Annual business planning and effective HR keys to profitability
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Primary factors that distinguish a profitable boutique financial planning firm from an unprofitable firm are annual business planning and a monthly review of business performance, according to Macquarie Practice Consulting's 2010 Boutique Practice Benchmarking study.
The study found profitable boutique practices are 21 per cent more likely to believe that regular, formal business planning is critical for good practice management, and more than twice as likely to believe that reviewing their business performance each month is a necessity.
Robust human resources practices, which include accurate job descriptions and key performance indicators (KPIs) for all staff that are clearly linked to achieving business goals, are also essential to profitability, according to the results of this study.
The head of Macquarie Practice Consulting, Liz McCarthy, said that during the global financial crisis many planning firms had to divert attention from the strategic aspects of running their business, the impact of which is becoming evident.
“The reality of the past few years of market turbulence is that planners have been forced to focus more time and energy on looking after their existing clients,” McCarthy said.
“This has meant that looking at the strategy driving their business has had to take a backseat, as have paying attention to HR practices, and the impact of this is evident,” she added.
With the end of financial year fast approaching, McCarthy believes now is the opportune time for firms that don’t have these practices in place to start with a “clean sheet and a clear plan”.
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