How to create a financial forecast for an immigration law firm?
Developing and maintaining an up-to-date financial forecast for your immigration law firm is key in order to maintain visibility on your business’s future cash flows.
If you feel overwhelmed at the thought of putting together an immigration law firm financial forecast then don’t worry as this guide is here to help you.
We'll cover everything from: the main objectives of a financial forecast, the data you need to gather before starting, to the tables that compose it, and the tools that will help you create and maintain your forecast efficiently.
Let's get started!
Why create and maintain a financial forecast for an immigration law firm?
In order to prosper, your business needs to have visibility on what lies ahead and the right financial resources to grow. This is where having a financial forecast for your immigration law firm becomes handy.
Creating an immigration law firm financial forecast forces you to take stock of where your business stands and where you want it to go.
Once you have clarity on the destination, you will need to draw up a plan to get there and assess what it means in terms of future profitability and cash flows for your immigration law firm.
Having this clear plan in place will give you the confidence needed to move forward with your business’s development.
Having an up-to-date financial forecast for an immigration law firm is also useful if your trading environment worsens, as the forecast enables you to adjust to your new market conditions and anticipate any potential cash shortfall.
Finally, your immigration law firm's financial projections will also help you secure financing, as banks and investors alike will want to see accurate projections before agreeing to finance your business.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
What information is used as input to build an immigration law firm financial forecast?
A immigration law firm's financial forecast needs to be built on the right foundation: your assumptions.
The data required to create your assumptions will depend on whether you are a new or existing immigration law firm.
If you are creating (or updating) the forecast of an existing immigration law firm, then your main inputs will be historical accounting data and operating metrics, and your team’s view on what to expect for the next three to five years.
If you are building financial projections for a new immigration law firm startup, you will need to rely on market research to form your go-to-market strategy and derive your sales forecast.
For a new venture, you will also need an itemised list of resources needed for the immigration law firm to operate, along with a list of equipment required to launch the venture (more on that below).
Now that you understand what is needed, let’s have a look at what elements will make up your immigration law firm's financial forecast.
The sales forecast for an immigration law firm
From experience, it usually makes sense to start your immigration law firm's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your immigration law firm (which can be used as a starting point for existing businesses) and the data collected in your market research (which both new ventures and existing businesses need to project their sales forward).
Your immigration law firm's sales forecast can be broken down into two key estimates:
- The average price
- The number of monthly transactions
To assess these variables accurately, you will need to consider the following factors:
- Changes in immigration laws and policies can greatly impact the demand for immigration legal services. As laws and policies become stricter or more favorable, the average price of your services may change due to the complexity of the cases and the amount of time and resources required. This can also affect the number of monthly transactions, as clients may seek your services more or less frequently depending on the current laws.
- The economy and job market can also affect the demand for immigration legal services. In a strong economy with low unemployment rates, there may be an increase in foreign workers seeking employment in the United States, leading to a higher demand for your services. Conversely, in a weak economy with high unemployment rates, there may be a decrease in immigration and therefore a decrease in the number of monthly transactions and the average price of your services.
- Changes in the political climate and attitudes towards immigration can also have an impact on your business. For example, if there is a shift towards more restrictive immigration policies, there may be a decrease in the demand for your services and a decrease in the average price as clients may be less likely to pursue immigration cases. On the other hand, if there is a more welcoming attitude towards immigrants, there may be an increase in demand and a potential increase in the average price of your services.
- The availability and accessibility of technology can also play a role in your business's sales forecast. A rise in online platforms and resources for immigration services may lead to increased competition and potentially lower average prices. Additionally, advancements in technology may make certain processes more efficient, allowing you to handle a higher volume of transactions per month.
- The reputation and success rate of your firm can also impact your sales forecast. A positive reputation and a high success rate can lead to an increase in demand for your services and potentially allow you to charge higher prices. On the other hand, a negative reputation or a low success rate may result in a decrease in demand and a need to lower your prices to remain competitive.
Once you have a sales forecast in place, the next step will be to work on your overhead budget. Let’s have a look at that now.
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The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
The operating expenses for an immigration law firm
The next step is to estimate the costs you’ll have to incur to operate your immigration law firm.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your immigration law firm's operating expenses should normally include the following items:
- Staff Costs: This includes salaries, wages, and benefits for your attorneys, paralegals, and administrative staff.
- Accountancy Fees: You will need to hire an accountant or use accounting software to manage your financial records and prepare tax returns.
- Insurance Costs: As an immigration law firm, you will need to have professional liability insurance to protect against any legal claims made against your firm.
- Software Licenses: In order to manage your cases efficiently, you will need to purchase software licenses for case management, document management, and other legal software.
- Banking Fees: You will need to pay fees for processing credit card payments, wire transfers, and other banking services.
- Rent: Your office space is a crucial expense for your law firm. Make sure to budget for rent, utilities, and maintenance costs.
- Marketing Expenses: To attract new clients, you may need to invest in marketing efforts such as advertising, website development, and attending legal conferences.
- Professional Memberships: Joining professional organizations and attending legal seminars can help you stay up-to-date on immigration law and network with other attorneys.
- Travel Expenses: If you have clients in different countries, you may need to budget for travel expenses such as airfare, lodging, and meals.
- Office Supplies: You will need basic supplies such as paper, pens, and printer ink to run your law firm.
- Continuing Education: As an immigration attorney, it is important to continue learning and staying up-to-date on changes in immigration law. This may include attending seminars, webinars, or enrolling in courses.
- Telecommunications: You will need to have phone and internet services to communicate with clients, partners, and government agencies.
- Client Expenses: Depending on the type of cases you handle, you may need to cover expenses for your clients such as filing fees, translation services, and medical exams.
- Office Equipment: In addition to basic office supplies, you may need to purchase equipment such as computers, printers, and scanners to run your law firm.
- Utilities: Don't forget to budget for utilities such as electricity, water, and internet for your office space.
This list is not exhaustive by any means, and will need to be tailored to your immigration law firm's specific circumstances.
What investments are needed to start or grow an immigration law firm?
Creating and expanding an immigration law firm also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for an immigration law firm could include elements such as:
- Office Space: This could include rent or purchase of a physical office space for your law firm. This is a necessary fixed asset for your business, as it provides a professional and secure location for meeting with clients and conducting legal work.
- Furniture and Equipment: This includes desks, chairs, computers, printers, and any other necessary equipment for your office. These items are essential for the day-to-day operations of your law firm and should be included in your expenditure forecast.
- Legal Software: As an immigration law firm, you will need specialized software to manage and track your cases. This may include case management software, legal research databases, and other tools to assist with document preparation and client communication.
- Legal Library: As part of your legal research, you may need to purchase books, journals, and other reference materials specific to immigration law. These items are considered fixed assets and should be included in your expenditure forecast.
- Security System: To protect sensitive client information and valuable assets, it is important to invest in a security system for your office. This may include cameras, access controls, and alarm systems.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your immigration law firm.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
The financing plan of your immigration law firm
The next step in the creation of your financial forecast for your immigration law firm is to think about how you might finance your business.
You will have to assess how much capital will come from shareholders (equity) and how much can be secured through banks.
Bank loans will have to be modelled so that you can separate the interest expenses from the repayments of principal, and include all this data in your forecast.
Issuing share capital and obtaining a bank loan are two of the most common ways that entrepreneurs finance their businesses.
What tables compose the financial plan for an immigration law firm?
Now let's have a look at the main output tables of your immigration law firm's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your immigration law firm is likely to be in the years to come.
For your immigration law firm to be financially viable, your projected P&L should ideally show:
- Sales growing above inflation (the higher the better)
- Profit margins which are stable or expanding (the higher the better)
- A net profit at the end of each financial year (the higher the better)
This is for established immigration law firms, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your immigration law firm's forecasted balance sheet enables you to assess your financial structure and working capital requirements.
It is composed of three types of elements: assets, liabilities and equity:
- Assets: represent what the business owns and uses to produce cash flows. It includes resources such as cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: represent funds advanced to the business by lenders and other creditors. It includes items such as accounts payable (money owed to suppliers), taxes due and loans.
- Equity: is the combination of what has been invested by the business owners and the cumulative profits and losses generated by the business to date (which are called retained earnings). Equity is a proxy for the value of the owner's stake in the business.
The projected cash flow statement
A projected cash flow statement for an immigration law firm is used to show how much cash the business is generating or consuming.
The cash flow forecast is usually organised by nature to show three key metrics:
- The operating cash flow: do the core business activities generate or consume cash?
- The investing cash flow: how much is the business investing in long-term assets (this is usually compared to the level of fixed assets on the balance sheet to assess whether the business is regularly maintaining and renewing its equipment)?
- The financing cash flow: is the business raising new financing or repaying financiers (debt repayment, dividends)?
Cash is king and keeping an eye on future cash flows is imperative for running a successful business. Therefore, you should pay close attention to your immigration law firm's cash flow forecast.
If you are trying to secure financing, note that it is customary to provide both yearly and monthly cash flow forecasts in a financial plan - so that the reader can analyze seasonal variation and ensure the immigration law firm is appropriately capitalised.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
Which tool should you use to create your immigration law firm's financial forecast?
Using the right tool or solution will make the creation of your immigration law firm's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your immigration law firm's projections
The modern and easiest way is to use professional online financial forecasting software such as the one we offer at The Business Plan Shop.
There are several advantages to using specialised software:
- You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
- You have access to complete financial forecast templates
- You get a complete financial forecast ready to be sent to your bank or investors
- You can easily track your actual financial performance against your financial forecast, and recalibrate your forecast as the year goes by
- You can create scenarios to stress test your forecast's main assumptions
- You can easily update your forecast as time goes by to maintain visibility on future cash flows
- You have a friendly support team on standby to assist you when you are stuck
- It’s cost-efficient and much cheaper than using an accountant or consultant (see below)
If you are interested in this type of solution, you can try our forecasting software for free by signing up here.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional immigration law firm financial projection.
As you can imagine, this solution is much more expensive than using software. From experience, the creation of a simple financial forecast over three years (including a balance sheet, income statement, and cash flow statement) is likely to start around £700 or $1,000 excluding taxes.
The indicative estimate above, is for a small business, and a forecast done as a one-off. Using a financial consultant or accountant to track your actuals vs. forecast and to keep your financial forecast up to date on a monthly or quarterly basis will naturally cost a lot more.
If you choose this solution, make sure your service provider has first-hand experience in your industry, so that they may challenge your assumptions and offer insights (as opposed to just taking your figures at face value to create the forecast’s financial statements).
Why not use a spreadsheet such as Excel or Google Sheets to build your immigration law firm's financial forecast?
You and your financial partners need numbers you can trust. Unless you have studied finance or accounting, creating a trustworthy and error-free immigration law firm financial forecast on a spreadsheet is likely to prove challenging.
Financial modelling is very technical by nature and requires a solid grasp of accounting principles to be done without errors. This means that using spreadsheet software like Excel or Google Sheets to create accurate financial forecasts is out of reach for most business owners.
Creating forecasts in Excel is also inefficient nowadays:
- Software has advanced to the point where forecasting can be done much faster and more accurately than manually on a spreadsheet.
- With artificial intelligence, the software is capable of detecting mistakes and helping decision-making.
Spreadsheets are versatile tools but they are not tailor-made for reporting. Importing your immigration law firm's accounting data in Excel to track actual vs. forecast is incredibly manual and tedious (and so is keeping forecasts up to date). It is much faster to use dedicated financial planning tools like The Business Plan Shop which are built specially for this.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
Use our financial projection templates for inspiration
The Business Plan Shop has dozens of financial forecast templates available.
Our examples contain a complete business plan with a financial forecast and a written presentation of the company, the team, the strategy, and the medium-term objectives.
Whether you are just starting out or already have your own immigration law firm, looking at our financial forecast template is a good way to:
- Understand what a complete business plan should look like
- Understand how you should model financial items for your immigration law firm
Takeaways
- Having a financial forecast enables you to visualise the expected growth, profitability, and cash generation for your business over the next three to five years.
- Tracking actuals vs. forecast and keeping your financial projections up-to-date is the only way to get a view on what your immigration law firm future cash flows may look like.
- Using financial forecasting software is the mordern and easy way to create and maintain your forecasts.
This is the end of our guide on how to build the financial forecast for an immigration law firm, we hope you found it useful. Don't hesitate to contact us if you want to share your feedback or have any questions.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
Also on The Business Plan Shop
- Example of financial forecast
- How to create a sales forecast for a business?
- Financial forecast template for a business idea
Know someone who owns or is thinking of starting an immigration law firm? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
