Strategic business planning: Start your year off on the right foot

Do you practice what you preach? It is no secret that financial advisors understand the importance of business planning - and they are more than willing to share the merits with their clients - but in some cases, they aren't applying those same tenets to their own financial advisory firm.

However, the real problem isn't taking the time to create an effective business plan - it is actually following the guidelines you lay forth. It is imperative that you have a strong foundation for your practice in place, and as you know, the beginning of the year is as fantastic a time as any to get started.

Below we've outlined the importance of business planning for financial advisors, why some plans tend to fail, and how you can create a perfect - yet surprisingly simple - plan for your own advisory firm.

Why a business plan is important for financial advisors

Why is a business plan important for financial advisors? The answer comes in multiple parts. As Eric Sheikowicz, managing partner at Focus Partners, wrote for Financial Planning, a business plan is the path that will help you:

• Determine where you firm is in the industry
• Figure out where you want your firm to be in the future
• Outline how you can achieve those goals

According to Sheikowicz, an effective business plan will also help you elevate your performance to the next level. For example, financial advisors who have difficulties with time management and production could see their performance improve with a business plan in place. The best professionals have a plan and then they act on that plan. This allows for more efficient use of their time - a positive for themselves and their clients.

Most importantly, a business plan will keep you on track. It is easy to lose focus about your career goals and aspirations, and as a result you could end up somewhere you don't want to be before you even know it. Instead, create a plan that is in line with your professional desires.

Why certain business plans come up short

Before you sit down to create a business plan, it is beneficial to identify common reasons why these plans fail - and what you can do to avoid making those same mistakes.

In an article for Financial Planning, Ken Haman explained that business planning for financial advisory firms is different than planning for another type of company. He cited the SMART approach as one reason why. SMART, or specific, measurable, attainable, realistic and time-bound, is an oft-cited how-to guideline for business planning. SMART goals, while beneficial, can cause an advisor to focus in on the end result when planning. Instead, Haman recommended honing in on performance, not the destination.

When following the SMART principle, advisors will frequently create goals for their business plan that are all about the end result. This creates a document that is heavy on pass-fail. An advisor can either hit his or her goals - and feel pride - or miss, and feel like a failure. Don't be distracted by this type of business plan.

Instead, create a performance-based plan that details those activities you want to accomplish, not the end results.

For example, say you want to increase your clients by 10 during the 2015 calendar year.  This is an admirable addition to any business plan, except for the fact that it only covers the destination. A better addition would be to outline steps to take control on a daily basis, such as revamping your social media presence or cold-calling prospects a few times per week. 

How to craft a perfect business plan

Now that the new year is upon us, it is time to create a strategic business plan that hits all your benchmarks for 2015. While focusing on performance, not the destination, is one critical step toward accomplishing that goal, there remain other considerations.

In an article for Wealth Management, Stephen Boswell and Kevin Nichols outlined several of the important steps for a financial advisor preparing his or her new business plan. These steps include:

1. Lean toward concision

A short business plan is better than a long one. Your plan should focus on:

• Goals for 2015 and beyond
• Strategies to overcome obstacles and achieve those goals
• Benchmarks you want to hit along the way

Your plan should be designed for quick reference, not like a college textbook.

2. Dedicate a section for marketing

A key component of your plan should be marketing. This section will outline steps so you can grow your business. Look back on previous years to determine what strategies worked well for you. Include those again this year, plus research some new methods to expand your horizons.

3. Schedule times to check up on your plan

Have you created a plan in the past, only to never revisit it later in the year? Don't do that in 2015. Instead, Boswell and Nichols recommended creating a schedule to ensure you check back in at a later date. If you use a calendar, add a reminder every month to revisit this document. At that time, determine whether or not you are adhering to your goals or if any changes are needed.

4. Feel free to brag

Once you've created a plan, don't be afraid to brag about it to your colleagues. Why should you do this? According to Boswell and Nichols, it will then become a matter of pride throughout the year. If other people know your professional goals, then you have that added incentive to keep moving forward.

Maximize your potential with a plan

A business plan isn't a cure-all for a financial advisory firm. However, it can be a document that directly guides your day-to-day life at the office. 

Remember that your plan must outline the:

• The current state of you business
• The direction you want to go
• The steps you need to take to get there

Then, you will have the type of document needed to streamline the growth of your business and hit your desired benchmarks along the way.

To learn more on this topic, register for our Certified Wealth Strategist program or learn more about our other offerings at www.cannonfinancial.com.

Copyright ©2015 Cannon Financial Institute - All Rights Reserved

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Sources/Resources:

http://www.financial-planning.com/blogs/Why-Every-Advisor-Must-Consider-Putting-a-Business-Plan-in-Place-2681391-1.html

 http://www.financial-planning.com/blogs/the-problem-with-business-plans-and-why-every-advisor-needs-one-2686327-1.html

 http://wealthmanagement.com/business-planning/business-planning-new-advisors

Disclaimer: The materials and information contained herein are intended for educational purposes, to stimulate thought and discussion so as to provide the reader with useful ideas in the area of wealth management planning. These materials and information do not constitute and should not be considered to be tax, accounting, investment, or legal advice regarding the use of any particular wealth management, estate planning, or other technique, device, or suggestion, nor any of the legal, accounting, tax, or other consequences associated with them.
While the content herein is based upon information believed to be reliable, no representation or warranty is given as to its accuracy or completeness. For this reason, the program of study should not be relied upon as such. Although effort has been made to ensure the accuracy of these materials, you should verify independently all statements made in the materials before applying them to your particular fact pattern with a client. You should also determine independently the legal, investment, accounting, tax, and other consequences of using any particular device, technique, or suggestions, and before using them in your own wealth management planning or with a client or prospect. Information, concepts, and opinions provided herein are subject to change without notice. The strategies contained within these materials may not be suitable for all clients. For many concepts discussed herein, clients are strongly urged to consult with their own advisors regarding any potential strategy and will need to strategy described herein is suitable for their particular circumstances.
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