As an entrepreneur and the CEO of your own firm, it is important to develop a detailed annual business plan. The benefits of business planning are twofold: a tangible plan helps your partners and employees focus on your annual goals, and it enables you to benchmark your firm’s progress.
While many firms recognize the merits of business planning, only a few actually write one, share it with their teams, hold each member accountable and measure the ongoing results.
Business intelligence is sorely lacking in the industry because most firms do not have the data needed to analyze the success of their practices or inventory the opportunities that exist inside of their businesses. As a result, firms are unable to properly optimize their revenue and earnings potential. Without a plan and the proper analytics, it is possible that the true value of the business is largely unknown and cannot be realized.
After all, what gets measured gets done.
Building Your Plan’s Foundation
When it comes to business planning, less is more and simpler is better. While setting short-term goals is important, consider how these goals will impact your firm’s long-term objectives. Whether you want to increase your cash flow or prepare your business for succession, keep your plan focused, clear and concise.
If you are committed to growth and practice excellence, build a straightforward plan that focuses on five critically important considerations:
- How do you bring in new relationships, and what is your target growth rate for the year? How to do you hold each other accountable for your key business development results?
- How do you manage assets and how do you define investment excellence? Are you using a repeatable and scalable process that is consistent across your team?
- How do you measure client satisfaction? Do your client service practices retain your clients and inspire referrals?
- What are you doing to increase your core competencies, including earning new credentials and accreditation? How are you going to market these?
- What business investments (people and infrastructure) will you make this year?
Any mature, healthy business should be able to succinctly answer these questions, which form the foundation of an annual business plan.
Make It a Team Effort
After drafting detailed responses to each of these questions, review and refine your answers and objectives with your partners. When all of your partners are aligned, share the plan with your relationship manager (RM), or practice management consultant (PMC), if you have one. Your RM or PMC can serve as an accountability partner, guide your team through the final stages of business planning and help you assess your goals against the growth and best practices of other comparable firms.
Finally, let your team in on your vision. Gather input from your key employees, and hold an annual kickoff meeting with your entire firm to review the business plan, share key objectives and discuss questions and concerns. This will help each individual team member understand the firm's objectives, as well as their individual role as it pertains to accomplishing these goals.
The Importance of Data Tracking
Like a car without an engine, a business plan is worthless without execution. The top firms in the industry are those who execute strategically and consistently, as well as gather data and keep meticulous records of their results.
Throughout the year, you must synthesize your business intelligence to create meaningful and actionable data. Accurate, empirical data is critical to measuring the health of your firm, guiding its growth plan and benchmarking yourself against industry standards and top-performers. It is also the key to reviewing your results versus your business plan.
Investing in quality and dynamic business intelligence can be expensive, but it is necessary to track and measure your progress, highlight areas for improvement and identify opportunities for growth. In a recent article by Joel Bruckenstein, a co-creator of the Technology Tools for Today's High-Margin Practice, Joel points out that a business intelligence dashboard should "display important business metrics such as assets under management by advisor, revenue per client, profitability by advisor and by client, the average age of the client, and a good deal more." Without this important data, it is difficult to truly understand the state of your practice or track against your business plan.
When you equip your firm with a thorough business plan and track your objectives with practice and performance data, you position your firm for sustainable growth. Numbers don’t lie, and quantifiable results demand action: what gets measured gets done.
Michael Parker is Chief Development Officer for Hightower Advisors and architect of the firm’s business growth resource, Blueprint for Growth.