The Professional Business
Professionals have the same issues with strategic planning as do non-professional businesses. A founding professional looks at the professional business as his or her professional practice. Often overlooked are the administrative and logistical aspects of the professional business. While it quickly becomes apparent that in a successful practice one professional cannot always be available and professional business owners have agreements concerning their practice coverage, there are often difficulties in establishing agreements concerning uniform professional practice standards for all professionals in the business. Rarely is there planning which contemplates obtaining the highest value for the professional business from a purchaser outside the business. This is a significant lost opportunity, because often when these sales occur the valuation is very favorable to the seller.
A common problem issue for professional businesses has to do with the ability of the professional to adequately prioritize time and effectively delegate the management of the business. That there is often a failure to create and observe governance procedures. The typical professional business is owner-managed. The principal activity of the owner is the conduct of a professional practice. Most states’ statutes require professionals to be in charge of the professional practice of their businesses, but there is no restriction on the delegation of business management activities. Professionals have a very difficult time recognizing and respecting the educational requirements and experience necessary for effective business management. Professionals often arrogantly assume that the business management function can best be performed by the professional as time is available. While this may be possible, it is rarely the best practice. What is far more common is that a professional, typically one of the most experienced and highly qualified professionals and often a founder of the practice, demeans his or her professional practice while trying to also manage a business. Important business decisions, especially planning decisions, are postponed while professional matters are prioritized. The management job is rarely done well, and the professional practice suffers. For these reasons, governance in a professional business often is not a structured or established process. Frequently, because professionals generally are poor at delegation, business decisions are made at too high a level without adequate information and process.
Another common problem issue has to do with the degree of professional training within the professional business, including the implementation and maintenance of professional systems to elevate and maintain on a consistent level high standards of practice. Effective strategic planning will make the professional business aware of the need to establish a professional business that supports and sustains a number of quality professional practices meeting an overall standard of practice. Professionals who are trying to maintain a professional practice and manage a business also often fail to establish practice systems and training for younger professionals. It is ironic that many professionals choose to dabble in business management rather than train younger associates, the training and teaching activity being one for which they are better qualified than being business managers. Professionals, because they do not systematize their professional practice and fail to adequately train younger professionals, develop a professional business that is built around their personal capabilities. These professional businesses have practices identified with the professional who is thereby indispensable to the practice. As with any business, this factor causes the business value to be lower.
As with non-professional businesses, the wealth-building lesson for professional business owners is that until an owner adopts the value perception of the business, recognizing the benefits of building the business as a system while keeping productive and management elements of the business engaged with proper compensation, the maximum benefit of owning the business will not be realized.