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.