Think back to when you first started your firm: how excited, motivated and inspired you were. One way we describe that feeling is “brilliance,” which is, according to TheFreeDictionary.com, “exceptional clarity and agility of intellect or invention.” It’s the mental state that enables us to do our best thinking and our best work.
Unfortunately, if you’re like most advisory firm owners, you probably don’t feel that way anymore. The long hours, constant pressures and continual challenges of running your own business eventually take their toll on you—physically and mentally. The result is that you’ve probably lost much of your “brilliance” and your enthusiasm for your work. Today, I’m going to start you on the road to getting back that enthusiasm and brilliance by suggesting that instead of seeing your firm as the business you started so many years ago, instead you should view it as a new and different business.
In our experience, at some point most owner-advisors become frustrated and unhappy with their businesses. They are working more than they want to and taking home less than they want to. The firm isn’t growing as fast as they want, and their employees are a pain more often than they’d like them to be. You probably feel many of these frustrations to some degree. Over the past 15 years working with hundreds of independent advisory firms, we’ve come to realize that the vast majority of frustration and unhappiness that many owner-advisors feel is the result of just one problem—they are trying to run their businesses as they did in the past.
We all accept the fact that you have to run a business with $1 billion in annual revenue very differently from the way you run a firm that’s generating $100,000 a year. But what most people don’t realize is that you also need to run a $250,000 a year business very differently from a $100,000 a year business, and a $500,000 a year firm very differently from a $250,000 a year business. As a business continues to grow from $500,000 to $750,000 and then to $1 million in revenue and beyond, the owners need to continually change the way they run the firm. If they don’t, the business will stagnate, or even decline, and they will start to feel frustrated and unhappy, and lose their enthusiasm—their brilliance—for their firm.
To get their brilliance back, advisory firm owners need to think of their businesses as a new business at each growth stage, with new challenges that require new solutions. The good news is that in the independent advisory business, while each inflection point brings new challenges, those challenges are similar from firm to firm, and so are very predictable. In fact, if you tell me your firm’s annual revenues, I can tell you what challenges you’re currently facing, what you’re doing about it nine times out of 10 and why it won’t work (hint: because it’s what you did to get to this point).
For instance, if your firm is approaching $750,000 in revenue, you’ve probably added two or three staff people over the past couple of years. However, because you have no employee management systems in place (because you didn’t need them in your “old firm”), training, supervising and supporting the employees is taking a growing amount of your time, which is reducing your ability to service clients and greatly reducing your time to bring in more clients. Consequently, the business is stagnating and you’re frustrated.
Or if your firm is approaching $1 million in revenue, you’ve probably brought in a junior advisor to take some of the workload off your desk. Because you have no professional training program in place, though, you’re finding that the new advisor is taking more of your time than he or she is saving you. Because the young advisor isn’t yet ready to work with clients as quickly as you’d hoped, your firm’s capacity for growth is very limited, while your overhead has risen substantially.
You get the picture. Unfortunately, what I can’t tell you is how to solve the challenges you are currently facing. And neither can anybody else (although some folks may claim they can). That’s because every firm is different. The owners have different knowledge, abilities and preferences; the employees have different skills and experience; and the clients have different wants and needs. (In fact, we have an assessment questionnaire we use with our clients because every firm is different: It predicts what is required to grow a specific firm).