Your law firm is a business, and every business is a numbers game. You know how your business is trending when certain numbers go up or down. We refer to these metrics as Key Performance Indicators or KPI. Examples of good Key Performance Indicators include:
These and other KPI allow you to take the pulse of your business, not just in the moment, but over time. Interpreting these numbers will help you identify what changes need to be made, in order duplicate your successes and avoid repeated mistakes.
Create an Effective Reporting System
Without a system in place to help you generate KPI, you could easily become overwhelmed and unproductive. Thus, streamlining the process for reporting your KPI is just as important as the numbers themselves. I recommend utilizing good accounting software, like QuickBooks. Depending on your workflow, you may need to supplement with some proprietary methods of your own, but, generally speaking, these programs can translate data into reports at the touch of a button.
Interpreting Your KPI and Acting on It
When you have a good system for generating KPI, you can look at reports over time: You'll see week-to-week, month-to-month and year-to-year how your business is performing. Every action taken within your business is either earning or losing money.
When the numbers are up, try to discern what your people doing well, so you can reinforce those actions. When the numbers are down, try to pinpoint actions that caused the dip, so you can change them. As you fine-tune this system of reporting, interpreting and acting on your data, you’ll begin seeing measurable results that, in turn, generate wealth.