Grasping the Importance of Key Performance Indicators
It’s embarrassing when you don’t have a firm grip on your finances.
It can be disastrous too, which is worse.
Not knowing key financial numbers is a regular theme in the TV show Shark Tank.
Contestants regularly get peppered with questions like these:
What’s your annual revenue?
What are your annual expenses?
What are monthly revenues and expenses?
Are they rising, staying even, or falling (and why)?
Those are the easy questions.
The Crucial Key Performance Indicators in Law Practice
But here are harder questions that cause contestants to stammer:
What’s your average revenue per sale (i.e. client matter)?
What’s your average cost to acquire a new customer (i.e. new client)?
Those last two are crucial for figuring out what you can reasonably spend on marketing/advertising.
Of course, most small law firm owners don’t know those two numbers. Most of them use “gut feel” for managing their business.
It’d would be interesting to see lawyers on Shark Tank trying to answer these common questions from the sharks, like Robert Herjavec.
Herjavec says, “If you don’t understand your basic numbers, you’re going to fail.”
Now, obviously you want to keep your practice financially healthy.
So…
You need to know your numbers.
But the question arises: which numbers do you most need to know?
Well, that’s what attorney Patrick Slaughter will be talking about at the upcoming Virtual Bootcamp.
His talk is entitled: “How to Achieve Financial Success By Measuring KPI’s (and how to make sensible practice management decisions based on those KPIs).”
What are KPI’s, you ask?
Well, KPI is short for “key performance indicators.” (as in…you should pay more attention to some numbers than others).
You can read about KPI’s in this section of The Personal MBA, by Josh Kauffman. It’s not specific to lawyers, but it will help you understand the thought process of identifying KPI’s.
But, I’m guessing that if you’re like most lawyers…
You’d rather learn about KPI’s from a lawyer like Patrick Slaughter. And see what he has to say about which are the key numbers to track in a small law practice.
If that sounds like something you’d like to learn, then register for the upcoming Bootcamp.
Yes, it’s an investment of time and money.
But it’ll be a worthwhile investment it if you want to make important changes to your law practice.
Oh, and here’s another important observation from Robert Herjavec as recounted in this Business Insider article.
“Aside from knowing the numbers, it’s also important for people to invest in themselves. In fact, when asked about the best investment he’s ever made in his life, Herjavec proudly said, ‘investing in myself.’ People always ask me, ‘What should I invest in?…and I always say, ‘Invest in yourself.”
So, what about you?
Are you thinking that maybe you should invest more in yourself?
That’s an excellent first step in shifting your mindset in a powerful way.
General Resources
- Check out my Inner Circle (to participate in ongoing discussions about tech tools I discuss and recommend)
- Check out this Law-Tech Assessment if you want specific recommendations for improving based on the technology you’re using in your practice
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