Business transition – the importance of business planning

In this series looking at business transition principles, Mike Leeson takes a look at why business planning is so important in helping to build a sustainable business, and Mimi Pienaar shares her insights into how to make the process of business planning more meaningful.

Like it or not, the international advice market is transitioning. Regulatory change is building momentum, and customer demands and expectations are evolving. More and more international advisers are acknowledging these changes and are thinking about ways to ensure their business survives and becomes future fit.

When a business transitions, there are many areas the owners will need to look at. We have identified the following six areas as key: business planning, understanding the client, investment planning options, profitability analysis, people assessment and operational efficiency. Advisers who embrace the challenges of the new world of advice and evolve their business model will be the real winners, with both clients and advisers benefitting.

Business planning

Business planning for the future is a crucial exercise and a key driver of business sustainability and profitability.  It allows business owners to take time out from giving advice to really analyse their business, develop strategic and annual business plans, and consider all the internal and external factors that could affect them reaching both their personal and business goals.

There is evidence of a clear link between having a business plan and the profit that an adviser firm makes. Research by Business Health Australia* shows that not having a partial business plan can mean missing out on an increase in profits of 117%, and not having a clearly documented 3-5 year plan can mean missing out on a profit increase of 194%. Research by Practice Management* shows that effective business planning can increase profit by as much as 246%.

These are incredible statistics which highlights the power effective business planning can have. A key driver for the increase in profit can be attributed to the increased focus within the business: focus on priorities, focus on the right target market and focus on cost.

Business planning is also a good reality check for firms. It helps assess what has worked well, where the gaps are and how next year will look. Business plans help to make owners and staff accountable for their actions and provides an ongoing benchmark for evaluation.


Mimi Pienaar from Masthead has worked with Old Mutual International for over three years, developing a Practice Management business development programme, helping adviser firms build a sustainable business model. The programme independently assesses the potential within an adviser firm, and then creates a blueprint, helping the business transition to its optimum model of profitability and sustainability.

“A good place to start the business planning process is to start by evaluating the firm. Without understanding where the business is today, it will be difficult to navigate the future and create a sustainable business. Owners should begin by looking at the income streams of their business. This normally involves assessing the on-going commission and fees which builds business value and, as a result, sustainability and profitability.

“Both the quantitative (income) and qualitative (business practices) analysis is important in understanding what is going on within an adviser’s firm and what can be done to ensure the business remains current and relevant.

“Building a business plan shouldn’t be considered an annual administrative event, but instead it is a call to action that must become a part of the business’s daily diet. It’s about defining the vision for the business and building a roadmap. Business goals need to be clearly articulated together with a plan of action and realistic timeframes. The end result should be aimed at enhancing capital value and achieving predetermined successes.

“Advisers who run a small business may be tempted to neglect business planning. Planning can be a time consuming process and time spent planning might be time spent away from earning money. However, the benefits of good planning far out-weigh any temporary loss of earnings.”


Mike Leeson, head of distribution development for Old Mutual International, part of Old Mutual Wealth.


* Business Health in Australia , Future Ready VI.

** Figures provided by Masthead and are based on a combination of two research reports: i) AFA White Paper; New Frontiers – The Age of Consumers March 2013 prepared by Business Health ii) Future Ready V November 2012 BT Practice Management