In the first part of our series with illuminate, we considered how to approach applying for your FCA Authorisation. This next section is focused on the Build of your Business model and will again look at what to do, what to expect, and what to avoid.
The first consideration is around your business structure; sole trader, limited company or LLP? The decision may well be driven by the nature of your set up, in particular if you are going directly authorised with at least one other person. For each structure, you should be aware of:
These will help you choose the structure that works best for you. Factoring in your eventual goal (what will your business look like in five years, rather than right now) can help make the decision.
Next steps? Consider your client segmentation. We suggest firms follow this process:
Identify your ideal client (based on demographics, rather than their level of assets)
Then some of the less sexy stuff; you need to be thinking about your training and competency framework and how your ongoing business compliance will be monitored and maintained. Not sexy; but utterly essential.
You can then start building your marketing and proposition based on these categories (more of that in part 3 of this series).
Nothing to work. Well, expect nothing to work exactly as you thought it would first time. Your clients might not be where you’re expecting them to be. They might react to a different type of marketing that you have planned. Your segmentation might have ended up too niche or too wide and you’re getting enquiries that are not suited to your area of expertise.
Likewise on the compliance front; your T&C scheme, especially where there are other advisers, will need to be amended as you get to grips with what KPIs are important for your firm, or how different advisers best respond to training.
So expect everything to need tweaking. But get it all in place, as soon as possible; it is much easier to refine a process later down the line, than have to build it from scratch when you’re then super busy (hopefully!) with everything else.
Try to avoid falling down the classic trap of spending all your time on the fun seeming stuff like client profiling or marketing. Firstly, it will almost certainly change as you get up and running and realise what clients your firm is a good fit with.
Secondly, that stuff is important, but, in our regulatory world, not as essential as having a robust compliance and T&C framework in place. Having that fully planned out, and implemented, right from day one will greatly reduce the risk in your new business (who doesn’t want that?!) and enable you, when the clients start queuing round the block, to be able to focus on them, safe in the knowledge the important stuff is in place.