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Are you working hard but losing money?

Antoinette Tuscano

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How business planning can prevent you from spending more money than you make.
Harpreet Atwal, a five-year MDRT member from Solihull, England, found himself working harder than ever before, with two financial services offices that seemed successful — from the outside. The reality, however, was when all the expenses were paid, he wasn’t coming out ahead.

Atwal took a close look at his business and realized he needed to make some changes. “I wasn’t a business owner; I was a good financial advisor who was good at selling and closing,” he said. “I had wonderful offices. But I forgot to look at profitability.” Working like that wasn’t making him happy.

“Hope is not a plan. My business plan has become more in-depth as my business has grown.”
— John R. Benton Jr.

As a course correction, Atwal created a business plan that focused on profitability and efficiency. He planned how the money coming into his practice was spent, with each percentage going into its own account.
  • 35 percent for the owner’s paycheck
  • 40 percent for operating expenses
  • 15 percent for personal tax and company tax
  • 10 percent profit, which is not spent monthly but quarterly
Atwal also realized he needed to understand how much it cost for him to do the work. For example, in his practice there’s a huge demand for mortgages. He charged clients what he thought was a good fee. When he analyzed it, however, he found it took hours to do the work — which was longer than he realized. He was actually losing money on this service.

“We immediately doubled our fees, and the clients didn’t flinch,” Atwal said. “The clients will only do what we tell them. If it’s unprofitable, we tell them that. I would rather not do a piece of business if it’s not profitable. I think we need to be fair and honest with ourselves.”

As part of the changes to his business, Atwal closed both of his offices and re-opened an office attached to his home. Both his income and his happiness increased. In 2017, he qualified for Court of the Table for the first time.

Business planning
Business plans, whether formal or informal, are tools for improving your understanding of the mechanics of your business — such as operational and marketing costs. Business plans serve as maps to guide your business in the direction that’s most important to you.

“If you’re not dreaming, thinking and then planning for what’s ahead in your business, you’re going to be a cyclical robot. Your work will become redundant and tiring,” said Matthew Joseph Murphy, EPC, a six-year MDRT member from Calgary, Alberta, Canada.

Without a plan, as many advisors would tell their clients about managing their finances, you’re randomly trying to arrive at a destination, hoping for the best and that you have enough money to get there.

A vision and mission for the business work alongside the business plan. “A vision is more personal than a plan. The mission statement is the business mission to make the vision happen,” said 29-year MDRT member Andrew C. Lord, CLU, ChFC, of Portsmouth, New Hampshire. The business plan is what’s specific, measurable, attainable, relevant and time-bound, or your SMART goals, Lord said.

“Hope is not a plan,” said 13-year MDRT member John R. Benton Jr., of Warren, New Jersey. “My business plan has become more in-depth as my business has grown. As we developed into a substantial business, it has become very detailed with regards to expenses, revenues, specific activities that need to occur to meet the goals and, most importantly, weekly revisits to it all. Monitoring the plan helps every part of my business increase.”


Your value proposition. What do you offer that other advisors don’t or what are you exceptionally good at?

Marketing. What are the trends in your market? How will your audience learn about your business, and what’s your message to them? How do you best reach that audience? What’s your budget for this?

Operations plan. How do you keep operating costs under control while still taking care of your clients?

Financial plan. While this is crucial when seeking investors or if you’re selling your business, it’s important for any business owner to understand where they stand financially. What’s the value of your company? What are the income projections? What are your assets and liabilities?

Staffing plan. Do you have the staff to allow for scalability in business? Do you have the right number of people possessing the relevant skills to meet the needs of your business and clients, now and in the future?

“If you’re not dreaming, thinking and then planning for what’s ahead in your business, you’re going to be a cyclical robot.”
— Matthew Murphy


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