For most advisors, business management doesn't excite the same passion as interacting with clients. But tending to the business side of the practice is equally important. If you choose to wear the hat of business owner, the joys of being independent, calling your own shots and determining your own destiny must be balanced out by a slew of management and leadership responsibilities.

How can advisors manage these roles simultaneously? A systematic approach to practice management can help. It encourages advisors to embrace the leadership role and proactively, efficiently integrate fundamental business management responsibilities into their schedules, instead of waiting for crises to happen.

Assuming The Role Of CEO
There's no getting around it: As a business owner, you're the CEO of your firm, and it's up to you to ensure that the practice thrives. First and foremost, every CEO needs to chart a course for the future. This typically involves creating a business plan to define where the business is going and how it will grow. Yet advisors who are so competent at managing the financial lives of others are sometimes sloppy when it comes to monitoring and managing the finances of their own businesses. They may track revenue and expenses, but are they also using gross profit margins, operating profit margins or productivity measures to assess how well their firm is being managed?

A Framework For Business Management
As part of assuming the CEO role, business owners must oversee certain organizational functions. A small advisory practice may not seem to have much in common with a Fortune 500 company, but large and small entities alike must pay attention to these key business areas:
Human resources: A CEO must make sure that her employees complete their daily work accurately and efficiently.
Operational efficiency: She must streamline the business's operations, in part with technology.
Marketing: She must promote the firm to prospects.
Production growth: She must ensure ongoing revenue generation.
Risk management: She must identify and mediate risks to the firm.
Let's break down these critical management functions into a series of activities that will help you feel more confident and in control of your business. 

Human Resources
For a small office, HR can be overwhelming. Luckily, there are a few simple things you can do that have a huge impact.

Assemble the essential documents. In its research on the best places to work, Gallup Inc. has found that employees want to know what is expected of them at work and how they are doing at performing those tasks. This means CEOs must have documented job descriptions, performance reviews and an employee handbook. If you don't already have these, create them. And if you do have them, be sure to use them regularly and keep them current. By defining every position in a job description and regularly giving your employees feedback on how they're doing, you'll build a solid human resources foundation for your firm.

Prioritize staff meetings. Besides creating crucial documents, one of the most effective steps you can take is to hold regular staff meetings. A good meeting can help employees understand how critical their performance is to the mission of the organization.

Operational Efficiency
There's no doubt that technology is key to keeping your practice running smoothly. But any techie will tell you that you need a good flowchart of your manual processes before you can create an efficient automated process. Which processes do you need to document? Though every practice is different, almost all firms carry out these daily functions:
Preparing for client review meetings;
Conducting client review meetings;
Following up after client review meetings;
Determining clients' asset allocation;
Servicing client needs between review meetings, especially when the client needs cash; and
Converting prospects into clients.
Making flowcharts is an efficient way to document these core processes, and it will help you identify opportunities to streamline some processes while you're at it.

Use the checklist system. Once you've made a flowchart of your processes, convert each chart into a simple, easy-to-follow checklist. Unlike wordy written procedures, a checklist covers the basic steps for each task, making it particularly well-suited for a fast-paced work environment. When creating a checklist, keep the following tips in mind:
Make it brief. There's no need for complete sentences.
Indent to indicate multiple "if-then" paths depicting situations with the client.
Include the "last reviewed" date at the top of the procedure to remind yourself to update the checklist at least annually.
Consider color-coding the steps to show who's responsible for completing each action.
Don't forget to title the process!

Having a checklist is one thing. Living by it is another. It's a good idea to conduct an audit at least annually to ensure that the steps outlined in the checklist remain up to date. You can delegate the audit to an employee and have him or her share the results at a staff meeting to ensure that everyone buys into the documented process. Just don't be surprised if it turns out that you are sometimes the problem when a procedure isn't followed!

Marketing
Marketing isn't something to turn on and off like a faucet; it needs to be done consistently to be effective. Furthermore, defining a specific niche to target often yields better marketing results.

Identify your niche. Advisors often want to keep the door open to all potential clients. But more successful marketing efforts are discriminating and identify a particular client niche instead. A brochure or Web site designed to appeal to anyone and everyone typically appeals to no one. With the niche approach, you instead identify your target audience's hot buttons and define what makes you uniquely qualified to deal with them. The result is a better ROI for your marketing efforts.

Build a marketing calendar. A marketing calendar lays out the specific tactics you plan to deploy to reach your target audience. After determining what your niche is, identifying your marketing strategy and tactics and drafting your annual plan, you can delegate implementation of the marketing calendar to a staff member. This helps you be more consistent. You can then meet weekly or monthly with that staff member to review progress.

Production
Whether you run a solo practice or supervise other advisors, staying focused on revenue-generating activities is a big component of production growth.

Hold yourself accountable. A CEO must keep herself and her advisors on track by managing the sales pipeline. One great way to do this is to use a 20-point system: Identify the actions that lead to appointments with prospects (asking for referrals, networking, meeting with strategic alliances) and then assign points to each of those activities. Set a goal for the number of points you need to earn each week (for established advisors with a book) or per day (for new advisors without one). For offices with several advisors, a 20-point system spurs production and inspires positive competition.

Consider your attitude and aptitude. In addition to activity, be aware of how your attitude and aptitude affects, or limits, your production growth. "Enough is enough" is a mind-set for some advisors. For others, enough is never enough.

Risk Management
Different business structures face different risks, depending on the stage and maturity of the practice and existing state laws, not to mention their tax structures. Risk comes in many forms, so advisors must evaluate where their practice stands and be sure they're carrying the appropriate insurance, be it for disability, business interruption or the loss of key personnel.

Make a succession plan. One of the greatest business risks independent advisors take is operating without a succession plan. Luckily, it's a risk that is avoided relatively easily. As the industry has grown up, so have the advisors who built it, and far too many of them haven't planned for the future of their firms. Since getting hit by a bus is an equal opportunity experience, every advisor needs a continuity plan. If you already have a plan in place, remember: Like any other business document, succession agreements should be reviewed annually so you can ensure they continue to meet your needs.

Getting Started
The first step in implementing a system of proactive practice management is to assemble the documents you need to operate like a business. Here are the foundational pieces that most advisors should have:
  A business plan;
Key HR documents (job descriptions, performance review templates and an employee handbook);
Documented core processes and checklists for carrying them out;
A marketing calendar detailing the tactics you'll deploy over the next year;
Tools to help you focus on revenue-generating activities; and
A succession plan and insurance policies geared toward the risks your practice faces.
Second, and equally important, you must use and maintain those documents as integral parts of your management infrastructure.

Making business management a habit. We're all creatures of habit. Advisors are in the habit of managing their clients' financial lives, but not necessarily in the habit of running a business. To make business management part of your daily routine, you may want to use a tool like the chart at left.

On the left-hand side of the spreadsheet are fundamental tasks and activities for running a business. Across the top are the months of the year. The X's represent the months you have targeted to accomplish certain tasks. A spreadsheet like this can help you complete activities consistently, without constantly reinventing the management wheel. You can even block these tasks into your calendar to help you stay on track.

Color-coding the spreadsheet adds a layer of accountability. Green indicates the task is completed, yellow shows the task is started and in process, red alerts you to tasks that are dragging on or stalled, and blue indicates a task that should be deleted. Of course, change is inevitable. Keep in mind that additional management responsibilities are bound to arise, and you'll need to adjust your system accordingly.

A Few Words Of Advice
Everyone needs support and structure to form new habits. If business management is new for you, you need to start somewhere. This approach can help.

As you begin taking a proactive approach to practice management, remember: While executing your management responsibilities well is important, it's best to start with the attitude that practice makes perfect and that perfection is the price of progress.