“All men make mistakes, but only wise men learn from their mistakes.” —Winston Churchill
Starting up your own practice can be one of the most rewarding career decisions you ever make. However, it also carries with it the possibility of financial risk and ruin. According to SmallBizTrends.com, 80 percent of startup businesses make it to their second year, 70 percent to year three and 56 percent are around at year five. Here we are going to explore 15 of the more common financial mistakes lawyers make in order to learn from the prior mistakes of others.
1. No Business Plan
A business plan is your road map to the future. Plan out your business on paper in much the same way that an architect plans a building before the first shovel hits the earth. Your business plan should set out many aspects of starting your own practice but in particular, you need to answer the following question:
Why am I going into business? (Hint: The answer is not to make money. Money is the result of successfully running your business.) Are you trying to escape a negative work environment? Or is the idea of running your own practice exciting and the next challenge in your career path? Not everyone loves the business side of running a law practice. If you don’t have a fire in your belly to be immersed in all the details of running a business, then perhaps starting a practice is not the best decision for you.