Home Business Building Corner Don’t Drown in This Wave of Common Mistakes Business Owners Make

Don’t Drown in This Wave of Common Mistakes Business Owners Make

by Don Schreiber, Jr.

There’s a good reason why well-meaning, hard-working advisors and planners find themselves with an all-consuming job and very little to no equity in their practices. Most have copied the methods and structure of their seemingly successful mentors rather than creating a written, detailed strategic business plan designed specifically to meet their own objectives. In my book, Building a World Class Financial Services Business, I outline common mistakes business owners make that really limit their ability to achieve the level of success they’ve envisioned. So let’s dive in to the next wave of common mistakes. You can catch up on my list of mistakes in my pervious article about wearing too many hats

#5 — Failure to Create a Company Bank

A lot of business owners fail to draw a clear line between business and personal assets. If you’re going to own a successful business, you must take the risk of owning the business away from your personal finances. You never want to be in a situation where the business doesn’t have a capital base from which you can build the business or cover a shortfall. Once you take the money out of your personal pocket you’re taking a fast spinning spiral down the drain. 

So simply put, build the company bank. Instead of taking all the profit out of the business, pay the taxes and leave the profit behind. This will create the capital foundation needed to build a bigger, stronger, and more competitive business. 

#6 — Mysterious Targets

In order to develop an effective financial planning practice you must know who your clients are and what they want. I always worked with three main target groups because if one school of fish doesn’t bite, there are plenty of other fish in the sea.

  1. Business Owners
  2. Highly Compensated Executives
  3. Professionals

What market segment is your business targeting? You will need to determine if enough prospects are willing to purchase what you have to offer, at the price you need to charge to make a profit. You may want to consider several target markets because if one market for whatever reason begins to dry up, then you have a built-in fail-safe that you can pivot to. You must have agility in your business plan. Failure to clearly identify your target market is one of the worst common mistakes business owners make because every aspect of your business should be to better serve your market. 

#7 — Not Selling what People Want

That seems pretty simple to avoid, right? Well, I have to tell you time and again I have met business owners that are a little too akin to the lemming jumping off the cliff because all the other lemmings are doing it. Just because something is a fad, doesn’t mean it’s going to have staying power — and actually it’s usually just the opposite — it goes as quickly as it came. Getting this aspect of your business right is highly dependent on correctly identifying and understanding your target market. If you don’t have a clear picture of who they are then it will be impossible to deliver products and services they want. A key question to ask yourself is what purpose or benefit does each product or service offered provide to your clients.

Having the right product offering is especially important for financial planners right now. After over ten years in this roaring bull market phase, one would surmise that the end of that run could be near. Making sure you have the right products for what comes next will save you from a major withdrawal phase — where investors are leaving the market en masse due to a major downturn in the market — and could save you from compound liquidation on the assets you bill on. We suggest diving into what’s going to work in the imminent bear market phase that is upon us. Start putting to work those products with risk mitigation that are geared toward garnering decent return, but also protecting capital. 

#8 — PUT YOUR BUSINESS PLAN IN WRITING

The single most important thing you can do as a business owner is to write down your business plan. I cannot tell you how often I speak with business owners who “will get to it.” Don’t wait! Do it now!

  • What is your business strategy?
  • What is your value proposition?
  • How are you going to brand the company?
  • How are you going to separate yourself from the competition?
  • Why should you exist in the marketplace?
  • What is it that you do better than anybody else?

When you can decide all of these things and you can put together a business plan that’ll highlight those things and put it into action in an operating business plan, you’ve got a head start on most business owners. Strategic planning often takes a backseat unless time is scheduled. Even then, it is easily postponed — not because it’s so difficult, but because most of us just don’t know how to begin. However, we repeatedly perform these services for clients as financial advisors. When you think of planning as a facilitator to achieve personal life goals, it becomes fun. It’s like you’re throwing on a lifeguard uniform and trying to save your goals from getting swept under the current. When you document the process, others in the company can follow it. If you choose to carry your plan in your mind, you will always have to be physically present. None of your knowledge is transferable. And more importantly, the operations of your business cannot be systematic.

I would wager to say you became a business owner because you thought you could do it successfully. By avoiding these common mistakes business owners make you will be able to jump in and swim further than you thought possible.

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Important Information

Past performance does not guarantee future results. The views presented are those of Don Schreiber, Jr., and should not be construed as investment advice. All economic and performance information is historical and not indicative of future results. This is not an offer to buy or sell any security. No security or strategy, including those referred to directly or indirectly, is suitable for all accounts or profitable all of the time and there is always the possibility of loss. You should not assume that any discussion or information provided here serves as a substitute for personalized investment advice from WBI or any other investment professional. If you have questions regarding the applicability of specific issues discussed to your individual situation, please consult with WBI or your chosen professional advisor. This information is compiled from sources believed to be reliable, accuracy cannot be guaranteed. WBI’s advisory operations, services, and fees are in the Form ADV, available upon request.

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