I’m going on a bit of a rant this week! I hope you’ll find it helpful.
For many years financial advisors, M&A advisors, insurance brokers, bankers, and estate planning attorneys talked about “exit planning” or “liquidity events.” They were dismayed as owners were disappointed by the money they got for the company they’d nurtured for decades.
Suddenly a few began to shift the language from exit planning to “value creation.” This new phrase value creation would surely mean more to firm owners.
Guess what? I’ve had dozens of conversations with firm owners and none of them—NONE—have immediately understood what “value creation” means. It’s just more jargon.
I decided to try out a few different phrases: exit planning, liquidity event, value creation, and nest egg. “Nest egg” is the term most familiar, and most meaningful, to firm owners.
Now that you and I are on the same page, let’s look at three tips that will help firm owners build their nest eggs.
Three Tips to Build Your Next Egg Starting Now
The key is to start wherever you are. Here are the 3 tips that have made a difference to many of my clients.
- Commit to a financial advisor. I remember feeling queasy the first time I spoke with an advisor who’d been recommended to me. What would she think? Would I look stupid or naïve? Careless or ridiculous? Would she reprimand me, tell me what I should have done?
It has been a huge relief to confide in a knowledgeable expert all my quirks, fears, and mistakes.
If any financial advisor doesn’t feel good to you, find another one. The right advisor takes you where you are at. Nothing can be done about the past, only the future.
Don’t be shy or withhold information. Your financial advisor should be someone you believe is on your side.
- Take a close look at your business from all angles.
If this is too complicated or time consuming, you won t do it. That’s why we created our LADRSM Tool. It guides you to study each of the 7 elements needed by a firm to deliver results.
Once every six months take a half day to review the firm’s Strategy, Brand, Offerings, Prospects, Marketing, Sales, and Leverage. Choose one or two elements to dive deeply into each time.
For example, review and analyze the range of products and services you offer. Make a list by name and revenue per item. Do they fulfill your strategy; make you enough money? Knowledge and intellectual property should be fertile ground for upgrades. Get rid of ideas that have become obsolete.
Also, look at how many long term clients you have. How many new clients are coming to the firm? Are you enjoying introductions and referrals from long-time clients? While having long term, loyal clients feels great, some may no longer be viable given your product and services upgrades.
A firm that grows the owner’s nest egg is a firm that ensure that all 7 elements that deliver results are working in synch with each other.
- Live by, the wisdom that the owner should work ON the business, not in the business. If you wonder what the heck you’ll do all day if you’re not actively marketing and selling, doing client work, and managing operations, stop it.
Firm Owners should be where their clients and prospects are. That’s how they get inspiration for the next generation of offerings; learn what’s obsolete; and where they might get in at the leading edge.
Take a longer view. Read articles, attend meetings, follow other leaders to keep abreast—and even ahead—of developments. Then bring that knowledge back to the firm for development by your subject matter experts. The Owner should also mentor one or two people who will learn how to also take the longer view.
The Owner who takes the longer view, and mentors others to do the same, is the owner who builds his or her nest egg.
One Twig at a Time
Add one twig, then another. Before you know it, you’ll have a solid, and robust nest egg that will take you wherever you choose to go, when you choose to go there.
Think some clarity around your situation could help? Let me know and we’ll talk.