Have you ever completed a business plan and then stuck it in a drawer and forgotten about it? Does your firm make you fill out business planning templates that are based on their needs instead of your goals? Are you just tired of going through what seems like an annual exercise that looks great on paper in the beginning of the year, but seems to fall short at the end of the year?

To write an annual business plan that works, there are several components. It entails engaging in the right was to conduct a review of the closing year, creating massive leverage in the coming year, and finally, coming up with strategies to make your plan actionable instead of merely readable.

You need to start your business plan by reviewing the year coming to a close. Some key metrics you should consider reviewing are:

  1. What are your net flows (assets acquired versus assets transferred out)?
  2. How many high-value clients did you acquire, and how did you acquire them?
  3. What are your client satisfaction or loyalty scores? Did they change?
  4. What were your employee satisfaction or engagement scores? Did they change?
  5. What were your product sales? Did those sales reflect the mix you desired?
  6. What is your return on assets (revenue divided by assets under management)? The industry average is 1.19%.
  7. What are your business expenses as a percentage of revenue? Should it be lower?
  8. Does your tech need an upgrade?
  9. Did you have enough time off?
  10. Don't forget the most important thing—did your health improve or deteriorate? It rarely stays the same. Your health impacts your work performance, and your job can impact your health.

The best way to review these metrics is on a graph or chart that can quickly show you the trend of the metrics month to month, year to year, etc. Most broker-dealers provide tools for this type of analysis.
Once you review your metrics, both strengths and weaknesses will be apparent. Apply the 80/20 rule to everything. The 80/20 rule is often called the Pareto Principle, and it simply means that 80% of the effects come from 20% of the causes. Too many people get burned out trying to change 100% of the causes. That is the road to frustration and stress.

I promise that you can take any metric you want and identify the 20% causes responsible for 80% of the effects. It is fairly well known that, for most practices, 20% of the clients produce 80% of the revenue. In that case, 20% of your clients also cause 80% of your problems. Also, 20% of your staff account for 80% of the activity driving your practice. Meanwhile, 80% of your referrals come from 20% of your clients. You should also recognize that 20% of your marketing activities provide 80% of your results. Get it?

Make a list of your weekly work activities and decide which 20% of your activities are responsible for 80% of your results. What 20% of your products result in 80% of your revenue? Apply this principle to every metric I listed above, and anything else you track.

The next exercise will make you laugh and then make you cry. First, identify the 20% activities responsible for 80% of your results—makes you kind of happy when you do those things well, right?

Now, how much time do you spend doing those 20% activities? (Are you sad yet?)

Once you complete applying the 80/20 rule to everything, you will have identified exactly what you need to be doing, who you should be seeing, what you should be selling, what staff person should be getting more attention and money, etc. You will also have identified the black holes that are sucking the life out of your practice. Now, you are ready to plan for next year.

Look, if your plan is: "I want to double my revenues," I have news for you: that is a desire, not a plan you can control. Your plan needs to focus on what you can control—you and your staff's activities. It's fine to start with numeric goals and/or desires, but your business plan needs to spell out which activities need to be performed, by whom, and how much time will be devoted to those activities a month, and when will they be performed.

Specifically you need to be spending more time in the 20% activities that produce 80% of your results and reduce or eliminate the other stuff. How? Begin by identifying the 20% clients that cause 80% of your problems, and fire them. Better yet, send them to your competitor. Then, identify low-value activities and eliminate or outsource them. There are $10 an hour tasks and $100 an hour tasks, and they should be delegated accordingly.

Typically, referrals are one of those activities responsible for the majority of your new client acquisition. I have never met an advisor that doesn't have client acquisition as a top annual priority.

Todd Colbeck is principal and founder of the Colbeck Coaching Group,
a subsidiary of General Business Center, Inc. You can reach him at this address.

Register or login for access to this item and much more

All On Wall Street content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access