But this says nothing about the quality of advice or the quality of the lives and relationships involved, does it?
I am not saying do not grow your business. I am just saying that we should not automatically hit the ‘growth button’ and we need to be clear about the pain we want to bring into our lives as a result of whatever ‘growth’ means. As a small adviser business, many in the industry will have you believe that the writing is on the wall, and you are toast. I am not convinced that is right at all.
Small, not small-minded
If you want to stay small, what you need is to become known for something specific to a big enough audience that really values what you do, and is happy to pay for it. A small advisory business will struggle if it has a commoditised service that looks and sounds like everyone else’s, or if it cannot get away from getting paid to sell the industry’s products. And let us not forget the industry would quite like to keep advisers in that position.
An increase in revenue, expanding client and adviser numbers, and growing sales does not necessarily convert to increased profits. Scale is notoriously difficult to achieve in a profitable way because the increased scale usually comes with increased costs; and when that happens firms can end up with an even bigger problem.
A small well run business can be extremely profitable, and there does not seem to me to be a real improvement from economies of scale until a firm reaches super-sized status. I wonder whether many of us might not be leading ourselves into trouble by entertaining ambitions of growth just for the sake of it. What do you think?
Please click here for Part 1 and Part 2 of this series.
