What separates great businesses from failures?
In case you did not know, there is a direct line between your corporate finances and a successful business strategy. Yet, many advisory firms fail to take the time to ground their business strategies in a sound financial reality. Doing so is at the heart of setting wise business goals.
At the most basic level, running an advisory business — or any business —comes down to one thing: making good investment decisions. Every new piece of technology, new hire and new service is an investment in the business that produces, hopefully, a return.
Which is why it’s so alarming that so many advisors operate without a strong understanding of the financial picture of their own businesses.
What Your Peers Are Reading
Your advisory business is an investment. How you invest in it will ultimately determine how well it preforms.
Ask the Key Question
Business strategy meetings are often filled with discussions around what you should do and what is not working. What if, all business strategies meetings started with the question: How are we going to invest in our business?
Based on my experience consulting for many advisory firms, starting with an investment question — rather than talking about goals, what’s not working and what needs to be fixed — changes the conversation for the better.
This focus creates a growth mindset and also gets firm leaders’ to give their full attention to solutions that ground the business in returns, instead of on spending resources to fix problems.
This is particularly important in partnerships. Most partners have a good idea of what will produce more revenue and profit in the business. But not all partners can agree on where spending needs to happen to keep the business moving forward.