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Practice Management > Building Your Business

Set Goals That Build on What You've Got

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With 2020 rapidly approaching, it’s time to address one of the main challenges that owner advisors face: establishing goals for the coming year.

How can setting goals for a business be a challenge? By themselves, goals in business are basically harmless. Typically, they are expressed as a number, a time frame, an innovation, an addition, or a change.

The problems arise from how we think about them: as something that we now must do, create, attain, or achieve. And once we’ve set our goal, or goals, we usually believe that not attaining them is a failure on our or our teams’ part — an indication that we’re not really as good at what we do as we previously thought.

Today this behavior commonly is referred to as “setting ourselves up to fail.” An example is setting a goal for your AUM growth to be attained within a specific time frame (for example, reaching $1 billion in AUM within the next three or five years.)

You can see some of the flaws in this approach, starting with the tendency to select an arbitrary number. That is, it’s just a figure we’ve pulled out of thin air, based on nothing but wishful thinking.

In contrast, a more rational approach would involve making a realistic assessment of:

• What could you do to attract more client assets, more quickly, than your current rate and strategy? • What can you do to better train your people serving clients? • How can you be better at changing and leading your organization?

In my experience, most growth plans fail not because the firm owner was lacking the required skills, but because the owner’s goals were unrealistic.

The reality is that growing an independent advisory business takes a lot of capital, time, hard work and realistic planning. While setting a big goal like the above may seem motivating, the other side of that coin is it also can create a lot of stress — and the more unrealistic the goal, the greater the stress.

Move Outside the Box

What’s more, goal setting — whether unrealistic or not — tends to limit an owner’s thinking. When firm owners set goals for themselves and their businesses, they often get so focused on reaching those specific targets that they fail to consider other alternatives that could be even more beneficial to their business.

For instance, a focus on reaching a specific AUM by a set date can prevent owners from looking at other non-AUM based services they could add to their business, such as tax planning, estate planning, 401(k)s, and more. Often, these other services can be more easily implemented at much lower costs — having an even larger impact on a firm’s profitability and diversity of services.

Finally, setting goals can blind owners to existing issues in their businesses that may hamper the growth they are looking for. To help owners both reduce the stress of unrealistic goal setting and the fear of failing to attain those goals, they should start their growth plan by first making an assessment of where their firm is today, and how it would have to change to support the kind of increase they have in mind.

This assessment is not about what your goals should or shouldn’t be, but rather creating a solid foundation in your current business before setting the goals and/or building and adding something new. Here are seven areas of advisory businesses that owners need to review prior to setting goals for the coming year.

1. Core values. Do you have them and are they implemented? Many firm owners tend to fail in this area. Often they take the time to write out their core values then never implement them properly. Typically, owners don’t explain values clearly to employees on how values apply to their work. And if owners do adequately explain them, there is no follow up to see how employees are acting within the core values. When everyone in the firm understands how their behavior drives the growth of the business, it’s much easier to deliver consistently good client service.

2. Client service experience. What can be improved? While most firm owners start out with a clear idea of what they want the experience of their clients to be, they often stop refining and monitoring it overtime — thinking it cannot be improved or streamlined.

Over time, things in an advisory business tend to get more complicated, which slows the growth of the firm. Remember, the goal of client service is to enhance the advice that you give and make it better. Client service is always a work in progress. How will you make it better in the next year?

3. Sales process. How well do you communicate the value of what you provide? Most firms tend to focus on the technical stuff (e.g., portfolio management, financial planning, insurance, tax planning and estate planning), but they tend to leave out the results.

What your clients really want to know is how what you do will affect their lives and the lives of their loved ones. What goal can you make to communicate your value better?

4. Employment manual. Most firms have some kind of manual, and they guide the culture of the firm by telling employees about benefits — and the benefits of working at their firm. But they are rarely updated or improved as the company grows.

Costs rise every year, and new programs might have been added to make employees happier. Many owners ignore higher cost but regularly do cost/benefit analysis. To be fair to your employees, and to keep them and their growing expertise at your firm, it’s important to keep your employment manual current and competitive. What goal can you set to enhance the culture of your firm?

5. Career tracks for employees. Despite all that’s been written about them, most firms still don’t have these pathways for employees. Make it a goal to create one. To keep your employees motivated and happy, it’s important that they can grow within your firm.

If you do have one, take a hard look to see if it is working. Are your people growing in knowledge and productivity, getting better each day? If not, what goal can you make to improve growth of your employees?

6. Compensation. A compensation strategy evolves overtime and significantly influences behavior of employees. Is your structure getting the behavior you’re looking for? You don’t have to start from scratch and start over with the compensation strategy. What goal can you make to enhance it for the coming year?

7. Marketing strategy. The biggest problem with marketing is doing too much “stuff.” Ask yourself if your marketing strategy is hard to understand or hard to implement, and whether it’s even effective at all. Wherever you want to take your firm, your marketing strategy will be part of getting there. What small goal can you set to improve it?

Don’t make big goals; make small ones that produce great results and work on doing a better job at this each year. These steps should propel you to growth beyond what you imagine is possible today.

Angie Herbers is an independent consultant to the advisory industry. She can be reached at [email protected].


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