Why Advice Businesses Flatline…
Practice Management & Sales & Marketing for Professional Services & Sales Tips & Strategic Issues

Why Advice Businesses Flatline...

October 10, 2014

by Tony Vidler  CFP logo   CLU logo  ChFC logo

Irregular beat….irregular cashflow…

 

The heart worked too hard….the heart gave out….

 

The business flat-lined….

 

I thought of this as I reviewed an excellent Slideshare presentation by Chatswood Consulting which summarised their key observations from conducting valuations for financial advice businesses earlier this week.

 

There’s a heck of a lot of advice businesses that are just a few irregular heartbeats away from flat-lining.

 

I don’t want to steal Chatswood’s thunder, and I encourage you to look at the quick presentation (link at end of the article here) which prompted me to think about why it is so.

 

Here’s the bottom line:  what advisers say their business is about, and what it often is actually about, are quite different things.

 

And what happens to a really high proportion of advice businesses is that they never actually turn into businesses over time.

 

Revenue increases nominally year on year, and the business provides an income for the owner-practitioner….

 

…and that is it.

 

What happens in that flatlining space is the business “heart” is beating just enough, and keeping just enough cashflow “blood” in circulation to stay alive.

 

All it takes is one nasty shock to flatline.

 

Chatswood make a number of salient observations about the issues, and solutions which can prevent the business flatlining.

 

Here’s a different perspective though:  Many advice businesses never evolve beyond start up phase.

 

This is not contradicting Chatswood’s conclusions, which I agree with entirely.

I do believe though that the reason many advice businesses stay in start up phase, and then encounter the issues they do, and manage them the way they do, is because they’ve never sat down and figured out how to differentiate.  As such they stay in a highly competitive and highly combative state of trying to deliver stuff that people will buy, and invest in building relationships where the loyalty can hopefully be counted upon to provide some ongoing revenue or opportunity.

The essential difference between those advice businesses which stay in start up phase, perpetually running the risk of flat-lining, and those which enjoy accelerated growth is “differentiation“.

 

It is the lack of differentiation, or reason a consumer would particularly choose a firm, which leads to the advice business flat-lining eventually.

 

Focussing upon understanding and promoting a key point of difference is the key to a healthier business which will outperform the competition.

Click here to see Chatswood Slideshare

 

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