Evaluating Your Firm’s Market Position
I’ve begun contributing articles for the Louisville Bar Association’s membership publication, “Bar Briefs.” The January 2015 edition features my article, Evaluating Your Firm’s Market Position. As you prepare for the new year, it’s a good idea to take stock of where you are and what’s going on in your local market. A lot has changed over the past year or two. Some of these changes may lead to hidden opportunities if you take the time to look. A SWOT analysis is a good tool use.
Here’s the Louisville Bar Association article for your review and consideration:
Evaluating You Firm’s Market Position – January, 2015
If you’ve ever been to one of my CLE’s you’ve heard the phrase, “the business of law.” There are fundamentals to running any successful business. The beginning of the year is an excellent time to take stock of where the practice has been and where it needs to go. One of the key ways to understand how to move your firm closer to your business objectives is to begin evaluating your firm’s market position.
Everyone has a mental image of what their firm is, how it’s perceived and why clients should hire the firm. However, doing a simple SWOT analysis is a good way to identify specific things you may need to change to achieve your current year and long-term objectives.
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Begin by drawing a large square and dividing it into 4 smaller squares. Write an “S” above the top left square and a “W” above the top right square. Then, write an “O” below the bottom left square, and a “T” below the right square.
In the S-square, list the firm’s internal strengths (e.g. niche focus areas, specific experience/capabilities, proven reputation, cash position). In the W-square, list internal weaknesses (e.g. lack of capacity, old technology/systems, staffing issues). In the O-square, list external opportunities (e.g. competitors leaving the market, new geography, changes in the law). In the T-square, list external threats (e.g. specific competitors, potential changes in the law, pending legislation, upcoming key vendor price increases).
The idea is to begin looking for ways to establish specific plans to leverage the strengths, defend the weaknesses, take advantage of the opportunities and avoid the threats (if possible).
I know it sounds academic, but the exercise can quickly help you identify ways the firm could combine its strengths and opportunities. That lays the foundation for a strategy to generate more revenue, and hopefully deliver increases in the end-of-year net margin. It’s always about the net margin, regardless if it’s a solo practice or a partnership. Remember, we’re talking about the business of law.
It’s time well spent to consider ways you can leverage your internal strengths to take advantage of external opportunities. Does the firm have capacity to expand into a new practice area? Should the firm increase specific marketing efforts? Are there associates who have a talent for generating new clients? How could you incentivize them to do more of it?
Consider a few things when it comes to the firm’s weaknesses:
- It’s possible to spend a lot of time trying to turn a weakness into a strength, but it’ll never be as effective as leveraging natural strengths.
- Will that effort yield sustainable results?
- Will changing the weakness provide the same level of passion and fulfillment?
Most of the time, the answers to the last two questions are invariably, “no.” It may suffice to better understand the weaknesses, but spend time focusing on ways to leverage the strengths.
It’s time to ask hard questions about whether it makes sense for the firm to continue targeting areas of law where the internal weaknesses leave the firm vulnerable to external threats. From a practical sense, that may mean moving away from low-margin clients in highly competitive areas of practice.
Finally, consider the threats. These are external in nature, so the ability to control them is limited. In considering your market position, devise “plan B” scenarios, should any one of those threats become a market reality. Should the firm hedge by looking for additional geographic markets? How would the firm attract profitable business in those new markets? If legislation impacts significant clients, could you generate revenue by helping your clients deal with the new laws? What should you be learning about now to prepare for that eventuality? Does that open a new area of focus for the firm? Can the threat be transitioned into an opportunity?
As the new year begins, take time to seriously evaluate your firm’s market position. Performing the initial SWOT analysis as a group could yield interesting insights. Most importantly, be brutally honest. You may uncover some great opportunities for growth in 2015 and beyond.
I hope you found this article helpful. When it comes to your firm’s marketing efforts, remember the adage, “If you aim at nothing, you’ll hit it every time.” If you’d like help developing your firm’s SWOT analysis, contact me at (502) 208-9639. I’ve worked with and developed territory analysis overviews for 20 years. It’s always an exercise that helps focus the efforts you’re about to undertake during the upcoming year. Finally, if this article caught your attention, I’d appreciate it if you’d share it with your friends and colleagues.