Operational efficiency is one of the greatest challenges facing most growing advisors. I struggled in the early years to build my practice through sales, yet at the same time develop systems and procedures that would help the office run smoothly and efficiently. Let’s face it: When we don’t have efficient operations in our back office, the business ends up owning us, rather than the other way around.
To help illustrate the point, I like to think of how I can maximize the value of my practice. While I’m not really interested in selling my practice, I would like to create the highest possible price tag for my business, which is typically measured as a multiple of earnings.
The most highly valued practice is one that doesn’t depend on any one person to thrive. In other words, it should run like a well-oiled machine. In our industry, building a business that doesn’t depend on us is challenging, because the advisor is the actual brand. How do we build an independent, thriving practice while also being the primary rainmaker?
One of the real keys, in my view, lies in our operational efficiencies. How do you go about improving your office efficiency? One great way to get started is by developing checklists. I absolutely love checklists for everything from writing birthday cards, to answering the phones, to handling complex file preparation processes. When you have checklists, it helps to ensure things are preformed correctly every time, and it provides accountability for your employees. Checklists can then provide the foundation to a policies and procedures manual that outlines how all office functions are performed.
If you have employees, I believe it’s critical that they do the work creating the checklists, rather than you doing the work for them. As an example, I recently returned from a trip to New York City. I’ve been to New York several times, and each time I’ve taken a taxi into the city. However, if you put me behind the wheel of a car and told me to drive into the city from LaGuardia, I’d be completely lost because I’ve never been the one actually driving.
Likewise, if you do all of the work in recording all of these checklists and procedures, then your employees won’t be nearly as efficient at performing the work. Instead, have them prepare the checklists, and you merely provide guidance and accountability.
If your practice is not running efficiently and independently, look at your internal policies and procedures. If they’re lacking, begin by creating checklists for your tasks. Even if you’re a solo, one-man/woman shop, checklists will still help you organize your preparation and ensure that you don’t miss things. As your practice begins to run more and more on auto-pilot, you’ll have tremendously increased its value to both you and a potential buyer.
For more from Jim Brogan, see: