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Building a Foundation for Independence

Perhaps you envisioned going independent, but for whatever reason (stability and security, education and training, family and home life) you know you won't be able to turn this goal into reality for some time.


Don't stress about it. Taking your time might make for a more successful bid for independence in the future, if you use that time as preparation. Just as a building must be built on a solid foundation to be viable, so must your move to independence.


Here are eight things you can start doing now that will create the structural foundation for a smooth transition to independence.


1. Start thinking like a business owner. 


When you go independent you become a business owner. So now is the time to start thinking like one by building a business owner’s mindset and skill set.


Do you ever have moments where you think, "Well, if I were running things at the office, I'd do this..."? Good! Keep thinking like this, and keep a tickler file where you make notes of good and poor business practices that you've experienced or observed.

2. Assess your business skills...and look for ways to develop the ones you don't have. 


Supplement those observations by reading and absorbing everything you can about entrepreneurship and successful business management. Advising and managing are two different skill sets, so take stock of what you know already and focus on seeking out insight and education into the things you don’t know.


Between the library and bookstore, you shouldn't have any problem finding books that will help you fill in your knowledge gaps. Community colleges often offer classes or seminars with business themes. Your local Chamber of Commerce is likely to hold workshops for first-time business owners, and SCORE's small business counselors are also a great resource (and their services are free).


One great book that can help you get started (and get a grip on the many hats a business owner wears) is The e-Myth, by Michael E. Gerber.


But overall, make it a habit to stay mindful of your strengths and weaknesses – both as an advisor and as a future business owner. Don't be afraid to check your ego at the door and have a trusted friend or peer help you with your evaluation. Critical self-assessment can be restricted by what we are willing to admit, and others may be able to provide clearer insight.


3. Practice "visioning."


It might sound like some sort of new-age tactic, but studies show that envisioning what you want can help you turn your vision into a reality. Be specific: think about how your independent practice will look, what type of office you’ll have, the sorts of clients you’ll attract, etc.


It works because visioning helps you "see" and keep in mind (even subconsciously) the steps you need to take in order to turn the vision into reality. This process will inform more concrete aspects of your transition, such as developing your business plan, as well as short and long-term goals, like your key product mix.


4. Save money. 


There are various start-up costs and ongoing costs related to going independent. Options such as office space are often dependent on your budget and having adequate savings will open up your search process.


The prevailing rule of thumb is that you should have at least six months' worth of savings to live off while you ramp up your business. If you can save eight or ten months worth, even better. This might be a challenge, but it is important.


Your savings will be your working capital and resources while you establish yourself and payments begin to filter in. Keep in mind that there may be some things you'll need to start paying for right away, such as health insurance or COBRA.


Having a "future business" nest egg not only makes sense, but may be crucial to alleviating pressures that can contribute to poor decision making under stress.


5. Discuss your desire for independence with your spouse. 


You'll need a support network, especially in the early months of your independent practice. If you’re married, start discussing the idea of independence now – long before it becomes an imminent reality. This gives more time for discussion, negotiation, strategizing, and “buy in,” critical steps that make independence a successful team effort.


Besides, no one likes surprises, and a supportive, informed spouse can be one of the best sources of emotional support, especially if they feel "invested" in the business alongside you.


6. Continue to build solid relationships with your clients. 


Client relationships are the bread and butter of a successful career as an advisor, regardless of whether you choose to go independent. But the more solid your client relationships are now, the more likely your clients are to follow if you choose to leave.


This is critically important. If you decide to go independent, the first thing that will happen after you make your announcement will be a targeted effort to retain your clients. Each one of them will be approached by your former colleages, and generally speaking they will be wooed with one of two approaches:


  • The first is to critique your portfolio-building and management skills

  • The second is to try and befriend the client, in effect by “out-schmoozing” you


Both strategies are easy to overcome, but only if you’ve been doing the right thing all along. Ideally, each client should have had an in-depth portfolio review with you right before you resign. Any client who you believe doesn’t know you well enough should have heard from you at a personal level a few times in advance.


But as you probably already know, successful client bonding can’t happen all of a sudden and out of the blue! So start now. Building a consistent process of reviews and relationship-building is fundamental to your success – whether or not you ever go independent. But having it in place gives you one additional piece of leverage in the leap to an independent model.

7. Stay away from proprietary products and do your homework. 


Once you leave your current firm, all the proprietary products that you've gotten to know so well won't be yours to sell anymore.


So start focusing on products you believe in that you will be able to represent, regardless of where you end up. Take the time to research alternative products that you feel good about and that complement your clients and any proprietary products you’re still using.


Even if you choose not to ever use this knowledge for an independent practice, your understanding will provide you with a deeper knowledge base, which you can use to help your clients make informed decisions – and to demonstrate the value of your service.


8. Understand what you don't AND do like about your current situation. 


Just because there are certain things you don't like about your current employment situation, it doesn't mean you need to have your own independent practice. It could just mean you're at the wrong firm.


Understanding what you do and don’t like about your current firm (make a list!) will help you differentiate between a firm that's making you unhappy or a business model that's making you unhappy. It’ll also help you identify the things you do like about your current situation – whether that’s a process or procedure, type of product mix, or something else.


Take Your Time

Remember, starting and running your own independent practice is a marathon, not a sprint, and it involves considerable physical and mental preparation.


So take your time, and do it right. Building a strong and protective foundation today can help you experience a smoother transition to independence later – and even if you never go independent, it can help you build a better practice wherever you are right now.

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