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The distribution business is a thin-margin business and you should be extremely mindful while allocating funds to upscale. In this context, the latest episode of Lessons from the Masters hosted Babu Krishnamoorthy, Chief Sherpa, Finsherpa Investment Services who in conversation with KS Rao, Head Distributor Development and Investor Education, Aditya Birla Sun Life MF shared with us some proven ways to take your business to the next level.
Here are the five key highlights of the session.
1. Be an asset to your business
Plant and machinery and intellectual property are important assets for any business. When it comes to the distribution business, you should be that asset. But how can this be possible?
Invest in knowledge. Mutual funds have passed the concept-selling phase and clients seek more details. Make a constant endeavour to upgrade and stay abreast of what is happening in the industry. This is an age-old way of winning client confidence.
2. Have an office set-up
An office comes first. Having an office space puts other things in perspective. How does this happen?
You typically spend 12 working hours daily and having an office space will make you more conscious to spend the day more productively. Also, hiring a team comes into the picture only after you have an office premises. Further, monthly office expenses push you to work harder and generate higher revenues for staying profitable.
3. Build a solid team
Onboard members who share a similar passion and can add value through their domain expertise. Also, keep their excitement and interest alive. How can you do this?
Where possible, offer a salary structure with an interesting mix of fixed and variable components. A variable component encourages them to go beyond their job role. Also, make them feel respected. It is a good idea to introduce them to your clients as a colleague rather than a subordinate. Such a blend of monetary and non-monetary incentives ensures high employee morale.
4. Leverage technology effectively
Investing in tech is equally essential as investing in marketing and branding. Leveraging technology effectively improves overall productivity. How can you do this?
Reporting, basic research and CRM (Customer Relationship Management) tools are three essential tech tools to support your business operations. You can start with a basic version and then eventually upgrade to a higher version. Reporting tools give a comprehensive overview of how your clients’ portfolios have performed. Research tools help to validate your analysis of mutual funds. Lastly, CRM tools improve client engagement activities.
5. Create your brand
Branding and marketing help to create a brand and establish a presence. What can you do here?
Dedicate some attention to having a website and social media handles. Posting educative posts regularly on YouTube helps in creating an informed client base. Keep these videos short and restrict them to 10 mins. This helps makes investors comfortable to invest in mutual funds through you.
A concise Investment guide
Basis Babu’s wise advice, here is a concise investment guide.
- Investing money in business comes with long-term paybacks and tax benefits
- You never grow when you are comfortable. The moment you feel you have achieved a comfortable AUM size, invest to expand your business further. Additional expenses push you to generate higher revenues for staying profitable
- Explore free technology tools to support your business operations
- Distribution is a people-centric business and people cost (team) is the key expense. It could go up to 50% of your revenue
- After a certain stage, branding and marketing could be allocated 10% to 15% of gross revenues
You can watch the entire episode here.
