit in 6 months, build a highly profitable, valuable business & plan for exit with the PROFIT System. DM me “SUMMIT” to boost your profits!
You're here because you already have a good law firm, but you want to make it great. ?You have a good revenue, decent profits and a team that does a good job, but you know it could be better.
You’re just not sure exactly how to get there, but you know you don’t want to just work harder.
You’ve earned the right to capitalise on your years of hard work, investment and sacrifice.
So now you’re looking to scale your business, increase your profits, and increase the asset value of your firm, all whilst having the option to reduce your working hours.
And that’s exactly what The Profitable Practice Newsletter will give you.
No business buzzwords or academic waffle just straight-talking, no-nonsense, easy-to-implement tips and techniques that will guide you to build the law firm and lifestyle you’ve always dreamt of.
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In previous newsletters, I covered the 3 elements of the Profit System *
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In this newsletter, I’ll explain how they all fit together and how you can coordinate these 3 elements to grow your business.
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*?? For further details on each of the elements see previous newsletters.
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The 3 Elements of the Profit System:
Element 1: The “5 Levels of Business Ownership"
Level 1 is "Overwhelm"
You feel like you're juggling too many tasks at once, winning the business, managing the cases, recruiting, training, and invoicing…..? it feels like it’s all down to you.
At this stage, most business owners rely on hard work to grow the business and it’s overwhelming. But there's a better way!
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Level 2 is "Overworked"
Level 2 is not so overwhelming but it’s still hard work. You're often trying to micromanage everything, working a lot of hours, sometimes evenings and weekends.
You can’t progress from this stage by hard work alone, you need to build effective systems that can run the business and a great team that can run the systems.
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Level 3 is "Organised"
This feels like a “good” business.
You have robust systems and talented people to support your growth. You’re feeling in control of your business, able to work more ON the business than IN the business and the business is growing as a result. Your profits are growing even though you’re able to reduce your working hours.
But it can provide you with so much more …
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Level 4 is "Overseer"
You have an excellent team being efficiently managed by a Manager Team / Departments Heads allowing you to focus on strategic planning.
Your revenues and profits are growing, you have predictable cash flow.
Business and life feel good, but there’s still one more level to achieve.
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Level 5 is "Owner"
This is the ultimate goal: a law firm that operates seamlessly and is able to grow even in your absence.
You have the income, the time, and the freedom to only do the work you want, when you want, where you want.
Your business is now an extremely valuable asset that provides you with long-term financial security and the lifestyle of your dreams.
Element 2: Build the “3 Business Pillars” to Move Up the 5 Levels
Pillar 1: Vision - clear goals and a plan to get you there.
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Pillar 2: Velocity – controlling the rate of your growth
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Pillar 3: Value – developing the long-term asset value of your firm
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Element 3: Follow the “9-Step Roadmap” to Build The 3 Pillars
The Vision Pillar: -
Step 1. Alignment Accelerator
Aligning your business goals with your personal goals.
Rather than building a business and just hoping it’s going to provide you with what you want on exit, it’s far better to plan your Personal Goals and then work out what your business needs to achieve to deliver it.
Set your 10, 5, 3, 1-year Business Goals and align them with your Personal Goals.
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Step 2. Driving Growth
Once you have your business goals you need to do a COMPLETE business audit to understand exactly where you are right now. This will identify your strengths and where your gaps are.
Now you can make a comprehensive business plan to help you get from where you are now to where you want to be.
Doing this step helps you avoid short-term, knee-jerk tactics, and ensures you constantly move toward your long-term goals.
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Step 3: Dynamic Planning
Now you have your starting point (from Step 2) and your business goals (from Step 1)) you can create your plans:
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90-Day Action Plans ensure you work on the most important tasks every week and are not getting distracted by “Shiny Objects” or “Non-Important but Urgent”.?
Ideally, everyone in your business will have their own 90-Day Action Plan so that your whole team is working towards your business goals.
The Velocity Pillar: -
Step 4: Profit & Cash
Your priorities should be Increasing Profits and Managing Cash Flow – not Marketing!
That comes later, because …
… if your margins are low and/ or your cash flow is not controlled, increased marketing can damage your business!
Attracting low-value clients into an inefficient business with poor cash flow will increase your workload as you’ll have to work harder and harder to fix the inevitable financial problems.
So, maximise your efficiency and profitability, and improve your cash flow management before focusing on marketing.
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Step 5: Marketing & Revenue
Good marketing will attract A-Grade clients who are willing to pay you handsomely for your expertise and are fun to work with.
And when you get it right, it’s free! That’s right, FREE CLIENTS!
When you have developed your marketing properly you will get a brilliant ROI (Return On Investment) because:
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“The Client Acquisition Cost” (how much it costs you to obtain a client)
is less than
“The Lifetime Value of a Client” (the total revenue your client will pay you over the time you work with them).”
? =? Every client is a profitable client ??
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Step 6: Operations & Systems
As your business grows you will need to improve your systems and processes.
Without good “business” systems (not just service delivery and governance systems) your firm will grow into an uncontrollable beast. You’ll be working harder to fix the problems.
Systems should run the business and people should run the systems. It is your job, as the business owner, to manage the people.
With good systems, training, and people in place you’ll have the confidence that your business can grow whilst you can reduce your working hours.
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The Value Pillar: -
Step 7: Financials and KPIs
Just like an aircraft pilot needs flight instruments in his cockpit, you need Financial Information and KPIs (Key Performance Indicators) in your business so that you can make good decisions.
Without good business data, you are flying blind.
Your KPIs should relate to your 12-Month and 90-Day Plans so that you can measure progress and correct course as necessary.
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Step 8: Innovation & Leadership
You’ve probably heard of the Kaizen principle, meaning "continuous improvement".
Innovation does not necessarily mean big, impressive initiatives.
The best innovation in your business will come from consistent small changes that culminate in huge improvements – the principle of Marginal Gains.
When your team is highly engaged, taking ownership, and demonstrating self-leadership they will identify and implement these improvements for you.
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Step 9: Team & Culture
Developing a world-class management and leadership team will enable you to step back from the day-to-day running of the business.
You will be able to focus on the strategic direction and have the confidence that you have people running their departments who are even better at it than you are. ??
At this level, you have the income and the time to do what you want, when you want, with who you want – complete Freedom!
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How They All Fit Together
You can move up the 5 Levels of Business Owners by building the 3 Business Pillars.
You build the 3 Pillars by following the 9 Step Roadmap.
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So, Where Do You Start?
1. Set your Personal Goals
Get completely clear on exactly what lifestyle you want to achieve, by when, and what it will cost you financially.
2. Build the Vision Pillar.
Set your business goals so that your business provides you with the personal income and gives you the time needed to achieve and enjoy your personal goals.
This will ensure you are out of Level 1 (Overwhelm) or if you are already above this level, it will set the foundations to sustainably move up to a higher level.
3. Build the Velocity Pillar.
This is to ensure your business grows at a controlled rate making it easy to manage and consistently grow profit margins.
The first priority needs to be maximising profit margins and cash flow. If you focus on marketing first, you may actually be harming your business by attracting low-profit work and/ or creating a cash-gap which makes business hard work and life stressful.
When you have good control of cash flow and profit margins you can focus on developing effective marketing strategies that attract high-value clients and give excellent ROI.
As your business grows you will need to improve your systems and processes to further improve your efficiency, make your service delivery more consistent, and reduce the time needed for the business owners.
When you have built this pillar, you will have moved through Level 2 (Overworked) and achieved Level 3 (Organised).
You will have a far more profitable and efficient business that needs less time from you.
4. Build the Value Pillar
At this point, you should be moving to Level 4 (Overseer).
Developing a good business dashboard showing the key KPIs that are driving your business is key here. You will have the confidence that you are making excellent decisions based on relevant and accurate data.
To build a successful and highly valuable business you will also need to develop a highly engaged, motivated, and innovative team, and have a team of highly capable managers.
At this level, you will only need to work ON, rather than IN, the business.
You are able to step right back from the business whilst it grows steadily and generates excellent profits.
5. Achieve Total Freedom
When you achieve Level 5 you can say you are truly a “Business Owner”
You have a robust, profitable, and growing business and are now able, if you choose, to employ a Managing Director or General Manager who is skilled at running the business.
You can do as much or as little as you like.
If your business is able to run and grow without you even being there then you have an incredibly valuable asset and total financial and time freedom.
Ready to take your law firm to the next level?
Message me for more information on how to build your firm into a highly profitable and valuable asset that can run without you!
Let's have a conversation and explore exactly how you can build the 9 Steps and move up the 5 levels of Business Ownership.
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Something I Learned Recently:
I’ve met many owners of law firms and other businesses that have worked really hard but have not managed to move up the 5 Levels and receive the success they deserve.
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Despite having a “good” business they often find themselves:
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This is because they haven’t followed the 9 Steps Model in a structured manner.
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However, several of my clients have 10X’d their businesses in only a few years by:
If they have achieved this, why can’t you do the same?
Once you have the foundations in place scaling your practice and increasing your profits is far easier, and much more fun.
Do comment, subscribe, and share!
I’m John McCarthy, the Law Firm Profit Sherpa.
I support owners of law firms to scale their practices, grow revenue and profit, and increase the value of their business by following the proven P.R.O.F.I.T system (all whilst working fewer hours and having more fun).
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Take a look at the “9 Proven Steps For Law Firms” and discover the 3 key phases that owners of law firms can implement in their firms to gain predictable and growing profits
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If you want to discover exactly how you can increase your firm's profits by a least 61% and be able to work at least 10 hours less per week, all within the next 6-12 months, book a 15-minute call here:
Have a successful week!
John
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