Many independent advisors want to make their firms larger for reasons like helping more clients reach their financial goals, taking home more money and a combination of these and other aims.
But what some firm owners may not realize is that business growth comes at price, and that price is change. Specifically, I’m talking about two changes in the way they run their practices.
First, larger practices require more management, which requires more time and effort from the owner. Many owners are good with this, as part of the price for having a larger business, as long as it doesn’t get out of control.
But some owners aren’t so comfortable with the second major change: altering the way they run their businesses.
Most successful firm owners feel good about their ability to grow the business to where it is today. What they may not realize is that taking their firm to the next level — and beyond —requires a different set of skills and knowledge.
This means that to grow, they have do things differently than they did to get to this point. Or, in other words, the firm owner has to change — their approach, skills, knowledge base and management style — to take the business to the next level.
At this point I find it helpful to quote the Albert Einstein gem: “The definition of insanity is doing the same thing over and over again, but expecting different results.”
If you want a different result from your business — more revenues, profits, clients, etc.— you’re going to have to do some things differently. This means that you are going to have to change along with your business. In fact, I’ve found that an advisory firm’s rate of growth is directly connected with its owner’s rate of change.
Here are areas in which owners will need shift their thinking and behavior in order to successfully grow their firms:
1. Talking vs. Listening. When an advisory firm is in its early years, most owners are pretty clear about what help they need from the few employees they have, so they spend their time explaining what they need their staff to do.
But as their business gets larger — with more clients, more advisors and more staff — an owner tends to lose touch with the day-to-day operations of the business. That means to stay in touch with what’s really going on with their business — and make successful decisions about its future — they have to start listening more than they talk.
2. Leadership vs. Management. The next change is to stop trying to control employees and/or micromanage them. For one thing, an owner won’t have time for that anymore.
But more importantly, for a larger business to be successful, employees need to be making good decisions every day. But if they’re constantly turning to the owner for direction and decision making, they’ll never learn to figure things out for themselves.
To do this, an owner has to learn to be better at encouraging people to find solutions on their own, letting an owner know what they want to do, and how things worked out.
And as they do this, an owner has to be supportive rather than critical; helping them focus on learning from what happened and coming up with a better approach next time. In other words, let them fail as rescuing them doesn’t serve anyone.
3. Problems vs. Solutions. An owner has to be clear about the problems and/or challenges a business is facing before solutions can be determined.
When firms are small, many owners try to sidestep their challenges and focus their efforts on solutions. And that can work — for a while. But if an owner wants to grow the business, he or she will have to face challenges head-on and explore every idea a team comes up with to overcome them.
More owners stunt the growth of their firms by refusing to consider solutions proposed by their staff than for any other reason. Encourage out-of-the-box thinking, rather than stifling it. Accept that new challenges are different from old challenges; and consequently, there is a need for new solutions.
4. Personal Wellness vs. Working Harder on the Business. And finally, firm owners must learn to take care of themselves.
When a business is new — and small — an owner can take a day or two off every now and then. But as the business grows, it’s harder to take time away from the office. Instead, an owner needs to find ways to control his other workload without sacrificing self-care.
The best way to do this is through delegating time-consuming tasks to key employees who can either do the research and come up with viable solutions, or undertake projects and report back about the results. The experience a team gains will help a business grow even faster — and makes those owners more effective leaders.