Better than partnership
I’m not anti-partnerships. It depends on the partnership. But if you have a great idea and you need resources to implement it, I wish you luck.
Your initiative will have to be presented to a committee; weighed up against competing initiatives and if it gets over these hurdles, how much money will actually be made available?
There can also be inter-generational issues. Older partners would rather have larger drawings than put money into initiatives that have long term returns.
As a sole practice owner, you can try new initiatives, experiment and set your own direction without the need to answer to a hostile, conservative or sceptical committee.
Better than a salary
If you have an unexpected parting of the ways with your employer, it is a certainty that your income will go from whatever it is now to zero.
Contrast this to losing a client in your own practice. If you lose a client then your income may take a dip by a small single digit percentage and that is if the lost client isn’t replaced by a new one.
Better than a single location
It has never been easier to have a CBD address. It is true that some clients want to deal with “CBD firms”. Buying a suburban or even a regional practice does not prevent you from having other strategic locations. In fact, there are many sole practitioners who have an impossible number of branch offices thanks to facilities provided by serviced office companies.
The suburban practice can be the engine room where the work is done. It can also be the operation that provides the steady cash flow. You are not prevented from developing a new practice area and can take even greater risks knowing that you have a steady cash flow to support you.
Better than starting from scratch
I often think that people who have bought a practice and made it a great success would probably have made a great success had they not bought a practice and instead started one from scratch.
Buying a practice is a booster strategy. It can save you years in getting to where you want to be. No one has to buy a practice. However, if a practice is available, then don’t forget to calculate how much time and money you’ll have to spend on advertising and business development to reach the same level of revenue that you get with an existing practice. A dollar spent on buying a practice will generally have a much better return than a dollar spent on advertising.
Better than not trying
So you buy a practice and for one reason or another it does not feel right for you. It is not generating enough money or you decide to have a change in career direction. Even if you close the doors and walk away, chances are that it will not be a financial catastrophe. If you have managed your exposure to fixed costs, of which there are not that many, you will survive a change of direction.
At the moment, the funds needed to buy a legal practice are many times less than required to buy most other businesses.
(c) 2017 Peter Frankl Pty Ltd