TRANSITION TALK

Purpose, perspective, and premise are the foundations of business value. With these three key aspects we can weigh an incredible amount of detail and data to determine the most accurate value of the business–for any circumstance. The more accurate the value, the better the outcome of your situation, and the better your ability to plan ahead for future growth and higher profits.

Everything starts with “why.” What is the purpose for the valuation? As we like to say, “value is in the eye of the beholder,” and purpose allows us to pinpoint that perspective to know what makes a business valuable to them. And when we drill down into situational specifics and the nuances of perspective, we can understand the future-state of the business and the premise of the valuation to fine tune its accuracy.

The value of your practice is determined by many factors, some obvious, and some not so obvious. And the degree to which some aspects impact your value more largely depends on the reason you’re valuing the business in the first place. 

Whether you’re considering acquisition, onboarding new talent–or new owners–, monitoring annual growth, or getting ready to sell, these ten factors have the most significant impact on the value of your business. Focus in these areas can make a major difference in your book’s sustainability and its eventual purchase price when transition time arrives.

For our clients, the courses of action may differ, but growth is the number one priority. The goal could be to grow and then sell it to a third party for maximum value. Alternatively, the aim could be to create a sustainable enterprise capable of supporting a gradual transfer of ownership, leadership, and responsibility to an internal successor. 

Many advisors arrive on our doorstep using terms like “silo” and “ensemble” to describe to us what they believe they have built. However, these terms merely describe the organizational structure, which is just one facet of the strength of an independent advisory enterprise. These terms are not sufficient for diagnosing ALL structural elements needed to support a sustainable, profitable, valuable enterprise in this highly-regulated and sometimes complex industry. 

End the Cycle: How to Make Marketing a Constant Business Generator

Marketing powers growth, which is why it’s a priority when we’re in need of more business. But over time, with great marketing, business starts booming. That’s when many advisory firms begin to pivot to client service and satisfaction, letting the lead generation campaigns run their course. When the funnel starts to dry up, we dig back into early-stage marketing on social media, email campaigns, more lunch meetings – only to hit pause once a few more clients trickle in. Enter the vicious cycle of the start-and-stop campaigns. We get it, you cannot do it all.

But what if I told you there was a way? Would you be interested? We’re breaking down the challenges and matching you with immediate solutions. Let’s go!

CHALLENGE #1: In the Moment Decisions

Something triggers a renewed marketing focus. It could be anything, but more commonly this can come from an increase in capacity (new team members, better technology, clients on target and requiring less focus) or it could be due to a need for more revenue (profit margins are down, loss of a long-time client, more clients entering retirement). Whatever the source, you start looking for ways to boost revenue.

Editor’s Note: We originally posted this article by Colleen Jordan Hallinan in 2018. Since then, the need for business owners to focus on building the right team in order to grow and establish sustainability has only increased. And so, five years later, Colleen’s guidance on nurturing your team, evolving your own role, and adjusting your mindset to cultivate a stronger, more capable group of professionals is just as relevant.

Successful, ambitious, and conscientious advisors ask questions like: How do I create next-level growth? What will it take to build a firm that delivers an extraordinary experience to my clients and their families? How am I going to achieve my own next-level life? 

The answer starts with another strategic question: What has to happen to give you the freedom to focus on precisely those aspirations?

Your catalyst for growth in all three areas lies in the talents of your team. Make your A players your #1 priority and you’ll have an alchemy that expands your available time and transforms exhaustion and obstacles into more space and energy.

But it doesn’t come without a cost. The cost is personal sacrifice of current habits, beliefs, ego, and behavior, plus an investment of more time now to blend together the ingredients for that alchemy. Your results will come from your ability to:

• let go and stay focused on the big picture,
• place yourself in service to your team, and
• treat them like your best clients.

I rarely meet a financial advisor who doesn’t immediately mention that they want to buy a practice. It seems to be every advisor’s goal. Of course it is. And in my fifteen years in the industry, I have seen why.

One of the fastest ways for a firm to grow is to acquire another book of business. However, the process is more nuanced and competitive than most advisors seem to think. Most assume they will figure it out as they go along. If you take the unguided DIY approach, however, mistakes will be made–perhaps big ones–and you’re likely to leave money on the table. Our EMS^TM

EMS™

Like every aspect of business ownership, acquiring a book of business takes advanced consideration and preparation. These are a few steps you should be taking now, prior to developing and executing your acquisition strategy.  

1. Develop Your Buyer Profile

Membership to fptransitions.com is free. We don’t believe there should be a series of hoops to jump through before you can explore the largest open market of M&A opportunities; or even to access our library of business building, acquisition, and succession resources.

Step one to taking advantage of your fptransitions.com membership is to complete your buyer profile. This series of basic questions gives the team at FP Transitions an overview of your company and team so we can best help you find acquisition opportunities that would be a good fit.

Pro tip: FP Transitions uses the information provided in your profile to search our database of 25,000+ advisors to find the right buyers for private sales, continuity partner matching, and successor searches.

The buyer profile is your opportunity to offer information that makes you stand out from your peers. The Practice Description field especially. If you offer a few concise thoughts on what makes your practice unique, you’re already setting yourself apart.