Mastering the Foundations: Essential Steps for Effective Business Growth

What if I told you that achieving sustainable growth in your law firm isn’t just about taking on more clients or increasing revenue? In fact, it starts much earlier, with mastering a few critical steps that build a stronger, more resilient foundation.

On this episode of the podcast, we dive into foundational steps that will help you build a stronger, more resilient law firm.

Key Takeaways from this episode

De-risking: The Cornerstone of Stability

De-risking your firm is paramount to sustainable growth. Rapid expansion without addressing potential threats can lead to chaos and financial instability. Key risks to address include:

• Client Concentration: Avoid dependency on a few key clients, which can destabilize your practice.
• Dependency on Key Personnel: Minimize reliance on single individuals, particularly the firm owner.
• Legal and Compliance Risks: Stay current with ethical and regulatory requirements to avoid penalties.
• Financial Instability: Ensure robust emergency funds are in place to cushion unexpected revenue disruptions.

Addressing these issues establishes a stable groundwork for growth.

Strategic Planning: Your Growth Roadmap

Effective growth necessitates a well-defined strategy that provides direction and focus, allowing proactivity rather than reactivity.

1. Vision and Mission: Clearly define and document your firm’s vision and mission.
2. Target Market: Identify and focus on your ideal clients.
3. SMART Goals: Set specific, measurable, achievable, relevant, and time-bound goals.

Strategic clarity aligns your team and streamlines growth initiatives.

Boosting Efficiency: Enhancing Profitability

Efficiency directly impacts profitability and service delivery, enabling seamless scalability.

• Workflow Optimization: Regularly evaluate and enhance processes.
• Delegation: Empower your team to handle tasks effectively, reducing owner dependency.
• Cost Control: Routinely review vendor contracts and subscriptions to eliminate waste.

Efficiency enables your firm to manage more clients without becoming overwhelmed.

Defining and Achieving Sustainable Growth

With a solid foundation, strategy, and efficiency in place, pursue growth with clear objectives.

1. Clear Objectives: Define specific growth metrics, such as revenue targets, client acquisition, or team expansion.
2. Tangible Goals: Document growth targets and review them regularly.
3. Strategic Hiring: Consider new talent and invest in outreach strategies like digital marketing and referral networks.

Focus on sustainable and documented growth to avoid overextension.

Cultivating a Strong Culture

A positive and robust culture is essential for long-term success. Culture fosters employee engagement, retains talent, and enhances client loyalty.

• Core Values: Infuse your firm’s core values into daily operations.
• Employee Engagement: Actively involve your team in the vision and strategy, making them feel integral to the firm.

A strong culture ensures your firm remains committed and resilient.

Conclusion

Growth should be pursued methodically to ensure sustainability and resilience. By focusing on de-risking, strategic planning, efficiency, growth targets, and culture, you will build a robust foundation aligned with long-term goals.

Resources:

• Book a Call with Darren
• Wurz Financial Services
• The Lawyer Millionaire: The Complete Guide for Attorneys on Maximizing Wealth, Minimizing Taxes, and Retiring with Confidence by Darren Wurz
• LinkedIn: Darren P. Wurz

Transcript:

Darren Wurz [00:00:00]:
What if I told you that the secret to sustainable business growth lies in mastering a few key steps before you even think about expanding? Welcome to the Lawyer millionaire, where we deliver financial planning insights for ambitious law firm owners so you can enjoy more time, more abundance, and less stress, even if you’re still growing your practice. Today, we’re diving into the essential steps for effective business growth. Steps that will help you build a firm that’s not only bigger, but also stronger and more resilient.

Darren Wurz [00:00:48]:
Welcome back to the Lawyer Millionaire podcast. I’m Darren Wurz, your host, and I’m thrilled to have you here today with me as we continue our series on business growth for small law firms. I’ve got some great stuff for you today. In our last episode, we dove into the four c’s of intangible capital, human capital, structural capital, customer capital, and social capital. And we talked about how those elements are essential for building a strong foundation in any firm and how you can leverage those in your firm. Today, we’re moving on to part two of this series, where we will explore the essential steps for effective business growth. Now, growth is a goal for you, I imagine. But before we can chase that expansion, we need to ensure that the ground we’re building on is solid.

Darren Wurz [00:01:40]:
That’s why in today’s episode, we’re going to break down five key steps to effective growth. And here they are. Number one, de risking. Number two, strategy. Number three, efficiency. Number four, growth. And number five, culture. You might be wondering why growth isn’t the first step and why culture comes last.

Darren Wurz [00:02:01]:
Well, I’ll explain that shortly. And let’s start by addressing that question in particular. Why isn’t growth the first step? It’s natural to want to jump right in and expand your firm. Let’s take on more clients. Let’s increase the revenue. But if you don’t have a solid foundation, rapid growth can lead to unsustainable expansion. It can lead to chaos. It can lead to financial strain.

Darren Wurz [00:02:30]:
It can increase your risk. Growth brings risk to an organization. Think about it like building a house. If you start adding more floors before you ensure that the foundation is strong, you are setting yourself up for a potential disaster. And why does culture come last? Well, culture is something that develops over time. It’s the culmination of your firm’s values, behaviors, and practices that become ingrained as your firm matures. It can’t be rushed. It can’t be forced.

Darren Wurz [00:03:03]:
It’s something that will evolve over time, organically. By the time you have de risked, strategized, improved efficiency, and grown, you will find that hopefully, a strong, positive culture has naturally taken root in your firm, and you will find that’s the case if you have done some of the things that I am going to tell you today. With that in mind, let’s dive into the first step. De risking. Number one. De risking. Oh, yay. So much fun.

Darren Wurz [00:03:36]:
De-risking sounds fun, doesn’t it? Well, no, it’s not. I’ll admit de risking isn’t the most fun area. It’s not the sexiest area of business, but it is the area where you can get some quick wins and you can really make a big impact in your ability to scale and grow, especially as a small law firm. De risking is all about, first of all, it’s not about insurance. We’re not talking about, go get more insurance. Now, when I first heard this, I was like, what? Okay, insurance. No, this is all about identifying and mitigating the risks that could pose a significant threat to your firm. Right.

Darren Wurz [00:04:17]:
What are the things that could threaten your stability and your growth? It’s about ensuring that you’re not vulnerable to sudden disruptions or challenges that could derail your progress. Now, yes, I know, not terribly exciting, but let’s talk about some of the key common risks. Here they are. Number one, client concentration. A lot of firms struggle with client concentration. Concentration. Risk is where a significant portion of your revenue comes from. A small number of clients.

Darren Wurz [00:04:52]:
And I have clients that face this problem. Right. I have a client who is in insurance litigation, and two clients, as we found out, make up 80% of his business. Wow. This is a huge problem because we talked about him. We talked with him about ways that he can improve his profitability. And we were exploring, you know, maybe you can raise your rates. Well, can’t raise the rates, because I only have two clients, and if I raise the rates, they’ll leave.

Darren Wurz [00:05:17]:
Right. And if one of those clients leaves, it can have a devastating impact on your firm’s financial health, obviously. Well, how did you get there in the first place? Part of it is having the boldness and the courage to say, you know what? Screw you. I’m going to go find new clients. I’m going to raise the rates anyway, or I’ll go find new clients. Right. You know, so part of it is having some bravery and having some gumption to maybe think more broadly. You don’t have to be stuck there in this, in this space where you are, you know, these two or three clients are able to sway the entire direction of your firm.

Darren Wurz [00:05:57]:
You can determine your own destiny here. Right. So. But that is one of the biggest risks with law firms. It’s very common with law firms. Maybe that’s not one for you. Another big one is dependency on key personnel. Many small firms rely heavily on a few key individuals and most often that is you, the owner.

Darren Wurz [00:06:22]:
Yes. And we call that owner dependency. If, you know, if key personnel leave or become unavailable, that’s going to be a big problem for your firm. If you leave or you become unavailable, that’s going to be a big problem for your firm. And not only that, right, your team, your clients are going to be in trouble, but your family would be in trouble because the firm would not be able to continue without you. And obviously, if the firm can’t continue, then it can’t continue to pay you. So owner dependence is one of the biggest problems. Another big one for law firms.

Darren Wurz [00:06:56]:
Legal and compliance risks an ever present issue in the legal industry. Staying up to date with ethical regulations and requirements. Ensuring that your firm is always in compliance is crucial to avoiding penalties and legal issues. And finally, my favorite, financial instability, cash flow. Let’s talk about that. You know, the ups and downs of cash flow, instability of cash flow, high levels of debt. These are big risks in a lot of law firms. And I can’t tell you the number of law firms I have spoken with who on the business side of things, have no emergency fund, have terrible liquidity.

Darren Wurz [00:07:38]:
One of my clients has a very decently sized law firm, I think ten to twelve attorneys working for him. And when he first came to me, I asked him about his emergency reserves in the business and he was really struggling with cash flow and he had none. And the firm is doing millions of dollars in revenue and there is literally no money in reserves. And actually something really problematic happened because his practice works very closely with the government. Yeah, right. Fun. There was an issue processing the claims that he deals with and as a result his firm didn’t get paid for like six months. Could your firm survive a six month disruption in income? Now maybe that’s not a terrible risk for you, but it’s something that can happen.

Darren Wurz [00:08:37]:
It’s something that happened to a lot of us during COVID A lot of law firms had a disruption in income. Could you survive that? Do you have the resources set aside to ensure the continuity and stability of your practice? Now I cant stress to you enough how important it is to solve these problems before you start to grow. Dont go out and take on a whole bunch of new clients if you havent solved the financial stability issue first. And liquidity is just one of the biggest problems that I see for law firms. How about for you, how much money do you have set aside on the business side? Not in your personal accounts, in the businesses emergency fund. How do you de risk your firm? Well, obviously you could address each of these areas. We just covered diversifying your client base. Make sure you’re not relying too heavily on a few clients.

Darren Wurz [00:09:30]:
Have a broad range of clients to choose from that will reduce the impact if one leaves. Focus on building a strong second in command, reducing that key reliance on you. You could have somebody else as a potential second in command who could take over in the event something does happen to you or you become ill. That’s really, really important with key employees. Make sure you’re cross training employees, have client matters handled in more of a team approach so that it’s not so reliant on any one individual attorney in your firm. And why is that a problem? You know, I was talking with a bankruptcy attorney here recently about this difficulty, and they said, well, you know, I bring on attorneys, but here’s the problem. I’m just training my competition. Yeah, you are training your competition.

Darren Wurz [00:10:29]:
If you’re not taking steps to reduce the dependence of the firm on those key employees. And also if you have not thought about culture and making them feel like they’re really a strong part of what you are doing, that is a big concern. Right. I bring on an attorney, they’re a big hitter. They’re a big winner. They are a rainmaker. Right. What happens if they leave? Well, you’ve got to reduce the risk of them leaving or you need to reduce the potential impact of them leaving.

Darren Wurz [00:11:04]:
Some things to think about. Make sure you’re staying on top of all your legal and compliance issues. Right. Are you doing that? I know we’re busy people. This is a huge one in the financial world. And I gotta tell you, you know, dealing with regulatory stuff is the last damn thing that I want to do. You know, it’s just, it’s not my favorite thing to do. I would, there are much, there are other parts of my business that I would much rather be doing than, you know, going through the transactions and making sure that everything’s in compliance.

Darren Wurz [00:11:40]:
Right. But it’s really critical because if you have an issue with legal or compliance that could put you out of business, and that’s going to be a big problem. So what good is the growth if you haven’t taken care of that? And finally, of course, make sure you have a financial cushion in place. It could be the form of a reserve fund. It could be a line of credit that’s open, not necessarily being used, that’s available for emergency stability is the bedrock of sustainable growth. Okay, let’s move on to strategy. Strategy, what does strategy mean? We’ll say you de risked. Your firm’s de risked.

Darren Wurz [00:12:19]:
Now let’s talk about strategy. A clear, well defined strategy is critical. Before you grow, you’ve got to have direction and focus. Without a strategy, you might find yourself being reactive rather than proactive. Now how do you be proactive instead of reactive? Now I don’t know about you, but I have, I have business ADHD where I want to try every new thing, every new software, every new idea. I’m an innovator, I can’t help it. But the thing that keeps me on track and not jumping haphazardly down a pathway that has no relevance to what I’m doing is having a firm, having a well established vision and mission that guides my decisions. So there you go.

Darren Wurz [00:13:06]:
That’s the first thing. How do you develop an effective strategy? I have emphasized this before and I’m going to emphasize it again. Make sure that you have a strong vision and mission. Your firm’s vision and mission should guide every decision that you make. If you haven’t done that yet, start doing that. I was just talking with some prospective clients about this idea and they said, oh yeah, you know, we have a vision. We’ve done that. We already know we’ve got a vision for where we want the firm to go.

Darren Wurz [00:13:41]:
Is it written down? Well, no, we just know it. You don’t have a vision if your vision is not written down. If your goals are not enumerated. 12345, if you have not specified that and communicated that to your team, if you have not plastered that up on the walls and put that on the zoom background behind you, if you have not put that in your email signatures and in every single place that you can find, you do not have a vision. Sorry, but you don’t. It’s got to be written down. It’s got to be communicated. That is really, really key.

Darren Wurz [00:14:20]:
Sorry, I’m passionate about this. Okay. You’ve got your vision. You also need to, you know, part of that visioning process is to be very, very clear on who is your target market. Don’t go after everybody. Figure out who are your ideal clients. Not everybody is a great client. Be willing to say no to some clients, not because you got an icky feeling from them or because you just didn’t like their attitude, but because they did not align with the vision and mission of your firm.

Darren Wurz [00:14:56]:
That’s why, see, when you have a very clear, well defined vision and mission, it gives you alignment. It gives you alignment with who should be our clients. And yes, there are some people who just don’t make good clients. I have had to say no to many people who were interested in becoming clients because they did not align with what we are trying to build here at the lawyer millionaire. So that’s critical. And also, it differentiates you. That’s a key way that you set yourself apart, is by having a very focused niche. That’s one way that you are gonna stand out.

Darren Wurz [00:15:36]:
That’s how we stand out here at the lawyer millionaire, because what we do is so specifically tailored to law firm owners. We’ve built a process, we’ve built a workflow, we’ve built a system, we’ve built a membership program that is so in tune and aligned with what we know our clients need and want. Okay. Another key component is setting smart goals. Right? We know about smart goals, but what should those goals look like? Well, they should be broken down into time frames. Once you have your key, you know, your big vision, then break down your goals. Where do we want to be in three to five years? Where do we want to be at the end of this year? Where do we want to be at the end of this quarter? Break it down. Right.

Darren Wurz [00:16:23]:
If we’re going to be here in a year, where do we need to be at the end of this quarter to be on target to get where we’re wanting to go. And by the way, make sure that you get your team involved in this process, get their buy in, get them involved in this, because that is how you’re going to get them to stick around. Okay, next. So de risking strategy. Now we move to efficiency. Once you have a strategy in place, the next step is efficiency. Efficiency matters because it directly impacts your profitability and service. The more efficient you are, the more you can do with what you have and the more capacity you’re going to have to take on more clients.

Darren Wurz [00:17:08]:
So you got to do all this before you even think about growing. Where should you focus on improving efficiency? Well, you know, we know, you know, workflows, processes, systems, we need to have all these things. But are you checking these things regularly? Are you regularly thinking to yourself? Are you catching yourself when you’re in the middle of a repetitive task and thinking, oh, wait, I can have my assistant do this, or, oh, wait, why don’t I have a technology do this for me? Yes, yes, yes, yes. And then constantly be thinking about how you can improve those workflows. Technology can help you. Yes. Time management delegation are going to be really, really key to efficiency. And I know from first hand experience that this is where a lot of law firm owners struggle.

Darren Wurz [00:18:00]:
Delegation. I can’t tell you the number of law firm owners who’ve told me that they can’t delegate. Nobody does it like I do. I give it to them to do and they mess up. Yes. Yes. That’s going to happen. But there are things that you can do, right? You can, you can delegate.

Darren Wurz [00:18:25]:
I just want to be clear about that. You can delegate. You’ve got to take the knowledge and training and experience and expertise that you have. You’ve got to document that, and you’ve got to communicate that to your team in a way that they can pick up and they can run with. And a lot of it comes from motivation. A lot of it comes from that work at the beginning, no one’s going to be really motivated and want to do things the way you want to do them. You know, just to get a check. People are not motivated by money today.

Darren Wurz [00:18:56]:
They’re motivated by being a part of something important. And you’ve got to make them feel like they’re a part of something important at your firm, that they are doing important work. Also, another area we don’t think about very frequently when it comes to efficiency, we need to also think about the efficiency of money. Cost control. Are you getting the best value from your vendors? Are you evaluating your vendors on a regular basis? Do we really need that software? Do we really need that subscription? How could we make things more efficient here? Right. Cut the waste. Are you allocating resources in a way that supports your strategic goals? It is so easy to sign up for things. By controlling costs and allocating your resources wisely, you will maximize your efficiency.

Darren Wurz [00:19:48]:
And efficiency is a growth enabler. When your firm operates efficiently, you can scale without becoming overwhelmed. You can take on more clients. You can handle more cases. And that brings us to section four, growth. Now that you’ve laid the groundwork, now it’s time to talk about growth, right? And growth can take many forms, but what you need to do is define growth for you. What does growth look like? What are you trying to achieve? Is it a revenue target? Is it a number of new clients? Is it expanding your team? Let me suggest that rather than revenue, it should be profit. That would be my suggestion to you.

Darren Wurz [00:20:28]:
But whatever it is, you have to develop very clear objectives and measure your progress. And by the way, like I said before, those need to be written down. Unless they’re written down, they’re just lofty pie in the sky. They’re always going to be changing. You got to write those things down. You got to tack it up on your, your, what is that? That board, the board where you attack things. I forget what it’s called. Anyway, you tack it up in your office somewhere.

Darren Wurz [00:21:00]:
You can see it. Here’s our goal for this quarter. Here’s the growth that we’re going to achieve. And think about growth strategies. Where can you, how can you expand? Not just, I’m going to work harder thinking about how you need to, maybe you need to hire new people, new staff. Maybe there are certain areas you need to go into. This is where now you start to think about improving your online presence, your digital presence, leveraging more referral relationships, forming new strategic partners. This is where you start to invest in all of those things and thinking about scaling your team and infrastructure.

Darren Wurz [00:21:42]:
Growth comes after infrastructure. I just want to emphasize that again, it’s a critical, critical point to understand growth should be pursued once your firm has de risked, established a clear strategy and enhanced operational efficiency. This ensures that your firm will be able to handle the demands of growth without compromising quality and stability. If you grow too quickly without these foundations in place, you risk overextending yourself and creating more problems than you solve. Finally, that brings us to culture. Last but also, but not least. Last but not least, the final step in growth is building and sustaining a strong culture. Culture is what is going to retain employees.

Darren Wurz [00:22:29]:
Culture is what is going to keep the ship moving forward. A positive culture fosters engagement, collaboration, a sense of purpose among your team members. It will help you attract and retain talent. As a number one concern for a lot of law firm owners, I bring in new attorneys. I’m just training my competition. You don’t have a strong culture. You just don’t, right? A strong culture also enhances client loyalty. Clients are more likely to stay with a firm that values integrity, professionalism and client service.

Darren Wurz [00:23:05]:
And why is culture last? Because it’s the culmination of everything you do. Some of these things you’re going to do in the beginning, some of these things you’re doing throughout, always thinking about it at the very beginning, when you create your vision, think about your core values, your identity. What kind of organization do we want to have? Think about it from the beginning. Make it a part of everything that you do throughout all of these steps and you will find that you have created a beautiful culture. So here’s the message today, growth isn’t just about expanding your business, it’s about doing so in a way that is sustainable and aligned with your long term goals. Remember, the foundation you’re laying today through de risking strategic planning and operational efficiency, will determine the success and stability of your growth tomorrow. My challenge to you today is to take a hard look at your firm and identify one area that you can strengthen your foundation. Whether it’s mitigating risks, refining your strategy, improving efficiency, make a commitment to shoring up that area today.

Darren Wurz [00:24:19]:
By following these steps, you’re not just growing your law practice, you are creating a resilient, scalable business that can thrive in the long term. This isn’t just about creating revenue. It’s about building a legacy that will provide wealth and security for you, your family and your team for years to come. If you are feeling overwhelmed or uncertain about where to start, remember, you don’t have to go it alone. We specialize in helping law firm owners like you develop the strategies and structures needed to grow your business effectively and sustainably. If you love what you heard today, be sure to connect with me on LinkedIn to stay up to date with more tips and growth insights for law firm owners. Just searched Darren Wuertz on LinkedIn or search the lawyer millionaire and follow us there. This has been the Lawyer Millionaire podcast.

Darren Wurz [00:25:15]:
I’m your host, Darren Wurz. Thank you for joining me today on this journey to expand your business, maximize your profits and secure your financial future. I can’t wait to connect with you again next time. Until then, take care and keep pushing forward.