This case study is based on the situation of a client of the Covenant Group. Names and details have been changed to preserve privacy.



“This is a really tough decision for me,” Chris Robinson admitted. “I know I am going to have to bite the bullet on it someday, but I am not sure I am ready.”

Chris, an up-and-coming advisor, had decided after working in a branch environment for two years that he wanted more “independence.” To Chris, that meant setting up his own office and establishing his own identity. But like so many relatively young advisors, Chris was concerned about costs. So he elected to work from his home. He had a comfortable, private area for his desk and a high-speed Internet connection.

He had also arranged with the telephone company for one of its “identity-ring” services, which gave him a dedicated number without requiring a second line. One ring meant the call was to the home number and two rings indicated it was a “business” call. Each number also had its own voice mailbox. Chris’s children knew not to answer the business ring and if Chris was not available, his wife would answer the business line as if she were his receptionist. For less than $100 a month, to the outside world, Chris Robinson Financial was a fully functioning advisory practice.

There was, however, the inconvenience of meeting with clients. For those with whom Chris had more open, casual relationships, getting together in his family room was OK. In fact, once the business aspects were concluded, the session often morphed into more of a social occasion than an advisor/client discussion.

For those clients for whom Chris felt the need to meet in a more business-like environment, his dealer firm had a “client room” on its premises that could be reserved at no charge.

In the 18 months since becoming “independent,” Chris had been able to grow his business with few direct operating costs. Now, however, he had reached the inevitable point that most advisors in similar circumstances do: he was wondering whether it was time to hire an assistant and set up an office.

“What’s driving this decision for you, Chris?” I asked.

“Actually,” he replied, “it was a comment by one of my best clients. We were sitting in my family room having our semi-annual review. When I got to the item on the agenda about asking for introductions and described my ideal client profile, my client said he had a business associate whom he thought would fit. But then he added that he had reservations about introducing him to me.

“Obviously, I was taken aback and asked why. His response was: ‘Joe is one of those guys to whom appearances are important. Everything about him is always orderly, from his hair and his clothes to his car and his office.

“‘Don’t get me wrong — he is a great guy and lots of fun. And I know you two would hit it off from a personality perspective. It’s just that he has this thing about looking and acting like he has everything under control. Quite frankly, I don’t know how he’d react to the fact that you work from your home. I know it has no bearing on your ability to do good work and I actually enjoy the chance to mix business and pleasure. But my sense is that Joe just might think it was a little unprofessional, so to speak. Do you have any plans, Chris, to open a real office?’

“It was the emphasis on the word ‘real’ that jolted me into thinking it was time to take another look at my business model. I have been a sole practitioner for almost two years now. My business is doing well, but I know I am missing opportunities because of the way I work. I literally do everything, from answering the phone to creating client plans to sales to administration and client service. I have saved money but, perhaps, it’s time to go to the next stage in my business. What do you think?”

“Your dilemma, Chris, is not uncommon,” I replied. “Every successful business goes through stages of growth that typically look something like this.” I drew a large stylized letter “S” on my whiteboard.

@page_break@“Think of the bottom of the ‘S’ as the start-up period — generally slow growth as you learn to identify repeatable patterns of success,” I explained. “If you are able to implement the good ideas, the business begins to accelerate until it invariably reaches a level of complexity where the pace slows and growth starts to plateau, perhaps even declines. That’s the top part of the ‘S.’

“At that juncture, the business has to re-invent itself to renew the growth curve. In fact, long-enduring businesses pass through a number of these cycles as they evolve, each time re-examining their strategies to break through the next ceiling of complexity. In the world of a financial advisor, we recommend a critical review at least every two years.

“It sounds like you are at that point,” I said. “Think about it: two years in the branch; two years working from your home. What do you want your world to look like two years from now?”

“Well, obviously, I want my practice to be larger,” Chris answered. “And I’d like to spend more time with my clients and less on non-revenue producing activities.”

“In other words, doing what you do best?” I asked.

“Yes,” Chris responded. “I can do all those other things reasonably well. But I know, of course, it’s not the best use of my time.”

“In our parlance,” I said, “we call that ‘working at the highest level of your capability.’ And to do so, you have to employ two concepts: ‘optimization’ and ‘leverage.’ You can probably guess what each means. Optimization is all about identifying those things that you do best and working to spend as much time as possible doing them. ‘Leverage’ means taking advantage of the time, talent and resources of others.”

“You mean hiring someone,” Chris offered.

“It might,” I continued, “and I know from personal experience that is a difficult decision. You think your personal standard of living is going to suffer because the salary expense is coming right out of your pocket. But I can also tell you that, almost without exception, advisors with whom I have worked who finally made that choice come back about six months later and ask, ‘Why did I wait so long?’

“Having competent staff to free you up to spend more time on business development activities is an investment in your practice — not an expense,” I said.

“Intellectually, I know you are right,” Chris admitted, “but emotionally I am not sure I am ready to commit to a $30,000-a-year salary for someone, a couple of thousand dollars a month for a long-term office lease, plus all the furniture and trappings — not to mention the hassle of looking after my own space.”

“Why not start off slowly, then?” I offered. “There is an executive office suite not far from your home. Someone I know in another industry has settled in there. For about $1,200 a month, she gets a prestigious business address, a nicely furnished office, a place for her part-time assistant to work, reception service and telephone answering. There are a couple of fully equipped meeting rooms available as well. It is very professional and both she and her clients love it. Would something like that appeal to you?”

“It would definitely appeal to me,” Chris responded. “It still leaves the question of hiring someone. But, like your friend, a part-time assistant would probably be enough to start. If, as you predict, my business continues to grow or even accelerates, I could commit to a full-time person when I really need one.”

“Yes, you could,” I answered, “and knowing the trajectory of your business today, I suspect that won’t take very long. Do you have any candidates for the position?”

“Actually, just as we were talking about this,” Chris said, “I thought of Mary who worked at my bank until recently. When two branches merged, she was downsized. She told me she was taking a couple of months off but then wanted to ease her way back into the workforce. She has excellent people skills and attention to detail. I’d love to have her working with me!”

“So what’s next for you?” I asked.

“Three phone calls,” was Chris’s reply. “One to the executive office, one to Mary and one to my client who was reluctant to introduce me to his associate.

“He needs to know that I am setting up a real business!” he said. IE



George Hartman is a coach and facilitator with the Covenant Group in Toronto. He can be reached at george@covenantgroup.com.