I think the open rates for this post will likely be higher. After all, we love secrets, magic pills, tips, tricks and hacks. And while there is indeed a powerful secret, there are no quick fixes or tricks or hacks. But this secret will only be revealed if you read (not rush through) the entire post. Needless to say, this secret has a direct impact on the value of your firm. Does this seem intriguing enough? I bet it is and I am super excited to share this secret with all of you.
But first a real story that played out a few months back…Ashish Prajapati (name changed) came to us to sell his business. He had some thoughts on what he thought was the value of his business. Truth be told, he was trying to sell his firm for quite some time. To give you some context, Ashish is a solo practitioner like many individuals in our industry. While he has built a good AUM (Assets Under Management) and income, there was no interest from anyone in acquiring his business. Needless to say, he was shocked with his experience of trying to sell his business.
In his book, “7 Strategies for Wealth and Happiness,” the late American Entrepreneur and Author, Jim Rohn wrote, “Mr.Shoaff, my mentor, said to me one day, ‘Jim, there are always a half-dozen things that make eighty percent of the difference.”
A half-dozen things…what a key thought.
Whether we are working to improve our health, wealth, personal achievement, or professional enterprise, the difference between triumphant success or bitter failure lies in the degree of our commitment to seek out, study and apply those half-dozen things.
For example, for a farmer to reap a plentiful harvest in the fall, the half-dozen basics he must concentrate on are fairly obvious: soil, seed, water, sunshine, nourishment and care. Each component is of equal importance because only together do they bring fruition to a successful harvest.”
The same is true for your business. There are half a dozen things that will make the most difference to the value of your business. And you will only get results when all these things work together in a system. The question you might be wondering then is – what are the half-dozen things that will make the most difference to the value of my business. The understanding and application of these half a dozen things is then the key to success.
While there are half a dozen things, this one thing is so important as it cuts through the other five things. But not only is it a difficult one to guess but its relevance is not very intuitive at first. Thus, most people ignore it and I think you might have too.
What’s Your Why?
Are you at least a little bit surprised with this answer?
Another version of it – Why do you do what you do? Or
Why are you in this business?
Try this exercise – Ask the above question to your team but first answer it yourself. Write it in a notebook or the app on your phone or wherever but write it.
a. How easy was it for you to answer this question?
b. Does everyone on your team know this Why?
c. Do their answers align with yours?
Here is why this first thing is important.
If you and everyone on your team know your why, there will be minimal disruption in running your business. The effectiveness and efficiency of your business will be superior. This is because people stay at your firm. Not just any but good people stay at your firm. People who believe in the cause. People who are committed to the cause. You are not constantly hiring or changing people. And this applies not only to your team but also to your partners who support you.
Imagine the pain and cost of constantly hiring people. It’s expensive in every way. We all know that it is far more profitable to retain existing clients than to keep adding new clients. Isn’t the same then true for our team members and all our key relationships?
There is no doubt it is.
At the same time, does your team truly believe in your why? Do they believe in world class work/delighting the clients or do they just want to go through the motion of work?
The answers to these questions are equally important too.
A strong belief in delighting clients leads to growth through a culture of excellence. And it’s a no brainer to see how delighted clients can help you in one of the most important levers of growth – referrals.
But what do the above things assume?
That you have invested in people.
You have recruited people who believe in your cause. And why is this important?
Because people who believe in the cause will not only help you grow the firm but also provide you with a solid succession plan in place when the need arises. And these 2 things are the most important drivers of value of a business.
Many in our industry mistakenly think of AUM, revenue and number of clients as the driver of valuation of their firms. Yes, these things do matter but nothing matters more than having a real team with deep personal relationships with clients and at the same time can drive the future organic growth of the firm. If you haven’t addressed this already, then you have a real problem. And your problem will become the problem of the firm that acquires you. And who do you think wants to create more problems for themselves? The answer as you know is NO ONE.
Ashish…are you listening?
P.S. The Other Five Things – Ideal Clients, Value Proposition, Client Experience and Technology Innovation, Marketing, and Operational Excellence.