Occasionally I have the opportunity to speak to the business class at CSU on a business related topic. Today was one such occasion, with two classes, and the subject for the day was Valuation and why young business owners need to engage and understand the basic concepts.

I enjoy the chance to speak to these classes and always encourage a two way dialogue as far as time allows and ask the students as many questions as I get asked. I truly believe that the level of education being provided in these business classes prepares the students with a very solid foundation in running and operating a business.

They clearly understand the issues of structure, cash flow and marketing and therefore are equipped to make a lifestyle or financial choice when determining what type of business they wish to pursue. Income versus vocation. As the class progressed we reviewed a particular statistic I use to emphasis the issues/opportunity related to supply and demand, specifically where the demographic of the likely sellers of businesses outnumber the probable buyers. There is more supply than demand and this means an advantage for the potential buyer [i.e. these class participants at some point in the near future].

The sellers are Eighty20 Advisor’s typical client. I described how this type of imbalance can affect valuations even when the fundamentals of the business do not change. In the market we serve, Financial Services, the big issue is younger participants choosing occupations other than financial services. I asked the question. “Who here wants to be in financial services?”

In two classes there were a total of some 45 students. None of them raised a hand! I pushed the point and asked again with some level of humor to disarm a potential shy group and again no-one raised a hand. I went on to explain the potential benefits of buying a business that has clients, revenue and operational history rather than starting from scratch. Nothing! This was true for both classes so it could not be put down to 8.00am malaise alone.
I asked the question differently “If you had the potential to earn $250k a year – would you consider taking a position or looking more closely at Financial Services?” 70% of the arms shot up.

I realize this is not a fair question and has a clear bias toward financial gain rather than a genuine desire to become an advisor straight out of college. But I do know that the number of advisors earning $250k a year as a percentage of the advisory community is far higher than many other professions and so if financial gain is a real motivator – financial services is a real opportunity for many of these students.

It’s clear from this simple and spontaneous survey that the industry we all work in has a “bad rap” and is not foremost in the minds of many soon to be graduate business students. If the hot topic of the day “Succession and recruitment of the next generation” is to be addressed at the grass roots level we all need to get more closely involved with the academic community – not just the finance classes, but all business related curriculum classes.

You should participate with your local university and honestly represent what you do and how you do it, the good and the bad and the benefits. Then encourage others around you to so the same. The more Advisors who share their experiences, the sooner the reputation of our industry will start to change for the positive.

If you do not have a relationship with your local schools – reach out and you will be welcomed I am sure. The academic world more than ever needs to forge relationships with the outside world and the returns are truly positive for all who participate. If you do have a chance to get involved but need a PowerPoint – let me know, I am happy to share the various topics we have developed and use.

And thank you for sharing your time and energy in developing a positive reputation and encouraging the next generation.

Allen W. Duck.