Just like any other business, financial advice practices need to think about sustainability. Marc Fabris explains how to make sure your business enjoys many happy birthdays.

What is it that sets a business that grows and thrives apart from one that simply survives?

When looking at the financial advice industry, external factors certainly have an impact, but if we are all operating in the same economy and under the same regulations, why do some businesses fail and others continuously reach new milestones? 

Clearly the last few years have been difficult, not only for those in the advice industry but for almost anyone in business. During difficult times, it can be easy to lose sight of what you need to do to make your business truly successful - and to focus instead simply on survival.

However, maintaining your company vision and ensuring you achieve a level of personal satisfaction is vital, no matter what the external environment brings. 

VIEW ALL

View all

As a judge for many years on the Association of Financial Advisers (AFA) Adviser of the Year Awards, I have been very fortunate to spend a great deal of time looking at what makes the difference between a business that just survives and one that lasts the distance.   

One of the stand-out features for me is that excellent practices are always striving for growth. When we looked at a number of ‘excellent’ advice businesses last year, 78 per cent of the practices define themselves as in the business growth stage.

This is interesting when you also consider that 50 per cent had been in operation for more than five years and 34 per cent for more than 10 years. 

What this means is that even if you have been in operation for any number of years, you still should be as hungry for growth as you were when you were a start-up. 

Another critical success factor is not simply relying on your own judgment when it comes to business improvement and planning.

Most highly successful practices will seek external assistance to ensure they are on the right path. This could be appointing independent directors to your board or regularly consulting with a business coach. 

This certainly adds additional costs to your business, but if it results in greater profitability, happier clients and business longevity, then it is certainly well worth the time, expense and effort.    

But just as importantly, it is crucial that your business meets your personal needs and gives you a level of fulfilment. Your business will not survive if you don’t love getting up and working every day in the business. 

I remember going to a restaurant a few years ago, which had opened with much fanfare and publicity. The decor had clearly been meticulously selected by a high-end designer and the menu was both extensive and expensive. 

But I also saw the owner of the restaurant continuously walking around aimlessly. 

He wasn’t talking to the customers, nor the staff, nor clearing any dishes. 

I wondered how someone operating a new enterprise could clearly have such little interest in what was actually happening within the business itself. As you would guess, the restaurant was closed within a year. 

 We have been saying for some time that there are green shoots of recovery starting to show in the economy. 

With most of the Future of Financial Advice reforms now seemingly clear, with equity and property markets demonstrating some growth and interest rates reaching record lows, it seems there are plenty of reasons to be optimistic about the coming 12 months – and with good management, your business can enjoy many happy returns in the years to come. 

Top-5 tips for long-term business success 

The current AFA Adviser of the Year, Olivia Maragna, has recently celebrated 10 years of success with her business. Olivia has given us her five factors for long-term success.

These are applicable not just for financial advice businesses but can also be applied to any of your clients who may be running their own business – be it large or small. 

“Owning your own business is one of the riskiest investments anyone can undertake,” according to Olivia.

“When you take on more risk, ideally the returns should also be bigger – whether it is financially, or non-financially through flexible work conditions or a better work-life balance. As a business owner, there are some important steps you can take to help ensure long-term success and satisfaction: 

• Risk: One of the considerations when being in business is the risk to your family home or assets, should the business find itself in hot water. Separating this risk from your personal assets should be considered. For example, the husband may hold the risk by being the director of the business and the wife may hold the personal home in her name only.  
• Superannuation: I know that despite what they tell their clients, many advisers do not pay themselves the right level of super. Plus, nearly 50 per cent of business owners aren’t paying super for themselves and are relying on the sale of their business to be their retirement fund. Selling your practice is never guaranteed, so paying yourself superannuation along the way is a great way to assist in your long-term retirement planning.  
• Wage: Paying yourself a market wage is always a hot discussion point, as most business owners say that they only get whatever profit is left at the end of the day. It is important to make sure that you are being rewarded for being in business, and one way to make the business accountable is to pay yourself a market wage. 
• Diversify: If your business is making good profits, it is important to diversify. Taking some profit out of your business and investing it in passive assets allows you to diversify your investments, but it also builds up money outside of the business should you need it in the future. 
• Pulse: Finally, keeping your finger on the pulse is the key. Holding good levels of cash, reviewing your numbers on a more regular basis and seeking good strategic advice is essential.” 

Marc Fabris is the national manager, sales strategies and research, life risk at Zurich Financial Services Australia.