We had a chat with Lynette Murray from Acton Advice who left a high flying corporate career to start her own financial practice.
In this 3 part series as we explore her journey we look at intrapreneurship and how both organisations and innovative individuals can benefit from growing the kind of business that attracts investors; and how technology innovation can make a difference in a business.
PART ONE:
Entrepreneurship opportunities in the corporate environment
I always wanted to have my own business. When I was with St George as a financial planner they had this program where you could buy your own practice from the bank. With the idea that as your skills outgrew the complexity usually required for the people coming in through the bank referrals, you could buy your practice. The banks are very much a training ground for different advisors and by moving out you would be making room for someone else to come through and be trained up.
I'd been there for a while and trained 4 or 5 planners for the bank so I'd got to the senior planning stage and senior mentor role. I had the idea of buying my own practice cooking away in the back of my mind for 10 years or so and I was really lucky in that I had a great Head of Advice who had a lot of faith in me and he let me pilot a whole range of ideas.
So, I suppose I've always had that interest in innovation. He let me pilot ideas within my practice in the bank with the agreement that if anything worked really well and was repeatable across the bank, that they would take the idea and roll it out across other planners. At the same time, there was always an understanding that there would probably be a few things that would work but that they would only work in my practice because of the structure that we had around us and the unique way we did things within our practice.
So, I've been incredibly lucky as a result of this. Its one thing to have big ideas when you have the safety net of a salary and think you know how to run a business, but quite another when its your own business and you have to wear the risk. I was fortunate in that I actually got to try out a number of those big ideas whilst I was still earning a salary.
Knowing what you're getting yourself into
I was also lucky in that my parents were self-employed. My dad had a transport business in Tasmania and he and mum worked in that business for as long as I can remember. I had seen how tough it could be to be self employed. I'd seen that business grow quite large by Tasmania standards and I'd seen it recede back again. I was well aware of the challenges and issues you have with staffing and growing a business.
So, I wasn't naïve about what it takes to run your own business, but as with everything it's one thing to have the knowledge and it's another thing to apply it.
We asked Lynette whether growing up in a family business made that option more attractive to her or whether seeing the highs and lows made her more cautious.
When I finished my education I definitely knew I didn't want to have my own business. Then, even though I had all this freedom with St George, I could see that if the bank was prepared to implement my ideas and maybe spread it across the bank, maybe I had something there. So, the idea of starting my own business slowly started to tick away.
The timing was interesting. I know that I'm married to a squirrel (in reference to Lynette's book Pretty Rich that describes your money personality in terms of 'squirrels' and 'swans'). This means that security, safety and all those things are important to him. I was on a really good salary so that I knew that if I was to pack it up and go out on my own and take on the ebbs and flows of income that comes with being self employed that he would be very stressed about that. So, I had to make sure that all our financials were set before I could walk away and concentrate on the business. I was lucky enough to be able to get to a stage where our retirement is more or less sorted so that I could go out in my own practice without the really heavy burden of having to support a family or support our retirement.
The Golden Handcuff
I had this fabulous Head of Advice and he even said to me at one stage, "I don't know why you're still here". And as I said to him 'there's no reason for me to leave. So, whilst St George was giving me the scope to do and trial and pilot my own stuff all the way through my career, there was no reason for me to move.
I was happy, I was respected, I was supported, I was encouraged, so why take on all the challenges of your own business when basically they were letting me run my own mini-business within the bank. And they were giving me a regular salary. There was no reason to go.
Starting a Business later in life
If you start a business later on in your career you need to have a plan about how that business is going to grow and how you're going to work in it. Because if you're starting a business later in life especially the business that I'm in, it's about being there for people when they need you over time. The only thing that I had to have a plan about was how long I was going to be working and how that was going to work going forward, and it had to be a plan that I could share so that people would be comfortable with the whole plan that I had in place. Other than that there was a whole lot more positives than negatives.
You also need to be clear about whether you are buying yourself a job or growing a business. If you're buying a job, I don't think that is a business. If you are looking to start a business then you need that internal drive because you need to build it, to grow it, to invest in it. The investing part is very important in many ways for me. It meant getting to a level where I was financially comfortable so that I could invest in the business and invest can mean different things. It could mean not drawing a salary to begin with. Or it could mean drawing a portion of a salary that allows you to indulge in things you want to do in the business.
I was a little bit indulgent when I started my business – there were things I wanted to do and hadn't got to do while I was at the bank. I decided that was a part of the pay back for me. I could do those things and do them the way I wanted to do them. Now I've been in business for a while and it's paying me a salary too which is even better.
When to Jump
It was one of those catalyst things that happened. The GFC hit which was challenging for anyone in finance (and out of finance) but it was very interesting as well. It meant that St. George was merged with Westpac, and Westpac had a different view on how they ran their financial planning service and the freedom that I'd had in the past wasn't something they could offer me within their new structure. The new group was much bigger and so they had to have formal arrangements with everybody and understandably weren't as able to provide the freedom.
So that was probably one of the major turning points – I didn't have a reason to leave and then all of a sudden I did! I decided to wait a little bit and see if it improved, because we were in a GFC and people were worrying about anything they could worry about so I waited to see if over time, it reverted to the previous flexibility. And that didn't happen so I decided that it was time.
In Part 2 of the series we look at some of the marketing challenges Lynette faced in setting up a business in a highly regulated industry.
PART TWO:
Difficulties with Marketing in a Highly Regulated Industry
We resume our conversation with Lynette Murray from ActonAdviceGroup who left a high flying corporate career to start her own financial planning practice. In the second part of this 3 part series we explore some of the early challenges she faced in setting up her business especially those around marketing in a highly regulated industry...
When I was working with the bank, for many of the last few years I was working adjacent to their commercial area which was great. I saw a lot of businesses, business owners, and regularily spoke to business lenders which gave me an insight I was lucky to have. But even with that awareness, what I found hardest about setting up my own business was not having a really clear picture of who to go to for what...there wasn't a central hub of information for people starting a new business. For me I really wanted to not have to do things more than once, so I wanted to make sure that if I started something I started it right. It made me think about what my clients might want from a financial hub.
I was very lucky when I left the bank; quite a number of my clients tracked me down and followed me. Many of them I had been looking after for 5 or 10 years, but it was humbling. There are people who followed me in the middle of the GFC so the weight of the responsibility felt quite heavy.
Marketing Restrictions
A financial planner has to be licenced, and you are either licenced to a dealer group or you can have your own licence. The first choice I had to make in setting up was deciding whether I would have my own or whether I would go with an established dealer group. I elected to go with an independently owned dealer group and my reason for that was because I wanted to be able to concentrate on running the business and providing the professional advice that I needed to for my clients. I was going to do what I thought was right from a compliance point of view, but what if I misunderstood a requirement. I decided I'd rather have someone else look over my shoulder and help me through that process.
I worked with a PR company and they were able to come up with some great ideas as far as public relations stuff went without breaking the non-existent budget of a start-up but a lot of the suggestions we weren't able to take advantage of because the dealer group made it a requirement that they sign off on everything before it's published. We were quite restricted for a while, but things have softened as far as general advice goes but of course they do still want to see it.
Word of mouth marketing is a bit like dating – you are more likely to go out if someone is introducing you to someone else. They know you and they know the other person and they match you up thinking it's a fit. We do get a lot of our referrals through existing clients. We have also written a book called Pretty Rich which talks about money personalities. Something I've noticed over time is that different people react to money in different ways. Sometimes people would come to me on really good salaries but with no traction at all. It can be very demoralising to be constantly hitting your head against a brick wall. What I've noticed is that it was to do with the fact that they didn't understand how they thought about money. If you don't understand how you think about money, how can you control it?
I believe people sit on a continuum – one end a squirrel and one end a swan, and the whole understanding of that then lets you bring through a whole pile of rules or strategies that you can live by. It's about understanding who you are and how you can move forward, and that flows from when you first start out and you're trying to save up for a deposit on a house all the way through to putting your children through school, on to retirement.
One of the things I find is that people don't go to a financial planner often; they think they need a lot of money to go to one. Really they need the gentle nudge of a financial planner early on but it's hard to deliver that nudge at a reasonable cost point. By having the book, we can have the conversation with them; they have the follow up from the book, and from there can apply the principles. What's become obvious to me is that it needs more than the book so the next major thing I will look at is turning the book into a webinar series of some sort just to take people through the process and get some interaction and feeling from clients.
In Part 3 of the series we look at how Lynette grew her business organically to the point that it was attractive to an investor.
PART THREE:
Organic Growth Attractive to Potential Investors
We resume our conversation with Lynette Murray from ActonAdviceGroup who left a high flying corporate career to start her own financial planning practice. In the third part of this 3 part series we continue Lynette’s journey and look at the role organic growth and an innovative mindset can play in attracting potential investors.
Growth, New Income Streams and Diversifying
I do think diversifying your income stream is important. With financial planning to a large degree and professional services in general, there is a large personal exertion component involved so you do need to diversify as there are only so many hours in the day. Seminars being the traditional way to do this.
We were lucky enough about six months ago to be reverse Shark Tanked (as I like to call it), where instead of taking our company and pitching to a group of investors, we were approached by an investor who knew my business, our compliance record, and wanted to buy into our business. He’s putting together a cooperative of six financial planning firms, looking to put one in each capital city and he’s been cherry picking who he wants in each capital city and he approached us.
So we’ve done the negotiations and worked our way through that process and he is now a part of our group which is really exciting. So, although we aren’t expanding nationally, there is a national cooperative that we are now a part of.
Taking on an Investor
It’s scary – this has been my business, my baby, my vision and then all of a sudden you’ve got someone else looking over your shoulder and looking for issues within your business. I’m used to someone doing that on my professional advice but having someone do due diligence on my entire business was scary. I began doubting myself - had I done it right? What if it’s not as good a business as I think it is? This could be a bitter pill to swallow. It wasn’t like I needed the investment, but then the professional part of me kicked in and I thought this provided the opportunity to diversify the business further.
I spoke to my accountant who I have a really good relationship with. I can’t say just how important it is to have an accountant who really knows your business and how you operate. Her biggest piece of advice was to caution me that the person coming in isn’t family so be careful about expectations and how they think it’s going to work. On that advice we worked through the negotiations and were able to come to a comfortable agreement. And then the next part was when I tried to break the relationship. I sat down and listed all of things that I thought could be an issue and put them all on the table and said this is everything we need to talk through and be comfortable with addressing each of these instances. I believe that spending as much time as possible on this is vital in the negotiation phase. I looked at all the ways it was possible to break the relationship before there was one. So, when we went to the lawyer it was more about getting what we had agreed on reflected in the agreements and the back and forth discussion was more about clarification rather than decision making. I was very much focused on the contract reflecting the relationship – I wasn’t comfortable with any ambiguity in it.
Expanding Services
I’ve always known I wanted to have a financial hub. You can have financial planning, but if you’re going to talk about gearing into something then you need to be able to seek out a loan, so that’s where the mortgage broking part of the business comes in. On the other side, if you’ve got a mortgage broker and taking out loans then you really should be reviewing your insurances and so you need a financial planner to do that, and a lawyer to put stuff together. So my idea was that we would build a financial advice hub where we would either have the advice in house or have close relationships with people who would offer that and know that our clients will be looked after. The concept of what we do is to make it as easy as possible for a client to get the best outcome they can.
Another source of innovation in terms of providing a better experience for our customers has been the development of our software system, Treasure. It was the client part again – there are different providers out there for the different disciplines of financial services, but there is nothing that actually encompasses all of them. So, we’ve started building a CRM system that we can bolt stuff onto that gives us a portal for clients through our website. While it’s still in its development stage, we’ve already seen the difference it can make with regards to efficiencies in our practice.
The software platform provides a holistic approach to meeting our clients’ needs. Our clients only have to give us their information once and we know that everyone managing a client’s affairs across the different service areas in our practices always has the most up-to-date information.
I believe we’re building an asset. It’s been an expense for now but the way I view it is that if it can free up a person to work on other things then that’s an ongoing saving. My concept is that in the first two years of the system’s development I would be prepared to spend a salary on it and then after that, that’s when it needs to be paying back. It takes a good amount of time to have someone trained up to work the way you want them to so to me to invest that in a staff member or system was an equivalent investment. The software needs to make the process much more efficient in the business so our staff is spending more time working with our clients rather than on data entry or processing.
I think if I have to give any advice to someone wanting to tackle an IT project in their business, it would be that it’s going to be a lot slower than you expect it to be. It really depends on who you’re going to work with. We’ve got someone who is in IT, who has all the professional services as far as IT goes, but also has a background in business advisory so it was perfect for us. We don’t have a tightly written technical specification, we have a broad range of outcomes we want to achieve that we are working towards and we just keep testing as we go. We’re lucky to have someone working with us who understands what we need.
About Lighthouse Business Innovation Centre
Lighthouse has a strong track record of supporting entrepreneurs, researchers and inventers on the path from concept to commercialisation. Since July 2008, Lighthouse has worked with over 990 distinct enterprises and provided group and peer based services to over 3400 enterprises and individuals. For over five years Lighthouse has successfully delivered business advice, education, mentorship and networking opportunities to help these businesses commercialise their ideas and grow their companies. Lighthouse also delivers programs such as the ACT Microcredit Program for the ACT Government. Visit www.lighthouseinnovation.com.au for more information.
