In order to achieve your defined measures of financial reward now and upon exit from your practice, you must design and hire a team that is:
1. Capable of all aspects of practice management, client development and client service delivery without you
2. Sufficient in size to create enterprise value in your practice
3. Interested in assuming the reins of the business after your exit
At its core, enterprise value (the economic value of equity in your firm) is what not only will attract other strong advisors into your firm, but also serve as the key determinant of the economic return you’ll be paid upon your exit from the practice.
Therefore, the team you design and hire must be capable of engaging in and developing all aspects of the firm’s activities – from rainmaking to relationship management, planning, advising, administration, operations and leadership. But where do you start? How do you determine whether or not you have the right people in the right roles, and if you don’t, how do you go about correcting course?
Fostering greater interdependence
First and foremost, you need to be able to step back and objectively assess the current state of your practice.
Of the functions and activities currently dependent on you, which are most important to your firm’s sustainability and growth of enterprise value?
Which of those might be shared more completely with other team members to create more sustainable enterprise value?
Are there specific areas of development you need to focus on with individual team members so they can eventually assume additional areas of responsibility from you?
Do you need additional team members in order to lessen dependence on you? If so, when will you need to add them and what skill sets will they need to take on the functions you’ll shift to them?
Of course, there will be a direct correlation between the value you ultimately wish to extract and the size of the team you’ll need to generate sufficient revenue to reach that goal.
Keep in mind that the vast majority of firm sales are internal. Therefore, cultivating team members who are interested and willing to buy the practice is going to be paramount to reaching your personal financial goals. Even if you end up selling externally, a buyer is only going to pay a premium if they feel assured of team stability and long-term practice continuity.
Building a strong, interdependent team is not only an essential ingredient in building sustainable enterprise value, it provides the foundation that allows you to work the way you’ve always wanted to work while achieving your short-term financial goals as well.
If you're looking to grow your team and want to learn more about business coaching, click here.
Coaching Questions from this article:
What more can you do to ensure that every member of your team understands your common goals, why they’re important and how they’ll be achieved cooperatively?
Which of your current responsibilities are solely dependent on you? Which current (or future) team members could take on joint responsibility for each of those and how might you undertake the transition?
How can you better emphasize the importance of mutual support among team members, and stress that success depends on the participation and commitment of everyone on the team?