Want More Profits? Create A Revenue Plan

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Savvy solos know how important plans and strategies are to running a successful business.

One of the most important aspects of your practice is bringing in revenue, and like everything else, it works better if you have a plan.

There are many reasons you want to have a revenue plan for the year. For one, it helps you break down exactly how you will reach your financial goals.

If you plan to apply for a small-business loan, you’ll need to a detailed revenue forecast to submit to lenders.

And you can also use your plan to help you determine when you can hire employees, how much you can spend on marketing, and how you can reach other business goals that require funds.

Here are some things I look at when creating my revenue plan

Decide on a Timeline

The first thing you need to do is decide how far into the future you want plan.

For example, if you want to figure out how to hire an associate in two years, you’ll need to make a plan that forecasts your revenue the next two years to know when you can afford it.

I like to focus on a year at a time. I’ll look at my long-term goals, decide what I need to do this year. Then I’ll break my yearly goals into quarters then into months.

So lets my revenue goal for this year is $480,000. Let’s see how a plan can help me do it.

Forecast Your Expenses

Now, we know how much we want to make, but how much do we need to make?

Predicting your expenses will help you come up with a baseline of what you need to make each month. This can be super easy if this is not your first year of practice- you can use expenses from last year plus anything new.

If this is your first year, you’ll have to estimate.

Be sure to include your personal expenses as well.  And don’t forget taxes!

Knowing your expenses will give you a starting point for how much you have to make. And it will help you make goals for profits. Profits = Revenue -Expenses.

Forecast Your Revenue

Next, you want to forecast your revenue. This is much easier to do if you have data from prior clients, but even if you don’t you can estimate and adjust as the year goes on.

Here is how you can forecast your revenue for your revenue plan

Determine the Average Amount of a Typical Retainer or Fee.

Tracking data in your practice is extremely important. It makes it easier to set prices, make marketing decisions and plan for the future.

Look back at your average upfront fees you earned per client last year. If you don’t have that data, look at what you plan to charge for your most common type of case.

So let’s say that on average, a typical client pays me an initial retainer or flat fee of $5,000. Keep this number in mind for the next steps.

Determine The Percentage Of Your Consultations That You Convert Into Clients

This number varies by practice but look back at your averages over the last year. If you don’t track this information you need to get on it!

Going back to our example, let’s say I typically convert 80% of my consultations into clients.

Do The Calculation

Now let’s put our plan together.

Our goal was $480,000 in revenue for the year, so divided by 12 months means we need to earn about $40,000 a month. We already determined that our average flat fee/initial retainer is $5,000, so we need at least 8 new clients. On average we convert 80% of consults into clients. So to get 8 new clients we need at least 10 consultations per month.

Now is a good time to determine if your goal is realistic. Consider: Is it possible for you to get 10 consultations a  month? Can you even handle 8 new clients a month? Take this time to review and adjust.

Now Work On Your Plan To Achieve This

So you decided that your revenue goal is realistic. But how will you reach it?

This is where your marketing strategy comes into play. Determine what you will do this year to get those 10 consultations. If PPC has worked for you in the past, maybe increase your marketing budget. Or build your email list. Or work on a sales funnel. Look at what worked in the past or what you think will work in the future to figure out how to reach those numbers.

The key to success in any business is strategy. Having a goal in mind and knowing exactly how you will reach it will keep you motivated and on track.

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Joleena Louis

In addition to assisting New Yorkers with their family law issues, I also advise other entrepreneurial attorneys on starting their law practices. I have a weekly column on the Law Firm Suites blog called Things I Wish I Knew, a family law blog at joleenalouislaw.com and my solopreneur blog mondernsolo.com.

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