There are some hard facts to face when running your own business. Over the years as a business coach, I’ve been trained to spot the flaws in an advisor’s system. Whether it’s personal to the advisor, a hiring error, or structural mistake I’ve seen it all and helped fixed it all.
But no offense, there is something that advisors tend to get really prickly about fixing, and it’s one of the fastest ways to grow your business.
Few, if any of you, spend the right amount of money on your business.
You spend money on your team. Some of you even pay well
You spend money on events. I can’t guarantee they’re well attended or profitable, but you do it.
You spend money on some sort of canned commentary and communication to your clients.
You spend money on your tech, trading and RIA or BD fees.
And quite a few of you have so much money left over that you use your business as your own piggy bank.
Few of you spend money on what matters most. Real service. Real marketing.
I wish I knew who convinced our industry that some crappy email commentary was an actual desired piece of communication.
You know this from your open rates, since 80% or more of your clients don’t read emails from you. They’re straight to the trash. And honestly, that’s probably because they know you didn’t write it.
These emails make them think too much about the market. Which is the exact opposite of what they want to do (they hired you to do it for them, remember?).
So even though it may be hurting your business, you still send it, which means you’re still paying for it. And you’re not providing a service.
Many of you also host that once-a-year or once-a-quarter client appreciation event believing that’s enough to keep you top of mind. I have a family reunion once a year, and let me tell you, the moment I leave I instantly forget whatever inappropriate comment Aunt Gladys made.
Then to top it off, you phrase these events as “Bring a Friend.” Translation? Bring us more clients, or we don’t appreciate you.
Marketing + communication = service
Few of you spend the average of 7% of your gross budget on real service. Gartner research says companies that want to grow should spend 10.2% of their gross budget on marketing and communication.
So let’s do some math! I love math! You love math. And we can’t argue with numbers.
A firm that grosses: $500,000 should spend 10.2% of that on service: $51,000! Now that is some walking around money!
Some of you are thinking that’s crazy! What would I spend 50K on when it comes to service?
To be clear, cost is entirely relative due to location. But let’s look at a breakdown of what you could do with a service budget of 51K based off of some of the firms we’ve worked with.
10K should be donated every year to sponsoring an event that your firm cares deeply about. This should be to help that organization raise money for their charity. You could even run the event yourself, but this is your charitable contribution budget.
13K should be spent on outgoing communication that is tailored, created for and by your company. This is not for a canned commentary about the markets.
13K should be spent on social media communication specifically. This can be a part-time person or having your social media outsourced.
Why 13K? Well, social differs from regular communication due to frequency of posts. For every one financial services post you need to have 2 personal posts about your office. These can be action shots, posts highlighting things your team does, the advisor does, things outside of work, local news, motivational sayings, things about a book you are reading, the weather, whatever, just skip the number talk.
3K X 3 should be spent on nice things for your clients. Holiday events, movie events, cookouts, golf, wine, whatever (if you want to know more download the book: http://a.co/3WOua7C )
So we are at 48K for real service. None of what I just described could be labelled as sales. All of the money went directly into deepening your relationship with your clients. The firms that do this grow faster than firms that don’t. Just common sense.
And guess what?
You still have $452,000!
And if we take ½ of that for all other expenses. The advisor keeps $226,000…
A 45.2% profit.
Where else can you get that sort of profit that is legal? Nowhere.
You have to spend money on your business. And just like the cost of your groceries, the cost of doing business increases every year.
If you want to grow, make the investment in your business.