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Practice Management > Building Your Business

How to Balance Your Needs With Those of Your Practice

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An advisory firm owner I work with recently got upset, because she didn’t feel I was focused enough on helping her get her “wants and desires” met through her business. Sadly, this isn’t an uncommon occurrence.

It’s hard to run a business. What many owners don’t understand is that building a successful advisory business is about finding the right balance between their needs and the needs of their business. It’s my job to help them find that balance.

This wants/desires imbalance commonly appears after owner advisors have built a successful business, are growing it and then decide it’s “payback” time.

This is when they start taking more money out of the firm and spending money on things that don’t really improve the business (like new furniture, better office space, more travel, appearances at conferences to talk about themselves and their success, etc.). It’s at this point that the business becomes all about an owner’s needs, instead of the other way around.

At the same time, owners often want to “grow their way out” of declining profitability by spending even more money on increased marketing or methods to attract new clients. Of course, getting current spending under control first is a much wiser step to take.

Pain Points

It’s when they are experiencing these pain points that owner advisors call our consulting firm. And we remind them that all this new spending has consequences that can (and probably will) affect the future of their business.

This also is when the dominoes can start falling down quickly in the wrong direction.

Building and running a business has many parallels to raising children. When parents have a baby, they’re usually ecstatic and have great hopes for her/him. Then the reality of raising a child sets in, and they realize that it’s going to take some significant sacrifices — of time, energy, money, sleep, etc. — to raise their child to maturity.

In the advisory business, the sacrifices that owners make when they are starting and growing their business, can turn into greed (and neglect) after they’ve had success. Then, the business becomes all about their wants and desires — and what’s good for the future of the business can take a back seat.

Reality Check

This is the point when  firm owners need a reality check. Understand, there is no right answer here. If a firm owner doesn’t want their business to grow any larger — or even wouldn’t mind if it were a bit smaller — then draining it of resources may not be a problem.

But if the owner still wants to achieve the original growth goals (such as reaching $1 billion in assets/AUM), then they are going to have to find a better balance in how they use their resources.

To continue growing — or even remaining at its current size — a financial advisory business needs to control its expenditures. And that means that firm owners need to continue to be disciplined, regardless of how large their firm has grown. Discipline can get, and keep, the business in line with its current income.

There’s nothing wrong with firm owners having wants and needs. The key is to balance them with the needs of the business. It’s no different when you do financial planning with a client. You balance the wants and needs of the client with the actual needs of their families and retirement.

Going into 2019, challenge yourself to distinguish between moves you want from those that the business needs. Remember, you can have everything you want, but rarely do you get it all at the same time.


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