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).
I can’t tell you how to solve your growth challenges, but I can tell you how to find out. That is, I can tell you how to find the solutions that are right for your business.
To take your business to the next level and regain that brilliance you once had, you have to manage your firm like it’s an experiment—the greatest experiment you’ll ever conduct, with the most risk and greatest rewards. The risk comes from the fact that when you started your firm, you didn’t have anything to lose—now you do. I can tell you about the reward from personal experience: There’s nothing like running your own successful business.
The first step is deciding if you really want to grow. It sounds like a silly question, and when I ask it to a room full of advisors, about 90% will say yes, but in our experience only about 5% really mean it. The rest will continually postpone taking the steps necessary for growth or will actually sabotage their growth plans through self-destructive personal habits or lack of commitment.
Once you’ve decided that a larger firm is really your professional and personal life goal, you have to take a big second step: admitting that you are the reason your firm isn’t growing. It’s very common for advisors to blame their lack of success on someone else: their employees, their custodian or BD, their clients, or even their location. But the truth is, as a business owner you have control over all those elements. If you can’t accept the responsibility, that’s probably your psyche telling you that you don’t want to grow.
After you’ve accepted that you’re the problem, the next step is to admit that you don’t have any idea how to grow your business from where it is now and to put down your preconceived notions that you do. Remember, what got you to this point is not going to get you to the next level: your business is different. So set aside all your cherished business wisdom (which I call your “monsters”): being in control, setting time limits for projects, working long hours, working harder, hiring more or better people, pushing your people harder, etc. We have no reason to think that any of this is going to help in your new business, so lay it all down.
Now you are ready to conduct the experiment of your new business. It’s going be trial and error. Think about where you want your business to go from here, think of a reasonable first step to get there, take the step, give it time to work, carefully monitor the progress, and then take what seems like the best next step. Yes, your decisions will be based in part on your past experience, but accepting the fact that it could be the wrong thing to do now and not “buying in” to your decisions frees your mind to more accurately assess the results so you can make better decisions about whether each new plan needs to be expanded, tweaked or abandoned.
Viewing each step as an experiment takes out much of the emotion, which helps owners keep from wasting time and resources on bad ideas and from pulling the plug too soon on good ideas. It also takes the pressure off each decision and puts the fun—and the brilliance—back into your business. You’ll find yourself thinking up new things to try and new ways to fix your current projects. You’ll be more open to ideas from your employees and less worried about whose idea turned out to be the best one. You’ll be so caught up in finding success, that you’ll stop worrying about attaining it. Which just may be the real definition of success.