A business consultant said there is a proven correlation between advice businesses that develop and commit to a clear business plan and those that see higher profit outcomes, but only when done right.
Business Health owner and principal Rod Bertino said on an Advisely webinar that it is “absolutely critical” that advice practices have a clear strategy for the future of the business, even if that is only for the next six months, as this will guide all decisions about the business in a consistent direction.
However, he suggested that practice owners sometimes have a tendency to overcomplicate this planning.
“Business planning, per se, is not an academic exercise. It should be a living, breathing document that guides where you spend time, effort and money and review regularly. Do that, and our stats clearly prove profit outcomes are better,” Bertino said.
While some get caught up in the formality and fluff of creating a business plan, Bertino suggested that clarity is most important to consider.
“You don’t necessarily need a business plan. You do need a clear plan for your business,” he said.
“Where most firms and most leaders get hung up is on constructing the plan, the words, the nouns and verbs, the volume of pages, the leather binding. None of that’s relevant. The most profitable firms we work with, their business plans quite often are quite rudimentary, but they work.”
Bertino explained that there are three key aspects owners need to include to create an effective business plan:
- A clearly outlined starting point,
- An action plan, including deadlines and who will handle each task, and
- What success looks like for them.
This, Bertino said, creates a clear road map to guide business decisions.
“Not everything in the plan is going to work, but at least you’ve got something to measure against. If it’s not working at your reviews, you can explore why the strategy is right, but the implementation was wrong. Did the market move from where we thought it was going to do? Therefore, we need to do something different. All that’s valid. That’s just doing business in today’s environment.”
Having implemented a business operational plan in his practice, Jeff Thurecht, Evalesco Financial Services chief executive and adviser, said the firm is never chasing more than five key priorities at any one time, all of which are outlined in a clear digital document.
If a new priority arises and they are at capacity, he explained that an existing priority either needs to be completed or there needs to be a strategic decision to remove one.
Thurecht said: “It’s very much about, what are the operational actions we need to take to move us towards the outcomes that we’ve set in the overall strategic plan.”
Agreeing with this approach, Bertino said: “There will always be more to do than there is time to do it. Don’t beat yourself up. Don’t set these unattainable goals and then document them in a plan, knowing full well that, no matter how hard we work, we’re never going to do all that.”
While a strong business plan can deliver significant benefits for practices, Bertino said they can fail if they take wrong approach. For example, some look at business plans as a marketing initiative and are simply looking for a tagline to post across their communication channels.
“If it’s not your ‘North Star’, the fundamental element on which your entire client offer is built, it’s going to fail at some stage. When the pressure goes on, it will fall over.”
Others, he said, fail to integrate the plan mindset throughout their staff base.
“It’s got to be lived and breathed by everyone in the business, not just the advisers and not just the owners. It’s got to be core to this is how we do business here.”
