Do you have consistent processes to facilitate efficiency and profitability?

You can keep tabs on your progress by using business metrics

It goes without saying that the overarching objective of all advisor businesses is to be profitable. While revenue growth is an important gauge of success, it is not necessarily an indicator of growth in your bottom line. It will, therefore, be prudent to keep tabs on your profitability by using business metrics that measure variables such as the growth of assets, fixed and variable costs, individual client revenue, profitability, and staff productivity.

In addition, while not a common practice among advisors, you can gain insights into client profitability by estimating their lifetime value to your practice. This measure can provide guidance on whether you should fire certain clients, adjust your service levels based on their value to your business, or redefine your preferred clients.

Running an efficient practice can also enhance your bottom line. One way to do this is to establish repeatable processes for routine, predictable activities. These processes will enable consistent execution of administrative processes and foster a uniform client experience, allowing you to better manage your own time as well as that of you team. They can also greatly improve the efficiency of the client onboarding process and enhance regulatory compliance.

Staying abreast with regulatory changes and ensuring that your practice is always compliant are critical to your survival because being offside during an audit can have dire consequences. It is therefore necessary to document your compliance processes and procedures and ensure that you adhere to them in your day-to-day operations. You must be proactive rather than reactive when it comes to compliance documentation.

Maintaining a compliant practice also means observing rules associated with digital compliance in an environment in which technology is playing an increasingly important role in running your practice. While useful, technology, however, adds a new to type of risk, cybersecurity risk, which you must consistently guard against to prevent disruption in your operations and to protect sensitive client data. In fact, it is now necessary to have a cybersecurity plan – an added responsibility that comes with technological innovation.

As your business grows you might find that it is necessary to have a client advisory board to ensure that you are consistently meeting the expectations of your clients. Time and again, you may also find it necessary to rely on a mentor who can help guide you through challenging situations. But you will remain the captain of your ship and will be responsible for ensuring that it operates efficiently and profitably.