9 ways to sustain growth and profitability
There are three exit doors for a business owner: Work until death, sell the company or perpetuate the business by transferring ownership internally. It was through trying to pursue option three that David Hatter, president of Arista Financial Group in Alpharetta, Ga., “accidentally learned about growth, profitability and efficiency.”
Having won many industry and general business awards in the last several years, Hatter explained to attendees at last week’s EBA Workplace Benefits Renaissance in New Orleans that he is most proud of becoming a Psychologically Healthy Workplace and a Best Place to Work, because those awards reflect the quality of his employees’ experience at Arista.
In his presentation, “Organizing agency resources to accelerate revenue growth and profitability,” Hatter drove home that the way to achieve success is by putting employees before customers. Put them first and they will take care of the clients. “The cobbler’s kids, they need shoes, too,” Hatter said.
A triggering moment for Hatter personally was when a friend and fellow adviser Steve Albers died suddenly in 2012 after a biking accident. He watched Albers’ wife have to scramble to try to save the business when other brokerages almost immediately went after it.
Until that moment, Hatter’s own agency had been coasting through the previous few years with stagnant growth and not much vision. “I didn’t want to go into the office. I was not thinking about the future, just trying to get to the next day,” he said.
Albers’ sudden death taught Hatter he “needed to put plans in place sooner rather than later,” Hatter recalls. He realized he needed to organize his company so that it could be successful without him.
“How long can you continue to grow if you’re the key sales person? How large can you get if every employee reports to you?” he said. “You may be the biggest obstacle to your success.”
Achieving a business model where the company is able to run without its leader is a long process, Hatter warned attendees. It takes at least five to 10 years. And the key to its success is finding the right people, he said.
It starts with attracting great people to the company, which “is a two-way evaluation,” he noted. After all, dissatisfaction with their boss is the No. 1 reason people leave a job, Hatter said. “If you aren’t willing to create a great environment and a great runway for them, they will go someplace else,” he added.
Creating that environment, Hatter said, involves giving employees access to several key factors:
· An outstanding employee experience;
· A steady flow of career growth opportunities;
· Top compensation and benefits;
· All tools and resources needed to be successful.
However, he said, it’s an expensive process. When Hatter made the commitment to improve Arista he had no cash flow and was scared to go all-in with producers, only to possibly have them leave for another firm.
“Sales solves a lot of problems,” he said.
A little bit of growth will create a little bit of margin to work with, as well as growth opportunities for staff. In turn, profitability will create permanent margin, capital for growth and staff stability. “You don’t get a lot of chances to hire the right people,” Hatter said.
The fact that this whole process takes up to a decade or more is a good thing, he added: “Thank goodness for that. You’ll need time to grow yourself.”
A leap of faith
The hardest phase of the revolution comes after that first bit of success, Hatter said, when it comes time to sustain that growth, profit and employee experience. Often afraid to rock the boat, many agency owners at this point would be hesitant to divert their attention from methods that are working and start delegating business processes to others.
“You need to take a leap of faith before you can get to the next level,” Hatter said. “Why are you necessary for so many things?”
He offered nine tips to get to that point:
1) Work on, not just in your business;
2) Spend time and money on employee environment;
3) Train your leaders;
4) Invest significantly in recruiting and performance evaluation;
5) Measure referrals: Do employees refer new business and friends for jobs?
6) Acquire for talent — not for a book of business, revenue, scale or client list;
7) Develop a dream team and a great farm team;
8) Don’t forget the magic fairy dust is growth and profitability;
9) Have a specific company system for operating.
Hatter ended with an anecdote about his son going to a golf training event as a kid. He wasn’t very enthusiastic heading into it, but the day proved to be a turning point in his game and he excelled from there on out. Years later, Hatter asked his son what had been the spark for him at the event. His son could not remember one element of that day. The point, he said, was that he “just decided to make it happen.”
“Do whatever it takes to get there,” Hatter said.