What action steps are needed to move your business in the right direction?
By Lisa A.K. Kirchenbauer, CFP®, RLP®
Now is the time to reassess your practice. Think of your practice as a true business that not only has a positive impact on many people, but also has a positive impact on your life.
Through a series of questions, action steps and resources, you can turn your practice into the model of business that you really want in 2010. Now that you know what kind of business you have or want to have (see "What It Really Means to Run Your Practice Like a Business," in the January/February 2010 issue of Practice Management Solutions), use the steps outlined here to make it happen.
Before you can leap into action, ask yourself, "What kind of business do I have currently? What kind of business do I want to have?"
To get a deeper handle on what your business really is about for you, answer these questions:
- If you had all the resources you needed-money, staff, tools, technology, etc.-to support your business, what would you do with that business? What kind of business structure would it be?
- If you knew you only had five years to be part of your business before you left it, what would you change or make happen?
- If you suddenly had to close your business today, what would you regret? What would you wish you had done, created and gotten from your business?
The goal of these questions is to help you find the business that you really want, to identify the true purpose of your business and to gain a sense of the action steps that you should take at this point. After what we have all been through the last two years, it's time to see our businesses from a more conscious and strategic standpoint.
Each business model has a number of action steps that can help move it in the right direction.
A lifestyle-based business (LBB) is one that functions only as long as its owner is in business. It is meant to generate as much cash flow to the owner as possible. That cash flow is redirected to other investments for the future, as well as used to cover current expenses. If you have an LBB, you and the business are closely linked, so much of your work is concentrated on supporting yourself and your finances. Here are some action steps to consider:
- Get your personal financial house in order including cash flow needs, retirement savings required, retirement plans, disability and life insurance, and certainly an emergency fund.
- Determine your niche market-critical for an LBB-and streamline your business to support that niche.
- Consider individual business coaching or a group coaching program such as Strategic Coach® to help you get and stay on track.
- If you are currently a no-staff business, consider a virtual assistant to support your business without taking on the expense and space of a full-time, in-house staff member.
An equity-based business is one that you consider an asset that will fund future pursuits and/or retirement. The goals of EBBs and LBBs are different. With an EBB, you need to work toward freeing yourself from the business so that it becomes a viable, valuable entity that will help create an exit strategy for you. Here are some action steps to consider:
- Hire an accountant/bookkeeper to get your business finances in order.
- Run your own, or better yet, hire an objective financial planner to run your retirement planning numbers to determine what you need to get when you sell the business.
- Consider using assessment tools such as Kolbe and StrengthsFinders to build a solid and coordinated team that is aligned with the team members' own strengths and the needs of the business. (Hint: Not everyone should be a clone of the owner.)
- Develop written processes and procedures for everything that your business does.
- Create a formal disaster recovery plan.
- Develop a funded succession plan. If there is a buy/sell agreement, it needs to have disability and life insurance supporting it.
- In case of temporary owner disability, purchase business overhead insurance. If there is not a clear succession plan, purchase life insurance in case of the owner's death. By having this insurance in place, you provide some financial flexibility to the business to make plans if you are disabled or die, providing your heirs some resources needed to sell the business.
- Accumulate cash and a line of credit to support the inevitable ups and downs of the business.
- When you are ready to leave the business, seek individual coaching and/or life planning to help you get comfortable with the transition. Work through the challenges and begin to develop a life that you can move to once you have sold the business.
- Assess your staff's professional development needs and consider additional training or additional staff to fill in the holes as you step out of the business.
- Market your business as a team approach, and bring other advisers into client meetings early to avoid dependency on you.
- Consider group coaching to address the process and team building that will be necessary.
Stay On Track
To keep you on track, here are some gentle reminders to keep moving forward and checking your progress along the way:
- What are the consequences of the choices I am making or not making based on what I have discovered about what I want out of my business and my life?
- What progress have I made this week/month/year toward my business goals, as opposed to what I haven't accomplished?
- What kind of example am I setting for my team and my clients, some of whom may be business owners?
- What do I really need-financially or otherwise-to feel like a success and be happy and fulfilled now, rather than just in the future?
If you're not sure how you are doing, get some feedback. Consider conducting a blind client survey or a 360-degree review of your progress by your team, and don't forget to ask your family and friends how they feel you are doing. Let family and friends help you by being part of the support you will need to maximize your business.
Plan for the Future
What are some of the other critical elements to running your LBB or EBB? In light of the last 18 months, consider these steps and plan for the future:
Develop a business plan. A one-page business plan can be as effective as a multi-page document. See www.onepagebusinessplan.com for some resources.
Create a real marketing plan for the year. What markets will you focus on? How will you reach them? What will you offer them?
Assess your business on the following criteria. Determine where you would like your business to be in terms of these metrics and check in annually or quarterly to see how you are doing:
- Number of clients (the generally accepted rule of thumb is 70 clients per adviser)
- Clients' median or average age (the older the clients are, the less attractive your business may be)
- Hours per client and revenue per client
Update your Web site to fit with the direction your business is going, not necessarily just where your business is now, and continually add new information, such as articles, newsletters and video clips.
Take time to assess what you learned from the Great Recession. What worked? What didn't? What can you do differently?
Run a stress test, if you are an EBB, by going out of town for an extended period of time, and see what works and what doesn't. Make changes as necessary.
Create your "story" around what you are passion about and what really brought you to this business; then incorporate it into all of your client and prospect communications.
Consider shadowing a successful business that is set up like you would like to be, particularly one that is in the process of implementing a succession plan.
The closer you can align your business to what you are passionate about and what will financially and emotionally support you, the more successful the business you are likely to have.
Lisa A.K. Kirchenbauer, CFP®, RLP®, is president of Omega Wealth Management LLC, a fee-only, independent, holistic wealth management firm based in Arlington, Va. She serves as a trainer for the Kinder Institute, is an affiliated adviser with the Sudden Money Institute and a participant in the Strategic Coach® program. She provides coaching to business owners and advisers seeking more successful and satisfying lives and businesses.
E-Myth and The E-Myth Revisited by Michael Gerber
Deena Katz's Tools and Templates for Your Practice by Deena Katz
The 7 Habits of Highly Successful People by Stephen Covey
The 4-Hour Workweek by Timothy Ferriss
Now, Discover Your Strengths by Marcus Buckingham and Donald O. Clifton
StrengthsFinder 2.0 by Tom Rath (use the code from the book to take an online assessment)
www.WhitewaterTransitions.com for succession planning for financial planning businesses
www.Kolbe.com for Koble assessment information-take the Kolbe A Index for yourself and contact the organization for further consulting with your team as needed
www.ConnectToTheCore.com for resources on creating and using your "story" in your marketing messages
www.StrategicCoach.com for entrepreneurial training and coaching