Plumbers with leaky taps – planners without plans.
Since 2002, Business Health has released a series of whitepapers providing the most comprehensive insight into the health of the Australian advisory industry and its preparedness for the future. These papers have become known as the Future Ready analysis. The latest in this series, Future Ready VII, which has been proudly sponsored by knowITdigital, has recently been released and, as was the case in 2014, most practice principals remain optimistic about the outlook for their business over the coming 12 months. This in itself is a testament to their resilience and strength of entrepreneurial spirit.
- 94% of the principals expect to increase their practice revenue and 89% will increase the revenue generated by fees.
- 86% expect to see an increase in practice profitability.
- 80% will increase the number of clients they service.
- 61% will build on the number of third party referral partners/centres of influence that support their practice.
- 42% plan on recruiting more income producers to their business.
- 46% want to add more support staff.
However, each of these are major business initiatives that will require significant management time, focus, expertise and resourcing. Yet consider that only one in three (35%) practices have a longer term strategic plan for their business and just 38% have an operational business plan covering the upcoming 12 months (and many of these are light on content/detail).
Without a carefully thought out plan to implement, we question whether the above are truly realistic goals or are they simply well intentioned dreams and hopes?
As the old adage goes, while no-one plans to fail it appears far too many of our advisory businesses are failing to plan. And I know many of you will have heard the traditional business planning mantra thousands of times before and as evidenced above, for many practices, it simply does not work. The good news is a business plan per se is not that important. What is important is a plan for your business.
There is single “right” formula for creating an effective plan for your business – a beautifully scripted and word smithed, 100+ page document that gathers dust on a book shelf is of little use to any business. However, there are a few fundamentals that remain consistent across most successful advisory practices.
First and foremost, they have a plan for their business and secondly, they have managed to avoid the common pitfalls listed below.
So all this sounds straight forward? Yes, you’re right – building a plan for your business (not necessarily a business plan) certainly isn’t “rocket science”, but the fact remains that many advisory businesses don’t do it very well.
The opportunity that exists however is clearly shown in the following table. In our Future Ready VII analysis we have been able to quantify the actual bottom line profit return being received by those principals who have invested the time and effort into building a plan for their business.
* All profit calculations assume a notional $100,000 salary for each principal working in the practice.
For your consideration.
Business Health Pty Ltd
Rod Bertino is a partner and director of Business Health Pty Ltd. Business Health is a consulting firm specialising in the financial services industry. Business Health develop and market a suite of unique and exclusive business diagnostic tools which are supported by a range of specialised consultancy services.