Law Firm Budget Precedent
Budgeting and managing your cash flows are a big part of staying in business. It is an old adage that what gets measured gets done: if you have set out straightforward financial goals and expectations that are to be met within a reasonable timeline, you will be able to judge if you are meeting, exceeding or falling behind your goals.
On an ongoing and regular basis, review your finances and the goals you have set, and if you find yourself falling behind, take corrective action before it is too late. If you ignore the initial signs of trouble, you may find that you are quickly out of business, and possibly facing even greater debts than when you started. Download this law firm budget precedent (PDF format and Excel format) and adapt it to your circumstances. It will help you improve the finances of your practice.
If this is your first budget, sit down and prepare a detailed month-by-month budget for at least the first 12 month period. Your budget should include all expenses that you know of and/or can anticipate, and when they must be paid. Include an amount for unexpected expenses, since it is Murphy’s Law that costs will always be greater than you expect, particularly as the volume of work increases. Build in marketing time and expenses. Most of all, build in your draw: if you don’t look after yourself, no one else will. Compare the total expenses to your anticipated revenue. If you do not have an historical basis to forecast income, make an educated estimate based on your marketing plan.
This precedent is a supplement to Managing the Finances of Your Practice, which provides practical advice on how you can take a more active role and better manage the finances of your practice. See also our Law Firm Business Plan Precedent that will help you build a roadmap to a better future.