Alexis Martin Neely Alexis Martin Neely built her law firm from nothing to more than a million dollars a year in only three years by putting in place a radical new business model that allowed her to work only a few days a week and have extremely happy clients who loved her. She now teaches her methods for attracting, engaging, serving, and retaining clients to thousands of lawyers through her company the Family Wealth Planning Institute. Its mission is to change the way lawyers think and change the way the American public thinks about lawyers. Alexis can be reached at 866-999-3974 or by email at firstname.lastname@example.org. Join her Law Business Revolution ( www.lawbusinessrevolution.com) and receive more than $22,500 of practice building resources and tools.
Financing Your Law Business: How to Find All the Money You’ll Need to Go It Alone and Grow Big
When I first started my law practice back in 2003, I expected to pay the bills for my new business by bringing in clients.
I didn’t have any money in savings, and my husband was a stay-at-home dad without an income, so it was seriously do-or-die time for me and my family.
I had been making $165,000 per year as an associate at the big law firm, and we were spending all of it, so I needed to at least replace that in profits from my firm.
Everyone told me that I needed to plan not to be profitable for at least a couple of years, but I believed I’d be the exception to this rule.
I did hedge my bets a bit by finding office space I could use without paying rent by trading my time with an attorney who had an empty office space in his suite. This worked out well for me because that office space also came with all of the big equipment I’d need to get started, like phones, a copier, and a furnished conference room.
All I needed was a laptop, my own phone line, a website, a desk, and some chairs. I was able to pay for all of that out of the little bit I had in savings and on my credit card.
Now, it was time to start bringing in some revenue.
Fortunately, I quickly discovered that as a business owner, I’d be keeping a whole lot more of what I brought in as a business owner than I was as an employee due to the favorable tax treatment for business owners who know how to use the tax code in the right way. (If you need a little brushing up on this, check out the book Lower Your Taxes – Big Time! by Sandy Botkin, CPA, Esq., the best resource I’ve come across on the subject.)
Pretty quickly, I realized I’d need to bring in at least one person to help me because it just wasn’t possible for me to do everything I needed to do to attract clients, engage them, service their matter, and build a relationship with them without help.
At the time though, I didn’t feel as if I had enough revenue to bring on an employee I’d have to be responsible for paying each month.
But when I really looked at the numbers and how much more money I could bring in if I could focus my energy on revenue-generating activities only, I decided I couldn’t afford not to bring someone in. I’d just have to make the commitment to myself to bring in one additional new client per month to pay for my part-time employee and determined that with the extra time I’d have, I could do that.
At the time, I didn’t know that as a small business owner I’d actually have access to financing that would help me grow my business.
And a part of me actually felt like I should be able to do it all on my own without any help. You know how a two-year-old blindly yells, “I DO IT, I DO IT!” and doesn’t want any help even though any adult looking on can clearly see that the two-year-old would benefit from a little assistance? Well, that was me. Business-wise, I was a two-year-old, blindly insisting I didn’t need any help.
But then I got to a point where I was stagnating. I wanted to grow bigger. I wanted to move out of that office space I was sharing with those other lawyers and into my own space. I had a very clear idea of how I wanted my office to look and the kind of image I wanted to create, none of which was possible in the high-rise office space I was sharing.
I wanted a team of staff members standing by at the ready to support me and my clients, instead of just the surly receptionist who growled “law offices” when she answered the phones. I didn’t want my clients to have to navigate a confusing parking garage. I wanted beautiful letterhead and envelopes and a better website.
All of that would take money, money I didn’t have and wasn’t going to save up seeing one or two clients per month, which was all I was able to bring in on my own without investing in some really good marketing, which of course I didn’t have the money for.
Right around this time, I happened to meet a local banker in my community who was opening up a new community business bank.
This was a fortuitous meeting because, up until then, I thought a bank was merely a place to deposit checks, and had no idea that a relationship with a banker could be helpful to me in my business. The banks had always been a necessary evil up until then and certainly not anywhere I would think to turn for help.
But this banker wanted to know about my business. He wanted to know what my vision was for its growth and how he could help me. I excitedly shared with him the amazing vision I had for the law firm I wanted to grow.
He could see the vision and wanted to help me make it a reality, so he let me in on how I could find all the money I’d need to build my business.
Here’s what he told me to do:
- Figure out exactly how much money you would need to do everything you want to do and write it all down. Think big. You can always scale back later or do it in stages, he said.
- If you have family, he said, have a frank conversation with them about what they are willing to invest in your business. Let them know your vision, how you’ll use their investment, and when they should expect to receive their investment back. Put it in writing.
- Next, look into a loan or line of credit through the United States Small Business Administration (SBA). He said he would help me complete all the paperwork for this. (This is the benefit of working with a small community bank who takes an interest in you and your business.)
- He also told me that I could use equipment financing for things like my computer network, my phones, and even furniture. He connected me with an equipment financing company that was able to roll everything together into one neat package.
- Last, he told me to begin applying for credit in the name of my law firm, separately from myself. This is a process that can take some time, but is well worth it and if done right can get you a whole lot of money to grow your business without any of it personally guaranteed.
- If you have not already incorporated your business, this would be a great time to start because you are going to want to apply for business credit using your business Tax ID number, not your own Social Security number.
- After you’ve incorporated, make sure you’ve got all the right city licenses in place and begin registering your business with the business credit reporting agencies, such as Dun & Bradstreet.
I’ll be honest with you, all of this was difficult to do. It was difficult from a paperwork perspective, but it was also difficult emotionally.
The entire time I was going through the process of applying for the line of credit through the SBA, I was full of feelings of embarrassment and shame. I can’t tell you why: I can only tell you I felt it, and, as I’ve talked with other business owners, they’ve expressed that they’ve felt the same during the process. So, don’t be surprised if you do. And, more importantly, don’t let those feelings hold you back from getting the money you need to finance the growth of your business and grow big. It’s totally worth it!
During this process, it can be helpful to have guidelines to consider when making projections about income and expenses. I created a comprehensive business plan for my law firm that you can have to review. To get access to it, go to http://www.LawBusinessRevolution.com and join the revolution. I’ll send you the business plan as well as a whole lot of other free practice-building gifts that I created for my law firm that will give you a much bigger vision of what’s possible for your business.
Alexis Martin Neely built her law firm from nothing to more than a million dollars a year in only three years by putting in place a radical new business model that allowed her to work only a few days a week and have extremely happy clients who loved her. She now teaches her methods for attracting, engaging, serving, and retaining clients to thousands of lawyers through her company the Family Wealth Planning Institute. Its mission is to change the way lawyers think and change the way the American public thinks about lawyers. Alexis can be reached at 866-999-3974 or by email at email@example.com. Join her Law Business Revolution and receive more than $22,500 of practice building resources and tools.
© Copyright 2009, American Bar Association.