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The Practice Doctor is IN
The time management questions just keep on coming! Since it seems to be such a popular topic, let’s take a look at it from another point of view. Time is certainly our most precious commodity as we have only a limited amount of it to use and, unlike cell phones, there are no roll-over minutes, hours or days. I’d like to be able to take the 4,000 or so minutes I have accumulated with my cell phone company and use them to add real time to my life, but, alas, it is not to be. Andrew, an advisor from Albuquerque, New Mexico, called to ask how he might formulate a 50-hour work week. This is his sixth year in the business and he has estimated that over the past year he worked an average of 65 hours per week. That was his wife’s estimate, actually, and he simply verified the number after reviewing calendar entries for a twelve-month period. “How do I start to get a handle on this time management issue? It’s causing some stress at home. Carla, my wife, was hoping I’d have established myself by now and gotten down to a reasonable 40-hour week. She’s patient but would like to see a 50 hour work week, at the least. I agree with that 100%!” Step one was to assess Andrew’s practice. He took the PracticeTools online Practice Checkup. He scored a respectable 535, with high scores in the Case Development and Sales Process core business systems and low scores in the Time Management and Communication infrastructure systems. He’s on pace to do $125,000 in first-year commissions in 2007, which is flat from the previous year. He has a relatively new assistant, Gayle, who is full time, bright, motivated but not licensed. She will be getting her life/health license next month. We first designed a model week for us to target. After some discussion, Andrew and I arrived at the following grid. Given that there are 168 hours in a week, we took 50 of those and plugged them into the four work categories:
The other remaining 118 hours were Personal time.
We began with the premise that the mature practice (scoring 600+ on the thousand-point scale) has the advisor being in front of business-building contacts 30 hours a week. At this time, Andrew is only managing 14 hours week with prospects, clients, centers-of-influence, and networking. Of the 65 hours he’s working, that’s 51 spent in the office or attending other company-driven meetings. The biggest wake-up call was that the ideal mature practice advisor spends only 15 hours a week on case prep and service work. Naturally, this is only possible with a sufficient staff to take over the activities in those areas that Andrew is currently doing. His annual earnings are $125,000 from new business and another $30,000 from fees and recurring revenue. So we did the math. Total income: $155,000 over a 48-week work year (52 minus a week around Christmas and one in the summer, with two weeks on company-sponsored trips and schools). 65 hours a week x 48 weeks = 3,120 hours a year. That works out to Andrew earning roughly $50 an hour. I asked Andrew, “Would you charge a client $50 an hour for your level of knowledge and experience?” “I’d like to think I’m worth at least $100 an hour!” he said after seeing that number. Let’s go for it. If we took the same number of weeks, 48, and multiplied them by a 50-hour week, we’d have 2,400 hours worked. At current production levels, that’s only $65 an hour. If he was to bring on an additional part-time assistant to do strictly administrative work and move Gayle into more of a marketing role, Andrew estimates the new person would cost him about $20,000 a year. However, if he could increase his face-time hours to more than 20 from the current 14, Andrew estimates he could bring on at least two additional clients a month. A new client in 2006 was worth $2100 in first year commissions and $400 in ongoing revenue. 24 additional clients would gross Andrew $50,000, bringing his annual income up to $205,000 and an additional $10,000 in recurring revenue. At $215,000, his 2,400 hours worked are now worth $90 each. As Gayle gets licensed and able to take over more of the case work, and the new assistant takes on more of the service work, Andrew can see pulling closer to that 30-hour-face-time mark. “Or, at least, I can see 25 hours out and 25 hours in, but they’ll be more productive hours, that’s for sure.” The road will be long (2 years minimum) and Andrew will have to strictly adhere to a practice development plan. The assessment brought to light some systems and skill issues that Andrew will have to address to enable those hours worked to be most productive. But there is light at the end of the tunnel. We reviewed the game plan with Carla and Gayle and both were solidly behind it. “By my 10 th year, I would like to be working for $150 an hour,” Andrew stated. We can help get you there! Until next month, The Practice Doctor is out! Al Depman , CLU, ChFC, CMFC, BH, a.k.a. “The Practice Doctor”, is mitchanthony.com’s Business Practice Consultant. He is the creator of “The Practice Management Assessment” tool and materials and has authored numerous articles in professional publications on practice management. Al combined his Liberal Arts studies with 10 years of management experience with McDonald’s Corporation to enter the financial services world 22 years ago. Since then, Al has evolved from an MDRT-level sales rep into a full-time consultant specializing in helping others engineer their business practices to the next level. Contact him at al@mitchanthony.com . © 2007 Al Depman |
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Al Depman, CLU ChFC CMFC BH |
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