Successful practices of the future will adopt one of two business models and need to be very clear about what it is they do
I believe the practices of the future will have business models that are corporatised and multi-disciplined, or niche specialised and very fully priced. In both instances practices need to be very clear about what it is they do.
In No More Practice 4, Sam Henderson is on a journey to grow his SMSF practice in the most effective, efficient way possible. A key part of my advice to him is to consider corporatising his business model – something that many practices can benefit from with the right advice and support.
When corporatising a business model, the number one thing a practice principal needs to understand is the role that they play. At Securitor, we believe that we have relationships with four key individuals within a firm: the adviser, the CEO, the business owner and for those who run their own AFSL, the responsible manager.
For the practice principal, there are a number of key considerations. They need to determine whether they are operating as a:
- Adviser, in which case they have the technical competence and expertise and are face-to-face with clients and prospects every day
- CEO, in which case they’re focused on the people, systems and processes, clients and financials
- Business owner, in which case they’re concerned with return on capital invested – either to grow their business now, or to trigger a liquidity event sometime in the future and also risk management;
- Responsible manager, in which case they are focused on the responsibility of ensuring the organisational competence of their business and managing the associated risks with running their own licence.
It is important that the practice principal be clear on their role, so they can decide where to focus and allocate their time to each of these roles as required in going about their day. In doing so, this will improve the outcomes for the business through clarifying each of these individual areas and also make the processes in your business much more efficient.
Finding your niche
The second business model for successful practices of the future is to be niche specialised and very fully priced. I actually don’t think that it’s all that difficult to find a niche. You can be geographically specific, specific around education type, or specific around demographic split in your business.
For example, we’ve got a number of practices that focus mainly on legal medicos, while we have other practices which focus mainly on opportunities in the accounting space and the small to medium enterprise businesses that service that sector.
The reason for establishing these particular niches is not necessarily because people go looking for these sorts of clients, but rather advisers naturally gravitate towards people who they are familiar and comfortable with – and better able to build rapport with and service.
So if there’s one tip around finding a niche I would say it’s actually to trust your gut instincts about the people that you gravitate to in your personal life. Trust your instincts about the people that you find you connect with early in your career, and build a business out of this. Whether it be based on geography, age, demographics or a specific piece of advice, if you trust your instincts you will intuitively know how to find your niche.
