The Practice Doctor is IN

Al Depman, CLU, ChFC, CMFC, BH

Practice Management Consultant

Taking Inventory for the New Year

As we leave a rather––what’s the right word––rollercoaster of a 2011, it’s a good idea to take the temperature of your practice going into 2012. Most advisors I’m working with these days focused on putting the best finish they could on 2011, closing deals, and getting business thorough the pipeline.

Now that 2011 is over, let’s pick up the mirror and look at you and your practice. The greatest gift you can give yourself, your team, and your loved ones is a strong start to 2012.

In all my research into best-practices, I have simultaneously uncovered some of the worst-practices in the financial services business. One of the worst of the worst-practices is exhausting all one’s resources in an all-out year-end push and entering the new year having to essentially start all over again from scratch.

This is a formula for discouragement. Traditional wisdom in our business is summed up in “As January goes, so goes the year.” I’ve come to agree with that maxim. A slow or poor January puts undue pressure on the all-too-short February and before you know it, the first quarter is over and you’re in the hole for the year. The resulting performance pressure causes shortcutting of business systems and processes and a truncated ability to be proactive with top clients. In short, a bad January can have long-term stress implications to your stomach, your team, and your family.

There are four indicators to review to see whether or not your practice has momentum going into 2012. See how you fare in each. They are:

• Prospect inventory
• Open cases
• Submitted cases
• Opportunity inventory

Prospect Inventory

The prospect inventory reflects the number of new prospects you have to call in the new year. These are prospects, not suspects. Suspects are just a name and number.  Prospects have some substance: they’ve been referred, provided in a warm context (by a Center-of-Influence, for example), meet specific criteria (executives at a particular corporation or a targeted list of architects, e.g.), or have indicated in the past to be “called back later.” 

A healthy prospect inventory number is 50 or more.

Open Cases

Open cases are clients or prospects you have asked to buy something but have yet to say yes or no. The presentation has been done; perhaps some exploratory underwriting has been started. Still, your offer has not been formally accepted.

This is an area where too many outstanding open cases can be as dangerous as too few. 10 is a good, healthy number. Too few might suggest not asking enough or closing everything quickly. Too many open cases can indicate a lack of urgency on the prospect/client’s part, which speaks to the advisor’s sales process.

Submitted Cases

These are the cases where you have gotten agreement on a course of action and collected the check or initiated the transfer. This is often referred to as “pending business.”  Smart advisors will have a healthy number of these cases crossing over into the new year. Depleting this supply before year end almost always guarantees a slow January. Here, the bogey is not so much a number as a percentage of income. The submitted cases awaiting completion should be approximately 100% of your average monthly income expectation in 2012. I like to see this be in five cases or more––to prevent the “elephant hunting” mentality and spreading out the risk. 

Opportunity Inventory

These are the seeds you’ve already planted with current clients. During the course of the year, you know that a certain amount of business will be written from current clients based on their implementation plans, interest areas that were to be addressed later, and cross-selling campaign plans.

Recording these opportunities is an exercise that can provide great peace of mind. There is a form on which to record these opportunities that is available for the asking. Just email me (aldepman@aol.com) and I’ll send it to you to check out.

In summary, the four aspects of your practice’s health speak to:

The immediate future – pending cases;

The near future – open cases;

The intermediate future – opportunity inventory; and

The far future – prospect inventory.

Until next time, keep those inventories full!

The 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, and author of the book, How to Build Your Financial Advisory Business and Sell It at a Profit, now available from McGraw Hill. Al combined his Liberal Arts studies with 10 years of management experience with McDonald’s Corporation to enter the financial services world 25 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.

© 2012 Al Depman