| 16 July 2009
We all know that growing your business requires your full time attention. Yet how do you do this when there are so many things pulling at you from every angle? This is a disease that all entrepreneurs suffer from whether you’re just starting out or are farther down the road. Whether or not you intend to, most financial advisory firms grow their business to the point where they need additional staff to respond adequately to clients. This “additional staff” can take the shape of full/part-time employees or vendors to whom you outsource certain functions. In any event, having a solid back office is key to you achieving your goals and living the life that inspired you to become an entrepreneur in the first place!
So, where do you start to put this together? Well, let’s back up and identify the components of a strong back office:
- First and foremost, your clients are being serviced in a timely and efficient manner and are giving you positive feedback at every opportunity
- You have hired top notch staff to handle the things you don’t do as well or enjoy doing (or outsourced them to competent vendors)
- You have a strategic plan in place and have someone holding you accountable to executing it
- You have a strong compliance program in place
- You have a Practice Policies Manual (thanks to Velda Eugenias of Cedarholm & Eugenias in Gadsden, AL for coming up with a great name for this important component of a successful advisory practice) in place so you know that your directives are being followed and you’re not reinventing the wheel at every turn
- You have the necessary technology, both software and hardware, to run your firm efficiently and it’s being utilized to its fullest extent.
Items number one and two go hand in hand with the right staff on board. If you currently have staff but still feel like you’re too involved in your day to day operations, perhaps it is time to evaluate your staff again. Just having a staff is not enough – they must be competent, trustworthy, accountable, entrepreneurial, committed to personal excellence and self-starters. These folks are above average and will need to compensated appropriately. We all know that famous old saying “you get what you pay for” and no where else is it more true than in hiring staff. If you’re going to get where you want to go, it is imperative you have the right team in place.
Additionally, having a strategic plan in place is paramount to reaching your goals. It’s the flight plan for the firm and although it will need to be tweaked on occasion, for the most part it will be the best and shortest route to your success and ultimately reaching your goals and dreams. Hire a competent business coach to help you write one and then to insist you stay accountable to it. Writing it isn’t enough…you must also execute it!
Having strong compliance in place is one of those necessary evils. However, today there are several excellent, reliable technology companies providing turnkey solutions for your compliance needs. One of them is ComplianceMax (www.compliancemax.com). Their software is easy to learn and they provide you with a customizable compliance manual, business continuity plan and monthly workbooks which basically provide a “self audit” of your systems throughout the year so that when the SEC comes knocking on your door, you will be ready.
A Practice Policies Manual (P&P Manual) is an absolute must if you’re to know that your way of doing business is being carried out on a consistent basis and you are to feel comfortable delegating certain tasks. By developing this set of procedures, you are saying to your employees “this is how we do business here. If you can’t do business this way, this is not the right place for you”. Other reasons include compliance. If tasks are being performed in compliance each time, it will eliminate “deviations” that may cause problems or errors. It can also eliminate the “scramble” that can be created by the loss of a key employee. If the processes are documented, then it will be much easier for someone new or someone else within your firm to step into that position. You are also creating a “proprietary system” which will differentiate you from your competitors and make your firm more attractive to a potential buyer should you decide to go that route at some point in time.
Finally, technology can be a great time saver IF it is the right technology and is being used to its fullest potential. It’s important to understand what you need from technology and then match those needs to the best product. Additionally, invest the time and money if necessary to make sure everyone who uses this technology understands its full capabilities and is using it in that manner. However, don’t let too much technology take over your life. Don’t just invest in the “latest and greatest” software or gadget. Make sure that it truly fits your needs and vision and adds to your efficiency, not your frustration level.
One way to figure out if you’re spending too much time on your back office (or ANY administrative duty) is to chart your activities for a month. Set up an excel spreadsheet with the hours of day (in ½ hour increments) and document everything you do. After a month, take a look at it and see where you are really spending your time. A 2001 study by Russ Alan Prince found that advisors who spend less than 60% of their time in front of clients or prospects earn significantly less (32% less per year on average) than those who spend 60% or more in front of clients or prospects. At which end of the scale do you want to be?
Spending the time AND money necessary to create an efficient and sound back office may seem overwhelming but no other single investment can save you so much time and frustration. Look at your operations as a competitive advantage rather than a necessary evil…make operations not back office but front office and a clear part of your positioning statement.
Please call me or email me with any questions or I can assist you in structuring an efficient back office or with the writing and execution of a strategic plan.
