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The Biggest Risk in Successful Advisory Businesses

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The Biggest Risk in Successful Advisory Businesses

As business owners, there are two types of risk we face.

The first is the risk that the business will fail. But let’s face it, if you’ve reached any level of success in this industry, this is highly unlikely. The second is the risk that the business won’t reach its potential, that you’ll leave something on the table.

Unfortunately, this risk is not only possible but entirely likely among successful advisors. And it not only affects the success of your business, but can negatively affect your own well-being and even your health.

Jim Collins hinted at this risk when, in his outstanding book Good to Great, he wrote that “good is the enemy of great.”

But I think the risk runs deeper and is more insidious. It’s true that, as human beings, we seem to stop pushing ourselves when things are good. Some would say that’s because running ‘from’ failure is a stronger motivator than running ‘toward’ bigger success. When we’re comfortable that we won’t fail, motivation dissipates.

However, I believe there’s a bigger risk that many (if not most) successful advisors face at a certain point in their journey.

When you hit a certain level of success, you often lose a compelling personal vision of what you are trying to create – the kind of vision that propelled you forward in the first place. Operating without that vision is like a boat without a rudder and can have significant negative consequences for the future of your business.

The Path to Success

To understand what happens, let’s look at the typical progression of most advisory businesses. If we accept that growth is a reasonable standard by which to measure success, then most advisors are succeeding to varying degrees. While there may be hills and valleys, growth is typically moving up and to the right.

However, when we layer in a second measure of success – fulfillment – we see a different pattern. Fulfillment seems more erratic and ultimately appears to flatline. I wrote more about the fulfillment flatline here.

To understand what’s happening (and to do something about it) we need to dig into this in more detail.  There are, in fact, three important and distinct phases, which you may recognize.

Phase 1: The Honeymoon

Phase 1 is that period of time when you have clarity, focus and a hefty dose of energy. You get into this industry with a vision of creating something great – a business that is not only growing, but fulfilling. And while you may not know what you’re doing quite yet, your energy is a strong counterbalance to confusion. The business is growing and it feels great.

At this stage your vision is clear. Your approach, as a result, is highly proactive. Your growth is strong and your level of fulfillment is high. All of this creates true momentum.

Phase 2: The Reality

And then something happens and it’s both natural and necessary. You begin to deal with the challenges that success creates. You spend more time responding to the needs of your clients and your team.  And you may feel like you’re reacting all of the time.

It’s at this point that you focus your energy on creating an infrastructure to support your success. You focus on team, technology and process. For those who didn’t get into the business to focus on infrastructure, it can feel like a necessary evil.

At also at this point that you put your vision on hold while you deal with the necessities of running a bigger business. Your approach, as a result, is highly reactive (to clients, team and everyone else in your life). Growth continues at a steady pace but fulfillment is tested. This isn’t necessarily the work you were built to do.

Phase 3: The Risk

It’s in Phase 3 that we face the big risk. At this point you have your house in order and the future looks bright. You’re still energized to grow and you talk about ‘taking the business to the next level’. But for some reason you don’t feel the wind at your back in the same way you did when you were starting out. Something is different and it creates a form of inertia.

The big difference at this stage is that the personal vision that drove you at the beginning is gone. You are different. And what you want to achieve is different, now that you have some experience under your belt. It’s as if you’re poised on the starting block of a race and you’re full of energy. The starting gun sounds but there’s no track ahead and you don’t know where to focus that energy.

Your vision is unclear and, as a result, your approach continues to be reactive to the day-to-day issues that arise. Growth continues but ultimately begins to decline because you may feel like you’re going through the motions. And yet you’re still responsible for most, if not all, of the growth in the business. It’s here that fulfillment flatlines.

The Impact

It would be easy to brush this off and see personal vision and continued growth as a luxury. The problem is this. Entrepreneurs who are not completely energized and connected to a big future for the business will ultimately create a drag on their own growth. Lack of vision is a powerful thing and the business relies on you for vision, motivation and leadership.

An entrepreneur without a personal vision is like a race car without fuel.

Looking Forward

Of course, it doesn’t have to be this way. I write about finding personal vision extensively in the Pursuit of Absolute Engagement. I can summarize the path forward, in three steps.

To swerve the fulfillment gap and maintain the level of focus, energy and joy that we deserve to have, consider the following:

  1. Change the question you ask yourself. Instead of asking what you need to do to grow the business by 5, 10 or 15% in the next year, ask a new question. What do I want to create? The things you need to do in order to take action on a bigger vision for the future are different from what you need to do to achieve incremental growth.
  2. Once you’ve defined what you want to create, let that vision drive your business vision. What clients will you target? What work will you do for those clients? What role will you play in the business?
  3. Tailor your client and team experiences to actively support that new business vision. This means acknowledging that you can’t create an effective client or team engagement strategy without a clear vision of the clients you serve and their unique needs. Your client experience needs to be ‘in service’ of a well-defined target group.
     

These are, without doubt, big steps so there’s a good chance you won’t accomplish these before lunch! That said, we’re talking about the future of your business (and your life). They are worth considering and I believe we owe it to ourselves to put personal vision back into the driver’s seat of our businesses.

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