Ensure your practice’s viability with a solid business plan

By Brian J. Quinlan | January 7, 2004 | Last updated on January 7, 2004
8 min read

(January 2004) As an accountant, I have the privilege of working with a number of financial advisors who refer clients to me. From time to time, an advisor will ask me to do a business plan for a client. When I, in turn, ask if the advisor has a business plan, the answer is usually “no.”

All advisors need business plans, period, since they are in the business of managing their client bases. Just because the advisor doesn’t need to find capital or source product from China doesn’t mean it’s any less of a business.

A business plan goes beyond simply articulating your goals. It’s a written summary of your business, where it is going and how it is going to get there. It contains information from the past and present and expectations for the future. It also provides an early “reality check” — a way to minimize surprises in the future and to handle the stumbling blocks now.

Without a business plan, it’s difficult to reach your goals. Instead of taking the straightest path, you’ll take the scenic route. Worse, you won’t realize you have strayed from the path. You may miss an opportunity that would have moved you ahead of the game.

By writing down your plan, you can pinpoint where things go wrong, and because you have a step-by-step approach, correcting an error may just mean taking one step back versus starting from scratch.

The plan should be written by you. Who else knows your business, your priorities, your goals, your strengths and weaknesses better than you? Only you can take responsibility for following (or failing to follow) the plan. Third-party authors of business plans, such as accountants, have preconceived notions. They may be too optimistic or more likely pessimistic. However, once you finish drafting your plan, consider having a business advisor critique it. They can point out matters that may have been overlooked, are unclear or have been glossed over.

A proper business plan is made up of nine standard components.

1. Your mission statement

Write down a sentence or two that describes what you do (or what you are going to do) and how you are different from others. This is the shortest part of your business plan but the most difficult to write. Marketers call this “branding yourself.” What message and image do you want to communicate?

Your mission statement may become your opening line in meeting a prospective client.

Your personal mission statement explains how you are going to undertake the mission and how you will differ from your competitors.

2. Your background

Who are you and what have you accomplished? Better, what have you done lately that supports you being a financial advisor and how it will help you in the future? Consider:

  • your specific strengths and weaknesses;
  • what you have accomplished to date;
  • your experience, education, and training as a financial advisor;
  • how you focus on sales and/or client relationship management;
  • your experience in marketing yourself.

3. Your direction

Simply put, what are your specific goals in being a financial advisor? Your goals need to be challenging yet realistic — and measurable. Ask yourself:

  • Why the financial advisory business?
  • What are my short-term, mid-term and long-term goals?
  • What will be my area of concentration? (financial planning, securities, insurance, etc.)
  • What is the desired value of my book at the end of the coming year? What is my target for growth? What do I need to put in place to reach these goals?
  • What are my client target groups (e.g., business owners, families, etc.)?
  • Are my goals are realistic?
  • Is there an industry or firm guideline I can compare yourself to?
  • What is my most critical success factor (e.g., technical skills, marketing, client service, etc.)?
  • What is my most critical failure factor (rejection, intimidation, etc.)?
  • Do I accept that people will not break down my door to see me just because I think I have exceptional investment/insurance knowledge?
  • What constraints do I have?
  • What obstacles do I need to get over?
  • How can I be the best I can be?
  • Do I have a contingency plan? (Note: This is not a sign of weakness or planned failure, but a sign of reality.)

4. Your target market

Describe your target market, why it is your target market and what is the outlook for this market (current, short, mid or long term). Be wary of generic comments that we all could read in a newspaper (baby boomers inheriting, less kids per family being born, etc.) and focus on your specifics (you are from a wealthy graduating class, etc.)

Also describe your ultimate client and why they would be your ultimate client. Then, as a reality check, describe the next best client.

5. Marketing

How do you intend to get your name out there, attract a client and retain that client? What is your marketing strategy? Consider the following.

  • Compensation: There are different ways to be compensated, including charging commissions, fees or a combination of both. What control do you have over pricing? Would you be charging hourly and how much? How are you going to communicate your pricing policy to your clients and how will you deal with objections clients will have about your compensation?
  • Education: You need to keep expanding your professional knowledge — how will you keep up with the new products and new regulatory and tax laws? Will you be working toward additional designations or degrees? Consider how much time you will dedicate to readings and continuing education. If you need additional expertise, who will you turn to?
  • Serving clients: Great service is a given in a client’s mind. Will you meet with them in the office, visit them at home, limit them to phone conversations or exchange e-mails? How often will you be in contact? How quickly will you return phone calls or e-mails? How often will you review an account? Is there a special treatment for ultimate clients? What tasks will you handle personally and what will you delegate to your assistant?
  • Marketing: How much money and time per day will you dedicate to marketing? Will you purchase a block of clients? After you have contacted all your relatives and friends, then what? What types of advertising and promotional ideas do you have? Will you do bulk mailing, article writing, cold calling, write articles or distribute newsletters?

What will be your daily routine?

  • Morning: Read paper? Networking breakfast club? Answer e-mails? Follow-up phone calls? Cold calls — how many?
  • Afternoon: Meet clients? Meet prospective clients? What will you do at lunch? Cold calls — how many?
  • Evening: More reading? Write newsletters? Seminars? Meet clients? Home visits? Service club meeting? Recreational sports? Evening networking club? Cold calls — how many?

6. Your competition

Detail your competitive advantage and how you will maintain or acquire it. Ask yourself:

  • Who are my current and expected competitors?
  • Specifically, how will I differentiate myself? How will I communicate that I am different?
  • What puts me ahead of the others in reaching and securing clients in my target market?

7. Support staff

The growth of your business will require help. The most successful people in business have a great skill — they delegate well and delegate often. So how do you find the right support staff?

  • Write a detailed job description for the position. You need to be able to communicate your requirements.
  • Be involved in the interview process. If time is tight, you can hire a recruiter or use a hiring agency. Use the recruiters to narrow down the number of applicants but the final decision is up to you. In the end, you are the one who will be working with and relying on the new employee.
  • Design an orientation program to evaluate the abilities of the assistant. This will benefit even the most experienced assistant.
  • Be patient. Take your time to find the person you want, not just who happens to be available.
  • Relate your staffing needs to your business growth expectations. You’ll have to figure out how many assistants you think you will need, whether they should be at different experience levels and how the responsibilities should be shared.

The assistant will only become what you allow him or her to become. Make the commitment to orient, educate, and integrate your assistant into the practice. Without commitment, expect to accept a lower level of performance than you desire.

8. Your personal finances

How much money is realistic for you to earn? How much money do you need to live on? Ask yourself:

  • When do I come off an employer’s salary and really “go on my own”?
  • What is my break-even point?
  • Do I have other sources of cash?
  • Do I have an “emergency fund” for the slower times?
  • Do I have access to a line of credit?
  • Have I arranged my financial affairs to ensure any interest I incur is tax deductible?
  • Am I looking after my own retirement savings?

9. Your executive summary

Sum up your whole business plan — in one paragraph. The executive summary highlights the major points of your business plan — your purpose, a clear description of your business, an analysis of the market and the competitive advantage that will bring you success. Ask yourself:

  • Is my summary too technical or have too much jargon?
  • Is it attractive enough for the reader to continue reading?
  • Does it communicate my enthusiasm?
  • Does it really communicate me?

A business plan is like a roadmap. It provides you with a level of confidence that you know where you are going and how to get there. However, one usually looks at a road map more than once during a trip. The same goes for a business plan. It needs to be looked at continually to confirm you are on the right track.

Already have a plan? Then dust if off and get ready to tweak.

Step 1: Re-read your business plan. It’s time to reassess the success (or failure) of your business plan. Ask yourself the following questions:

  • Is my mission statement still correct?
  • Have I been able to consistently convey my mission statement?
  • Am I where I expected to be in terms of target market, profitability and lifestyle?
  • Am I carrying out the marketing activities I planned?
  • Did I assess the competition accurately?
  • Does my business plan need to be updated (e.g., because business has matured, etc.)?
  • What have been my major successes? Failures?
  • What has caused me not to follow the plan? (The competition? Other factors?)

Step 2: Update it. A business plan that has been updated based on results is far more realistic than a business plan drafted at the inception of your business. Update your plan every fiscal year.

Step 3: Now use it! A business plan provides a reference source to ensure you are following the desired track. Compare your results to what you anticipated as documented in your plan.

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The bulk of this article also appears in the January issue of Advisor’s Edge on page 22. To read archived Advisor’s Edge articles or to subscribe to the magazine, please click here.

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Brian J. Quinlan, CA, CFP, TEP, is a partner at Campbell Lawless Professional Corporation, Chartered Accountants and can be reached at bjq@camlaw.on.ca.


Brian J. Quinlan