Got Game?

Brand the company in the community

Build a mature ensemble

Goals. As contrasted with strategy, goals need to be specific and measurable. Five to seven goals a year are sufficient if they address what is most critical to the firm. One approach for establishing goals is a three-stage format:

Draw up a laundry list of goals with an emphasis on quantity. This helps you to think creatively about potential goals. Put the list aside for a couple of days.

From the list, select five to seven items that are absolutely critical for your firm for the next 12 months.

Reword each item to make it SMART (Specific, Measurable, Attainable, Realistic, Time-bounded). Break down each goal into the tasks necessary to complete that goal.

The Process: Page Two

On the second page, include the following:

Revenue. Estimate next year’s revenue by anticipating recurring and new revenue from existing clients, as well as new revenue to be brought in from new clients. Alternatively, you can estimate future growth based on past annual growth, making adjustments as deemed appropriate. Many advisors find it useful to project a range for growth, given the variables that impact the top line in any given year. A revenue range also helps bridge the gap between those who prefer to set minimum goals that are likely to be achieved and those who prefer BHAGs (Big, Hairy, Audacious Goals) that may challenge an individual but that might not be achieved.

Expenses. Advisors are well-known as cobbler’s children when it comes to creating a budget for their practices. Moss Adams provides a template for creating a budget. The annual Moss Adams financial studies not only present budget categories, they also offer benchmarks (see Web Extras for the January 2009 issue at InvestmentAdvisor.com). There is value in applying this approach rather than in reinventing the budget wheel.

Of course, anytime is the right time to enhance and upgrade business prowess to financially manage your business. Consider following these four Cs, some coming directly from Mark Tibergien, formerly of Moss Adams and now CEO of Pershing Advisor Solutions.

Create and track profitability measures (e.g., gross profit margin, operating profit margin, productivity).

Convert from “creative” accounting to GAAP (generally accepted accounting principles).

Common size data so that each revenue source and budget item is represented as a percent of total revenue for easier long-term comparison.

Construct regular times monthly to review financials and apply them to decisions about expenditures.

The Process: Page Three

Advisors tend to turn marketing on and off like a water faucet. A different approach is to have a steady stream of marketing for your firm. The third page of your game plan will focus on marketing and will include a marketing plan that relates:

A definition of your ideal client

Your value proposition

A positioning statement that addreses how your firm is different and attractive to ideal clients

The market niches your firm targets

The tactics you will deploy for each targeted segment

A final component of your marketing plan is essentially a calendar outlining what will happen each month for each target audience. The beauty of a marketing calendar is that, once it is in writing, it can be delegated to staff to monitor implementation (see sidebar, “Make a Marketing Plan,” for more information).

Marketing in 2009 will be more important than ever. But budgets will likely be as pinched as wholesaler support. What to do? (See the sidebar below, “Now Is a Good Time to . . .”)

The Process: Page Four

The last page is a dashboard–a measuring device for the SMART goals you outlined on page one. Typically, a series of checklists or Excel spreadsheets monitor key SMART goals, all scaled to fit on one page. A support person can maintain the dashboard, which you can use at staff meetings to show the entire team how the organization is performing. Building on the sample goals above, measured items could include new assets under management, number of new ideal clients taken into the firm in the current year, number of referrals from selected strategic alliances, and so on (see “Make Dashboards” below).

Don’t Talk, Act

Everyone talks about evolving from a practice to a business, but in troubled times a plan is critical for making decisions that are in the best interest of the business. The current uncertain market may just separate the practices from the businesses.

Find a business planning system that you can sustain. The approach suggested here provides an alternative–one that makes the planning process straightforward. If creating a plan seems like a huge cultural change, completing just one of the four pages described here is enough for those with plan phobia.

Whatever approach you take, remember that planning is an annual event and that practice makes perfect. If you are new to a planning process, know that it gets easier and better each year.

Joni Youngwirth is the managing principal of practice management at Commonwealth Financial Network in Waltham, Massachusetts. She can be reached at [email protected]. Both John Augustine and Michael Duncan are registered representatives with Commonwealth.