partner and co-founder
How do you manage
problems? Go to
this article on
to share and read ideas.
You have TWO problems …
In 2007, I took my first trip to Ghana, Africa, where I spent more than a week with my professor, Dr. Senyo Adjibolosoo.
He is from a small fishing village called Akatsi,
which is where he has started a school to give
back. On a hot and humid day during this
visit, he said we were off to go sightseeing.
When I asked where, he replied, “To take a
tour down the Lotos River.” I asked him what
“Lotos” meant, and he replied, “alligator.”
As we approached the river, I saw I was
about to hop into a small wooden boat that
seemed to have been built 100 years ago. I
boarded the boat with four others, and then
we were off. I began to realize the gentleman
behind me was shoveling out water as we
moved down the river. I also realized that this
river was full of alligators we could not see.
I had two problems:
1. The problem I could see
(boat taking on water)
2. The problem I could NOT see
(the alligators swimming below the boat)
In your practice, there are many daily issues
you face to maximize every opportunity you
have. It’s fairly easy to identify the obvious
problems, but often the ones that are lurking
below the surface cause the most trouble.
During the past several years of traveling the
country and mentoring advisors, the top three
problems I have noticed are the following:
1. Not knowing the business numbers
2. Not knowing the business numbers
3. You guessed it …
It is very easy to start off and run seminars,
bring in prospects, engage new clients and
then repeat that process as many times as possible. You know you are spending money and
money is coming in, but do you really know
the ROI on the marketing?
Do you really know what your acquisition costs
are? Do you know what your conversation is?
All of these business metrics are necessary
for you to be able to properly manage your
business. I was told once, “Someone who does
not know their numbers does not know their
business.” So what can we do to get better?
Know what to measure
Here’s a list of what to measure:
New amount/percentage of revenue from
1) new clients, 2) existing clients
• Retention rate
• Average revenue/client
• Cost of client acquisition
• Closing ratio
• ROI on all marketing venues
Hire a virtual CFO
You can set a CFO up for as little as $1,500
a year. Basically, you identify the different
business metrics you’d like to know about
your business and give the CFO service access
to read-only financials. This is where the fun
begins because you can then begin to establish
how you plan to manage your business and
automate the feedback.
For example, let’s say you want to know the
ROI on the seminars you are running, and as
the year goes on, you have one that gives you
a lower-than-expected ROI. A good system
will alert you, so you can then further explore
the reasons behind the situation.
Find benchmarks to compare against
Most of us believe we are pretty good at what
we do, but without a measuring stick, we
really do not know for sure. Find resources
that can help you see all aspects of your business, what your peers are doing and how you
measure up. The one I am most familiar with
is from Charles Schwab, which puts out an
annual RIA Benchmarking Study.
I hope this topic inspires you to grab hold of
your business in a deeper way.
As always, I look forward to continuing to
share different strategies that will help you
grow your practice! RA