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We were at dinner with neighbors last week. They are an unassuming couple with a low profile. We knew they owned a shopping center as one of their business ventures. We talked about the pros and cons of riding to the restaurant in one car and eventually decided to arrive separately That’s when we learned the Maserati had just been returned because the lease was up. These and other clues qualified them as successful. So, what does “Business is like a fire” mean?
The husband and I were chatting because the acoustics of the restaurant made cross table talking difficult. He was talking about the long term strategy for one of their businesses. He likened the business to a campfire. It could be a firepit or a fireplace in action.
He mentioned “A business is like a fire. You need to constantly be feeding it fuel (wood) or it goes out.” This is a great analogy. He explained you can stop adding logs and the fire will stook look good and keep burning for awhile, but the flames will eventually get smaller and then go out. In the business world, this might be called “managed decline,” the situation where you are still operating, but revenues are declining year after year.
In industry, the solution might be investing in R&D. You might buy another similar business and merge to gain market share. You might find additional channels of revenue. You might advertise.
Another analogy might be considering your business as a bathtub. In this example you have faucets at the top and a drain at the bottom. If you are a financial advisor, you have a book or business, which is your clientele. You will lose clients, much as water exits through the drain. This is often beyond your control. Clients die. They move to another state and want a face to face local relationship. They get poached by a competitor.
The faucets at the top represent new clients entering your practice. This happens through prospecting, which includes getting referrals. You need to keep the flow of new water into the tub at the same level or faster than the water is draining out, otherwise the water level in the tub gets lower and lower.
These examples both point to the need to be proactive. One side of the equation is keeping the business you have from leaving. Using the fire analogy, there are logs sticking out of the edges that are not part of the fire. You need to stoke the fire and bring those logs towards the center. Put another way, you are working with what you already have. In the financial services industry, this means giving attention to inactive accounts. You are trying to get a greater “share of wallet” from your current clients who enjoy working with you. You are selling up and selling down across generations.
Now we come to feeding the fire or adding water to the tub. This needs to be proactive. Many advisors might hope for reassigned accounts or unsolicited referrals. This is similar to hoping a tree branch falls on your fire, adding new fuel. It could happen, but you have no control. Advisors need both a long and short term prospecting strategy. The long-term strategy might be going after whales or social prospecting in the community. The short-term strategy might be a series of monthly public seminars. You encourage attendees to bring friends. You are adding fuel to the fire.
The bottom line is you cannot get a business to a certain point and leave it alone. Like the fire or the tub, it needs constant attention.
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