Before You Expand: Mastering Your Core Services First

I'm Melissa Shanahan, and this is the Law Firm Owner Podcast, episode number 294.

Welcome to The Law Firm Owner Podcast, powered by Velocity Work, for owners who want to grow a firm that gives them the life they want. Get crystal clear on where you're going, take planning seriously, and honor your plan like a pro. This is the work that creates Velocity.

Hi everyone. Welcome to this week's episode. We are digging into something today that feels appropriate because with the new year comes this feeling of hope about all the opportunities in front of us. It's a fresh start. And so I think that you'll find this could be timed well. Nevertheless, no matter if it's timed well or not for you, this is a topic that I think I have touched on before, but I've never done an episode specifically on this, and certainly not in this way.

So what we're digging into is this common dilemma for law firm owners, but this happens to business owners across the board, by the way. But for you law firm owners, about expanding your offerings and deciding when and if you should develop another practice area as a revenue stream for the business. Now the problem with this is, the majority of people will jump on this before they should.

So I want this episode to be a chance for you to reflect. Maybe you're not even thinking of expanding your practice areas right now, but you want to in the future. Well, this is going to be useful for you. I think some of these principles are just going to make sense and they're going to land. You're going to remember these things, some of these things, when it's time to consider expanding into some new territory.

Now, spoiler alert, as you may have just guessed by what I've already said on this episode, the central theme in this episode is don't jump into expansion until your core offerings are humming like a well-oiled machine. So we're going to explore why this is critical and the signs that show you are truly ready to expand your offerings.

Now, people don't love hearing what I'm going to be sharing here because there are times that members, clients, or even just on consults, I am talking to law firm owners who tell me, well, I'm going to add estate planning to my practice, or I'm going to add, you know, whatever it might be, but they are struggling in so many ways and they think it's a quick fix. Well, they think it's a faster path to the income that they're hoping for, which then will give them relief, which because they have more resources to give to the problems that they're experiencing, like in their head, this all makes sense. And on top of that, you hear often in the circles that we are all in in the Facebook groups that you see, there's like video content that's out there of people who will say things like scale, scale, scale, expand. Yes, the wheels are going to come off, but you can handle it. That's part of growth. It's sort of expanding for the sake of expansion and saying that just going for it, there's freedom at the end of that road.

Well, maybe, but if you don't go about it in a responsible way, in a well-thought-out way, and there are varying levels of risk that people are comfortable with, so I'm not saying that there's one way to do this, but the way to do it for sure is to think it through entirely and to plan strategically for this. In order to do that, you have to be very honest with where you are and the current state of things.

It is good to know your desired state. It is good to know where we're headed, where we want to go. But if you're not very honest and have full awareness, almost like audit level awareness of what you've got right now, it's going to be very difficult to move with the least amount of friction as possible, there's always going to be some, towards what you really want.

The truth is, it's hard work to get what you have humming really well. That is work worth doing, but it's the unsexy work. It's the work that people talk a lot about, systems and process and culture and vision and operations and, and, and. There's many things we could throw into this bucket, but that is not a cakewalk to get to a place that means the business is able to take care of itself. You are able to pull the IV from the business out of your arm because you've got things humming so well. There isn't stress, there isn't a grind, there isn't hustle, there isn't disorganization. No, it feels good, your business feels good. Customers are happy, they're getting high quality work without any undue delay, and the team is happy. You are feeling a sense of balance that all business owners wanna get to a sense of balance. It doesn't have to be perfect. I don't think there's any such thing. But there's a bunch of boxes that have to be checked, which we'll go into.

But you will hear other people, successful people, it makes you think like, oh, that's what I'm supposed to do. You'll hear successful people say, just expand, just go for it. It's gonna be this new revenue stream and yeah. process, they will sort of insinuate that you should do it responsibly and with systems and with process. It all sounds so pretty.

But I have had the privilege and the honor of being behind the scenes and in the trenches with so many business owners and plenty of law firm owners at varying stages of their businesses. And oftentimes when someone comes to work with velocity work and they've already expanded but they've done it too early. There are things we have to unwind and it is much more difficult to get their hands around the business than if they would have gotten their hands around the core business that they had before they went to expand.

So yeah, I think there is freedom on the other side of scaling and of growth, but there is a way to approach this. Why are we in such a hurry to develop a new practice area? You have to ask yourself that. Why are you in such a hurry? And if your answer is that it's gonna be some sort of savior for a spot that you're in, you have got to question that. That is, in many cases, a myth that your brain is serving up. It seems like this path is gonna save you from X. It's going to give you more resources and be a relief. And I'm telling you, that is not the story. That is not how this goes. It can in the end, but that's not just you wave a wand and you open up a practice area and it's gonna be easy. You're gonna have money and you're gonna have profit right off the table and it's gonna solve a lot of problems. That's just not true.

So is there an opportunity there? Yeah, probably. If you have a hunch, if you sniff out an opportunity, I'm not saying that you should kill that dream or that idea. I am saying that you need to think about things in a smart way.

So let's dig into some of the things. The first thing I wanna talk about is why it shouldn't be rushed. Some of which I've already talked about, but basically the two points I had written down. This means distraction. When you open up a new practice area, it's a distraction. So you wanna avoid distraction. And when you introduce a new service or practice area, that demands time, it demands energy, it demands resources. People forget how expensive it can be to lift something off the ground, and that all of that can dilute the quality of your existing services. It can diminish the quality of the culture in your firm because it spreads people thin and that doesn't usually make for a very happy team.

Also the reason you shouldn't rush this is because your reputation may take a hit. This is sort of tied with what I just shared about wanting to avoid distraction for those reasons. Well, same thing. Your reputation can be damaged. If you expand too soon and the new offering isn't up to par, or if the existing clients you had with your core services you were offering, if they notice a decline in service quality, that is not only that you're going to take a hit reputationally, but also that's more headaches internally for you all. You have to deal with complaints, with more people calling in, with bad reviews online. And this stuff stacks. This stuff takes resources to deal with and you're already giving resources to the new practice area.

Okay, so given all that, then now if we talk about your practice humming like a well-oiled machine, how do you know if it's humming like a well-oiled machine? While there typically is a feeling associated for the owner and for the team, you need facts as well. We talk about facts, not feelings. Feelings matter. They absolutely do. But if you don't have the facts, then this is all just airy-fairy, super subjective. It's easy to lie to yourself and tell yourself that things are good, things are good, but you don't have facts to back that up. And that's important. It's a business. If we weren't talking about a business, then you don't need facts to back it up. Who cares, right? If it's a hobby. But this is not a hobby, this is a business. So you do need the facts.

So what I'm getting ready to walk through are the indicators that you are actually ready, that you do have a practice that's ready for you to expand. The first is steady revenue and profitability. You have consistent, predictable revenue streams and healthy profit margins in the current practice areas, in the core solutions that you already provide.

Along with that, what goes hand in hand is financial health. So ample cash reserves or resources to invest in this new practice area without jeopardizing the health of the business you already have. You have to remember, lifting a business off the ground, there's a lot of unpredictable components. You do your best, but there are curve balls. There are things that don't work. There are things that don't work like they should. Maybe you don't get the amount of clients that you wanted through the door right away. So then you're floating that business longer. than maybe you had anticipated. There's all kinds of things that can come up and cash is very helpful to have on hand so it doesn't create a bunch of stress for the core business, for the team or for you.

Making a move to expand before you're ready from a financial health perspective. So yes, predictable income and great profit margin, but on top of that, there's reserves just from a financial perspective, really healthy, not just from a P&L perspective. Making a move before you are there can implode your business. It can take a toll. It can take you from doing okay or pretty good to struggling, straight up struggling.

We always think we can control outcomes to the best of our ability. And if we're in charge, we're going to make it happen. We're going to lift this thing off the ground. We're going to expand this. We're going to spend the money to get this in. We're going to make the money back within the first year. And those are all great plans. But stacking that on top of a business that isn't very solid, from a financial health perspective, and otherwise, which we'll get into the other points can really be detrimental to your entire business, not just the new thing you're lifting off the ground.

The next thing to have a look at in your core business is operations. Do you have processes? Are they well defined and documented? Do so your team members know their roles and their workflows and the bottlenecks are minimal. If you listen to the episode I did with Darren Wurz just a few weeks ago that came out, I think it was the first episode of this year, 2025. And we talked about the four types of intangible capital and how important that is to increase the value of your business. But the side effect of that is the freedom that you get because these four Cs are intact. Of those was structural capital. And this is what it pertains to the systems, the processes, the documentation, the workflows, structural capital. So how is your structural capital? And asking yourself that is one of the things you need to check off when you're doing your audit of your current business of the core solutions and core services that you provide.

Okay, and you want to expand, do not expand unless this stuff is dialed. Also, note, as You all know I'm big on progress, not perfection. So when I'm saying each of these things, they don't need to be perfect. I don't even know what perfect looks like for each of these. That's not even a real thing, but they need to be stable and solid. There needs to not be things that draw your attention where it's in the back of your mind. It's not running very well, but we're getting by or we're getting around it. That's the stuff that's got to be cleaned up because as you grow, any problem that you have. As you grow, let's say you grow 10x, those issues grow 10x. So it's good to squash the stuff that if you just have an honest audit, it needs attention.

And the other thing is, there's no reason not to do that if you're not in a hurry. And if you're playing the long game, you're not in a hurry. So these are all important points to consider when you are running down this checklist of things to see if you should even entertain this idea at this point.

All right, the next one is team capability. Just how capable is your staff? How capable is your team? Are your employees? Are your contractors? What are all the people in this business? We talk a lot about people's costs here at Velocity Work. And we also, though I don't do a ton of that teaching, like the forefront teaching for it, we talk a lot about culture and people management and what that looks like for a firm in a really healthy way.

So when it comes to your team's capability, really how I want you to think about this, which is sort of how I want you to think about each of these things we're going through, is what is the strength? What is the stability? How would I rate that on a scale of one to 10? What is the stability of this team in terms of their skill sets and being able to execute and perform their jobs really well?

And the last one, which this probably falls on one of the ones I've already said, but felt worth mentioning on its own, monitoring, business monitoring. How good are you? How good is your firm at tracking the important things and understanding what those metrics tell you? Recognizing patterns, being able to connect the dots for the health of the business.

If your business isn't being monitored through metrics, through tracking numbers, And it doesn't mean you have to have, I've talked about this before, but there is this idea of KPIs and people think that they need 20 KPIs. No, you don't. You do need to probably track 20 things, not out of the gates. You work your way up to that. Tracking versus having KPIs is very different. KPIs are. indicators of success. There's a lot of things maybe you track because it gives you insight when you decide to look deeper. And when you do, let's say monthly, you look at all of the numbers you track just to see, are there any outliers? Is there anything here that's in a zone that doesn't make sense to me? It may not be a KPI, but it is you monitoring the health of the business.

So monitoring your business is very important. And if you do not do that with the current business you have. You have no business in expanding your law firm. These are the things. The things that I just went through are the top things. I rarely talk to someone who is wanting to expand, has this idea to expand, and it may not be a bad idea, but the timing is everything. And if you do it too early, you will shoot yourself in the foot. You will not be able to hold and continue to grow, to continue to create the foundation with the core services you provide, if your attention is somewhere else, if your money is somewhere else, set resources, money, energy, time, maybe people that are also working on core services. You have to do this the right way. You want to stack and build on a foundation, not just get ahead of yourself with an idea that might not be a bad idea, but it's the wrong time.

You have to put this idea in motion at a time that you've considered very thoughtfully, where you've already evaluated your current business, your current firm, and the services that are provided. Now, quickly, I'll just touch on, if you're thinking of expanding, you've checked all the boxes in terms of your audit, checking in on the health of your core services that you already offer, the current state of your law firm now, and you've checked all those boxes, and you've gotten to a place where everything is so stable, it is humming like a whale oil machine.

Then as you look to the future, there's a few things that make sense to mention, though it's not totally the point of this episode, but just to round out this episode well, when and why it makes sense to expand are very important for you to be able to articulate. You can't just throw up a practice area because you want to and expect it to perform really well without you giving thought and being able to articulate why you expect it to do well. Is there demand in the market? Maybe you notice consistent inquiries or unmet needs of the clients you are already serving. And or maybe it's a related area that it's different, but it's adjunctive. It's sort of in the next thing that might make sense. And there's a synergy with your existing services that can dovetail beautifully into this new business that can be sort of teed up really well by the current services that you provide.

So the new offering, I've seen it be especially successful when it naturally complements your current practice areas and it allows for cross selling or bundling or an offer after your core services are complete. It may make sense, they're going to have a different need, you're right there to meet it.

Another thing when it comes to the market and just validating the market, you need genuine signals that there are potential clients that are willing to pay for this new service and not just the other firms have people that will pay for the service. No, you need to test this out. You need to think about how you're going to approach lifting this off the ground and do not put too much pressure on that new practice area as you lift it off the ground.

This is probably the number one mistake I see people make when they actually get to the point where they're gonna expand and add a new practice area. First of all, most of the time, they don't check all the boxes with the audit. They aren't honest with themselves. And it's not because they're not willing to be honest with themselves. They just didn't slow down enough to ask the right questions to make sure that everything was healthy enough that this made the most sense. They didn't have the perspective needed, the 30,000 foot view. They weren't taking it. Not that they couldn't take it. They're smart enough to take it. It's just that they're running hot and have an idea, and they're gonna throw the idea into place.

And on that note, I guess I should say this too, because many of you know Colby, or you've done other assessments that sort of give you a sense of your style about how you operate. In Colby, for instance, quick starts fly by the seat of their pants. They are not risk averse. They go for it and leap and the net will appear. But it is smart to have people around you, if you're a quick start, that can do some of the things that will create stability and let you fly. They will do the research. They will look into what your competitive advantage could be and what the rates are in the area and all the things you might need in order to set this up thoughtfully and strategically. Then having people around you to do so is great. So if you're not that kind of a person, if your eyes glaze over the second that you start to get in the weeds on anything, having someone around. do that work and just give you the bullets or the bottom line is the way to go. And if you are a fact finder or someone who needs a lot of information before you're willing to move forward, then spend the time to get it. It's probably not going to annoy you as much as spending the time to get the information about the market, doing market research.

You have hunches. That's why you're thinking about expanding into a new practice area. That is not good enough. You should treat this like you're trying to get funding for something like VC money. I have a lot of experience in the tech world and you do not get funding unless you can validate that this is needed. There is evidence and you have a clear plan in order to get that business to win some of the market share. And how are you doing things differently than what already exists out there? All of those things matter and all of those things need to be thought through.

If you wouldn't be able to pitch this to somebody who would fund it, you shouldn't run with it. You shouldn't fund it. So you really have to do the work to sit down and be thoughtful. And please know that when you do this, it will never go as fast as you want it to. That's not true. I shouldn't say never. Never say never, right? What I'm saying is that most of the time, people have a lot of excitement and drive behind what they're doing. And they put it out there into the world and it's harder than they thought to get people to pay for it. It's harder than they thought to get people through the door. And even if they're getting business, it's not as easy as they thought to get the level of business that they wanted to. It takes time. And if you don't have that factored in, then you are doing yourself a disservice. You're setting yourself up for a scenario that's not going to probably go the way you had thought it would go. And that's just because you didn't think it all the way through. That's because you didn't plan for scenario A, scenario B, scenario C. You didn't play this stuff out. And you didn't have any skepticism at all about how well this business would do. You need skepticism. You need to be able to poke holes in your own plan. And if you can't poke holes in your own plan, and if you can't try to anticipate the barriers and then put things into place so that you can eliminate or lighten those barriers, then do not expect this to just lift off the ground the second you put some resources behind it. That's not how a business works generally. Sometimes you get lucky, right? But that's not the norm and that's not the way you should treat something new that you are investing real resources into, not just money, but certainly money, energy, time, team, etc.

thinking through the team aspect, thinking through how you're going to position yourself, thinking through how, how exactly is it going to go when if someone who is finishing up with your core services, how are you going to let them know and make it so easy for them to say yes to the next thing that they need that now you provide? Because as you might expect, it's not just as simple as whipping up a practice area and watching people just hop from one practice area to the other for yourself, or however you anticipate acquiring clients. Maybe it's not going from one service to the next, but you have to think that through. How are you gonna make it so easy and a no-brainer for people to say yes to the new service?

All right, I made a list of common mistakes that I see, that I hear in conversation with business owners, not just law firm owners, but certainly law firm owners. So as we go through these, I'm also gonna give you a nugget that will tie back to some of the things we've already talked about that will help you avoid some of these common mistakes.

So the first one is overextending financially. I mean, it just suffocates everything. It suffocates the creativity, it is stressful, it creates struggle, there's not enough to go around. And this can happen when you underestimate the cost or the time needed for this new service to become profitable.

The other is that you spread your team too thin. A lot of times when a new practice area comes up, most people have some sense to think that my current team, if they're close to capacity, they're not going to be able to just give to this new practice area. So I'm, how am I going to supplement that? What does that look like? Making sure that either the team that you currently have has the capacity truly has the capacity. You need to overestimate the capacity they're going to need in order to give attention to this new practice area, at least until it gets humming up and coming.

So, underestimating your team's capacity and when you evaluate that, what are you going to do? If you can't create more capacity, then you're going to have to hire for special expertise and for special needs. And sometimes this kind of goes back to overextending yourself financially. You can get ahead of yourself really quickly with the money this way. So, you have to have thought through that has to have been part of your plan. If you're going to spend up front, you have to see when that investment is going to come in. going to come back if I'm being conservative? Not the best case scenario. That is not how you plan. If I'm being conservative, what is the plan to recoup the cost, the money, the investment that I've put into this?

The other is ignoring your core clients. And so you could see every one of these stems from what we've already talked about, but I'm trying to put this in a different frame and have you look at this from different angles. Ignoring your core clients will hurt you. It will hurt your reputation. It will give you more to do, more to deal with because you're going to deal with complaints and increased calls, or maybe some not so great reviews. And if you are creating that experience for core customers, what do you think is about to be created for the new customers that you're bringing in a new client that you're bringing in?

And then the last one, another common mistake is a lack of proper market research, you do not have to be an all out marketer to do good market research. But you do have to be curious enough to dig in and see what is going on out there in the world. Where does this service that's being provided, where does it lack? How can I be better than what is out there being provided? Also, how can I make it so easy for people to say yes? And not in a way that means you're the cheapest. I don't think that's the way you need to go, but why should they say yes to you versus the other services that exist out there for it. Really thinking that through before you do anything. Before you do anything.

People usually build the plane as they fly it when it comes to something like this. And it's just not worth it, guys. You will burn through your cash. You will burn through your other resources. You will probably burn out yourself. And all the meanwhile, the experience for clients is subpar. It isn't thought through. And people can feel when you're flying by the seat of your pants.

So what is it going to take? How are you going to make sure that you avoid this mistake of just not doing enough market research, not being able to research and articulate your response to the research that you did?

So I took a little detour and talked about if you are going to expand the things you need to think through. But let's go back to the beginning, the whole premise of this episode is that you shouldn't expand unless. You shouldn't expand unless these things are true. You've done a bit of an audit and you have your hands around the current state of your business, of your firm, of the core services that you offer, and you can check the boxes on if things are humming from different angles. If there is stability in your firm. If there's really a strong foundation to build on, and it's not chaos, there is no disorganization, that is organized. It is calm. Things move at a pace they're supposed to move. Expectations are set appropriately with the clients. The team can follow through on those expectations. You get good reviews at the end.

I know that things aren't perfect even with customer experience, no matter what business you have, but generally speaking, it should be dialed. And when it's dialed, that is the time to start making plans and get really serious about giving your energy to the planning for the practice area you're going to open. And don't just whip it up. Don't just pull it together. Don't just throw money at it. Don't just offer it on a whim. No, you have to think this through.

If you were a startup, and there is an argument today that you treat this new practice necessarily like a startup. If you were a startup, you would not enter into that game without doing your research, without making sure that where you're going to put your resources makes the most sense, without making sure that the customer is at the center of your delivery and what they're going to experience deeply matters. All of this stuff takes planning. And it's not a two-hour session sitting down. You can get a lot done sitting down and thinking for two hours, but it takes more than that. And you don't have to spend a long length of time, you know, months and months planning this, but you need to give it whatever it takes to check off these boxes to make sure that you are sound in all of these ways in your core business. And then you start to look to the future and you think through and plan really well. You don't just spin it up.

I hope this helps some of you because if you're anything like me, sometimes you feel like, no, I got this. I've got this. No matter what, I will make this thing work. I will make it succeed. I trust myself. I've done it time and time again in my life and it's just not the way that it needs to be done. You're asking for more pain. You're asking for wasting resources. You're asking for stress probably for you also for your team, maybe for some of your clients. Like there's just no upside to flippantly opening a practice area.

So give this some thought. Do your homework. Make sure that you are being honest with yourself. It's an honest assessment of Your current state and then think forward and use this episode if you want to as a guide But for any of you listening who think well, I'm not ready yet But I'm gonna be ready at some point now you have some markers to say Okay, I'm not gonna be ready until this this this this this can be checked off then I'm gonna entertain it Then I'm gonna back it but until then we're gonna focus here And we're not going to water down our focus by focusing somewhere else to we're going to focus right here. We're going to get things right at home. We're going to get our house in order. Then let's go.

All right, everybody. Hopefully this was helpful for any of you who are thinking about expanding your business. It's exciting. And I am all for it. I think you should do it. I think if you have the idea, I think that you should validate it, you should make sure that it's going to be something great. And you should make sure the timing is on point. But after that, man, go for it. I am in your corner. That is for sure. I don't want to make this sound like I don't think people should do it. I do think you should do it. And the truth is getting yourself in a position in the ways that we talked about here on this episode, getting yourself in this position in order to make the decision to move forward will make it that much more exhilarating, fun, and fruitful for everyone involved. Client, you, team, everyone.

All right, everybody have a wonderful week. I'll see you here next Tuesday.

Hey, you may not know this, but there's a free guide for a process I teach called Monday Map/Friday Wrap. If you go to VelocityWork.com, it's all yours. It's about how to plan your time and honor your plans. So, that week over week, more work that moves the needle is getting done in less time. Go to VelocityWork.com to get your free copy. 

Thank you for listening to The Law Firm Owner Podcast. If you're ready to get clearer on your vision, data, and mindset, then head over to VelocityWork.com where you can plug in to quarterly strategic planning, with accountability and coaching in between. This is the work that creates Velocity.