Parker's Points
March 2008
How Do You Measure Success? - 10 Measurements for Your Practice
Monitoring your practice is imperative if you want it to grow and thrive. Looking at a set of measurements each week will enable you to regularly take the pulse of your business. Without this regular monitoring your business may have undetected problems. By the time you notice them, they may be out of control. Here is my list of measurements for a growing practice. What are the measurements you use for your practice? Let's hear about the ones you use.
- Realization refers to the percent of money collected compared to the amount that was billed. For example if you billed $100 but collected $75 then you would have a realization of 75%. Profitability is contingent on having a 95%+ realization rate.
- Utilization refers to the amount of time a person bills compared to the amount of time a person works. For example if you worked 10 hours and billed 8, you would have an 80% utilization rate. Time keepers should strive for 80% to 90% utilization.
- Lead conversion rate refers to the number of leads an attorney generates compared to the number of prospects that actually become clients. If you generate 6 leads and 3 become clients then you have a 50% lead conversion rate. This is a number that should increase over time as you get better at identifying good clients and gain experience in conversion. 75 to 80% is very good. More than that and you are a super star!
- Number of referrals you get from other people. Know who your best referrers are currently and how you found those referrers. You will want to stay connected to good referrers and treat them well. Not getting enough referrals? Try asking clients and other attorneys for referrals.
- Marketing Results refers to your own special marketing methods as detailed in your marketing plan. The plan should tell you what to measure i.e. leads from website, talks, and/article writing.
- Positive Cash Flow means that at the end of the month you have a positive balance once you have paid all your expenses including your salary. This money is the life blood of your practice and can be used for upfront costs that are incurred for a client before you have billed a client. Taking all the cash out of the practice at the end of the month will leave you strapped if an unexpected expense comes up that needs to be paid immediately.
- Client feedback refers to any method you have for determining client satisfaction. Some firms use surveys or feedback forms to determine this information. Others may use an interview process.
- Time keeping refers to tracking the hours you work and what you worked on both billable and non billable time.
- Total number of hours worked per week is a measurement you might use if you are striving for work life balance. Set a goal of working 50 hours per week and measure what percentage of the month you meet your goal. Sometimes when you know you can work late into the night, the work just fills that time. With a set end time you will be forced to be more efficient in your work processes. Working nights and weekends is not healthy and can make you susceptible to illness.
- Number of hours of exercise per week is another measurement
for insuring you are meeting your life goals as well as your business
goals. Getting sufficient exercise is important to your health and well
being.