Starting a law firm on your own can be tough, especially if you don’t have much capital to begin with. Even a relatively small-sized practice needs a decent amount of financial backing for it to reach its full potential. If you’ve already started saving for your law firm, you no doubt have a nice little nest egg to support your legal venture.
Unfortunately, sometimes one man’s efforts aren’t enough. What course of action should you take if it turns out you need much more capital than you originally planned?
Friends/Family/Immediate Network
It may be a little embarrassing to approach people asking for a loan—especially if they’re people you personally know. However, if you’re serious about furthering your law firm and investing in its eventual success, you’ll find yourself quite capable of swallowing your pride.
The best cure for this type of anxiety is to approach your parents, friends, and acquaintances with the same level of professionalism you would use when talking to potential investors or shareholders … because in this case, that is what they essentially are.
As long as you properly express your intent and are earnestly honest about your law firm’s potential, you’ll be surprised how smoothly each meeting goes—even if you are rejected. You might even be surprised to learn how many people are interested enough to support your dream.
Investors
As mentioned earlier, you might find it emotionally easier to approach investors and shareholders whom you don’t personally know regarding financial help. However, that doesn’t mean it’s generally easier overall. You still need to prove to these people that your law firm is a worthwhile venture for them to sink their money in.
To increase your chances, we highly recommend searching for angel investors. As the name suggests, angel investors are extremely affluent and influential individuals who enjoy helping fresh entrepreneurs, small businesses, and new start-ups. As long as their point of interest proves they’re solid enough and credible enough to be worth taking a chance on, they can be quite generous with their financial support.
A word of caution; despite their name, angel investors are a far, far cry from the mythical or ethereal. Ergo, make sure you have a real, solid business proposal and a proper presentation before approaching them. Kind-hearted or not, they’re still investors.
Personal Savings
Truth be told, this is actually the first place you should go to when saving for your law firm. How can you convince others that your law firm is worth putting money in if you yourself aren’t willing to make that bet?
If you’ve already spent a few years saving for your law firm but the amount just doesn’t meet what you need, it may be necessary to add your personal finances as well. Look at it this way: sinking your life savings into your law firm gives you a stronger incentive to succeed.
>> Learn About 5 Helpful Steps to Take When Launching a New Law Firm
Banks & Traditional Lenders
Some people prefer not to apply for small business loans from traditional lenders—such as banks and loan companies—due to the discouraging interest rates. However, if you’re hurting for cash, this is one of your safest options. It can optimize your credit score, secure your credibility as a “real” company, and really drive you to do what you need to do to make sure it’s paid back.
Traditionally speaking, this is actually one of your best, most cost-effective options for securing further capital for your firm. That isn’t to say that the others mentioned here aren’t just as effective. It’s a matter of taking into account every aspect of your current situation and then choosing which source of capital will best suit.