Some things have to be said repeatedly for them to sink in.  So, let’s go over one important item, again — actions that owner advisors need to avoid to run their business as a successful and growing business.

Specifically, let’s look at the practice of treating your firm like a personal ATM/loan department.

If you have never tinkered with the amount of money that you take out of the business to cover some personal expenditures, you can move on. But I’m betting that’s not the case for most advisors.

It may not seem like “a big deal,” but it is. How do you think Microsoft shareholders would have felt if quarterly profits tanked because Bill Gates took out a bit of cash to buy, say, Hawaii?

Since your firm probably isn’t as big as Microsoft, the impact of your fluctuating personal cash flow likely will have a negative effect on your business, so this action needs to be addressed.

To help owner advisors tackle this behavior and embrace possible solutions, I suggest they have  a heart-to-heart conversation with themselves about where they want their businesses to go.

Advisors essentially have two choices:

Choice One: Build a so-called “cash flow” business in which you keep expenses as low as possible and attract a sufficient number of clients to generate enough revenues to support you and your family in your desired lifestyle.

Choice Two: Set out to build a much larger business with more employees and higher overhead, serving more clients and generating substantially more revenues.

From an owner’s perspective, Choice Two means owners must reinvest a substantial portion of the profits generated by the business. In other words,  every dime an owner takes home, or takes out of the business, will reduce his or her chances of reaching the goal of the business.

Typically, because the initial costs to grow an advisory firm are relatively low in the first years, most firm owners can get by without much fiscal discipline when starting out.

But when their businesses reach  $1 million or so in revenue, and the dollars get larger on both sides of the balance sheet, firm owners have to get serious about growing their businesses.

To help firm owners make what is almost always a difficult  mental adjustment, they must shift their focus from taking money home to (instead) increasing the value of the business. In the end, they’ll probably  make more money from selling the business. But capping what they take home between now and then won’t be easy.

Make this mind shift: Separate the cash flow of your business from your personal life, and learn to live within your personal cash flow, not the business cash flow.

If you don’t have a financial advisor, hire one. (If you tell your clients the value of financial advice and don’t have your own advisor, what are you really saying? There is a reason why attorneys don’t usually represent themselves.)

Next, pay close attention to your firm’s balance sheet. By monitoring the growth or decline of your assets — partners, employees, clients and cash reserves — and liabilities, you can keep a good handle on the direction of the business.

Also, pay special attention to your liquidity. These resources will be needed to finance future growth, so don’t use them as your ATM.