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Keys to Scaling Your Advisory Business

by | Mar 23, 2020 | Blog

You’ve heard the word scale, but what exactly does this mean when it comes to your advisory business? Simply put, if your business is operating to scale, your business is profitable and can easily accept new clients without continuously having to increase your staff, resources, and overhead. Picture a balanced scale. On the left side, you have your existing clients, new business, and activities needed to support both such as marketing and ongoing client communication. On the right side of the scale, you have your staff, technology, partners, and resources that are needed to deliver your many services. In the middle is you, the advisor and the owner of your business. Think about what your personal scale looks like. Is it balanced?

When your advisory business is operating to scale, it means you are spending time doing what you enjoy, whether that be strengthening and building new relationships or managing investments. In addition, your team and resources are utilized efficiently, your existing clients are satisfied, and you are regularly meeting new clients.  Sounds great, doesn’t it? If this isn’t the current picture of your advisory business, you may think that you need to hire more staff, implement new technology, or make some other significant change. However, adding to the right side of the scale without careful analysis and consideration of both sides can lead to a greater imbalance in your business.

Let’s start on the left side, where your clients and marketing are weighed. Are you attracting new clients or is your scale too light on this side? What’s keeping you from prospecting and gaining new business? Is it because you are spending too much time on the right side of the scale managing staff, managing resources, and meeting every request of your existing clients? Or is it because you don’t enjoy prospecting and meeting with new clients and would prefer to continue to focus on investment management? Maybe the scale is light because you are not marketing your business. These questions are important because how you answer them determines which path to take towards a solution.

If you prefer building portfolios over meeting new clients, your scale could be rebalanced by hiring a junior advisor or bringing on a more seasoned partner to join you in the middle. This partnership could help you better balance the businesses by enabling you to focus on investment management while they spend their time on the left side, adding more weight to the scale by bringing on more clients.

If you do enjoy meeting with clients but your scale continues to be light on the left side, you may need to market your practice and connect more with your clients. Don’t assume this means you need to hire a full-time resource or spend more of your own time on marketing. Outsourcing some tasks, including marketing, is an affordable and effective solution to help balance the scale.

When your advisory business is operating to scale, your clients are aware of the services you offer, and expectations are easily met. If your client base on the left is at the level you want but you continue to be weighed down on the right side of the scale, you are likely trying to be everything to everyone. You can start to balance your scale by segmenting your client base and implementing a formalized client service model.

Additionally, keeping the right side of your business in balance requires organization. Along with client segmentation and service models, your staff needs to be capable and organized too. Do policies and procedures exist? Does everyone have the tools to help them be the most effective at accomplishing their job? Do you have the right people in place to support your clients? If not, here is where getting help with recruiting and hiring staff, implementing new technology, or outsourcing could help you better scale your business.

Regardless of which side of the scale you need to balance, don’t ignore the power of partnership in helping to scale your business. Many issues of scale are resolved when you find the right business partner. For example, if you are an independent advisor but need more significant support beyond what is provided by your home office, partnering with a larger advisor group may be all you need to scale your practice.

The most important thing is first to identify where you are off balance. We’ve gone over several of the potential issues associated with scale here, but it’s not always obvious when you’re the running a business. Experienced business consultants can help you evaluate where you’re at and what solutions can bring you back to having a balanced advisory business.

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