How Can Lawyers Seize Advantage in the Coming Recession?
There is a common assumption that when the economy is strong it’s a good time to start or grow your business and when the economy is in a downturn it’s a bad time to start or grow your business. At first glance, the data seems to support that logic. In fact, according to one Business Journal article, “The 2008 recession claimed 170,000 small businesses in two years.” That is a sobering number, to say the least, but it’s not the full story.
“New evidence is now showing that—over the longer run—recessions do not impact the eventual success of a business,” according to Entrepreneur magazine. Furthermore, an article by Toptal Finance reported, “…14% [of businesses] actually experience revenue and profitability growth [during an economic downturn].”
In fact, there are known business types (and sectors) that thrive during economic downturns and there is reliable data that points to a significant opportunity for estate planning specifically.
So what is the secret to success during an economic downturn? The answer lies in understanding this single truth: those that plan and work their plans—either in good times or bad—win.
Intentionally Decide Today How You Will Respond to the Economic Downturn
In the article Seize Advantage in a Downturn, the authors write, “Inaction is the riskiest response to the uncertainties of an economic crisis. But rash or scattershot action can be nearly as damaging.” Said another way, while the urge to avoid thinking about the implications of the coming recession may be strong, it’s critical to get honest with yourself and start to formulate a plan for action based on informed and reliable sources of information.
Are you ready to take a proactive stance and prepare your law practice to thrive in a new economic reality?
7 Practical Steps for Lawyers to Take Now
In HBR’s article Roaring Out of Recession, the co-authors share their findings that, “The best antidote to a recession,”…is deploying a combination of both offensive and defensive moves.
We recommend the following 7 offensive and defensive steps for estate planners to get into action now:
1. Create a 3-Scenario Plan: Hope for the Best and Plan for the Worst
Get crystal clear on your goals and map out the steps you need to take to get there. Consider developing three main scenarios: the original plan, the probable plan, and the worst-case plan. By working through each of these scenarios this process will help you surface reliable evidence for solutions better than any powerful gut feelings you might be tempted to follow during stressful situations.
Check out this in-depth training from NLBM that you can use to map out a plan for your private practice that will allow you to meet both your financial and time goals.
2. Know Where Every Penny is Coming and Going: Develop a Cash Flow Forecast
Get honest about how much money you have coming in and going out so that you understand how to make the numbers work for you, not against you. Be sure to review this document weekly. This will allow you to make adjustments where needed, and see where there is or is not an opportunity to adjust strategically.
Download NLBM’s Cash Flow Planning and Forecasting spreadsheet here and use it to create a year-long projection of your costs and how many clients you’ll want and need to pay yourself, cover your costs, and work a reasonable schedule.
3. Build a Team of Small Business Friendly Advisors: Talk to Your Bank Today
Do not underestimate the value of this crucial step. You want to ensure you are working with a Small Business-friendly banker. When you talk with your bank be sure to explore and understand all of your options – don’t be afraid to negotiate for the best possible terms and options.
4. Protect This Important Asset: Customer Relationships
Your existing customer base represents a significant source of income now and in the future so explore ways to make them your number one priority. Consider reaching out personally to each of your clients and find opportunities to make your customer service the best it can be.
5. Plan to Succeed: Invest in Yourself and Your Business With the End In Mind
Identify gaps in expertise and invest in the support and guidance you need to get to your goals. This is also a time to decide what your company does best and do it even better. This will ensure you have a stable foundation to work from as the economy shifts.
6. Differentiate! A Surefire Strategy to Avoid Becoming a Broke Lawyer
The truth is not all law practices are going to ride out a recession. Make sure your practice is one that does. Are there ways your competitors are outperforming you? Are there ways your practice can step up its game?
7. Make the Most of Your Marketing
Are you currently engaging 90+% of all people you meet with? If you answered “no” most likely you are wasting your marketing spend. Before you spend more money on marketing, stop and fix your client engagement problem.
Get Your Plan in Place to Seize the Advantage During a Recession
If you are ready to get your plan in place and proactively prepare your law practice to thrive no matter which way the economy goes, and build a law practice that you love and enjoy, use our online calendar to schedule your personal call today.