| If you will need to raise outside money to fund your | | | | serve more clients per day and manage more assets |
| financial planning practice, writing a business plan is a | | | | than another solo financial advisor could, if you can |
| must. In that business plan, you certainly must show | | | | devise such a system. |
| that you have the financial experience to be able to | | | | Economies of Scale |
| advise clients to make wise decisions or to make | | | | These types of plans show an investor that there is a |
| sound investments on their behalf. However, showing | | | | chance for a much higher return on their investment |
| your personal experience is not enough. The plan has | | | | than if the company's revenues are always a function |
| to show the groundwork for a business that can | | | | of your billable hours. They show that the company's |
| achieve economies of scale - that is, the ability to | | | | products or services are scalable beyond what |
| grow 100% in revenue, for example, while growing less | | | | independent financial advisors can do on their own. |
| than 100% in cost. | | | | If you want to simply be a busy, freelance financial |
| Business vs. Freelance Work | | | | advisor, you can certainly do so, but your options to |
| Proving to investors that your firm is a fundable | | | | bring in outside funding are more limited. The company |
| business and not just a way to reduce your personal | | | | has little value in a sale and therefore raising capital |
| tax liability, requires you to think like a business owner. | | | | through equity will be difficult. For a lender, there are no |
| Although, as you are starting out, the business may | | | | physical assets in the company to act as collateral, so |
| rely on your direct work with clients to bring in any | | | | it is less likely to receive a loan. In this case, you are |
| revenue, you should have a plan to build on that | | | | more likely to find success funding the company |
| foundation over time. That could be with products that | | | | through a home equity loan or credit cards to get off |
| you sell (i.e. reports, guides, spreadsheets), by pushing | | | | the ground. In these cases, you don't need a business |
| down lower skill work to employees, or by hiring | | | | plan for anything beyond your personal planning and |
| additional advisors to work within the company. The | | | | organization. |
| plan could also be a system which will allow you to | | | | |