In order to build a successful financial advisory practice, you must understand both the challenges and the opportunities you will encounter in your market.

This knowledge will allow you to “better align your resources to take advantage of potential opportunities and put measures in place to address anticipated challenges,” says Mahesh Dwarkaprasad, a project manager with Octane Capital Inc. in Toronto.

To get a clear picture, you should conduct a SWOT (strengths, weaknesses, opportunities and threats) analysis on your practice and its operating environment, says George Hartman, CEO of Toronto-based Market Logics Inc. This process will not only help you to establish your challenges and opportunities but will also allow you to determine your potential for growth and penetration of your target market.

Here are some of the issues you should address in determining your challenges and opportunities:

> Who are your competitors?
Identify those who provide services similar to yours in your market — your competitors. Make a list of your competitors and the products and services they provide.

“You want to know who else is doing what you are doing,” Hartman says.

Adds Dwarkaprasad: “The more you know about your competitors, the better you will be able to design strategies to differentiate your practice.”

> Evaluate your market
Conduct research into your market environment, with the understanding that different markets have different characteristics. If, for example, you find that a significant portion of the market in which you operate consists of seniors, then you may be advised to focus your communications and product offerings based on the needs of seniors.

It may not be possible to get the exact size of your market, Dwarkaprasad adds, but a reliable estimate will allow you to gauge its approximate demographic composition.

> Assess the scope for growing your practice
Based on your assessment of your competitors and the size and demographics of your market, Hartman says, you should be able to determine how much scope exists to grow your business.

Says Dwarkaprasad: “Being able to get people to choose you over your competitors is a challenge to penetrating your target market and growing your business.” Find out if there are any “unfulfilled needs” in your target market, which will give you an opportunity to fulfill those needs.

> Assess your challenges
Once you have identified your challenges, determine whether you have the resources to overcome them and seize any available opportunities to do so.

“This involves an assessment of your internal strengths and weaknesses,” says Hartman. Ask yourself questions such as:

  • Do I have the resources to grow my practice?
  • Do I have to make changes to my existing practice?
  • Do I have the ability to differentiate myself?

> Align your strengths, eliminate weaknesses
Your strengths will help you to overcome your challenges and take advantage of existing opportunities. At the same time, being aware of your weaknesses will enable you to determine what you need to do to gain a greater share of wallet in an in an increasingly competitive environment.