Breaking your business mold

Brett Davidson, chief executive of FP Advance, explains how to manage your business as it grows

Advisers are usually considered good because they are good technicians: that is, they know a lot about the job of financial planning. This is enough to get you going and can take you so far, but eventually you start to run into challenges that require strategic solutions and execution excellence for the business to continue improving and growing.

As your business grows, you begin to hit various ceilings of complexity where what used to work just fine does not really work anymore. Starting out, most players can get to around £300,000 of turnover before they have to consider systems and support staff in more depth.

Once that ceiling is broken, the next one occurs at around £600,000 to £800,000, as the business has now grown to a size where more staff, systems and technology are required to make it work, increasing the complexity. Crashing through £800,000 will take you to around £1.2m, then £2m, and then £5m, but at each stage there are new issues that must be resolved for the business to move on.

Creating and growing a successful business requires a broad range of skills from the business owner and staff; no one can do this on their own. As you grow, new choices need to be made regarding you and your role within the business. Many owners love the client work and do not want to give that up, but as they hit larger ceilings of complexity, the business requires more management and they struggle. Rather than accept that a choice needs to be made before they can move on, they stay stuck at the limits of their ability (which are different for different people).

This improvement process can be resolved only by your personal growth. It requires that you either develop new skills to allow you to plan, manage and execute more effectively, or recognise that you have some unique abilities which you should stick to; meaning you will need to find other people with the skills you do not have if you want the business to continue to get better. Getting better may be business growth in terms of top and bottom line revenue if you want to build a larger business than you have now, or it may simply be staying as you are but doing things more effectively if you want a lifestyle business.

Here are two simple management ideas that can get your business to the next level:

1: The professional manager

Genuine business management is a life-long career and a full time job. As your business grows larger it may require a professional manager to allow it to grow effectively. This is particularly true if you want to stay focused on dealing with clients or want to remove yourself from the day-to-day completely and focus simply on the strategic thinking and next priorities for the business.

Obviously, hiring a full-time operations manager is a significant expense, but it is essential if you are going to grow beyond your current limits. In larger firms, hiring a full-time person for this role makes sense, while in smaller firms you can always rent-a-practice manager on a part-time basis. FP Advance and others now provide this service for smaller firms.

A good manager will make you realise how poor you may have been at managing your business in the past. But most importantly, they allow you to focus on your areas of interest and unique ability. This adds up to greater business success and more fun.

2: Board of advice

A board of advice is very similar to a corporate board, but drawn from among your friends, clients, and other business contacts. The aim is to establish a mix of views and skills that may be different or complementary to yours, so that the business can be managed and steered along effectively.

Draw up a list of targets along with their unique skills or expertise. Approach each potential member and offer them a one-year term on your board. For some good quality contacts, this may be a paid position, while for others you may secure them for free (or in return for similar support in their business).

Meeting regularly as a board (for example, quarterly) provides you with continual feedback from external sources, as the board does not work in the business day-to-day. Their perceptions of what you do may generate new ideas, and their differing skills should mean that you have a wider skill set to draw on when considering a problem or challenge.

At different stages of your growth, this type of expertise can be invaluable. Each board member also has a wide range of their own business contacts that they can draw on as required, broadening your source of ideas and solutions.