How to make your service business scalable
This week I had the pleasure of presenting Superfund Wholesale as a case study at the Class.CUP.Cloud Conference on the Gold Coast.
The focus of my presentation was around how Superfund Wholesale is on the journey to creating a scalable SMSF administration business – however the concepts I covered could equally apply to any professional services business including financial planners, accountants or auditors.
What do we mean when we talk scalability?
Scalability is the capability of a system, network or process to handle an increased amount of work or its potential to be enlarged to accommodate growth.
To put it another way, it’s the ability to do more, with the same amount of resources. Scalability is all about leverage.
How does scalability apply to my accounting / financial planning / SMSF business?
When it comes to SMSF administration, I’m yet to see a truly scalable business – the larger businesses that look after more funds simply have more proportionately more staff. This is not surprising as most of the businesses in this space (including ours) have evolved from accounting businesses that have historically relied on human expertise and man-hours to get the work done.
Over the last few years Aaron Dunn of the SMSF Academy has completed the Future of SMSF Survey – many of us would have completed this survey. Aaron’s most recent analysis showed that the average number of SMSFs in an accounting / admin business per full time employee is 83.
By comparison, in our business one of my teams of three people has been looking after close to 700 funds – which is almost triple the average – and there still is unused capacity in that team.
That said, I will be the first to admit that Superfund Wholesale is not yet a scalable business – we simply have a higher leverage point compared to the average SMSF business that was surveyed.
What does a scalable business look like?
- Low owner support levels required
- Small number of staff
- Non-strategic tasks are outsourced – but core competencies are NOT
- High levels of automation
- High margins (50% plus)
Why would you want to make your business scalable?
In a nutshell, a scalable business model enables you to run your business, your way.
Allow me to explain. Commoditisation in professional services is NOT a dirty word.
By commoditising certain aspects of your service (i.e. making them scalable) – especially those ‘grudge purchases’ for example SMSF compliance and administration – you can dedicate more resources to the parts of your service offering that truly differentiate you from your competitors.
Differentiators such as:
- Higher services levels
- More personalised, targeted and relevant communication
- Increased client education
- More advice services
If you are successful at scaling your business, you could also reduce your margins and become a low cost operator in your space – however that is a dangerous move as there will always be someone with deeper pockets – so a strategy around differentiation is preferable.
Another interesting finding that came from Aaron’s Future of SMSF survey is that the current number one challenge facing SMSF specialist businesses is how to drive more efficiencies.
The 6 things you need to make your business scalable:
- Productise your service
- Make it uniform
- Make it basic
- Make it binary
- Make it transportable (and automate the hell out of it!)
- Make it run independently from you
To read this article in its entirety, including real life examples from our business, please visit our blog:
Superfund Wholesale - How to Scale a Professional Services Business
I am also looking to re-hash this article into a series of short videos that will provide more practical tips for advisers to build some scale when it comes to SMSFs.
To get access to these videos, please sign up for the monthly Superfund Wholesale 'Flight Plan' Newsletter: https://www.superfundwholesale.com.au/flightplan/