We all know it’s common practice for people to make New Year’s resolutions and start them Jan 1. We also know that most folks revert back to their old behavior by the end of January.
I believe that the high failure rate of most resolutions is due to unrealistic expectations of our new endeavors.
Exercising is classic example: Many folks resolve to get into better shape and head to health clubs at the beginning of the month. But when they get to the gym, they have unrealistic expectations, push themselves too hard and burn out — or hurt themselves — by the end of the month.
Most folks would have better success with their resolutions if they started more moderately, by walking or climbing the stairs every day, for instance.
I’ve found that many independent advisory businesses owners go through this same “failure curve” at the beginning of the year. They see the first of the year as the right time to start new projects intended to grow their businesses.
They launch marketing and human capital plans, revise referral programs, add new services and so on. Unfortunately, their success rate is about the same as the average exercise program.
The problem is that firm owners start making changes without preparing their businesses to handle those changes.
A typical example, of course, is launching a marketing program to attract new clients before a business is positioned to handle more clients. There are also some firms that hire young advisors without a training program, add new services without testing whether clients want them and venture into a new business area without having any experience in it.
Check the Core
To help firm owners avoid these and other “growth” mistakes, I encourage them to take a hard look at their “core” business. Even in the largest independent advisory firms, identifying the core business isn’t difficult — it’s where the majority of revenue comes from.
For the vast majority of independent firms, the fastest, easiest and safest way to grow is by expanding the “core business.” Whether it’s financial planning, investment management, insurance, etc., your core business is what you do best — and what you know the most about.
Therefore, before you even start thinking abut adding new products and/or services, focus your time and energy on growing your core business(es). Take a hard look at all the services you offer, the client experience you provide and the kind of clients you provide them to.
Are all your services profitable? Are there services only a small portion of your clients are using? Are you missing any services that your clients need? And are there any other client groups who would benefit from your services?
Growth is not easy, and it requires change and risk — two things that some owner advisors aren’t comfortable with. But by focusing on growing your core business, you can minimize your need for both.
When most firm owners want to grow their businesses, they think about expanding into new areas and new services like 401(k)s, institutional investment management, etc. But these efforts could easily turn into big mistakes, since advisors who focus on these new endeavors then have less time for much safer and more successful growth tied to their expertise.
Once you’ve realized all the potential for success in your core business(es), you can start to consider moving into new areas. But most firms — both large and small — are a long way from that point.
Do yourself a favor: Set yourself up for success in 2019 by (re)focusing on your core business and stay focused on it.