What to Consider When Starting Your Own Firm

If you’re like many financial professionals, your ultimate career goal might be building your own firm.

How do you know if it’s the right move? And, if you think it is, how do you go about getting started?

In a recent webinar for CFA Institute, Beverly Flaxington, the bestselling author of Understanding Other People and Make Your SHIFT as well as the founder of The Collaborative, a consultancy firm that provides leadership and business development consulting services to financial institutions and financial technology firms, explored some of the essential things you need to think about when you are considering going into the finance business for yourself. The webinar addressed the fundamental matters a potential finance entrepreneur needs to consider. In other words, it wasn’t about whether you should outsource your accountancy function, but rather what values will go into your decision-making process when you have to make that decision.

Typically we understand “going into business for yourself” to mean being an entrepreneur and starting your own firm. Largely that’s what was addressed in the webinar, but Flaxington reminded listeners that even when you’re working for others, you’re always the entrepreneur in your own career.

Flaxington had a number of insights that will be meaningful to anyone managing his or her career and especially to those who think one day they’ll want to launch their own financial services firm.

Central to Flaxington’s approach is the SHIFT^TM model. The acronym stands for:

• Specify the desired outcome.
• Highlight obstacles and categorize.
• Identify the human factor.
• Find alternatives.
• Take disciplined action.

Specify the Desired Outcome

Being clear and specific about what success really looks like to you is harder than you probably expect. It is very much tied to having a deep understanding of why you want to start your own business. If, for example, like more than half of the attendees at the webinar, it is because you want more flexibility in your work-life balance, then an endeavor that requires you to be in an office 50 miles from home, 16 hours a day, and six days a week will probably not feel like success to you. Flaxington suggests spending time thinking about what a successful outcome is to you. Write down your answers using lots of qualitative and quantitative descriptors.

Highlight Obstacles and Categorize

You will face challenges. Ignoring them won’t make them go away. Assuming you’ll be able to address them when they pop up won’t help you deal with them efficiently and effectively when they do. So plan for them as much as possible. Flaxington recommends categorizing the obstacles as either:

• Obstacles within your control to address.
• Obstacles you can influence.
• Obstacles that are out of your control.

Knowing that you can’t do it all by yourself is something within your control, while, for example, government bureaucracy and regulations may be quite out of your control. Understanding how your pending challenges stack up among these categories gives you the ability to plan your reaction and focus your energies. There will probably still be obstacles that take you completely by surprise, but at least they won’t be compounded by those you knew were coming along and decided not to prepare for.

Identify the Human Factor

In your planning and preparation, you must account for the human factor. The human factor is two-fold. First, you have to consider yourself and the values, motivations, emotions, behavioral styles, and strengths you bring to the project. Then you have to consider those of the people you will partner with, employ, outsource to, or take on as clients. Flaxington says that you will have different goals for managing and leveraging relationships depending on the power and interest in your endeavor of the other stakeholders. You will want to closely manage those individuals who have significant power over and interest in your endeavor — your business partners, for example. For those with little power over and interest in the project, you may only need to monitor the relationship.

Behavioral style frameworks such as DISC can give you significant insights into your own motivations and inclinations as well as how to engage others based on their motivations and preferences, Flaxington says. Several webinar attendees asked questions related to whether there’s an ideal mix of styles when it comes to partnerships or core teams. The important things really are to:

• Ensure alignment with your brand goals first.
• Best leverage everyone’s strengths in what is being asked of them.
• Acknowledge that everyone is coming to the table with different perspectives.
• Discuss in advance how to deal with conflicts.

Find Alternatives

Once you know where you want to go and have an idea about the obstacles you will face and the resources and people you have around you to help reach your goal, you may realize that there are several potential ways to get there. You will begin recognizing decisions and potential trade-offs that you need to make. Take note of these decisions and ensure you apply established decision-making criteria to them. Your decision-making criteria comes in the form of:

• The clear and specific vision of success you wrote down.
• The values and motivations you uncovered about yourself.
• The rules for addressing conflict you agreed on with your partners.

Take Disciplined Action

Now execute. That’s easy right? Well, even the simple steps in your plan may represent multiple discreet tasks that need to be done. Then there’s the sheer volume of things your plan requires you to do and the various personal and professional responsibilities you have outside of starting your own firm. Even those projects that on their face seem easy may suddenly look overwhelming. Flaxington recommends breaking everything down to specific, basic tasks and then making a schedule for completing them. This can go a long way in converting something that looks insurmountable into something very manageable. For example, “reaching out to potential new clients” becomes “make 30 calls to potential clients.” From there, you can commit to making three calls each day for the next two weeks. That’s very doable. Flaxington recommends composing your to-do list as a basic Excel spreadsheet with the following headers:

• Task
• Who Is Responsible
• Due Date
• Projected Costs
• Potential Obstacles
• Notes

If going into business for yourself is your vision of success, you will have innumerable things to consider on your way to accomplishing it. Hopefully you have found a few points in this summary that will help you organize and evaluate those considerations. If you have additional tips or advice about deciding whether going out on your own in finance is right for you and what to do it if it is, please share in the comments below.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

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