Too often owning a business can make one feel like they’re stuck on a hamster wheel. We go round and round through the motions but repeat the same common business owner mistakes and fail to make progress. It’s time to jump off. This installment wraps up my three part series highlighting 12 common mistakes made by business owners. I have seen these mistakes repeated by financial services business owners around the country seeking my advice throughout my career. That’s why I wrote Building a World Class Financial Services Business, to help you avoid getting stuck on the hamster wheel!
Did you miss the first two articles written about the most common business owner mistakes?
Common Business Owner Mistakes: Too Many Hats?
Don’t Drown in This Common Wave of Business Owner Mistakes
Mistake #9 — Failure to Clarify Partnering Relationships
Most financial planners and advisors create professional networks from which they can garner referrals. You might work with CPAs, plan administrators, broker-dealers, custodians, or lawyers. With any vendor partner, you want to make sure that you have a written agreement of what services are provided by each party. Take time to clarify your partnerships and assess the value you bring to relationships. Because if you can’t readily identify your value — your partners won’t perceive it either.
Mistake # 10 — Not Institutionalizing Your Business
The fundamental difference between having a business as opposed to a sales practice is institutionalizing the relationship between the clients and the business. If you are “the” guy /gal who is the value proposition to your clients, let me tell you, you are really limiting the success of your business. I’ve been there. I once was the value proposition of my business, and it made me feel awesome — good for the self-esteem. My clients depended on me to solve their problems and I took that very seriously. But the more successful my business became and the more clients I needed to provide service to, the more difficult it became for me to be the only person giving advice, service, and relationship management. The clients were no longer receiving the level of serviceI felt they deserved. You can see why this is on my list of common business owner mistakes. I knew I needed a different way of delivering advice and service to all of my clients. I put systems in place so that when clients call, they feel they can work with anyone in the organization and get the same satisfaction as if I was the one giving it to them personally. The bottom line is that institutionalization is the difference between having a job and building a business.
Mistake #11 — What Cash Flow Management System?
How often do you monitor your business’s cash flow? If your answer is a frequency any less than every single week, then you’re putting yourself at serious risk. Cash flow management is critical and understanding the movement of money in and out of your business will help you make better financial and business decisions. We are constantly enhancing our financial reporting to provide the kind of detailed information that is important to us. And you should too because if you don’t know exactly what’s going on in your business from a cash flow standpoint, then you have the greatest risk of going out of business. Remember, Cash Flow is King.
Mistake # 12 — Not Preparing for Exit
When we start a business, most of us can’t fathom heading for the exit. Most of us have no exit strategy, but in reality we should be prepared from day one. Luckily the same ingredients that will be attractive to a buyer someday will also help our business run more smoothly. If you don’t have a vision for what someone might want to invest in — or buy someday — then you might end up with nothing left. And if you’re like me, after so many years of giving it my all, that would be a bitter pill to swallow.
If your business depends on your presence, you may not have any equity to sell. Even if you can find a buyer, you may be required to become an employee of the new owner for three to five years. Plan your exit strategy accordingly.
Ready for Change?
Avoiding these 12 common mistakes will get you off the hamster wheel and help you become a more successful business owner. If you’re serious about transforming your financial services business, sign up for our Business Building Corner newsletter to get more helpful tools like this right in your inbox.
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.