"The painful truth is that most advisors don't own businesses, they own jobs. And, in many cases, they are pretty unattractive jobs at that."

Blueprint Your Business

By John Bowen

Do you want your financial advisory service to be all that it is capable of being—one of the most successful businesses in the world? If so, you have to first focus on delivering consistent value to clients, and then on building equity in your business—even if you never plan to sell it. If you establish the right systems, document your findings and blueprint your practice, you will achieve what few advisors even dream about: a hugely successful business that consistently impresses clients and reinforces a high degree of trust. You will have the option of running your successful business yourself, hiring a general manager or selling your business for a premium. The difference between your firm and others' is that you will be able to produce substantially greater results with significantly less effort.

Take My Job... Please

When I ask advisors how business is going, most respond, "It's great." But when I ask them to quantify their success, they answer: "Who's got time to count?" They are so busy keeping the business going that they never have time to find out if their businesses are achieving what they're capable of achieving.

The best indicator of value creation is market value. Most advisors would have to be content selling their businesses for only a fraction of the potential value—that is, if they could sell their businesses at all.

Here are the problems. Most advisors and their practices are one and the same. The owner's personal presence is required to maintain the business. Without the owner-advisor, there is no business.

It is hard to build equity in a business like that, and even more difficult to sell it. When retiring or leaving the business, the advisor normally attempts to sell the customer list. But more often than not, the attempt to sell a client list just doesn't work.

Advisors do not conceive of selling their financial advisory practices the same way other types of business owners typically do. But advisors can sell their business for what they're worth. How? By putting in systems that consistently work and then blueprinting those systems.

The painful truth is that most advisors don't own businesses, they own jobs. And, in many cases, they are pretty unattractive jobs at that. One recent survey found that the average financial planner's net income is $55,000. My guess is that most work well over 40 hours per week. Who would want to pay anything for a business that produces less income with substantially more risk than a corporate job?

Systems Make the Difference

It's time to turn your mediocre jobs into successful businesses. What is the most successful type of business today? The franchise. And what's the most successful franchise? McDonald's. That company succeeds not because of its method for making hamburgers, but because it has a reproducible system that consistently delivers results. Ray Kroc was not only able to sell hamburgers; he was able to sell the business itself—over and over again. The business became the product and a turnkey operation was created that almost anyone could run.

You must build a turnkey business, even if you never open any more offices. Why? It's the only way to ensure consistent experiences for clients, whether you're there or not. That's extremely important.

I recently attended a conference sponsored by Charles Schwab & Co. at Walt Disney World. If you ask the attendees what they remember most about Disney World, they'd say, "It was so clean!" Every night, the entire theme park is systematically steam-cleaned. That instantly sets Disney World apart from the crowd. Systems make the difference.

Use your systems to create a meaningful competitive advantage by differentiating yourself from your competitors in your client's eyes. In his book, The E Myth, Michael Gerber writes, "It's the systems that can give the consumers the perception of controlling their own experience." He goes on to say that every great business sells control, and control over clients' experiences when they buy from you is the ability to give them what they want the first time, and then to replicate what they have received faithfully from that point on.

What is the difference between systems and blueprinting? A system consists of integrated components that work in an absolutely predictable fashion. Blueprinting is the documentation of those systems. Once you have blueprinted your practice, the experiences you provide to clients can be duplicated time and time again.

Seven Steps to Blueprinting

Blueprinting consists of writing down procedures that work, and updating your documentation each time you make an improvement. Go step by step, noting all the details. Follow these steps for blueprinting a successful investment advisory practice:

Step One: Create a vision. First, take the time to be introspective. How are you going to assist your clients in achieving their financial goals consistently? Design systems to insure that each and every client has the same high quality experience with your firm.

Step Two: Design an investment program that delivers consistent investment results. Limit the number of investment products you handle, and track them carefully. Get to know everything there is to know about those investments. Personally become acquainted with every portfolio manager you deal with.

Step Three: Fine-tune your marketing plan. Be consistent and specific. Be strategic, not tactical. Consider the demographics of your target market, how you market to and monitor prospects and why key prospects buy. Consider working with tope marketing consultants to develop strategic marketing programs.

As you reach toward every higher level of success, greater opportunities will present themselves. Do not be tempted to constantly change your plan. Stay the course, working the plan, fine-tuning with new feedback your business provides. If something doesn't fit your plan, don't do it. No matter who walks in your door, each prospect should have the same experience.

Step Four: Document your management systems and scrutinize how you manage them. Monitor procedures and benchmark results to discover opportunities to improve the systems that are in place. Think of your business functionally. What are its functions and how are they carried out? Develop client-tracking systems. Document all the steps you take.

Step Five: Create an organizational chart. Who does what and when? What are your standards? Who manages your task force and makes certain you meet established standards? Who is in charge of what and who answers to whom? Draw up an organizational chart and job descriptions (even if you are the one who initially fills most of the positions).

Step Six: Develop the business. This requires constant innovation and continually ensuring that your systems really work the same way every time.

Step Seven: Develop hard, soft and information systems. Hard systems are the physical things around you, such as the material tools used in your business. Soft systems consist of intangibles, like what you say when you answer the phone or how you make presentations at meetings—all the systems that are made up of content. Information systems have to do with monitoring, software development and quantifying.

Focus, Focus

It has been said that the founder of IBM, Tom Watson, worked on IBM, not in IBM. By getting your systems in place—taking the time to be introspective, documenting each step of your operation, taking the focus off yourself, putting in cost controls and being consistent in your marketing plan—you can create a turnkey business where someone else can walk in and run your business efficiently.

If you follow these steps over the next three to five years, you can create a hugely successful business and serve your clients well. You will build equity in your business and actually achieve what might otherwise remain only a dream.

Reprinted from: FINANCIAL PLANNING