The Constraints that will change your Business and Life

Amar Pandit , CFA , CFP

Amar Pandit

A respected entrepreneur with 25+ years of Experience, Amar Pandit is the Founder of several companies that are making a Happy difference in the lives of people. He is currently the Founder of Happyness Factory, a world-class online investment & goal-based financial planning platform through which he aims to help every Indian family save and invest wisely. He is very passionate about spreading financial literacy and is the author of 4 bestselling books (+ 2 more to release in 2020), 8 Sketch Books, Board Game and 700 + columns.

Constraint is a noun and it generally means the state of being restricted or compelled to avoid. We think of constraints as something negative or bad for us. What if I told you otherwise that Constraints are great for us? I do not mean to use constraints in the sense of tying yourself to a chair or not being creative. I mean to say that within the bound of limited resources that I have, what is the best output that I can generate. Let this post grow on you in terms of what I intend to convey. I am pretty confident of getting the point across to you by the end of this post.

Imagine playing cricket on a ground with no boundaries or rules. One team has 26 players, and the other team has 28. You bowl till every player gets out. The bowler can bowl from anywhere. The batsman decides to stand anywhere he feels comfortable. Would you enjoy this game? I doubt so because if anything it will be frustrating, and most will not play it too.

Now imagine yourself playing badminton. The only difference is there is no court or net. Just 2 players hitting wherever they wish like hitting. Would this be Fun? I am sure you know the answer to this one. Thus, constraints are needed not only in sports and business but also in life. The constraints in badminton are imposed through a court with a net, and rules of the game. This makes the game challenging and fun.

These very constraints are essential for our business. However, many of you have removed these constraints and put your business in a danger zone. The best part is that many who do not really understand this business are telling you to remove these constraints and taking you to a bottomless pit. One gentleman (claiming to know this business) said “Sell all products”. Another proudly roared “Sell something and come. Get your foot in the door”. I will not waste time on such nonsensical advice but get to the core of this post.

The reality is that most businesses in our industry and profession have no constraints. You are either playing badminton or tennis with no rules and with everyone. Thus, this has become a source of stress and frustration for people.

Why do I say you are playing this game with no constraints? It is because you do the following.

  1. Have Most or All Type of Products
  2. Cater to All Types of Clients (whoever walks in with money or whoever has money)
  3. In short, you do everything for everyone.

Let me take the case of Raghav Joshi, who has been in this business for 20+ years and has close to Rs.170 + Crore of Assets Under Management. He does everything from Mutual Funds, Life Insurance, Home Loans, PMS and now wants to do financial planning. He has clients from Rs. 5 Lakh to Rs. 10 Crore.

Now look at his competition:

  1. MFDs
  2. RIAs
  3. Life Insurance Agents including Corporate ones
  4. Home Loan Agents
  5. PMS Providers
  6. Banks, and Wealth Outfits

Who is he really playing with and against? There are no clearly defined rules or competitors. Can he really be competitive against someone who just does home loans? Home Loans is a very different category in financial services and the business model is completely different. It is a hyper competitive business. The moment you submit a client’s file, the client will start getting 5 calls from different institutions promising a lower rate of interest to your client. Most of them are lies but they are great enough to frustrate you and steer the client away. Even if you have not experienced it now, at some point of time, I promise you will. This calls for a very different mindset, business model, team, skills, and set of rules.

Now think of Life Insurance and General Insurance. Another different set of rules apply. The same goes with PMS and every product category that you will deal with. Financial Planning as a process has a completely different set of rules and it calls for a different mindset, value proposition and capability (or willingness to build this capability). To summarize, you end up playing a game with no rules and with everyone. Therefore, most people in the profession do not end up becoming the best version of themselves. They end up running a stupid race in which there is no way to Win.

Raghav realized this in our coaching session and he decided to place these constraints on his business.

  1. Value Proposition – Life Centred Planning
  2. The tool to help clients achieve their goals would be MutualFundSahiHai.
  3. Will cater to Pre-Retirees between the ages of 50 and 60. He narrowed down his niche very specifically. There are 1000s of combinations of Niches that you can come up with. The key is to not force a Niche just because it is lucrative. Do you enjoy working with these people? We have smart ways to figure your natural market.

There are a couple of more constraints, but I highlighted a few as I am sure you are getting the point that I am driving. With these changes, Raghav could retain 90% of his assets with only 30% of his clients. His entire business numbers have changed, and he became very profitable with these changes. He has absolute clarity on the game that he is playing now, who his competitors are, and the team, technology, and the client experience that he requires now to be one of the best in this profession.

If Raghav could do it, I am confident each one of you can too.

Are you placing any constraints on your business? If so, what are the constraints?

I would love to hear from you.