Avoiding the potholes

Implementing a process to manage the work of Strategic Advising is the key to making it happen in a profitable, seamless way. Having a regular routine can make all the difference.

It’s summer break, and I have a 10-year-old.

This means summer camps and evening bike rides, and s'mores. It also means our standard daily routine is thrown to the wind! I love summer, but I also love the efficiency of the standard morning routine. I make the lunches, my husband feeds the dog, and our daughter complains about breakfast. Normal, right?!

Everyone knows what’s supposed to happen. Everyone knows how long each thing takes, and everyone performs their part of the routine. For the most part, we leave the house on time, and my daughter remembers her homework.

Processes work the same way in your business. In fact, they do even more. They establish standardized tasks, which allow for easy training and the ability to assign work to the right people in the organization. This frees everyone from the burden of having to wonder what to do. Employees know where they fit within the whole, and the right work gets done each time.

Why should you build standard processes for Strategic Advising?

But can processes work for something like Strategic Advising? It seems like such a unique type of work. Its tasks must be custom and distinct each time, right?

No! Not at all. In fact, implementing a process to manage the work of Strategic Advising is the key to making it happen in a profitable, seamless way. That’s because you become efficient about doing the work, everyone knows their piece, and your customers know what to expect—just like my standard morning routine.

When you think about doing Strategic Advising with your clients what’s the first thing that comes to mind? Are you excited? Worried? Confused? Or maybe frustrated because it’s something you want to do, but don’t know where to begin—you’re either living under a mountain of other work, or you haven’t introduced the subject to your clients.

If you’re like most people in the industry it’s probably a combination of all of those. You know you have some hurdles to overcome: pricing on a fixed fee, and the implementation of these services into your practice are probably at the top of the list.

Standardized processes address both of these problems. Let’s address them in turn, as they are your two potholes on the road to Strategic Advising.

Implementing advisory services

Implementation for advisory services becomes easy and straightforward when you have a process. The work procedures become tasks and those tasks get assigned to people. The people are trained on the procedures, and the tasks become a checklist of work to complete.

Some firms go so far as to develop workflows, which formalize the assignment of tasks and the passing of work from one person to another. Whether or not you incorporate workflows, having a standard, written procedure helps you avoid pothole #1 on your road to advisory: implementation.

How to determine your fee

Advisory services must be offered at a fixed price, or even better, a value-based price. Advisory work isn’t set up to be offered at an hourly rate. Pricing is addressed by your standardized advisory process, but might not be so obvious.

Pricing is always hard, and determining fixed pricing for services you are just starting to offer can seem daunting. But there is a way to determine a pricing schedule that will support a value based model:

Establish a basis on which to set your price—an upper and lower limit

The lower limit is what it costs you to do the work. After all, you can’t afford to lose money on a service. In order to arrive at an internal cost, use your advisory process. The process is a set of tasks. Assign time to those tasks, as well as a labor rate. The sum of those is your internal cost for doing that set of work: your lower limit.

The upper limit is always what the market will bear. Every market is different, so this must be determined by you. How much could you possibly charge at the very high end, and still feel good about charging your customer? You will have a good sense of this upper limit as you work through numbers.

Make adjustments and include value based pricing options

The last step is to make adjustments to your pricing if your lower limit is too close to your upper limit. If your cost is approaching the most you could ever charge your clients based on what they will actually pay (what the market bears) then you have to optimize your process, and determine how to be more efficient delivering the service, or be willing to increase your upper limit.

Value based pricing becomes more straight forward when you understand your upper and lower limits. You will enter the conversation with confidence knowing where you will break even, or make a profit.

Reduce any unnecessary costs. It’s a good idea to go back to your standard process at regular intervals, maybe quarterly, to see where you can find efficiencies. Maybe there are more tasks in the process that can be done by employees who are paid a lower hourly wage. Or maybe employees have received additional training and are more efficient at the work. You want to make sure that your pricing is delivering good value to your client, but also profitable for you and your firm.

You should also be tracking your average gross margin on your standard advisory services. Having good control and knowledge of your internal costs are the only way to accurately measure gross margin.

The process

We’ve established that your advisory process is the key to the two biggest hurdles in migrating to Strategic Advising: implementation and price. But how do you establish your process for Strategic Advising?

The first step is to determine your outcome. What do you want to deliver, and what should your customers expect each time?

Those things become your work product. Or better put: your scope and deliverables. Once you’ve determined these, you can establish a process for developing each one, and a set of tasks to accompany each process.

Next, define your deliverables. In addition to cultivating order, these deliverables are the things you will talk to your customers about. As much as you will use your knowledge and expertise to do advising, you must have deliverables to offer along the way.

Some examples of deliverables for advisory services are planning reports and month end summaries to show plan versus actual. You could even offer broad business summaries, for your client to use for marketing and business development.

Whatever your deliverables, there must be an agreed scope and a timeline for completing the work. Clear deliverables and scope will establish order for your customers, which they will not only appreciate, but which will save you time in the long run.

After you’ve determined your outcomes and defined your deliverables, it’s time to set up a regular, repeatable process for offering strategic advising services to prevent scope creep and keep your services profitable and scalable.

The LivePlan Method for Strategic Advising

We developed a process for Strategic Advising that we call the LivePlan Method to help firms build a framework for offering advisory services. It includes:

  1. Kick Off: Engage with your client, and learn about their goals
  2. Plan: Establish the business model and know the value proposition
  3. Model: Turn that plan into a financial model
  4. Build: Build the financial forecast
  5. Advise: Compare the forecast to actual data for given periods of time, looking for trends and anomalies, prepare reports and meet with the customer to help solve problems.

Each of those high-level categories, called phases, include specific work—very specific, down to the task level. We invite you to learn about this method through our online training program, as well as at this blog where I will cover each piece in turn on a monthly basis.

Remember, you are in the driver’s seat on your road to advisory services. Especially because you have the two most important resources for offering strategic advising: your client’s data and their trust.

Avoid the potholes of poor implementation and price by establishing your advisory process and scope, and you will be on your way to a very profitable and very necessary service offering.

Editor’s Note: This article was originally published on July 29, 2016. It was updated on July 25, 2018.