An industry executive friend of mine has moved into a role managing a much larger team of people.
The executive coach he’s working with suggested that whenever he faced an issue to resolve, he ask himself the question: “Who? Not how.”
The coach’s point was that when you’re the leader you don’t jump in and just do it yourself. This is the key to transitioning effectively from being a doer to the role of leader.
“As entrepreneurs, each of us has a constant stream of ideas and new projects that might add massive value – if they ever get implemented.
"As I come up with an idea, my sole responsibility is to ask, “Who am I going to tag in to implement this project?” It has been an absolute game-changer.”
If you want to build a business that really works, without you having to be involved in everything, then you have to build a team around you. This sounds obvious, although it is not necessarily easy.
There are two main ways I've seen it done. One has proved much more successful than the other:
1) Hiring more advisers
I meet lots of one-owner/adviser businesses who think the key to getting bigger is hiring more advisers.
They might be turning over £200,000 thinking, “If I can hire someone else who already has a client bank, I might move to £400,000.”
While I understand the thought process, I believe it’s a bad idea. Here are some reasons why.
You now have a business partner
If you bring in someone with a client bank, chances are they will want recognition for that. This might be in the form of equity.
Do you really want to be business partners with someone you may not know well enough at this stage? Relationships get tested in adversity.
If it’s not equity they want, then it’s likely to be a large take from the revenue they generate; often 50-60 per cent. As I’ve discussed in previous articles, this is not a sustainable pay-away.
Let's say you aim to keep your overhead (that is, every other expense in your business except money paid to advisers) at 35 per cent.
Even if you manage to achieve this, which by the way is incredibly difficult, then you don’t leave yourself much of a net profit. Certainly nowhere near the 25 per cent net profit margin I recommend you aim for.
You now have someone to manage
Like it or not, a second adviser will require managing in one form or another.
That distracts you from your main job; servicing your clients and finding new clients to serve.
You both do things differently
Advisers tend to want to do it their way.
Because you’ll be busy being an adviser yourself, it’s unlikely you’ll spend the time required on training, mentoring and passing on the values and culture you want to see replicated in your business.
Usually, that ends up in a bit of a mess with everyone doing their own thing. Not good, not enjoyable, and not scalable.
2) Start by managing yourself
The second approach to building a successful business without you having to be involved in everything, is to start with yourself first.
As I wrote about in a previous article, Could you generate £1m in fee income?, the first step in a growing business is to get yourself performing at a very high level.
- Because managing yourself is a breeze
- You can create the culture you want as you hire new support staff around you
- Everyone you hire has one focus: supporting you
- You can hire a shadow adviser or super-paraplanner to support you. This gives you real leverage on your time
They can do everything pre and post-meeting, and you can just run the client meetings. There’s not even any file notes for you to do
- Eventually, you’ll create your own home-grown adviser.
Once you reach your limits of production, managing £600,000 - £800,000 of revenue or more, you can detach your shadow adviser from you, if that’s what they want.
You could give them, say, £400,000 of your revenue, to be their own self-contained business unit.
You can then both find new shadows to allow you to build again to £800,000 or more.
As this model develops you’ve now created your two, three or four founding advisers.
At that point, you can step into the true chief executive role if you want to. Now your time becomes truly strategic; thinking 'who, not how' to get things done.
Alternatively, you can stay as the high-performing lead adviser, and hire a chief executive if you want to go to another level of fun and performance. The choice is yours.
The second option might be a 10-year growth journey, but it’s a 10-year journey that’s fun, profitable and will work.
With four advisers performing at that level, you’ve got a £3m turnover business.
The first approach of appointing lots of advisers too fast, without the time for support, mentoring and coaching from you, might fail and also be a huge headache.
Remember, 'who, not how.' Don’t do things yourself.
You can build a high-performing business, but you’ve got to be focused on doing it right.
Create a team of people that supports you. All the important tasks can be completed by skilled personnel, so you can stay focused on the jobs you love to do and are good at.
With the right strategic thinking from early on in your journey, you can make your business a joy to work in as you move through the gears of growth.
Let me know how you go.