There’s nothing big, hairy or audacious to see here

It’s that time of year again. The time of year when Christmas jumpers make their annual appearance, questionable beards are grown and goals are formed for the year ahead.

James Collins and Jerry Porras originally coined the term ‘Big Hairy Audacious Goals’ in their 1994 book Built to Last. As we start pulling together the numbers that will drive our business during the next twelve months, I’m not convinced that any of them quite meet this description. They’re ambitious, sure. But they are less hairy than the stubble spreading across my face during this month of Decembeard. They are grounded in reality, so in that sense are not quite audacious.

We take a pretty simple approach towards establishing our business goals. First, we come up with a number. This number is arrived at by adding our projected expenditure for the year ahead to the level of profit we want to generate from the business. This is profit we demand in return for taking the risks we take as business owners with our capital. It seems reasonable enough to want profit in return for hard work and risk.

From that number we subtract the recurring revenue already generated by the business. This is by no means passive income. There’s no such thing as passive income. We work our butts off each year to retain and grow that recurring income, by delivering a promised service to our clients and being consistently better than any alternatives they might be considering, including but not limited to the competition.

So big number less recurring revenue leaves us with a revenue goal we need to generate from engaging with new clients. We know the average initial fees we earn from engaging with a new client, so it becomes a simple case of dividing the revenue target by the average revenue per case to calculate the number of new clients we want to work with in the year ahead.

We also know how good we are when it comes to convincing a prospective new client to become an engaged new client. This tells us how many new enquiries we need to generate each month which, based on the average conversion rate, provide the number of new clients we need each month. Hit these numbers consistently each month and we reach our headline revenue goal.

This all sounds very ‘salesy’ and there’s absolutely nothing wrong with that. Whilst Financial Planning has rightly moved away from an industry to become an emerging profession, running a Financial Planning business relies on achieving revenue targets and remaining profitable. Without consistent profitability, we don’t exist to deliver service to our clients. I can think of little more irresponsible than being a habitually loss-making Financial Planner.

Of course enquiries, engagements and revenue are not the only metrics we measure. Our targets dashboard – which we update and review at the end of each week and at our monthly board meetings – captures key figures from all aspects of our business. It’s the revenue target though which dictates the tempo for the year ahead. It certainly informs our marketing planning.

On that front, we’re planning a lot more of the same and a couple of new additions for next year. What has worked exceptionally well for us this year has been content marketing (including the development of our podcast), PR activity (resulting in over one hundred national press mentions) and significantly raising our local presence (through networking and sponsorships). Added to the mix next year will be key client contact plans and the same for our professional contacts.

We’re also forming a busy events calendar for 2016, with a healthy mix of financial planning topics and lifestyle events. Reviewing the hobbies of our existing clients has identified common interests in food and music, theatre, walking and gardening. We will be catering for all of these with events for our clients which bring value to their lives and keep us at the front of their minds, generating introductions to the people we want to win as clients.

There’s nothing particularly complicated in all this, but it does require focus and a great deal of hard work.

Has your planning started yet for next year? Have you included anything big, hairy and audacious in there?


3 thoughts on “There’s nothing big, hairy or audacious to see here

  • Hi Martin,

    Our business is probably at a different place but we do have one challenging ” recurring ” task each time we begin a new year.

    Our income has been almost wholly recurring for many years which is fine but does present the ” recurring ” challenge of demonstrating value to client’s especially when there is little or no growth to be had on their capital.

    We have used Transact since opting out of commission in 2003 and the complete transparency given to clients by the process does remind you that the clients are aware of what they are paying you each and every month.

    Is this a challenge you share and if so how do you deal with it ?

    • Hi Phil, thanks for your comment. We’re still a growing business, so our revenue split is 72% recurring and 28% ‘new’. This is also important for us because we work exclusively with retiring post-war baby boomer generation clients, and their elderly parents, so our clients are in the wealth decumulation phase of their lives. That said, we are disclosing revenues to clients in black and white terms. We do this throughout the year, to coincide with annual review dates for each client, rather than at the start of the year. This spreads the communication over twelve months, which I guess helps, but it also means we present it along with our twelve-point annual wealth check agenda – As you will see from this link, there is little there which is about investment performance, so we shift the value of what we do towards other areas of Financial Planning. I can’t recall a single occasion over the past decade where a client has compared what they are paying us to the growth (or loss) in the value of their portfolio in that year, which I guess is a good thing.

  • Hi Martin,

    Thanks for that.
    I think a lot of our clients began as boomers otherwise they would probably be long gone by now.
    Forgive my ignorance but is what you refer to as decumulation ( and I suppose accumulation ) what old buggars like me call saving and spending ?
    Your comments indicate you contact your clients once a year for their annual review which will include price disclosure ? Presumably then your clients do not have ongoing access to charges in the manner that ours do on Transact ? If this is the case then I am not surprised clients don’t compare costs with outcomes. As I said our clients have had over ten years of immediate disclosure of all costs involved in our mutual relationship and we have always thought it would be extraordinary if there was no comment so we take particular steps to pre-handle the issue.


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