Running a business can be hard work. There seems to be a thousand things to deal with (all of them urgent), you’ve invested a lot of your time, effort and money in a business which has seen the reputation of financial services sector called into question on numerous occasions over the past couple of years. As we said… hard work!
On the other hand, you know you are performing a valuable service for your clients – the world of financial advice is complex and through your guidance, you know they’re in a far better position than they would have been if you hadn’t been around.
So what do you think – are you still enjoying the ‘journey’ and, importantly, are you achieving an appropriate ‘return’ on your efforts? While only you can truly answer these questions (and answers will differ between readers), the question nevertheless remains valid and particularly relevant at a time like this.
In #6 of our ’By the Numbers’ series, we shared the results of our latest analysis, which revealed in financial terms the average level of profitability amongst Australian practices was 28.2% – not necessarily right or wrong, it just is the outcome from over 300 practices who have utilised our HealthCheck or BenchMarker diagnostic over the year or so. You can read the article here <<Practice Management by the Numbers (6 of 7)>>. As I said, it’s not necessarily right or wrong BUT it does give you an idea (benchmark) to factor into your own business planning.
There are other areas where the owner should also be achieving an acceptable RFE. How about your client satisfaction levels (your client RFE)? How satisfied are they with your practice (for the fees they are paying)? Wouldn’t it be gratifying to know that they’re fully appreciative of your efforts? In our work with leading practices there have always been a couple of key indicators to the level of client satisfaction:
- Most obviously – you could ask them! Unfortunately, less than one in three Australian practices are actually surveying clients effectively (confidential, anonymous, with results benchmarked and compared to the marketplace).
- The level of client retention and number of complaints is obvious – more is not good.
- Are your clients actually referring you to others? This is always a positive indicator. Our analyses have continued to show that there is a very high propensity for clients to refer their adviser (currently 87%). Caveat – they have to be asked!
- Missing scheduled meetings with their adviser is a warning sign, so is not following through on agreed actions.
Hopefully, your business is actively measuring and monitoring these important lead indicators.
The other key area to factor into your RFE contemplations is – staff. Their remuneration is the largest single expense item for most practices and, in fact, according to our latest Future Ready VIII white paper, salaries equate to almost 45% of total practice revenue. How happy/satisfied are your people – are you achieving the RFE you feel is warranted?
This is unfortunately an area where the obvious isn’t so obvious. One in four practices haven’t actually asked sought any feedback from their staff over the last couple of years. Generally speaking, it’s been our experience that business owners consistently overestimate their employees’ perception of team morale or satisfaction – typically assuming that they’re much happier than they actually are. What’s the ‘vibe’ in your office?
Of course, perhaps the most objective indicator to staff satisfaction is productivity – if people are generally satisfied in their work, it will usually reflect in their performance. So how do you assess productivity? To help frame this discussion; according to our recent analysis, the average number of clients being managed by one support staff (FTE) is 223, the ratio of support people to adviser is 1.1 to 1, while the average practice revenue per salary dollar is $2.80.
Lots of benchmarks to consider and while I acknowledge that all businesses aren’t the same (and therefore these ratios may not necessarily apply directly to you), I would contend that they nevertheless will bring objectivity to the productivity discussion. If your ratios are different, why? While the answer might be as simple as your business model, it could, on the other hand, also be masking an underlying productivity and culture issue. Best to know, right!
Other less obvious signs of dissatisfaction include; absenteeism higher than normal, minimal participation in team meetings and events, unwillingness to ‘step up’ and assume more responsibility, contribute an idea or a suggestion to improve the business.
While profitability, clients and staff satisfaction are all good benchmarks of your RFE, the other important area to seriously consider is of course, the level of personal enjoyment/satisfaction being felt by the owner. Do you still feel the same passion and have the same drive as you did when you started out? Are you regularly finding a little ‘me time’ for the family, exercise and all-round health (big kudos here to the professional associations, product manufacturers and industry press for their support and initiative in this regard)? Business success at the expense of personal wellbeing is surely not success at all.
There are other areas where businesses invest a lot of effort and perhaps don’t consider their return, but these can wait for another day.
My bottom line is a simple one – if you are willing to invest your time, effort, resources and take the opportunity (some would say the risk) to run your own business, you owe it to yourself to regularly reflect on the return you are receiving. Is it truly worth your effort?
For your consideration.
Business Health Pty Ltd