However, just ‘hanging your hat’ on being an SMSF specialist is no guarantee for success in your business. In my view, this is only a part of the story.

Therefore, within this growing market, it is important for you to understand what your SMSF business model should actually look like, and there are several key considerations to keep in mind.

First, it is important for you to understand for whom you are creating value. Are you segmenting clients by needs, stage in the SMSF lifecycle, distribution channels or otherwise?

Once you understand the broader SMSF market, it is important to define who your most important clients are. For some SMSF businesses, you are likely to have to clearly define and segment your business model around any business-to-consumer and/or business-to-business offerings.

Once you have a better understanding of your target SMSF client, you can start to focus on the value that you intend to deliver. Part of this process is to articulate how you intend on solving your client’s problems and identify what products or services you intend to offer to each particular SMSF segment.

The next element for your SMSF business model is to consider which channels you will use to reach your SMSF clients. In understanding how your business is going to attract and retain SMSF clients, you need to consider which channels your clients and prospects can and want to be reached on.

With a growing amount of SMSF industry research around trustee behaviours and your own feedback from clients, you need to work out which channels work best, which are most cost-efficient and how they integrate with existing client routines. Using social media to engage with clients is one example of how your business may wish to engage with the growing younger customer segment within SMSFs.

It is also critical to have a clear outline of the type of relationship that you are going to have with your SMSF trustees and to articulate this. For example, the relationship will be dramatically different for a low-cost SMSF administrator that focuses on the trustee ‘self-servicing’, as opposed to a vertically-integrated holistic approach that provides strategic and investment advice, along with meeting the fund’s compliance obligations.

Also, it’s important to remember every business needs key resources. These resources allow you to create your value proposition, reach markets, maintain relationships with your customer segment, and earn revenues. You need to ask yourself: what’s needed to create the value that your business will offer your SMSF trustee clients? This may require an investment by the business in technology, people, or other things that are likely to require a financial commitment by you.

Further, key partnerships play an important role across the SMSF sector in what is a multi-disciplinary industry. This part of the building block focuses on creation of alliances to optimise business models, reduce risk, or acquire resources. The financial planner and accountant relationship is a good example here, where collaborative approaches to SMSF trustees can provide tangible revenue benefits for both parties.

Finally, creating and delivering value to SMSF trustees, maintaining these relationships, and generating revenue all incur costs. Some models are more cost-driven than others. For example, a no-frills SMSF online administration offer will have a business model centred on low-cost structures.

Whilst focusing on minimising costs to improve profitability is important, it is more important to some models than others. Therefore, it can be useful to distinguish between cost-driven and value-driven business models.

Many businesses already carving out a healthy niche within the SMSF space are already working through many of the key issues for continuous improvement within their respective client segment offers. If you see SMSFs as a key part of your business in the future, make sure you understand and build an effective SMSF business model.

Aaron Dunn, managing director, The SMSF Academy