{"id":2375,"date":"2023-03-29T19:59:44","date_gmt":"2023-03-29T19:59:44","guid":{"rendered":"https:\/\/testsite.socialitemediamarketing.ca\/?p=2375"},"modified":"2023-04-25T18:38:43","modified_gmt":"2023-04-25T18:38:43","slug":"overview-of-ensemble-business-structure","status":"publish","type":"post","link":"https:\/\/queenston.net\/fr\/overview-of-ensemble-business-structure\/","title":{"rendered":"Overview of Ensemble Business Structure"},"content":{"rendered":"
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Overview of Ensemble Business Structure<\/strong><\/span><\/h3>

By Jerry Butler<\/strong><\/span><\/p>

A.\u00a0 FIRST STEPS<\/span><\/strong><\/p>

Before getting to the nitty gritty the following topics should be discussed with possible partners if they have not been discussed yet.<\/p>

  1. Discussion of strategy \u2013 why combining?<\/li>
  2. Discussion of personal goals<\/li>
  3. Discussion of data \u2013 financials, processes, etc.<\/li>
  4. Business planning \u2013 what will a business combination look like? How will it conduct business? What business model?<\/li><\/ol>

    B.\u00a0 DIFFERENT BUSINESS STRUCTURES<\/strong><\/span><\/p>

    There are three main business structures:<\/p>

    1.) Solo \u2013 exactly what it states. One advisor.<\/p>

    2.) Silo \u2013 this is a Partnership (formal or informal) with some expenses shared but basically the Revenue and Expenses flowing through to each Advisor\u2019s bottom line.<\/p>

    3.) Ensemble \u2013 this is a formal Equity Partnership. It provides for both a Partnership\u2019s and a Shareholder\u2019s Agreements.<\/p>

    C. KEYS FOR PARTNERSHIPS<\/strong><\/p>

    Leverage \u2013 the combined business can use economies of scale and synergy to create a more efficient organization. Eg. Instead of two administration assistants maybe one administration and one a marketing assistant.<\/span><\/p>

    Sharing \u2013 strategy, clients, profits, staff, decision making and most importantly compensation.<\/span><\/p>

    If these two things can not be clearly attained then do not proceed.<\/span><\/p>

    \u00a0<\/strong><\/p>

    D. WHAT WE KNOW ABOUT ENSEMBLES<\/strong><\/span><\/p>

    Fastest growing business structure in the US.<\/span><\/p>

      1. Growth in Revenue much higher than other structures.<\/li>
      2. Built in effective Continuity Plan, Succession Plan and Exit Strategy.<\/li>
      3. Economies of Scale and Synergistic opportunities. Sharing resources. Different markets. Different specialities.<\/li>
      4. Efficiency and effectiveness should increase as more time spent in front of clients and prospects.<\/li><\/ol><\/li><\/ol>

        E. BUILDING AN ENSEMBLE STRUCTURE<\/span><\/strong><\/p>

            1. Define roles and responsibilities of each Owner.<\/li>
            2. BUSINESS MODEL \u2013 woefully overlooked by most financial advisors this is a key to get everyone on the same page and increase the value of your business.<\/li>
            3. Clearly defined service processes for each task \u2013 i.e. everyone does administration, service, sales, technology, etc the same way.<\/li>
            4. Create and manage job descriptions.<\/li>
            5. System of accountability \u2013 measurable and reviewable.<\/li>
            6. Develop departments and responsibilities:NOperations; Marketing\/Business Development\/Relationship Management; Insurance; Investment; Financial Planning; Tax (?); Estate Planning; etc.<\/li>
            7. Non discretionary expenses vs discretionary expenses.<\/li>
            8. Inventory of what matters \u2013 eg. What, besides the obvious, do you want to track? Client contacts; appointments, # of sales, new money, clients, revenue per household, etc. (measurable and reviewable)<\/li><\/ol><\/li><\/ol><\/li><\/ol>

              F. FIRST THINGS FIRST<\/strong><\/span><\/p>

              The order of issues when determining if this will work \u2013 as everyone has to be on the same page \u2013 is to deal with the following items in the following order:<\/p>

                  1. Compensation<\/li>
                  2. Structure \u2013 Silo, Profit Centers, True Ensemble<\/li>
                  3. Equity<\/li><\/ol><\/li><\/ol><\/li><\/ol>

                    i.) <\/span>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Compensation<\/span><\/p>

                    Compensation expectations is a way to determine if this particular arrangement is going to work. If there are unrealistic expectations \u2013 you\u2019ve got a problem.<\/p>

                    Partner outline of a typical Ensemble:<\/p>

                    Salary \/ Draw \/ Bonuses \u2013 40% of Revenue.<\/p>

                    Administration \/ Overhead \u2013 42% of Revenue.<\/p>

                    Operating Profit \u2013 18%.<\/p>

                    Salary \/ draw of owners becomes a fixed overhead expense so like paying the rent and employees should come from recurring revenue and\/or line of credit.<\/p>

                    Bonuses \u2013 can be structured to either reward those individuals who have brought in new business. Eg. 50% of new commissions \/ clients \/ AUM; etc. Profit Centers can be defined and bonuses paid on that revenue.<\/p>

                    Operating Profit \u2013 can be paid out as a bonus or as a dividend \u2013 or left in company.<\/p>

                    ii.)\u00a0<\/span>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Structure<\/span><\/p>

                    Jumping into an Ensemble especially one where the advisors are not bringing similar size businesses and business models to the table can be a littler daunting. Everyone comes to the table knowing how much money they made last year and they do not want to take a financial haircut.<\/p>

                    A strong consideration should be a better business, better growth, more flexibility and more net worth in the long term.<\/p>

                    A natural progression could be to build the base of a traditional Ensemble but operate as a Silo structure.<\/p>

                    iii.)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Equity<\/span><\/p>

                    Determining the initial percentage split of equity is a complicated process generally speaking. It is difficult to be based on sales, profits, recurring revenue, client demographics, valuation, etc. The reason is that there are many factors to consider when considering a partner besides their business. That can be certain skill sets that will be effectively used in the partnership to generate growth.<\/p>

                    In fact \u2013 all of the above should be considered and dealt with up front.<\/p>

                    G. REASONS BUSINESS PARTNERSHIPS FAIL<\/span><\/strong><\/span><\/p>

                      1. Lack of Planning.<\/li>
                      2. Feelings of inequity.<\/li>
                      3. Compromise instead of consensus.<\/li><\/ol><\/li><\/ol>

                        H. BUSINESS PLAN<\/strong><\/span><\/p>

                        i.) \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Team\u00a0Responsibilities and Roles<\/p>

                        ii.)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Business Model<\/p>

                            • Vision, Mission and Values<\/li>
                            • How model works<\/li>
                            • Value Proposition **(very important)<\/li>
                            • Target Markets<\/li>
                            • Marketing Plan and Processes<\/li>
                            • Key resources and activities<\/li><\/ul><\/li><\/ol><\/li><\/ol>

                              iii.)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Financial Analysis<\/p>

                                  • Breakeven analysis<\/li>
                                  • Sales projections<\/li>
                                  • Capital spending<\/li>
                                  • Operating costs<\/li>
                                  • Funding requirements<\/li><\/ul><\/li><\/ol><\/li><\/ol>

                                    iv.)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 SWOT<\/p>

                                        • Strengths<\/li>
                                        • Weaknesses<\/li>
                                        • Opportunities<\/li>
                                        • Threats<\/li><\/ul><\/li><\/ol><\/li><\/ol>

                                          v.)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Implementation Roadmap<\/p>

                                            • Projects<\/li>
                                            • Milestones<\/li>
                                            • Roadmap<\/li><\/ul><\/li><\/ul>

                                              vi.)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Risk Analysis<\/p>

                                                • Limiting factors and obstacles<\/li>
                                                • Critical success factors<\/li>
                                                • Specific risks and countermeasures<\/li><\/ul><\/li><\/ul>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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                                                  Overview of Ensemble Business Structure By Jerry Butler A.\u00a0 FIRST STEPS Before getting to the nitty gritty the following topics should be discussed with possible partners if they have not been discussed yet. Discussion of strategy \u2013 why combining? Discussion of personal goals Discussion of data \u2013 financials, processes, etc. Business planning \u2013 what will […]<\/p>","protected":false},"author":1,"featured_media":2388,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"disabled","ast-breadcrumbs-content":"disabled","ast-featured-img":"disabled","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[29],"tags":[],"class_list":["post-2375","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general"],"_links":{"self":[{"href":"https:\/\/queenston.net\/fr\/wp-json\/wp\/v2\/posts\/2375","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/queenston.net\/fr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/queenston.net\/fr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/queenston.net\/fr\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/queenston.net\/fr\/wp-json\/wp\/v2\/comments?post=2375"}],"version-history":[{"count":0,"href":"https:\/\/queenston.net\/fr\/wp-json\/wp\/v2\/posts\/2375\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/queenston.net\/fr\/wp-json\/wp\/v2\/media\/2388"}],"wp:attachment":[{"href":"https:\/\/queenston.net\/fr\/wp-json\/wp\/v2\/media?parent=2375"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/queenston.net\/fr\/wp-json\/wp\/v2\/categories?post=2375"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/queenston.net\/fr\/wp-json\/wp\/v2\/tags?post=2375"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}