When Henry Ford created an assembly line in his Detroit auto plant, he revolutionized manufacturing. Ten mechanics, each performing a different job on a steady stream of what became new cars, could produce many times the number of cars in a week than if each mechanic worked alone to make one car at time.
Today, that business strategy is called ‘scaling,’ optimizing resources to get the best results. Which is really just a fancy way of saying that your firm runs at maximum efficiency.
While it’s pretty easy to see how scaling can benefit a business that creates a tangible product—‘We increased the number of cars we build a week from 10 to 100!’—it’s a bit more difficult for most people to see how scaling would apply to service businesses, such as independent advisory firms. But we’ve found that effectively scaling an advisory business can have just as dramatic results.
We’ve also found that there’s quite a bit of confusion about business scaling among owner advisors. If they’ve heard of scaling at all, most firm owners seem to think it’s about creating a processes-and-procedures manual, and simply documenting how they already do things. But that’s only a small part of scaling a firm.
It’s also not simply adding more people to do more work. And it isn’t even adding more technology—although that can help in the scaling process.
To truly scale an advisory business, the owner(s), with help from the employees, need to determine the most efficient way to provide each of the services the firm offers and to perform every job in the firm. The impact will be seen in increased productivity (the lead advisors can work with more clients, etc.), which is measured by gross profits.
Through effective scaling, we can typically increase a firm’s revenues by 33% without adding more clients, more employees, increasing operating costs or working harder.
Here are the four areas we focus on with our advisory clients to get that kind of results:
- Consistent Services.
Although different clients often need a different combination of services, every service provided by a firm should be performed in exactly the same way, every time. That way, clients will know what to expect, and both advisors and employees will know exactly what’s expected.
The systems and tools necessary to perform these services can be efficiently provided, and should one advisor or employee have to fill in for another, they’ll be able to do so seamlessly.
- Optimal Services.
To maximize scaling, not only do the services offered have to be consistent, they also have to be well-thought-out.
Is each service offered the very best it can be for every client? How about the client’s experience? How about the advisor’s or employee’s experience—is their job as clear, logical and efficient as possible? Do they have all the tools and training they need to successfully deliver the required services?
- Consistent Messaging.
To deliver optimal, consistent client services, they need to be described in the same way, every time, by everyone in the firm. Differing descriptions only creates confusion among advisors, employees and, most important, the clients. To keep everyone on the same page, they have to be on the same page.
And when clients hear services described in the same way every time, they are far more likely to remember it—and describe it that way to their friends.
- One at a Time.
We’ve found that the more changes a firm tries to make, the lower the chances that any one of them will be successful. Successfully scaling an advisory firm is a long-term process.
Usually, client services require the most immediate attention, but you can’t change them all at once. Start with your most important or popular service and scale that. Only when you have that working smoothly and efficiently, should you start on the next service.
A successfully scaled advisory business offers many benefits in addition to the increased revenues I mentioned. The profit margins will be better, too, which means higher take-home pay.
And because you won’t have to grow your business (unless you want to) by increasing your overhead, it will stay smaller, with fewer employees than most firms with similar revenues and profits. That means fewer employees to manage, less stress and less time in the office.
After all, we find that ‘success’ for most owner advisors is not about what they take in, or how many employees they have, it’s how much they take home and how much free time they have.