To Grow (Catapult) Your Business That’s Why.

When it’s in your head it’s not as likely to happen–too much missed.

Before becoming an executive business coach, in my previous career as an electrical engineer I discovered some key practical things about business planning that showed me how to explode the growth of a business.

When I was in college if I was asked to design something my designs always worked….on paper.

When I got out of college, my boss would frequently come to me and ask if I knew how to design this or that. I always answered confidently, “Sure, I know how. Pointing to that space between my ears.”

Then I would design it on paper. And the first aha I learned was that once written down I could see more than I could when it resided between the ears. This piece just didn’t come together with that piece….and that one….and that one….

So, I would gradually work out all of the gotcha’s until all of the pieces worked on paper.

Then I’d go build one…..

And it almost never worked. I had made an assumption about something in the real world that wasn’t quite right. I’d missed something about the real world. So, I’d work back and forth from the ideal paper design to the real world result until it started working in the real world. Then I’d go back and document that on paper.

Now the real BIG AHA!

I don’t believe there is a self-respecting engineer anywhere in the world that is ready to release his design to production when production is screaming for it. The reason??? Once the engineer has a real working example on paper things start jumping off the paper at you. You can see things you didn’t even think of before. There are new concepts there.

“Gee, I didn’t see that. If I change this…it’ll work better.” Or..”Wow, over here, if I do ____ then it’ll be cheaper to produce” Actually, once it’s on paper and working it’s almost never ending what you keep finding.

Business Planning Between the Ears Doesn’t Allow You to Find the Opportunities or the Gotcha’s That Paper Planning Shows You Clearly

I had said to my boss, “Sure I know how” when he asked me if I knew how. But it was between my ears. I learned that you have to get it on paper to start seeing the gotcha’s before you can fix them, and once you build a real one you start learning new things about how to optimize, how to make it cheaper, how to make it work better, and it never ends. There are so many opportunities to make it better.
Now, let me ask you one more question:

How many people do you know that are running their business “between their ears?” How many are saying “I know how”?

I actually have had companies tell me “Get out of my way, I don’t have time to plan. I have to produce NOW” Then they call me back in a few months asking for help after they have lost hundreds of thousands of dollars.

That’s when the real aha hit me. After putting it on paper I’ve seen those same business jump 5 times, 10 times in revenues in just weeks.

So, how many do you know that are running their business between their ears and have never put it on paper? Or, some may have put it on paper, but it’s setting somewhere on the shelf.

The opportunity to grow your business, BIG TIME, is

Showing evidence of multiple revenue streams in your financial advisor business plan presents a more sound investment to potential investors and a safer risk to potential lenders. Any business which depends entirely on the work of the founder is, by its very nature, high-risk. If that founder should become sick or unable to work, there is generally no succession plan in such a company.

Advisor Revenue Streams

Advisors can charge fees in a number of ways. The manner that most clients would prefer is for fees to be performance-based, paying the financial advisor only when their investments and holdings increase in value. Of course, few financial advisors would agree to such a fee structure, as holdings will almost inevitably decrease in value during a market downturn. A second best model for clients, and better model for advisors, is to charge a fee that is a percentage of assets under management. If assets increase in value the advisor is rewarded with a higher fee. If the value would drop, the revenue to the advisor would decrease, but not become zero. This represents that, even in bad market times, an advisor can potentially be doing better for a client than he would be doing without the help.

When clients do not have significant assets or are interested in testing out the expertise of working with an advisor, the best fee structure might be an hourly rate for consultations. This is preferable for the advisor, and leaves it up to the client to decide if he or she got the expected value out of the conversations and advice given. Offering an hourly rate as well as an asset-based fee expands the market of who you can work with as an advisor.

Other Revenue Streams

Revenue streams for your business could be from a number of other sources. They could be from the sale of products you have created, such as reports, guides, worksheets, and programs to help clients, from the proceeds from seminars or webinars to multiple clients and potential clients, or from commissions on the sale of insurance or other financial products.

Notice that with each additional revenue stream that is added, there is potential for a conflict of interest. For example, if you seek to sell a certain report, you may have the incentive to withhold the information in it from advisory sessions with clients you work with. Whether or not you do so, there is the appearance that it might be in your interest. Also, if you receive commissions from certain financial products, clients may feel you will encourage them to buy those products even if it is not in their best interest, reducing the value of the advice you give in their minds. You have to be careful to uphold your reputation as a trusted advisor at all costs, and recognize the difficulties in adding potentially conflicting revenue streams.

Often business owners create a business plan because someone (perhaps a lender or an investor) ask for one. The better reason to create a business plan is to chart a course for your business and to be able to ask a very important question. There will be more about the question later in this article.

The term “business plan” in my experience often refers to an operational plan – how the business intends to meet the goals set forth in a strategic (long-term) plan. On the other hand, “business plan” could clearly include both kinds of planning (strategic and operational). It is important to think about both. It will enrich you to create a business plan, but how do you create a business plan?

The owners of a business, reflecting upon their own values and goals, should communicate and plan, setting forth a written strategic plan to be followed by the business. This plan should include issues relating to ownership transition and leadership or executive succession. The executives or managers of the business (who may also be all or in part owners) should create an operating plan to accomplish the goals of the strategic plan. Generally, the strategic plan is reviewed and revised annually, but I have seen it done successfully on a quarterly basis. The operating plan will be impacted by any change in the strategic plan and should be immediately revised accordingly. Aside from that, other dynamic factors concerning effective operation of the business may force changes in the operating plan on a more frequent basis.

The best place to start is at the end – the end of the planning cycle. I recommend something five years or less. Envision the business you could sell to a third party (non-owner) for the highest reasonable amount. (Understand that at this point of sale a selling owner cannot be an integral part of the business to obtain the highest possible value for the business.) Then work backwards. What would the business be doing the fourth year to get to the apex in the fifth year, the third year to the fourth, and so forth? If the market will not support the five year plan, something needs to be changed. Therefore, the market analysis becomes the reality check for the projected business status at the end of the planning cycle. The beginning question should be: “How can I develop a business I can sell for top dollar in five years?” In five years you do not have to sell, but you will develop a better business if you have that goal.

There are a number of ways to construct plans from questionnaires and software; there is nothing wrong with adding structure and detail in that way. Do the marketing and conceptual work first to know if you can go where you want. After you have established this perspective, the details can fall into place. This is not to say that the details are unimportant – they can make you or break you – but they must be within a frame that is realistic and defined.

The purpose of doing a business plan is that it gives you the ability to ask a very important question: “Why didn’t things go as in the business plan?” Answering that question is a valuable business analysis tool. Of course, the plan is the prerequisite to having the analysis tool.