Many advisors have a vision for their business, but that vision often gets blurred by the cataracts of competing priorities and short-term fixes. A common distraction is the temptation to over-diversify when one's approach or market or branding begins to sour. While this may work at a Fortune 500 company, most small businesses (such as advisory practices) do not have sufficient resources to open another front successfully–it's like trying to diversify a $1,000 investment.
Diversification is at its core a defensive strategy: We use it to manage risk. Long term, however, you can't grow by hedging your bets. Eventually, you have to commit to an offensive strategy.
Enter the vision statement. It differs from a mission statement in that it's designed solely for internal use, serving as a framework for making critical decisions about your business. Conversely, a mission statement is more often a concise phrase used in marketing materials. It may be an excerpt from the vision statement, or a rallying cry, but by itself a mission statement is not an adequate guide to building your business. That's because strategy encompasses more than marketing considerations; it includes human capital, technology, operations, financial management, delivery processes, client service, and other management disciplines.
A vision statement should be a relatively lengthy, well-written document that identifies your priorities and expresses where you want the business to be long-term. It provides a framework to both management and staff for whom you serve, what you provide, what culture you are trying to create, what your values are, and what initiatives you will focus on. It should guide your priorities when allocating your time, money, management, and energy. The vision statement is a filter for every key decision in your business, including what type of staff to add, when to merge or acquire another firm, which clients to take, how much to invest in which technology, and even in selecting the right custodian or broker/dealer.
By example, take a look at the sample statement on the next page. These advisors begin their vision with what they want to be known for–superior client service–and define what that phrase means. They support this statement with the type of organization they wish to create, the optimal type of client they wish to serve, and the geographic region in which they want to focus.
You don't necessarily need to follow this sequence since every firm's strategy depends on its own core capabilities, market, competition, and definition of success. In our work with advisors, we find there are nine leading strategic drivers (see my February 2006 column). When created properly, the vision statement should crystallize what you consider important and what you envision your business becoming long-term. It should be clear enough to have practical application in how you manage your business.
Using the sample statement, it's clear that the principals know what they should and shouldn't do to achieve their vision:
Priority 1: Invest in creating a superior client service experience and develop metrics and a quality control process to ensure this occurs.
Priority 2: Build a deep organizational structure that is designed to support this strategy and under which teamwork and cooperation is promoted.
Priority 3: Create a brand so that the practice is recognized as an expert in dealing with business owner clients.
