Five steps to get your business in shape for 2013

Ed Dymott, head of commercial and business planning at Fidelity International, reveals what it will take to get your business RDR-ready.

The finely tuned athletes set to compete in next year’s Olympics know that preparation is everything. They are already developing their game plans to ensure they are in the optimum peak condition for the biggest event of their lives. To be under prepared means they are guaranteed to fail.

However, clearly there is only so much they can prepare for – the conditions of their competitors and the arena they compete in is entirely out of their control. The British weather can guarantee one thing only: inconsistency.

Preparation in business is no different. Advisers need to ensure their business is at its peak condition to roll through what is likely to be some of the more challenging market conditions we have seen for some time. The RDR is, for many advisers, likely to have some fundamental impacts on their business models.

Now, I do not believe you need to have Olympic skills to prepare for the next 18 months, but by ensuring your business is in peak condition, you are more likely to be able to contend with the future challenges it will present.

You all know your businesses better than I do, and it would be foolish of me to try to teach you how to run an advisory ­business. However, there are a number of steps any business can take to help ensure they are running at their best, and these will be entirely relevant to an advisory business in the run-up to the RDR.

1. Re-evaluate your value proposition

Too many businesses try to run without a well defined value proposition; those that do are often the least successful. Without this, the customers and employees are not aligned, and it is unlikely the customer will fully appreciate the service being offered to them.

If a customer is paying for a service, they will expect something in exchange, and it is the transfer of value that ultimately defines your value proposition. For a customer value proposition to be successful, it must be distinctive, measurable, defendable, and sustainable, ultimately demonstrating why the offering is more attractive than the competitor down the road.

You should align your proposition to certain segments and, most important in the new world of adviser charging, you need to ensure that your customers are willing to pay for it. You should be able to write down simply what you offer your customer and what you expect from them in return. You need to test this and refine it. For some, this will be business as usual; for others, it may just be the most valuable time you can spend on your business.

2. Segment your customer base

As said before, this goes hand in hand with your customer-value proposition. There are two simple tasks you should complete and understand. First, understand what kind of customers you would like and develop your value proposition. Second, understand what kind of customers you have. For a business in prime condition these will be the same, however they often are not.

Once you have defined your target customer, you need to stick to it, even if it means turning potential customers away. A customer you do not really want to service is usually one that turns out not only to be unprofitable, but at some point in the future untenable. Set expectations with your customers upfront and they will be more satisfied.

However, the most important thing you can do in the run-up to the RDR is to go through your customer base and identify a strategy for how you will service each segment. You may need to use different solutions by segment to create value for your business.

For example, you may want to use managed products for low-value clients and drive this business online, whereas you may want a more relationship driven approach for your higher-value customers. This will be key to driving profitability.