When I started my consulting business back in 2001, the independent advisory industry had one major problem: The baby boom generation of firm owners was starting to reach retirement age. I built my business on providing solutions for this problem.
In working with hundreds of firms, I realized that most advisory businesses had two basic deficiencies that were hampering our ability to find workable solutions. The first was that most baby-boom owners didn't understand the fundamentals of running a successful advisory business — an ignorance that surprisingly includes owners of some of the most successful firms, raising the question of how much more successful many of those firms could have become under more experienced business leadership.
The second issue, which was in part based on the first, was that most owner-advisors were failing to train their successors to successfully take over and run their firms. As I mentioned, I've built my business on providing solutions to those two problems, such as transforming some larger firms into smaller, cash-flow-based firms that are much easier to manage successfully.
Fast forward to 2017. The majority of boomer firm owners either have retired or will retire soon, turning over a growing number of their businesses to my fellow Generation Xers (folks roughly between the ages of 35 and 50 years old). While many of my compatriots feel this is cause for big-time celebration, they don't seem to realize that it is also a tragedy. In very short order, whatever business wisdom the boomers have acquired will be lost forever, creating a knowledge void that the Gen Xers somehow are going to have to fill.
But that's not all — it gets worse. For some reason, we Gen Xers seem to be incapable of asking for or accepting any help from others. My theory is that most of us were raised by boomers to be very independent and to have unrealistic views of our own abilities. Consequently, most of us don't see the need to learn from others. Instead, we figure that if we just roll up our sleeves and get to work, we'll be successful.
While this kind of self-confidence can be useful to a point, it can also create serious problems, particularly when trying to run a successful business. For one thing, Gen X owners have no patience for learning fundamentals (or much of anything else). Instead, they want to jump right in with a solution, which means that they rarely, if ever, plan for or even anticipate their strategies not working out.
This, of course, leads to two more problems. First, Gen Xers spend a lot of time denying the actual outcome, and then, when reality finally forces them to acknowledge failure, it becomes a major, often incapacitating, blow to their ego. As you might imagine, both reactions render the firm owner incapable of making adjustments to a plan, or of making other decisions that would ultimately lead to success. Simply put, rather than acknowledge and fix, owners in my generation usually just quit and move on.
I've had to radically alter the way I work with owners of my generation. By trying to learn on their own, Gen Xers have developed a lot of bad habits that they need to unlearn. So, rather than assuming my typical role akin to one of the "Men in Black," the expert who's here to tell the firm owner how to solve her or his problems, I've transformed my approach to that of Mr. Miyagi in "The Karate Kid," browbeating and cajoling Gen X owners to "wax on, wax off" with their fundamentals until they build a strong enough base to serve as a foundation for a successful advisory business.
I've found that there are 22 fundamentals that successful firm owners have to get under control, which can be organized into eight main areas. I have agreed to write more frequently for ThinkAdvisor.com, and in these future blogs, I'll address each of the fundamentals. For now, here are the main areas along with why they are essential to the success of your business:
1. Leadership. Encyclopedias have been written on leadership, but in an independent advisory business, the basic job of top executive — owner, senior partner, managing partner, CEO, etc. — is to create and protect the brand of the firm. In most cases today, the brand probably already exists, but that doesn't mean that it can't be tweaked or even overhauled to increase success.
