As the CEO of your business, you need to analyze your business. It’s crucial to perform a thorough analysis of your industry, target market, and competition. We’re going to discuss the importance of analyzing your business and what you need to accomplish your goals.
The key to analyzing your business is to look at the recent trends within your industry. It’s important to read anything and everything you can get your hands on to attain information and insight. Daily, you or member of your team should be reading daily news, magazines, articles, reports, and books pertaining to your industry.
Below are a few examples of how specific trends within the financial industry can alert you to adjust your plan of attack:
- Low or no transaction costs through the internet. Trading that can be done almost free over the internet leaves little room for price advantage in offerings.
- A dramatic increase in access to information. The internet and personal finance media have given consumers access to information that in the past was available only to professionals at a high cost. The days of being needed for access to knowledge are over.
- Bull market performance. Favorable returns lull investors into thinking they can “do it themselves.”
The industry is continually changing, and you have to be ready for any change. In the early 1980s, financial planners wrote elaborate comprehensive financial plans for clients. In the late 1980s, traditional financial planning was forsaken as planners emphasized tax savings through partnerships. When this didn’t fare too well for the industry, in the late 90s with the development of new technologies, planners now tried to fit their clients into prepackaged investment plans. This example alone is why it is essentially to participate in the new directions the industry is heading. You don’t want to fall behind the times.
As a business owner several opportunities can present themselves pushing one to proceed in a new direction:
- Product superiority. You would need to spend a large amount of money on research and development.
- Price. You may need to compete with the price scale of big players within the industry.
- Customer Service. Develop an ongoing relationship with individuals.
The most obvious and perhaps most straightforward choice is to focus on giving value to your customers. At a minimum, you will need to examine specific questions to attain a proper analysis of your industry.
As a financial planner, if your desire is to not only get the money but to keep the money, you’ll need to focus on generational planning. Seniors control much of the money invested in the United States, and if you acquire their money at the senior level, you may get to manage it through the proceeding generations. In my opinion, seniors are an extremely profitable target market.
In addition to seniors, small business owners can also be an ideal target market because they tend to have complex financial situations and require a lot of help. This group of consumers may not be particularly price-sensitive, so they should be willing to pay top dollar for turnkey financial management advice.
Are enough prospects in your chosen market willing to purchase what you offer? At the price you want to charge? It’s important to conduct a methodical study of the market you plan to reach. Feel free to utilize these questions to clearly define and assess your target market, which is crucial when it comes to analyzing your business. Don’t forget — your client niche has to be sizable to sustain a profitable company.
It’s pertinent to remain aware of the competition that lies within your industry. You will need to focus on your strengths and overcome your weaknesses. The service-related investment business is a fast-growing sector. These days, competitors range from accountants, brokers, banks, investment advisors, insurance agents, and more. Follow these questions to learn how to identify key competitors within your industry. Though you may think you’ve identified the largest players in your industry, they may not all be your competitors. Think of your competition in terms of tiers.
First-tier- Advisors and planners with your service who are direct competitors within your geographic locality.
Second-tier- Competitors who offer similar products in a different business category or who are more geographically remote.
Third-tier- Providers of other types of products.
You’ll need to put yourself in the shoes of your customer. Look at all the alternatives from the customer’s viewpoint and determine advantages your business could provide over your competitors. You may even feel compelled to borrow ideas from second- or third-tier competitors, and by all means, this could propel you to compete more efficiently with first-tier competitors.
When it comes to the competition, you need to study all aspects of their organization. Take a close look at any promotional materials they send out, speak with their clients, analyze their ability to innovate. Are they doing anything well that you can replicate? Are they doing anything poorly from which you want to shy away?
Overall, you need to satisfy and retain customers who love your services. Selling to the same clients is more efficient than continuously searching for new clients. I can tell you from personal experience that you need to measure your plans against the competition carefully. As I learned the hard way in 1980, you need to have a plan in place to be able to overcome any competitive disadvantages. Remember, the industry is constantly changing and people are continually innovating. You must analyze your business to set up your defenses and prepare for any situation that may arise.
To analyze your business, use our downloadable worksheet.
Past performance does not guarantee future results. The views presented are those of Don Schreiber, Jr., and should not be construed as investment advice or trade recommendations.