Your law practice goals should include some easy to track financial goals to show you you are on the right path to reach your desired success.
Examples of basic financial goals (your budget) are:
- I want to bill x hours this year
- I want to make x dollars
- I want to reduce my expenses for the year to x dollars.
Come up with the amounts you want to achieve. Divide those amounts by 12 and then aim to hit or exceed that amount each month. Don’t be afraid or too busy to pay attention to your numbers each month.
Many lawyers (and others) are loath to spend much time with their financial records, but knowing where you stand financially helps you course correct much sooner than if you just guess at your financial situation.
A lawyer’s business plan should include financial statements that have more depth than the financial goals I’m talking about above. But the above simple goals make it easier to stay on track and not be deterred by complex accountant’s statements.
Use the content from the following accountant’s statements to extract and track the basic numbers you should monitor monthly:
Income statement: This statement shows your bottom line – it subtracts your costs or expenses from your income or revenue to come up with your net profit. A great number to track on a monthly basis.
Balance sheet: This financial statement includes what you own, what you owe, and what your practice is worth. You might want to monitor reducing your debt.
Cash flow statement: This financial statement helps you monitor the cash that comes into your practice.
Budget: This is your forecast of how much you plan to make and spend during the year. These number are your goals.
If you would like coaching on how to make your financial statements work for you, please consider contacting me to see how I can assist you.