Do the Math: The Hard Realities

By | January 17, 2017

While every advisor aspires to expand their practice in the New Year, it takes more than hope to achieve consistent, exponential growth. You need a plan, and that plan should be built upon a measurable foundation. If you do the right math, you can illuminate the steps you need to take to reach the new heights you desire.

Start by having an honest conversation with yourself. You likely have a business plan, but sticking to it and acting upon it can be difficult for a number of reasons. For 2017, challenge yourself to not only identify the path you need to take but to take the steps necessary to achieve your goals.

Let’s start with two questions: How much revenue did you generate in 2016, and how much would you like to generate in 2017?

Next, be honest with yourself. Are you going to put in the leg work?

The difference between these two gives us the ground you need to cover to reach your goal. Next, find your average revenue per new client to estimate how many new clients you need to acquire in 2017 to reach your goal. Within reason, we can assume that if you do next year what you did last year, you can expect to see about the same results. The plan we are going to make will address that new growth that you desire.

All of this is straightforward, and most advisors get this far, but our aim is to understand the steps you need to take to make those sales figures a reality. You know how many new clients you need, yes, but what will you do to get them? You might get some referrals. Those can be lucrative, but they are not dependable. You cannot accurately predict how many referrals you will receive. Stimulating that activity should still be part of your plan, of course, but the results will be far too inconsistent to become the sole piece of a reliable new business strategy.

If you want new business, you have to find it. This is where new business math gets interesting. How much leg work will you have to do to get the sales that you need?

Really. Be honest here.

One of the producers we’ve met through our work tells a story of getting his start (in the early 90s). He describes building a list of 500 leads and the grind of cold calling one after the other. Out of 500, he would set an average of 12 appointments. 4 of those 12 would meet, and 1 sale would ultimately be made. 12-4-1. Week in. Week out.

How much time it takes to develop new business from scratch is a metric that many advisors don’t track. We do. We know that a salesperson that specializes in cold calls needs about 50 hours of cold calling per month to set 6 appointments. 5 of those appointments will meet, and 4 will be qualified. A truly exceptional salesperson will close 25 percent of these opportunities (and that’s a really high conversion rate by almost any standard).

So if you need to close 10 sales to reach your 2017 goal, you will need 40 meetings with the right prospects, or the equivalent of 500 cold calling hours. To put those hours into perspective, if you have a 40-hour work week, you will need to set aside a little over 3 months, exclusively, to cold calling in order to generate the new business growth you desire.

That’s a lot, especially for an established advisor with an existing base of clients to service. If engaging completely new prospects is not your forte, which is not unusual, you might need even more time to develop these opportunities.

You want the new business, but do you want to do this volume of cold calling at this stage of your career? Fortunately, there are other ways to tackle this challenge. Here are your options:

  1. You can opt not to grow and maintain your status quo.
  2. You can do the calling yourself.
  3. You can buy leads to cut down a small portion of the upfront research.
  4. You can partner with an appointment setting firm to shortcut directly to meeting to qualified prospects.
  5. You can ramp up your seminar activity to attract new prospects.
  6. You can establish new partnerships (like with CPAs) to generate more referrals.

Option one is not acceptable. If you aren’t growing, you are giving your competition opportunities to expand. For an established advisor, option two is likely impractical. As we discussed before, it takes a significant amount of time to set a meeting, which also is the weakness of option three. Buying leads, in theory, is a happy medium between pure cold calling and appointment setting. Unfortunately, most leads are of a poor quality, leaving you to spend just as much time cold calling as you would have if you had started from scratch on your own.

That leaves options four through six. If you are chasing B2B opportunities where the sales are potentially large, appointment setting is the clearest, most direct path to growth. It allows you to get in front of the volume of prospects that you need to meet your goals without sacrificing huge quantities of your already limited time.  At the same time, seminars and strategic partnerships can connect you with new prospects without feeling as brutally soul-crushing as hours of cold calling can feel.

Do the math. Grow your business.

A version of this article originally appeared on LifeHealthPro.

Photo credit: Dalal Al Mudhaf, used with permission under creative commons license.

About the Author/Host

Jason Levy

Jason Levy - Vice President of Client Services

Jason oversees the entirety of each client’s appointment setting program, from implementation to ongoing management. Before joining The PT Services Group in 2006, Jason spent ten years in client services in Phoenix, AZ., through Cramer Krasselt Advertising and PR, the Phoenix Coyotes of the NHL, and the Boys & Girls Clubs of Greater Scottsdale.

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