Many midsize advisory firms, with annual revenues ranging from $1 million to $10 million, encounter growth obstacles despite their significant growth potential and advantages over smaller and larger firms, according to a recent article by Angie Herbers appearing in ThinkAdvisor.
Ms. Herbers writes that midsize firms encounter challenges in three critical areas of business planning. The first involves developing a growth strategy based on identifying the key performance indicator (KPI) a firm aims to improve. While earlier decisions might have relied on intuition, moving forward necessitates using high-quality information to shape strategies. The second challenge lies in managing the strategy, essentially determining the precise steps the firm will take. Lastly, implementation becomes another complex area once a management strategy is decided.
Herbers believes that all of those challenges lead back to the biggest and most common pain point for midsize firms: intellectual capital. She reasons that many midsize financial advisory firms are typically managed by their founding owners, who excel in business development and operations. However, a significant portion of the firm's intellectual capital and decision-making authority is concentrated in their hands.
To address that challenge, Ms. Herbers recommends that midsize firm owners seek more assistance and adopt a data-driven, more focused leadership style, often requiring significant enhancement of their leadership skills.
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