I spend a lot of time with the owners of advice firms discussing the development of their businesses.
In many instances, what holds them back is not their drive or ability but rather taking the time to articulate their aims and objectives, planning how to achieve them and then conducting regular reviews.
What follows are the key challenges for owners of intermediary businesses and how to address them:
1. Articulate your vision
Successful firms have an articulated vision that both the owners and employees sign up to and keep in mind as they develop the business. There is nothing wrong in this vision changing or evolving over time.
What is important is to know what a firm is in business for. Articulating the mission and values then follow naturally.
2. Take the time to plan
Too few intermediaries spend time planning their future, documenting it and then regularly reviewing their progress. The principals of firms that do are more likely to succeed. Bear in mind the old adage: “what gets measured gets done”.
3. Consult those around you
It might sound obvious to point out that a firm’s directors/partners must consult their fellow directors/partners as well as their families to gain buy-in and commitment. But this does not always happen. The consequence is that plans made by one individual in isolation can, and often are, derailed by others when they have not been properly consulted.
4. Select the right advisers
Choosing the right professional advisers is key. Just because you have an accountant and solicitor does not mean they have the required expertise to advise you in relation to your business. Those professional advisers with specific financial services knowledge will better understand and address your requirements.
5. Involve everyone in your business
Getting buy-in to your plans and aspirations is not just about you and your fellow directors/partners all agreeing on what you want to achieve and by when. It is important to communicate your plans across your business to ensure everyone is informed and acting in concert.
6. Adapt to changing circumstances
While some elements of your business will remain constant, many will change over time – in particular with regards to regulation. Plans need to be regularly reviewed and updated in light of such changes. Businesses that have review processes in place are better positioned to succeed.
7. Ensure the right resources are in place
When the time comes to execute major change within the business there needs to be the right type and level of resources to achieve the desired outcomes. That means having the right people in place to carry out the work and, in some cases, freeing them up from existing work.
In particular, making acquisitions or completing a sale are time- consuming and can significantly weaken a business if the deal is aborted. With about 70 per cent of attempts to buy or sell a business not succeeding first time round, the need to build in contingencies is all the more important.
8. Manage your business with the right data
Successful financial services firms do not usually achieve their position without having detailed data that helps them to manage their business effectively. Good data should be able to anticipate many issues before they become serious enough to affect financial performance or create regulatory risk. It therefore follows there should be continuing investment in the right systems to achieve this.
9. Have a clear negotiating position
In buying and selling businesses, it is vital to have a clearly defined negotiating position and parameters. Overpaying for a business usually leads to issues with achieving long-term value for money and the sale of a business is nearly always a once in a lifetime event. There are no second chances. If the deal terms do not meet the requirements that have been set, then it is often best to walk away – difficult though this sometimes is after what may have been a lot of time and effort.
10. Don’t make assumptions or lose sight of the detail
Also important when buying and selling businesses is to not make assumptions. Carry out whatever level of due diligence is required. A business you want to buy may appear to be attractive, or a buyer may come across as a substantial enterprise, but these are impressions which must be validated.
Where there are queries they need to be answered and notes should be made of every meeting and call. Deals can and do turn sour where corners are cut. The mantra to adopt is as such: check, document, review.
If you can say you have addressed all 10 points above, you are likely to be in a profitable and successful business that has a demonstrable value.
You will also be someone who is not complacent and will continue to review your position regularly. If you think there is work to do on your business, there is no time like the present to act to address the issues.
Roderic Rennison is director of The Ideas Lab