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February 02, 2016 at 07:52 AM
With 2015 already in the background, you should be looking ahead to having an active and profitable 2016. While every advisor aspires to expand their practice in the New Year, it takes more than hope to achieve consistent, exponential growth.
You need a plan, and that plan should be built upon a measurable foundation. If you do the right math, you can illuminate the steps you need to take to reach the new heights you desire.
Start by having an honest conversation with yourself. You likely have a business plan, but sticking to it and acting upon it can be difficult for a number of reasons. For 2016, challenge yourself to not only identify the path you need to take but to take the steps necessary to achieve your goals.
Let’s start with two questions: How much revenue did you generate in 2015, and how much would you like to generate in 2016?
Next, be honest with yourself. Are you going to put in the leg work? The difference between these questions gives us the ground you need to cover to reach your goal.
Next, find your average revenue per new client to estimate how many new clients you need to acquire in 2016 to reach your goal. Within reason, we can assume that if you do next year what you did last year, you can expect to see about the same results. The plan we are going to make will address that new growth that you desire.
All of this is straightforward, and most advisors get this far, but our aim is to understand the steps you need to take to make those sales figures a reality. You know how many new clients you need, yes, but what will you do to get them?
You might get some referrals. Those can be lucrative, but they are not dependable. You cannot accurately predict how many referrals you will receive. Stimulating that activity should still be part of your plan, of course, but the results will be far too inconsistent to become the sole piece of a reliable new business strategy.
If you want new business, you have to find it. This is where new business math gets interesting. How much leg work will you have to do to get the sales that you need?
Really. Be honest here.
One of the producers we’ve met through our work tells a story of getting his start (in the early 90s). He describes building a list of 500 leads and the grind of cold calling one after the other. Out of 500, he would set an average of 12 appointments. Four of those 12 would meet, and one sale would ultimately be made. 12-4-1… Week in… Week out…
How much time it takes to develop new business from scratch is a metric that many advisors don’t track. We do. We know that a salesperson that specializes in cold calls needs about 50 hours of cold calling per month to set up six appointments.
