I was reminded recently of a comment the esteemed US statistician, lecturer and management consultant, W Edwards Deming once uttered… ”It is not necessary to change. Survival is not mandatory”. Of course most of us really want to survive (and, for many, we’ll want to thrive). But as I look at our latest practice research, I can’t help but think that some have taken Deming’s statement to heart. Consider:
- 35% of Australian practices reported that they have a clearly documented longer term plan (3 to 5 years out) for their business. So 65% don’t! While only 38% have documented their plans for their next 12 months.
- Just one in three stated that they have any structured approach to seeking feedback from their clients.
- 62% contacted their best (“A”) clients less than ten times during the last 12 months.
Perhaps even more disconcerting than these very low percentages, is the fact that for three of these four areas, the results were down on our 2014 research. While for the other area (seeking client feedback) there was only a marginal uplift over our 2014 findings. Now, I’m pretty sure that our world hasn’t gotten any simpler since 2014! So why is it that principals aren’t actively planning ahead for their business, seeking feedback or communicating more frequently with their “A” clients?
It can’t be that they don’t have the time – after all, as the saying goes – ‘we all have 24 hours each day’ and Business Health has plenty of facts that prove some of their peers are doing a very good job in these areas. Perhaps it’s not having the skill or know how. Fair enough, but isn’t this where the licensee, trusted PDM, business coach or advisory board steps in?
Maybe it’s because they simply don’t believe in this type of activity. Or is it that they do believe but don’t want to pay to have someone help them? This is a little harder for me to get my head around as there can be little doubt that in today’s marketplace, practices are continuing to attract high multiples on sale. The advisory business certainly is viewed as an asset with substantial value attaching to it.
So why is seemingly so little effort being expended on protecting (or better still – enhancing) the value of advisory businesses? Is there simply an expectation that there’ll always be a buyer who’ll pay what I want, when I want it? Maybe so, but I think that today is different and what got you here, won’t get you there.
When a road trip is planned one of the first actions all reasonable drivers take is to have the car fully serviced and checked over. When an overseas trip is planned, isn’t the doctor consulted for those necessary vaccinations? And when the family home is about to be sold, won’t its owner firstly prepare for sale by painting and/or landscaping before going to market? What’s different about advice businesses?
Whatever the answer, I think that the clock is well and truly ticking. There’s so much going on in the world of financial services and it shows no sign of abating in the foreseeable future. And there continues to be a steady stream of new and different competitors vying for the consumer’s attention. So what to do about it?
At the top of my list:
- Put down in writing your objectives for the next 12 and 36 months. Beside them write down the strategies you’re going to employ to achieve these objectives. And while you’re at it – put in the ‘by when’ dates as well as the person who’ll be responsible for achieving them. And if you’re not confident in putting these together, enlist the expertise of an external party (PDM, coach etc) to help you. They’ll also be ideally placed to hold you accountable for your progress towards these objectives.
- Seek feedback from your clients at least every second year. They are, after all, your most valuable asset!
- Invest at least one day a fortnight to work ‘on’ the business. This will take you down many fronts, but most importantly, you’ll be working on and not in the business for this day. During this time, you’ll need to, at the very least review your progress to plan and consider if changes are required. Other worthwhile activities could include attending practice management focused conferences, reviewing a new piece of software or spending time with peers and colleagues sharing ideas and experiences for example. You should also be investing time by mentoring staff or talking to prospective new ones. All great ’on’ activities.
- Allocate part of your profit each year to an ‘r and d‘ account which will be available to fund your ‘on’ activities throughout the year.
- Be willing to adapt and change if necessary to fit the new world. As Charles Darwin is quoted to have said – “It is not the strongest of the species who will survive, nor the most intelligent, but the one most responsive to change.”
Hopefully these will help you to avoid Deming’s ‘mandatory ultimatum’.
Stats and facts drawn from Future Ready VII – the seventh in our series of white papers providing an insight into the ‘health’ of Australia’s advisory profession and its preparedness for the future.
For your consideration.