Episode 174 – Resilience in the Spotlight: How One Marketing Agency Thrived Despite Employees Trying to Capitalize On The Cancel Culture – Member Case by Ryan Gill and Chris Kneeland

Join us as we delve into the gripping tale of a marketing agency’s journey through the tumultuous waves of cancel culture. In the height of societal pressure, the agency’s founders, driven by fear and uncertainty, offered their employees overly generous contracts. As the dust settled, they realized the unsustainable nature of their decisions and faced the daunting task of restructuring their workforce agreements. Tune in to discover how Ryan Gill and Chris Kneeland, Partners at Cult Collective, navigated this challenging terrain, replacing idealistic contracts with market-based, realistic agreements, and emerged stronger than ever before. This episode is a testament to the power of resilience and adaptability in the face of adversity.


Greg Alexander: Hey, everybody, this is Greg Alexander, the host of the Pro Serve Podcast and the founder of Collective 54. Thank you for attending. On this show, we talk about how to grow, scale, and exit your professional services firm. Today, we’re going to discuss an important topic when you run a people business: employee documentation or employee contracts. We have a role model member with us this week who recently revamped this for their firm, Chris Kneeland and Ryan Gill from Cult Collective. Guys, please introduce yourselves, and then I’ll jump into some questions. So maybe Ryan, I’ll start with you.

Ryan Gill: Thanks, Greg. You can hear me okay? Are we good?

Greg Alexander: I can hear you great.

Ryan Gill: Awesome. Thanks for having us on the show. Long-time listener, first-time guest. Hopefully, this is the last time. No, I’m a 25-year agency guy, founder, a true founder, not an operator, which is what we’re going to get into a little bit today. We’ve had it going for about 12 years now and I’m looking forward to sharing some of our mistakes and maybe some stuff we learned today. Awesome. Chris?

Chris Kneeland: And I’m Ryan’s lesser half. I met Ryan 13 years ago. I had moved to Calgary, Alberta to take over a small business that was struggling to find a way to exit. The owner kind of gave up after three failed attempts at the altar and essentially gave away the business to his employees and brought me in to run it. That was a debacle, but that’s a podcast for another day. I met Ryan and I like to say that our two agencies had a love child that we now call Collective. He’s been my partner and friend for 12 years now, and we’ve had some big wins and some big failures. Today, I have a feeling you’re going to want to talk more about the failures than the wins.

Greg Alexander: Well, you know, we learn from our failures, and I’m just trying to help our members avoid some dumb taxes, as we like to call them. I appreciate you guys being comfortable enough in your own skin to share some mistakes that you made, but we’ll certainly talk about the successes as well. So, maybe as a way to kick this off, I asked you guys to be on the show because you recently went through a change as it relates to employee contracts and employee documentation, which is not uncommon. As a firm matures, things happen and these documents need to be updated from time to time. So maybe start with that, kind of give us some context of what happened, and then I can dive in and ask some questions.

Chris Kneeland: Ryan, we just lost you.

Ryan Gill: I’ll set this up and let Chris put in some commentary. Greg, when we talked about this and potentially talking to you about this, I got excited because I think the tax we paid is extremely high monetarily but also emotionally. When it comes to people, we’re in the people business, service business, you care about these people. And when you screw up, it screws up a lot of people’s lives. But with that background, we’re also not idiots. We’ve run companies before, we’ve been successful, had some exits, things like that. The backdrop for this is we came through some cancel culture. We all experienced that as business owners in 2016, 2017, 2018. I think it made a lot of business owners, especially small business owners, gun-shy to make any big decisions or to say no to things. They felt a bit hostage. I know I did, can’t speak for Chris. And again, like I said, rightly so in some areas, business needed to be cleaned up, but in most areas, we got gun-shy and I don’t think it was valid. Then we walked right into COVID, which put the whole world on its back foot, us included. It led to working from home, and again, it was an employee market. In my opinion, we had to pay to keep people, keep the lights on. I think a lot of us forget what it was like going through that. Chris was our CEO at the time and I believe managed it ethically. But you think we’re still human? So, I think a lot of times people, employees, or clients think agency or marketing consultants or business owners are superhuman. We were going through the same thing but we had to lead and give clarity and confidence to our team. But a lot of people took advantage of that, I feel. Chris and I made some mistakes in that. With the backdrop of those two things, we made some really dumb mistakes, which we’ll get into. Chris can share some of them. But we just overpaid. We felt, I know I felt distracted with everything else and we just made a bunch of dumb decisions. So those aren’t excuses, but I wanted to paint the backdrop. I think a lot of people might be listening to this. We’re coming out of the fog here in 2024 and I think the sun is clear in 2025 to take some of this advice.

Greg Alexander: You know, one of the things that I find remarkable about your story is we all made those mistakes during that historic time period that we’ll look back on at the end of our lives and say, holy cow, I can’t believe we lived through that. But you guys had the courage to fix those mistakes. I mean, you kind of tore up some legacy contracts and started over. So, Chris, why don’t you pick up the story from there? Like, what did you do?

Chris Kneeland: So, pragmatically, we found ourselves in a situation in the fall of 2023 with 21 employees and nine different employment contract structures, which differed in terms of pay banding. They differed in terms of performance bonus calculations. They differed in terms of equity or stock options. That was one of the first introductions to your program, Greg. We’re not the same as giant Fortune companies that can do stock options. Like, why is a 20-person firm trying to replicate what Home Depot or the Ford Motor Company does? And so, in an effort to try to equalize these things and try to figure out, maybe under the false hope that some employees would be good soldiers and take one for the team, you know, I hear about NFL players that do contract renegotiations so they can get people into the salary cap. None of that happened. No employee is ever gonna take one for the team and take less. So, we decided to hit the reset button and terminate every single employee on the same day at the end of October.

And there’s a nuance here: most of our employees are Canadian, and the Canadian labor laws have some different tricky things. But essentially, it was working notice in lieu. The way that our lawyer described it, it’d be like if I owned a factory and was telling the factory that we’re shutting it down in six months. So, you’re not fired, you don’t have to leave right now, but you know that there is an end date coming, and that there’ll be a new factory opening up six months from now, and you’re welcome to reapply for those jobs. We weren’t necessarily trying to clean house in terms of getting rid of bad people. We were trying to clean up bad paperwork, liabilities, and a misalignment of economic incentives. I’m pleasantly surprised that everybody said, okay, I’ll do it. And to Ryan’s point earlier, I don’t know if the dynamics of a buyer’s market or a seller’s market changed and some of their options had gone away. Some of our new pay banding and level setting actually resulted in more compensation for people. So, it wasn’t all bad news, but it cleaned it up until your sort of economic or I think you, I forget what you call it. You have a ladder, but the performance ladder of at least now everybody’s getting the same incentives tied to the profitability of the business in the form of a profit share. Leadership is being offered exit warrants, not equity, in regards to their incentives to help us build a sellable business. We hoped for the best, we prepared for the worst. It all kind of came to fruition at the end of March, so you’re catching us just a few weeks after everybody’s new agreements have been signed. I think there’s been a noticeable improvement to culture because there was a noticeable improvement to clarity of what’s my job, how am I gonna be rewarded, what am I expected to do? While it was a compensation exercise, it also allowed us to reevaluate and recommit to each other that we’re still adding value and we still have good things to accomplish.

Ryan Gill: One thing there, we also got 54 is great because you put us in touch, Greg, with, I think, the CEO’s right-hand company, and they brought a consultant in to help us with the pay banding. It was great; we gave them some business. They helped us out in a pinch, and that was very helpful because we were able to go with a straight face to say, hey, we paid the money and did the research. This is where you’re actually supposed to get paid. We made, and we hate humble pie, Greg. We just said we made a mistake. We were running around trying to please everyone, and then they put the firm in jeopardy. If the firm goes down, then it doesn’t matter what anyone’s getting paid.

Greg Alexander: There are so many questions I wanna ask. But the very first question is, I mean, that was risky to do what you did. Yeah, you did it anyways. So what gave you the courage and the conviction that you were doing the right thing?

Chris Kneeland: I think we both would say, I didn’t feel it was risky because we weren’t trying to preserve much of the status quo. We were kind of at our wits’ end. The notion of blowing it up and starting over was very real. It got to an untenable point. In hindsight, yeah, I wish we did it two years earlier. But at least for me, I was at a breaking point where I didn’t want to lead and manage an organization that was tethered to so much baggage and bad paperwork.

Ryan Gill: And I’ll say one other thing to that is the risky thing for Chris and I is we had basically been out of the business. So the big risk for us was we had to come back in. We had almost got to that exit velocity, Greg. Maybe you see this for some of your people in the five-year growth, scale, and exit. Chris and I basically, I don’t know if you see this in any other firms, maybe I’ll ask you. We were in the exit world. Clearly, we actually had an offer on the table, and this actually exposed a lot of it too. So we had to step back from exit back into growth. That was a bit painful and risky, but I think our multiple whenever we do sell will be better because of it.

Greg Alexander: You know, and as an education for those that are listening, the reason why employee contracts matter so much in professional services is because your assets are your people. It would be kind of like if you were a commercial real estate company; you would have contracts that governed your ownership of certain office towers or manufacturing facilities. In a service business, it’s the same thing. You have contracts that govern the relationship between you and your assets, in this case, people. So when you get to an exit stage, you’re going to have to go through due diligence. Part of that is legal due diligence, and all these things are going to be analyzed. If you’ve got nine different employees on nine different plans, the potential acquirer is going to say this is a mess. We’ve got to clean this up. Can we, or do we buy this firm, attempt to clean it up, and everybody quits? Now, all of a sudden, there are no more assets because the assets are the people, and they just quit. So what did I actually buy? This is the reason why it’s so important to do this by the book. I’m encouraged to hear that you leveraged another member, William Lieberman, and the CEO, right-hand, and you did that the right way because half the time is explaining to the employees or half the problem is explaining to employees how you reached the conclusion that you did. In your case, you went and found market data. You said this is the going rate for this job, and here’s what that job is designed to do and produce. For that, we’re willing to pay X. The use of data in that situation can be very powerful because it grounds everybody. Sometimes employees that might be on legacy contracts have a sense of entitlement. I’m not saying that was the case with you, but that can happen sometimes. All they know is what they know, what they’re being paid, and what their contract looks like. They lack the context of the broader labor market, and data can be really useful there.

Ryan Gill: Well, it’s for sure entitlement, but it was our fault. We made it happen, and we let the kids run the show, if you will. Like in a household, that doesn’t work. I use the words kids, or in my case, you’re in charge of your home. If you just let people do whatever they want, it’s your fault, not the kids’ fault. At work, they’re not kids; we call them into our team. We set this stage because, in my opinion, I think of some circumstances that are more macro. We still got to eat humble pie and fix it.

Chris Kneeland: In terms of risk, I was just kind of thinking about one of the things that Ryan taught me years ago: confidence comes from options. Sometimes as owners, we get a little too precious, thinking that somebody on our team is overly exceptional. There are certainly A players and rock star talent, but there are a lot of great players out there. Knowing that there was a risk that people may not sign up made us much more aggressive at getting back into the dating pool, if you will, and starting to see other options that were out there. It gave me a lot of confidence that there are certainly going to be hiccups and inconveniences, but it’s pretty humbling if you ever leave a company to realize how quickly they recover in your absence. You like to think everything’s going to fall apart when you leave, and rarely is that the case. I think it’s one of the responsibilities of leaders to constantly just like we’re not for sale, but we’re always for sale. I’m not hiring right now, but I’m always hiring. Never miss an opportunity to continue to build that network and surround yourself with great talent.

Greg Alexander: Everybody is replaceable, including us. Everybody is replaceable. You got to show up every day and earn the job every day.

Ryan Gill: And we proved it. Chris stepped down as CEO years ago, and I stepped down as president seven years ago, and the business grew. So now we’re going through it again.

Greg Alexander: Let me ask one more question. We try to keep these podcasts to 15 minutes or so. On the member Q&A, we’ll double-click on a lot of this because I have many more questions that I’ll ask, but we’ll reserve that for that time period. For a member who’s listening to this, who might find themselves in a similar situation, dealing with some baggage that they would like to hit the restart button on but might be hesitating, what would you say to that person?

Ryan Gill: I would say there was this really smart guy named Greg Alexander I talked to when I was going through this. He said when you make changes on people, not once in my career have, I said, “I wish I waited longer.” I always wish I did it sooner. We’ve made some changes already, as Chris said. We let them go at once, and it was a bit of a tricky way we did it, which we’ll explain more in the double-click when we get into the Q&A. But even at the, we’re talking with some bigger old people here that ran our firm, doing it sooner is better. So that’s my advice: I wish we had done it sooner.

Chris Kneeland: My advice would be I’ll elevate it a little bit because hopefully, your members aren’t as dysfunctional as we were and they’re not as broken. But just as you think about people in general and how you tether them to your business, another thought leader that Ryan introduced me to is John Maxwell. He has this idea about valuing people, praising effort, and rewarding performance. I think about that all the time. If you need to have tough conversations, it’s not about them as humans. You value them and their contribution. You can do things kindly and with compassion; it doesn’t have to be as cutthroat as it sometimes is. But you need to reward performance. If you mix those adjectives and adverbs up, or whatever they are, and you start rewarding people and valuing performance or vice versa, the contracts were out of whack because they were giving disproportionate amounts of profits to people who were underperforming. That sense of entitlement was there because they didn’t understand the clarity that you’ve now helped us create. It requires transparency on our part as well. If there’s a profit share, you’d better be talking about how we’re doing with profit. It shouldn’t be a black box at the end of the year where they’re wondering what it’s going to be. They should be able to calculate how they’re trending. There’s a lot of learning around people management. I don’t think the ad community, which is what we’re in—the marketing and ad business—is particularly good with numbers and spreadsheets, or tough conversations, radical candor. There’s a whole ecosystem that goes around this. If you’re in the mess, hitting reset and getting new paperwork isn’t just the solution. You got to look at all the symptoms that got you into that mess as well, about putting on your big boy pants, having adult conversations, and helping people appreciate that we win only if we all win as a business, not if you win as an individual.

Greg Alexander: Awesome. Great contributions today, guys. It’s really valuable. We’re so lucky that you’re in the collective. We learn so much from you. Thank you for contributing today, and we look forward to the member Q&A.

Chris Kneeland: Thank you.

Greg Alexander: All right. A couple of calls to action for listeners. If you are a member and this topic is of interest to you, watch out for the invite that you’ll be getting and attend the Q and a session with Ryan and Chris to talk about this in detail. There’s a lot more to the story and it’ll be a rather interesting conversation. You’re not a member, you want to become one, go to collective 54 dot com for an application. We’ll get in contact with you. You’re not ready for either of those two things. You just want to learn more, go to amazon and find my book. It’s called the boutique, how to start scale and sell a professional services firm. And that’ll give you a good overview. But until next time, thanks for attending. And I wish you the best of luck as you try to grow scale and exit your firm.

Note: This transcript was generated by Gong.

Episode 173 – Blueprint for Scaling: How a CPA Firm is Scaling Through Franchising – Member Case by Matthew Peterson

In this session, we delve into the strategic journey of an accounting firm that has mastered the art of scaling by franchising its proven system. Learn how they’ve transformed their business model to offer franchise opportunities that empower other entrepreneurs to build their own successful accounting firms. We explore the benefits and challenges of this approach, the critical components of their franchise system, and hear a firsthand account from a franschisor who has thrived under this model. Join us to discover how franchising can be a game-changer in the accounting industry.


Greg Alexander: Hey, everybody. This is Greg Alexander, the host of the Pro Serv Podcast, brought you by Collective 54, the first community for founders of boutique professional services firms. On this episode, we’re gonna talk about an interesting and novel way to scale a services company which is franchising, and we have with us a member of Collective 54… Matthew Peterson and he owns and operates True North Accounting, and he is pioneering. So, he is bringing franchising to the accounting space. And I thought this was such an interesting use case that I wanted him to come on the show and share it with all of you, our members and see what we might be able to learn about franchising and see if that might be an opportunity for you. So, Matthew, it’s good to see you. Would you please properly introduce yourself to the group?

Matthew Peterson: Yeah, thanks a lot, Greg. Happy to be here. And yeah, as you said, I’m Matt Peterson and I’ve been running True North Accounting for almost 10 years now and we’re really just a CPA firm focused on helping small businesses. And we’ve tried everything over the last decade on like as it relates to how to better empower entrepreneurs and how to provide a service that small business owners need. And yeah, so we’ve we kinda hit, a bit of a ceiling on our growth or at least it was going down a path that wasn’t so fun. So we started looking for other ways to grow and… we landed on, we ended up through like a kind of a zig zagging path, but we landed on franchising and it’s something that I didn’t want to really entertain at first but the more I learned about like the legal definition of it, it’s like, yeah, it became clear that was probably exactly what we wanted to do. And so we’ve bit the bullet. We’ve got all the legal paperwork done and… yeah, we’re just about to launch, our first three franchises this summer, maybe for the fourth in the fall… but yeah, it’ll be quite the adventure has been already.

Greg Alexander: So, let me, so for those that might not be familiar with franchising, I’m gonna start with the basics. So define it for us.

Matthew Peterson: Okay. There’s three things that need to be true that make you a legal franchise. And the first one is you have a brand or some IP that you’re granting somebody else the permission to use. So that’s the first thing, and the second thing is you’re getting you’re charging for the use of that. So you’re getting revenue from it. At this point, it’s basically like a licensing agreement. The third thing that makes it that kind of separates it from a licensing agreement is that you retain some sort of control over the people that are using your brand or your IP. And that’s if you do want to maintain that control, then you’re a franchise. And that falls into just another realm of legal kind of oversight and rules around there. So yeah, for us, we have our brand and our operating system that we’re offering our france are our licenses and we will be taking a royalty from them. And so we’re getting paid for it. And we do want to, we want them to use our app stack and our data structure. And… and so we can like really help them and coach them and keep tabs on them. So that’s, the control part that is really important to ensure everyone’s delivering value to their clients and not digging themselves into a pit of unprofitable clients. So that control is really important for us. And so, yeah, we’ve got our franchise agreement and franchise disclosure document and there’s a O, yeah, there’s a whole lot of disclosure steps, in the process. But licenses do have a, some recourse if they’re not getting the value from us.

Greg Alexander: All right. So I get the definition and I think those that are listening to this probably are familiar with franchising maybe from the fast food space like jersey Mike or something like that. What’s unique about this is that to my knowledge anyways, it hasn’t really been applied to the white collar professional services, something like accounting. And in that context, I want to first ask you how you make revenue through that business model, then I want to ask you how your licensee makes business model makes revenue through that model. And then third, why would a CPA firm… buy a franchise from you when they can just be their own CPA firm? You mentioned, the app stack and things like this. So, that hints towards your system for lack of a better term, allows a CPA firm to be a better CPA firm. So I really want to dive into those three things. So let’s take those one at a time lease.

Matthew Peterson: Yeah. So the, what we, what we’ve created for our franchisees is just like, all the aspects, of a CPA firm business loosely based on like traction or eos and we’ve built in the dashboards and the data structure, having the database of all the points on your client list and how your team is doing. And so we can have the, those key metrics just at the fingertips that’s a big part of it, the marketing and lead generation that’s something we’ve really kind of over built for our own size. So we have a lot of, a lot of reach there. And it’s all inbound marketing. We’re getting a lot of organic leads… and we could just turn up the paid ads part of it if we want to get into a new territory. So we have that like helping these see grow is probably one of the biggest reasons that’ll come to us. The thing like if we’re looking for entrepreneurial CPA’s, they want to run their own business, they feel stuck at their conventional accounting firm or maybe they’ve started their own shop and it’s just there’s too much going on. It’s too overwhelming. So, we want to help them hit their goals, get to their like right size firm that however many people they want on their team, what kind of clients they want to deal with. And we will send them leads and we have pricing policies and structure and how you set your proposals and your terms and conditions, and the onboarding process. We’ve got like over the past 10 years basically over built all those processes. We have, a pretty good bench of tools and templates and all that, to lean on. But the world is changing super quickly to a so… from like the HQ or the license or franchise or perspective. I like this is the kind of stuff I’ve been working on for the last 10 years in my own firm. And now I think this us, I’m not going to change that. Still trying to keep on the cutting edge of as AI comes in or there’s open banking coming into canada, us has started down that path as well. But these are big like shifts that are gonna change the way CPA firms operate there’s. Also a big wave of demographics, demographic changes. I guess coming to the industry, 75 percent of CPA’s are ready for retirement in the next few years. Half like enrollment, in accounting programs at universities is down… by more than half. So it used to be two percent 10 years ago. Now it’s less than one. Percent. So there is some concerns winds kind of shifting but that’s why somebody would join us like, yeah, they’re gonna have to pay a royalty, eight percent royalty and the three percent brand fund. But they E, they get the advantage of like somebody evaluating all these apps that are coming out and like adjusting procedure manuals for open banking. And… yeah, so there’s a lot of reasons there, to join like accountants. Like many technical people aren’t super good at running a team or running a business like focusing on everything they have to wearing all the hats. Yeah. So we want people that can manage a team and deal with their clients and let us evaluate the apps and build, the systems around that. And then the marketing and sales. I think that’s the big piece.

Greg Alexander: So you mentioned lead generation. So it sounds like you have an advanced capability there. So if I become one of your licenses and I am paying you for the right to be one of your franchisees. I now no longer have to generate leads. You’re generating all the leads for me. Is that true?

Matthew Peterson: No, you can definitely generate your own leads and we would just take that 11 percent of the revenue as normal as with every client. But if you do want us to help you grow or you’re O, you’re not finding clients fast enough. We a, there’s basically like a status that they can put themselves on like accepting all new leads that fit within are like predefined parameters or ideal client profiles, I guess. So if he, if they’re accepting clients, then we can, I, there’s two options. There’s a referral fee. So we’ll send them a qualified lead. It’s a meeting with the client, spin their calendar. And at that point we’ve estimated their annual recurring revenue. So say that’s like a 5,000 dollar client, we would set up a meeting and then we Bill them 15 percent of that arr, if they want us to O, like close that prospect for them. So, we actually get to sign engagement letter. We get the payment and we onboard them that we’re gonna pay or we’re going to charge them 40 percent. And that’s really just on the first year’s proposal or that like arr number. So we’re not taking that on. Like if there’s catch up worker… yeah, anything like that. So we try to keep it simple enough, to quantify.

Greg Alexander: So you got your first three doing this summer. What’s the vision? How many of these do you think you could have stood up?

Matthew Peterson: Well, we’re taking it one step at a time but I think like the overall mission is just like helping entrepreneurs and, these folks have a tough time finding good capable CPA’s people that like have the, have their processes figured out and can move at the pace that their businesses are moving. So, it’s really imperative that, we get as many entrepreneurial CPAs out there as possible and as quick as we can. So we like I think 100, in canada, 100 branches 100 CPA firms. I think that’s, our big goal, for the foreseeable future. And yeah, I guess we’ll just see how it goes if it takes off… and there’s an opportunity, to go south of the border. We would definitely look at that. But yeah, I think it could be like the bigger we get that’s what’s so interesting. Like if there’s 100 CPA firms each with 100 clients, that’s 10,000 small businesses that we have a direct line of communication to. And so there’s a, at that point, it gets quite like, yeah, there’s a lot of opportunity there to sell directly to those clients.

Greg Alexander: My last question would be, I mean you had a choice. I mean, you were running your own CPA firm for 10 years, and that had its own scale attributes positives and negatives to it. And you’ve decided to stop doing that and then empower and enable other CPA firms and go the franchising route. And obviously, since you’ve made the change, you feel that had more scalability built into it. So explain that to our audience.

Matthew Peterson: Yeah. So we got to, we got to 25 people like 3,000,000. We opened our second office a few years ago and we just found it became the client experience wasn’t exactly what we intended it to be. Like there was too many new faces. Clients were getting passed around. There were never quite sure who is there like main contact. So those are a couple of the issues that we faced by getting to that like two to 5,000,000 dollar range, you got to start hiring middle managers and a like a O in 2022 that was our journey. Like I was having my third kid took a few months off and brought in two managers, to help stabilize the team and run the day to day. When I came back after that sebatical, a lot of, a lot of the cracks in the business model where we’re showing and we were all kind of longing for that like those days of an eight person team. So I do feel like if we’re going to set some guard rails for a CPA to run their own shop, size is a big part of it. Like if you can get your team or keep your team under 10 people and yeah, you can operate profitably within there. You’re just like you have better relationships with your clients. Your team is more accountable like it’s harder for one person to hide and like just drift on everybody else’s coattails. And so, the account the client expect… and I think just… entrepreners want somebody that’s lived what they’re living or at least has some sort of empathy for what the business owner is going through. And so that’s the one thing like I had a couple of business partners that… each of them are. So they’re so good at servicing clients. But neither of them had that entrepreneurial experience. And now they’ve gotten that over this whole transition. And now they’re running, their own firms. And I think that I, it just forces them to like be more customer centric. I think as they are, they’re living it themselves.

Greg Alexander: It’s it’s a really a fascinating way of doing it. And, and I’m gonna put my own spin on it here. Just speaking directly to our audience. You know, if you think about Matt, so, he is running a 25 person firm doing 3,000,000 bucks, 10 years in steps away because he has a baby comes back, and things are cracking, right? Which I’ve heard that story. I don’t know how many times, right? I mean, it’s just the nature of the beast. So you have two choices there, right? You either go from 25 people to 250 people and those problems become bigger and bigger. And there’s a whole path to go follow there with middle management et cetera, and there’s pros and cons associated with that that’s one path inside a collective 54. We call that a rabbit business, a rabbit businesses. You have lots and lots of clients, but each client spends a little with you. And that was the path that Matt was on the alternative to that traditionally. And today we’re learning about a third choice. But traditionally is you go up market. So you transition from a rabbit business to elephant business, you grow your revenue and your profits but not necessarily your client count. So instead of serving onto peers and matt’s case, maybe it serves mid sized businesses at large enterprises. So now you have 10 20 30,000,000, but you’re still at only 25 people because each client spends, you know, that much more that’s another way of doing it in it has its own pros and cons. There’s no silver bullet here. What Matt is introduced us to today is a third way which is to stay in the rabbit business but with a different mouse trap which is to go enable all of these 10 to 25 firms and expand horizontally by allowing all of those firms to run successful lifestyle businesses. And that’s a positive complement and do so profitably and stably. And and yet Matt can still reach his dream. So it’s a kind of a like a horizontal expansion play. It’s it’s a, very interesting approach. So, Matt, on behalf of the members, I want to thank you for coming on the episode and sharing what it is that you’re doing it’s. Particularly interesting since you’re in the early days of it, and I appreciate your transparency there. And the members are gonna love the Q and a session that we’ll have coming up following this shortly. So thanks for being here.

Matthew Peterson: Yeah, no, my pleasure. And I don’t know why nobody has done it before and, but I don’t know, it seems like a clear win for us and so we’ll try it out and yeah, maybe we’ll find out why nobody does it, but, it’ll, be a fun journey.

Greg Alexander: Exactly. Yeah. I think it’s gonna work. I think it’s gonna work because I think it’s a good idea. I think you’re a smart guy. I think the fact that you lived this yourself for 10 years is gonna be the difference maker. I think, you know your client better than most. We’ll be pulling for you. So best of luck to you on it. Okay?

Matthew Peterson: Appreciate it. Thank you, Greg.

Greg Alexander: Just a couple of concluding remarks here. So, members, if you’re listing, you want to attend the Q and a session and ask questions directly of Matt, look for that invite. It will be coming out shortly. You’re not a member. You want to become one, go to collective 54 dot com for out an application. So will get in contact with you. And if you just want to read more about topics like this, I’ll point you to my book. It’s called the boutique, how to start scale and sell a professional services firm. You can find that on amazon. But until next time, I wish you the best of luck as you try to grow scale and some day exit your boutique pro serve firm.

Episode 171 – Mastering the Hire: Securing the Ideal Sales Leader for Your Boutique Firm – Member Case by David Kendall

In this session, we delve into the art and science of hiring the perfect sales leader for boutique professional service firms. We discuss the unique challenges these firms face, the qualities that define a successful sales leader in this niche, and practical strategies to identify and attract top talent. Whether you’re in the early stages of building your sales team or looking to elevate your firm to the next level, join us for expert advice and real-world examples to guide you through the hiring process.


Greg Alexander: Hey, everybody. Welcome to the Pro Serve podcast brought to you by Collective 54, the first mastermind community for founders and leaders of boutique professional services firms. My name is Greg Alexander. I’ll be your host and on today’s episode, we’re gonna talk about hiring sales leadership in a boutique professional services firm. We’re gonna talk about two different hires. One hire is hiring somebody to build a program that doesn’t exist, think of like an architect. The other hire is to hire somebody who is gonna run a program that’s already been built. These are two very different hires, different profiles, different management structures, etc. Collective54 member with us is David Kendall, who has experience with both. David and I have recently been talking about this and I suggested to him that we make this conversation public because lots of people have the same data. So that’s why we are here today. With that, David, good to see you. Please introduce yourself and your firm to the community. 

David Kendall: Morning, Greg. David Kendall, the owner of Kai Partners. Our firm specializes in strategy and management advisory services primarily to the IT community. 

Greg Alexander: Okay, so, David, let’s start with what you and I discussed a couple of days ago. Let’s define these two terms. So, Sales Leader A is somebody who builds a program. Sales Leader B is somebody who runs the program. You’ve had experience with both, so if you would, provide your definition for each, and then maybe give us some commentary around your specific experience with the two. 

David Kendall: Yeah. I think that the challenge in our primary market, which is state government IT projects, I think of very large implementations for health and human services or EDD, DMV, things like that. It takes relationships to be built over time to sell your services. That takes some experience in delivery, some experience in the politics of it. You have to be aware of the legislation and policy that gets implemented. It’s what you would expect a really good sales leader to accomplish, right? Build your relationships, get out there, tell them the message, etc. Very different than the person I need on my leadership team to build the program. The program within our organization, or type B that you described. If I—hopefully I didn’t get those backwards—is the person who needs to actually set up a vision, identify the right people, define the process and procedures, and invest in the technology necessary to empower the whole thing so that vision can complement the great work of our service delivery group, our technology and operations group, our business services, etc. And those are definitely different personalities. 

Greg Alexander: Now, you were telling me that you have made the mistake of needing one and hiring the other, and vice versa. So tell us a little bit about that story so we can learn from it. 

David Kendall: I like to call it learning forward. The reality is that, you know, as a young company, all I could think about was I need somebody to sell our services, right? And so I looked at my background and the companies I had worked for and I went forward and hired some people who were good at selling within our market and they had been with reputable firms. They had built some relationships. The challenge was, you know, the first 90 days is such a dangerous point of hire for anybody, much less a leadership team member. How did I convince them to be invested in the company and the outcomes, etc.? You can do that through compensation, which I’m sure we’ll talk about at some point. But the reality is they have to want to participate and get people to have ownership takes time. That’s why that first 90 days is critical. So we hired initially somebody who was good at sales. They literally sat next to my business services director for the first two months and didn’t talk to them. Well, that’s not very successful in building a division within the organization. They really weren’t all that great at the marketplace either because they now had to carry the message of a small organization where before they had worked for a large organization that already had a brand and a set of reputational experiences that they could depend on. So that one didn’t work out as well as I had hoped. 

Greg Alexander: Yeah. And then in this attempt to hire this sales leader who’s gonna own this division within your company, how many times have you tried to make this hire, and what have you learned through that process? 

David Kendall: Four. I hired two people from the outside, large system integrator companies, and hired two people inside. The insiders weren’t brave and courageous enough and didn’t have the relationships to go out to the field. So they were focused on the internal part. The problem was that the baggage that they brought with them was that they were focused on a narrow version of business development. And so they didn’t really build out a program. They built out a thing or they implemented a tool or they identified a role. And it took a long time for them to integrate all those pieces together. So those four experiences really taught me about what I wanted from this position. To be honest with you, the best thing I’ve done is I didn’t hire the next person and I’ve been doing the job because now I’ve been able to take those experiences and what I expect from it and put it into practice. 

Greg Alexander: Right. You’re right. I mean, sometimes that is the best thing, when trying to figure out what is required to be successful in a position. There tends to be no better teacher than actually doing the position yourself and seeing what the day-to-day looks like and then backing into some type of job spec that you could hire into. So, how long have you been doing this sales leadership position, and what have you learned? 

David Kendall: Yeah, since December of last year. You know, the first month was to make sure everybody keeps their feet on the ground and doesn’t freak out that we now are missing a leadership position. Then it was to start to build the coalition. I talked about building coalitions a lot. I was doing this internally. I was taking the people who were uninspired and weren’t really led very well, and I was giving them some things that they could start to chew on—actual activities that were leading in a direction, a discussion every week about how we were applying those tactics to get our message together. A whole new look at marketing, a whole new look at our materials. Not a wholesale change, but just building them into how we approached the business development dynamic in a way that started to get their interest. And I took them back to the beginning. I just want to say this: like most small company owners, I’m sure within our membership, sometimes you have to go learn from the beginning. And I truly believe there’s value in going back to the beginning and challenging all your assumptions, and learning from some people who have been successful at it so that you can apply it in a way that works for you. I’ve now got a group—and I get chills when I say this—that is bringing me more opportunities than I know what to do with. We don’t have the time because you can’t just go talk to people. You have to get informed. You got to do research. You’ve got to take the time to make it valuable for that customer from the very first time you get to talk to them. 

Greg Alexander: Leadership matters, right? So obviously it’s working, you know, what you’re doing. So I’ve got to ask the question. I mean, at some point, you got to have the courage to try it again for number five. Are you going to? 

David Kendall: We’re getting close. What I’m gonna have that’s gonna be different is I’m not gonna ask somebody to come and build it. I’m gonna hand them an operating system and their responsibility for the first 90 days. And by the way, our company culture is we set up a 30-60-90 day plan for everyone. From the very first day, you have goals that you have to accomplish. Their 30-60-90 day plan is gonna be very different than the previous ones. They’re not gonna have to build something. They’re gonna have to understand it. They’re gonna have to apply their skills and experiences in a way that is productive and they’re gonna be able to measure that because we are adamant about making sure that our KPIs matter. We talk about them from leadership all the way down through the organization. And I’m excited about the next hire. But I’m also gonna take a different approach to how that person gets hired as well, which I’m sure we’ll talk about here in a minute. 

Greg Alexander: Well, let’s go there. What’s the different approach? 

David Kendall: Well, as my newly found friend Greg Alexander suggested, I might look at a book written by one of his network of professionals called “Who”. And what I’ve gotten out of that so far is to make sure that I’m approaching it like I would any of my technical people—make sure that I’m doing a full psychographic, demographic, and skills-based analysis of who is a candidate for this. The other thing I’m gonna do differently is I’m gonna stop looking outside. I’m gonna give people within the company a chance to step up because I’ve got some people who have some exciting ideas. They might not be ready yet, but that might lend itself to maybe a fractional hire that then allows the permanent hire to grow into the position. Still working on that strategy, but I’m excited about all of those approaches. 

Greg Alexander: Yeah. You know, so in my time when I was in your seat as a boutique founder, my company was called SPI, and we were hired to build sales programs. We were a consulting firm specialized in sales effectiveness. And almost always we would enter an environment like the one that you’re talking about where there have been some attempts before and it didn’t work. And they had an epiphany that they needed to hire a builder. But a builder by definition eventually works him or herself out of a job. You know, the home is built. So now you have to move on and go build another home. And then somebody moves into the home and lives in the home to use a home analogy. That’s why I think the fractional approach for the builder is such a good strategy for many of our members because they can come in and they not gonna have domain expertise in the tribal knowledge that a full-time employee would have. But what they’re bringing to the table is a set of competencies that don’t exist inside the firm. And it’s one plus one that equals three there. Not to do cliché, but it really does. And then that internal person is watching the house get built while it’s getting built. So that when the keys get handed over, you don’t miss a beat because, you know, it was almost a co-creation process, a blend of external and internal, and that tends to work really well. Last piece of advice that I would offer—and then I got a couple more questions for you, David—is that it’s very rare. In fact, in my 30 years of doing this, I’ve only seen it a handful of times where one person can do both. It’s like finding a needle in the haystack. And I don’t know why that is. I’m not an organizational psychologist. I wish I could tell you why that is, but it’s very rare that they can do both. Somebody is either a creator or an operator, and the path of the highest probability of success is the founder does the creation and then hands it over to an operator and the operator runs it. It’s much more successful when it’s done that way. So my advice there just to sum that up is not to try to hire both. Okay. Let’s talk about leveraging your hiring success in other departments with this structured selection process that you just mentioned and applying it to the sales role. So, my first question would be, you know how to do this, you’ve done it successfully with other jobs. Why haven’t you done that with this job? 

David Kendall: Right. My very first reason is because I want to make sure that our culture stays intact. You know, the statement “culture eats strategy for breakfast” is not a small statement. And I believe it, right? Bringing a leadership team member on is disruptive at multiple levels, no matter how you execute the process. I do believe in my ability to pick a leadership team member to fit into the leadership team. What I have learned is I need to pick a leadership team member that fits into the organization. And that sounds almost trite given my statement about culture, but the reality is that I want some other voices involved. The way that we do this across the company is I always have multiple interviews get done and I’ve done that with every sales leader I’ve looked to as well because I can have a bad day, right? Someone can be bad, and I might meet the greatest person in the world and just write it off as not important. But this time I’m gonna have not just leadership team members involved. I’m also gonna have some key staff members involved who can ask their own questions and go through the process a little bit differently. I think leadership team members, it’s critical that you do a fairly robust evaluation of them and multiple days should be involved, right? It should describe why, what, and how the company runs. It should be an interrogation of their past experience and how it applies. You should be able to understand their motivations. Motives are critical in the business development leader for so many different reasons because you want somebody hungry out in the field, but you want them to be hungry for you, not for their next opportunity. 

Greg Alexander: Yeah, you’re right. I mean, in the boutique professional services world, in particular, I mean, I think the statement that culture eats strategy for breakfast is so accurate because when there’s a small number of people, you know, one bad egg can cause, you know, devastating impacts because it can ripple. And also one fantastic piece of human capital can elevate the entire team, and re-energize everybody. So it’s such a critical hire and therefore, it’s worthy of multiple days. 

David Kendall: It’s actually why we got into organizational change management. We provide that service to our customers because it is not just about changing. It is about changing in an environment that people want to work in. And that is such a critical part to every hire, to every time you get together as a group, to build that coalition I mentioned earlier. 

Greg Alexander: Yeah, yeah, you’re right. Good points. All right. Well, listen, these podcasts are supposed to be short. We’re at our window here. David is going to be hosting a private member Q&A session that’ll be an hour in length as opposed to 15 minutes and will give members a chance to ask questions of him. But a very hot topic, you know, the hiring of a sales leader, the different types, how to go about it, what works, what doesn’t work, etc. But David, we appreciate you coming on the podcast and contributing to our collective very much. Thank you. All right. For those that are listening, like I said, if you’re a member, come to the Q&A session, you’ll get a meeting invite. If you’re not a member and you think you might want to be one, go to collective54.com, fill out an application and we’ll get in contact with you. And if you’re not ready for either of those two things, you just want to learn more, I would point you to my book “The Boutique: How to Start, Scale, and Sell a Professional Services Firm”, which you can find on Amazon. But until next time, I wish you the best of luck as you try to grow, scale, and someday exit your firm. 

Episode 170 – Taking the Reins: A CEO’s Journey of Buying Out the Founder and Shaping the Future of a Boutique Professional Service Firm – Member Case by Jessica Knox

In this session, we delve into the ambitious journey of a CEO who took the bold step of buying out the founder of a boutique professional service firm. Through an intimate conversation, we explore the intricate negotiations, strategic planning, and the emotional rollercoaster that defined this pivotal transition. Discover how this daring move not only reshaped the firm’s future but also set a new course for its legacy, culture, and the very essence of leadership within the industry. Join us as we unveil the challenges, triumphs, and the profound lessons learned along the way in transforming vision into reality.


Greg Alexander: Okay, good. All right. Well, if you’re ready, I’m going to jump into it. Okay. Hey, everybody, this is Greg Alexander, founder of Collective 54 and welcome to the Pro Serv podcast brought to you by Collective 54. For those that aren’t familiar with us, we are the first community dedicated to the needs of the boutique professional services firms that are trying to grow scale and maybe someday exit their firms. And on today’s episode, we’re gonna talk about a familiar topic, but with a different twist, the topic is succession plan. But I guess today is the success or, and that’s the different twist. Oftentimes we talk about the need for the founder to find a high-potential employee to eventually transfer the firm to. But we don’t do enough speaking and analyzing and studying of the high potential person who eventually takes over for the founder and we’re gonna do that. Today. We’ve got a wonderful guess, a Collective 54 member, Jessica Knox.  Jessica, would you introduce yourself and the firm to the community? 

Jessica Knox: Absolutely. And thanks for having me today, Greg. So my name is Jessica Knox. I’m the CEO of Metrix and Metrix is an agency that helps life sciences companies, mostly pharmaceutical and biotech market their products to doctors, train their employees and support their patients through education. 

Greg Alexander: Okay, great. And your role there, and then I understand you have quite a journey with this firm. So I’d love to hear about that. 

Jessica Knox: Absolutely. So I started at metrics very young early in my career about 17 years ago. If you can believe, it is very rare. I say I defy most demographics trajectories for people of my generation that I, I’ve been with the company for most of that time. I did leave for a couple of years to do my own tech startup, which I think gave me the entrepreneurial bug, but I really started as an instructional designer, which is essentially designing corporate training. And I worked there, and got successive responsibility until I became coo and then CEO, and then finally CEO and owner. 

Greg Alexander: So fantastic. So tell us about the founder and how the founder transitioned the business to you first job transition, you know, CEO to CEO, and then ownership transition, owner to owner, please? 

Jessica Knox: Yeah, absolutely. So as I mentioned, I had left to do my own tech startup. I came back actually under, the agreement that I was going to help the founder sell the company essentially. So she knew that she needed a good, you know, person to operate the business as she was looking at ways, to, for selling for sale. And so I had come in really to take over a lot of the operations but she was still pretty involved in the business. She was, I would say not as active in project work, but definitely more on the strategy side. She would still from time to time even come and engage with our clients. But really I was slowly transitioning that role, but it was still under the guys. Not that I was gonna take over. It was really to get it ready for sale. 

Greg Alexander: Okay. But you knew, when you came back to take on these responsibilities that she was going to sell the firm, correct? 

 Jessica Knox: Yeah. 

 Greg Alexander:  Okay. So I’d like, to get inside your head for a moment and understand what concerns that you had given that context. And let me tell you why I’m asking that question. Most of our members are on the other side of that, they’re the founder, they do want to sell their business for whatever reason and they want and they want to leave after they sell the business. So they knew they need to develop a successor, but they’re hesitant to be that transparent and open with their successor, but your founder was open with it and you got comfortable with it. So tell me a little bit about that. 

 Jessica Knox: Yeah. I think one of the keys to that. So she was very transparent with me and, but at the same time, I mean, that I would say sometimes worked for and against us as we were on, you know, making the right arrangements because she would also maybe be transparent with what was on her mind. And maybe that would change over time. But I would say that a big reason why it was successful was just the level of trust that we had after working together for 17 years. So that was a big part I think of why we were able to do this successfully despite, you know, some bumps in the road and challenges as we tried to work through what it would look like? 

Greg Alexander:  Yeah. And what was it about the business and the opportunity that made you want to go from being, you know, a hired gun leader with no skin in a game and no risk to actually owning the place? 

 Jessica Knox: Yeah. I think that again, a deep familiarity with the company was obviously an asset for me. I had never when I was starting off my career imagined myself as a business owner ever. It was the furthest thing from my mind and it was really through doing the work. I love the work that we do. I’m passionate about what we do. And then as I spent time in the coo role, and then even stepping into the CEO role, I started to realize, wait a second. I do a, I can slowly build the skills to run a business. And so, I built confidence, in myself and I knew, you know, obviously it’s a journey. I’m still on that journey but definitely, you know, the closer you get to actually doing the job, you say, hey, wait a second. This is possible for me. 

Greg Alexander:  And I’m gonna ask you to put some words in your founder’s mouth, which is unfair, but I’m gonna do it anyway. And that is, you know, she was trying to sell the business and she could have sold it to other people, but she did, she decided to sell it to you. Why did she decide to sell it to you? 

Jessica Knox: Yeah. I don’t want to go into too much, of the details of what happened, but really I think there was a big part of her that wanted to leave a legacy that she was proud of. You know, this was her fourth child in a way this business and just seeing some of the options and seeing some of the plans that some of the potential buyers had for the business and really working that through. She said wait a second, and that we had enough trust, to structure it in a way where she could get what she wanted out of the sales financially. You know, there were a few sort of concessions of exactly how that would happen. But I think for the most part just making sure that she felt really good about, you know, where the company would go and had obviously a lot of trust because of our working relationship in that. 

Greg Alexander: It’s such a big thing, you know, I, I’m a founder myself and I do think about legacy. And to me, that means, you know, when I leave my employees who helped me build this great firm are going to stay and they’re still going to have jobs, and who are they going to be working for? And how are they going to be treated? That’s? Number one and number two. You know, most of our businesses are built on the backs of longstanding client relationships. So you also have a tremendous sense of loyalty and obligation to them. And you want to make sure that there’s no dropoff in service and that they continue to serve well. So by selling it to somebody like yourself who obviously, after 17 years is a tremendous amount of trust. It checks those boxes probably better than any other alternative. And, I just wanted to highlight that because for those founders that are listening to this don’t overlook the opportunity to, you know, sell your firm to a trusted employee that has earned the right to be considered. 

Jessica Knox:  Absolutely. I think that there’s this perception out there that there’s some kind of when to sell it to an external company. But when you think it through, I think it probably aligns better if you can find the right structure in the right mechanism to, you know, get certain needs met that you’re looking for? I think there, there can be a lot of real satisfaction, in doing that for sure. 

 Greg Alexander: Yeah. How long did you spend in the coo job? And then how long did you spend in the CEO job before you put the hat of owner on? 

 Jessica Knox:  Yeah. And I have to admit I’m not always good at saying exact chronology but CEO, I was about a year or two and then CEO… while I was CEO, we were in the process of negotiation. It did take some time. So, it was probably around the time that we started talking about what this could look like that I stepped into the CEO role in it. It really did take about two years before we figured out a way to make it work. 

 Greg Alexander:  Okay. And then once you figure out how to make it work, did the founder leave that day or is, did the founder stay on for some transitionary period? 

 Jessica Knox:  Well, the funny thing about that is we talked about a transitionary period, but as I’m sure, you know, many owners that have been so embedded in all the decision making of the business. It’s really hard to strike that balance. And because I was so embedded in the business, the operations of it, she didn’t really need to be there. And so we did form a strategic relationship but it became more of a mentor and a coach to me versus anything, in the business really. 

 Greg Alexander: Yeah. I think that’s the best way to structure it because sometimes letting go is hard for the founder. And, and even though they have sold the business either partially or in total or maybe, you know, some progression along the way, they can stick their nose where it doesn’t belong from time to time, which can create some problems for the successor. So it sounds like you all didn’t experience with that, which is great. So just two more questions, you know, speak to those that are listening that, are you meaning the successor who’s taking over? You know, now with the power of retrospection, you know, if you were to look back on it and you were just say, you know, here’s one, two, maybe three things to watch out for. What lessons can you share with us? 

 Jessica Knox: I did learn a lot through it. I think that if you are not used to it once you involve lawyers and accountants and everything, it can become a much different type of conversation. So I think you just have to be ready. Things feel really big and everything can feel big in the moment. But just taking some distance and stepping back and say, okay, what’s really important to me? You know, what am I willing to negotiate on? You know, where are my boundaries? I think that was a big learning for me for sure. I think as well. I mean, really understanding the financials of your business is really import important. And so for somebody like me who did not come from a business background but was much more of a, you know, a technical expert, I would say contributor just really getting comfortable with the financials, was important, and thinking through what’s your risk tolerance, especially if you have some sort of payout after the sale goes through. Yeah. So that’s at the top two that come to mind. And then just patience if you’re in a situation where it is a founder that’s been in the business for many years, because again, it is a, it’s a psychological letting go process as much as anything. And so recognizing that, but then also recognizing, how long you’re willing to be patient for? 

 Greg Alexander: Yeah. Exactly. All right. Then my last question is, so, so now you’re the CEO, the owner, right? So how is life change for you? 

 Jessica Knox: Well, I always laugh and when I tell this story and I think it did put a bit of a deadline on us. We transferred ownership to the day that I went to the hospital to give birth to, what of my children? And so I’m pretty sure that deadline helped. And so I told the staff on the way over to the hospital, to get induced, I said, hey, by the way this is happening, but I’m telling you it’s gonna be a change of ownership with probably the least amount of actual change for you you’ll ever see because I’ve been, you know, I know this business so well. I had an amazing leadership team then that was able to really step up which is great. And then COVID happened a few about eight months later. So that was a real leadership challenge for me and I really felt the weight. It’s really funny because even though I was acting as CEO, you always psychologically had that extra layer of the owner, right? But the cycle psychological, it’s all really on your shoulders to make it succeed or fail. Was was probably one of the biggest shifts. And really, I think finding my strangely enough again I was in the leadership roles but because we still have this extra voice, it was finding my own leadership voice really through all of that was probably the biggest challenge. And then for me we ended up adopting eos, that was hugely helpful for me in terms of just running the business and figuring out what our plans were and everything like that. So, you know, that definitely helped more from the strategy and operations side, but yeah, it was the psychological and the leadership stuff that was probably the biggest shift. 

 Greg Alexander: Let me tell you Jessica, you are one tough cookie. Only person I’ve ever spoken to that on the same day signed a deal to buy a company and had a baby. My goodness. That’s an unbelievable story. And then eight months later you get hit in the face with COVID. I mean, gosh so hats off to you for a tremendous amount of resiliency. 

 Jessica Knox: Thanks. It was a roller coaster and I always remember how long I’ve owned the company because it’s to the date of my, one of my children. So yeah, I had two babies that day. So pretty, yeah unusual, but, we pulled it off. 

 Greg Alexander: Well, that’s great. All right. Well, listen, I can talk to you forever about this particularly finding your leadership voice, but I’m gonna save that for the member Q and a session that will have an upcoming week. We try to keep these podcast short. One thing we’ve learned about podcasting is our attention span is about 15 minutes in length. So today was just sharing of the big idea for lack of a better term. You did an excellent job with that. Thanks for the contribution. And we look forward to having our member Q and a coming up in the subsequent weeks. 

 Jessica Knox: Thanks Greg, as do I. 

 Greg Alexander: All right, fantastic. So to close out for those that are listening. A couple of things. If you remember, watch for the meeting invitation that will come out where Jessica will be our weekly role model and you’ll have a chance, ask questions to her directly if you’re not a member and you want to become one, go to collect 54 com and fill out an application and we’ll get in contact with you. And if you don’t want to do either of those two things and want a more passive approach, I point you to my book. It’s called the boutique, how to start scale and sell a professional services firm, written by yours truly, and you can find it on amazon. But until then, Jessica, thanks again. And I wish you all the best of luck as you try to go scale and exit your firms. Thanks Jessica.  

Episode 169 – Maximizing Revenue Growth: Transforming Early Career Professionals Into Seasoned Revenue Generating Employees – Member Case by Phil Leary

In this session, we discuss some of the secrets of unlocking expansion revenue from within existing accounts. You’ll learn how nurturing and developing employees who begin their careers in non-revenue generating positions can lead to a surprising uptick in your bottom line as they learn how to become natural rain makers. Discover the approaches used to transform these high potential employees into powerhouse revenue generators, and how this approach not only boosts your firm’s financial health but also fosters a culture of growth and innovation.


Greg Alexander: Hey, everybody. This is Greg Alexander, founder of Collective 54 and welcome to the Pro Serv Podcast brought to you by Collective 54. And on today’s episode, we’re gonna talk about one of the five channels of expanding revenue within a boutique professional services firms. And it’s the most important channel. We call it the expansion revenue channel and it’s defined as generating additional revenue from happy and satisfied existing clients. And we prioritize it as channel number one because it tends to be the easiest to get to most profitable because we’re dealing with happy clients. It sits on top of the other four. And the other four are in order of priority is referrals, which comes second, word of mouth, which comes third, inbound lead generation driven by content, which comes fourth, and then outbound lead generation, which comes fifth, which is, you know, cold outreach to people who don’t know who you are. So, so today we’re gonna talk about expansion revenue. So we have a longstanding well respected Collective 54 member with us. His name is Phil Leary he’s worth a late. So would you please introduce yourself and your firm to the audience?

Phil Leary: Thanks, Greg. I appreciate that. So, I’m Phil Leary, I’m the chief operating officer of a late, we’re a technology consulting firm focused on digital excellence. We work with our customers on initiatives that are client facing revenue generating or in some cases drive operational excellence. We have everything from strategy delivery around data and software product management, and experience. And recently have added on longterm manage support solutions.

Greg Alexander: Okay. Sounds great. So, Phil late, it’s been quite the success story, quite a bit of growth over the last six or seven years or so. And from what I understand, a big piece of that was the expansion of revenue that you generated from existing clients. So why don’t, you tell us a little bit more about what that means to you and kind of who’s responsible for it in the system and the method that you used to make that happen?

Phil Leary: Yeah. You know that’s been a bit of an evolution over our timeline as a company. So we’re seven years old as you know. And about two years ago we sold a stake to a private equity which has kind of changed our focus a little bit to lots of inorganic acquisition revenue in addition. But one of the core features of the company has always been that it’s easier to keep our customers and expand our customers. And it is to go and acquire new ones. We absolutely love the net, new logo. We want to do outbound. We want to be finding new customers. We want to build relationships, but we want to be really quick to make new friends and slow to get rid of the old ones. And that’s kind of the watch word we follow. So one of the ways that we did that very early on was the relationships that our executive team had, our management team, and our executive team really fostered relationships over the last 20 years that led to probably our first three years of revenue as a firm. As we’ve moved into more of a commercial sales engine. We’ve had to put processes and policies and structure in place to support that. And a lot of that effort now really goes to the relationships that are very intentionally created and managed by our account managers. So as you grow up in the firm at lata, you start out as a consultant, you move up into associate, and then the manager and then into principle. And each one of those has really within our cohort structure, a definition of so span of control for responsibility and a principle starts to manage large scale programs, lots and lots of different projects, multiple clients. But is principally responsible for the client relationship. And so their focus is to build a relationship with the client with the buyer and to expand across to others that the buyer may refer us into within that particular company. And they’re held accountable to that with an account plan with a weekly call with conversations with our sales leader and with the firm around just performance from a delivery quality and from a revenue perspective for each one of their accounts, we do that in a couple of different meeting each week?

Greg Alexander: So, this principal job which is… the elevated career of somebody who’s gone through that ladder. As you just explained to it is that the first time that this person is responsible for revenue generation or does it come before that as well?

Phil Leary: The first time that they have a quota of any sort and it’s a soft right? We, we don’t beat people up if they’re not able to make their, you know, whatever we might call it two and a half 1,000,000 or to 4,000,000 in revenue on an annual basis because in many cases, we will ask them as a firm to focus on something else, an internal initiative work across multiple clients that are, you know, needing some sort of a recovery program or something like that where revenue may not be the focus but quality might be the focus. So we don’t beat them up too hard. But, as you grow in your career, we have, a dimension that we evaluate everybody on called advisor. So as a consultant, you’re straight out of college. You’re focused on a technical stack. You’re getting, really deep, on technology, which is what we do and nobody wants to think about being a sales guy. So what we ask them to do is just, hey, bree, reach out to them on Linkedin, take them out for a coffee. If you’re working remotely, hit them up on Zoom. Everyone’s wrong and just talk personal stuff as we get to associate.

We’re like, hey, now they’ll start to do that a little bit more intentionally. We’re going to assign you some team leads throughout the organization because that’s what you are. And we want you to reach out to your peers and have those conversations with them. So they’re in a mode even early in their career, building relationships and having those conversations as they move into the manager cohort. Now, they’re having conversations where they might have to have a hard conversation, right?

Where something’s gone wrong with a project or maybe a client person is not stepping up. And so we want them to build a political capital. So that political capital is done by celebrating mutual success. If you think about it, all of these are sales activities, right? They’re building a relation to so that we can have a conversation later about, hey, we’re doing really well or we navigated this really tough time together. How can we work together on the next project? Or is there another area of the firm that you could introduce me to? Where I could have one of our sales guys come in and talk about our capabilities that might help them out. So everybody gets this little step wise process. So by the time they get to principle there, maybe not formally have done it but they’re familiar with the concepts. So we used to hear it a lot. Hey, I don’t want to become a sales guy, right? I’m a technologist. And then we sneakily get them to do this advisor to mention until by the time their principles, they’re like, yeah, it’s not a big deal just to ask somebody for a little bit more work, but the intentionality comes in with the account planning that we do around that.

Greg Alexander: So let’s talk about the term political capital that’s an interesting term. What, what does that mean?

Phil Leary: When times get tough, you can’t just be bringing up, a tough topic with a

stranger for the very first time and accept a good reception. So if I wanted to tell you, hey, something was really going wrong with 54 or one of your people. We probably need to have some conversations ahead of time where things are going well or we have a personal relationship where we, we’ve created some respect for each other where that conversation is not gonna come out of the blue and you’re gonna be able to accept it that’s political capital. So, one of the ways we do that is that at every opportunity we try to talk about the mutual success we’re having and it’s mutual success, right? We’re not a show you out of the way consulting firm. We want to partner on hybrid teams with the client. And so every success we have every time we deliver code, every time we complete a strategy project, it’s a mutual success. So we can celebrate that. So if we celebrate that a lot and we’re thinking, hey, this isn’t just for the project. This isn’t just for the client. But this is also for Greg Alexander, my buyers career. Well, if I’m thinking about that focus throughout the entire project or engagement delivery by the time I have to have a conversation with you, that might be a hard conversation or a conversation where I’m asking you to introduce me to somewhere else in the firm, we built up positive political capital.

Greg Alexander: Yeah, I love the term. I love the concept because, you know, generating expansion and revenue from existing clients, which is the topic of today’s podcast, it very much comes down to the strength of their relationship and focusing on something like political capital in such a structured way allows for that relationship to be built. Let me pivot to the account plan. You discuss that. You do use one. We have members in collective 54 who don’t like account plans. They view it as administrative tasks. They view it as overhead, you know, non billable time. Why am I doing this? You know, pick your flavor of the week, excuse. How have you been able to get people to use account plans effectively?

Phil Leary: By acknowledging that they suck, right? And no good template is really gonna give us everything we need. And yes, it’s a hard thing to do. But we actually went through about a year long period where we put in place a weekly call where an account manager had to come to the call and we had two or three each week and present their account plan. And everybody got feedback from those account plans. And people who had never put account plan together could attend and listen and kind of understand what was really expected in the questions that they were gonna get from the executive team around those account plans that then led a lot of people to go. Well, it’s kinda not that big a deal. It’s a eight page powerpoint template. I need to do some thinking. I need to work with my team to make sure we’ve mapped out contacts and we’re thinking about introducing services across all of our service offerings? Not just the thing we’re doing for that client. But once you get over the hurdle of hey at sucks and I don’t want to do it, it’s actually pretty easy to do. And to make as long as you carve out, you know, an hour, the first time, 15 minutes every week or so, you can update that account plan. It’s also really useful. We put in place just a couple of years ago, an internal methodology that we call the laid away. What we discovered is that we would always just do things, you know, project based kind of, the method of the process was based upon whoever the account leader was or the project manager. Some of them were fun. Some of them were exciting. Some of them had no idea, nobody knew what their expectations were. So we put that laid away methodology in place to drive expectations. Well, an account plan also drives expectations. If I go into a project. And I know according to our methodology, I’m gonna be playing the role of a project manager. And here are the 1,525, you know, checklist items that I need to be thinking about to deliver a quality project. One of those is participation in the account plan. And what that means to me is working with my account leader to know who so should be reaching out to intentionally, right? Who should I be building a relationship with? And what political capital should I be doing? Am I gonna be the project manager of fun? And I’m going to celebrate everything? And I’m gonna be super excited and extra averted about it. Or am I the guy who’s focused on quality and constantly checking to make sure that our quality is good? Either one of those can help build up political capital. So that account plan is really important to us. It helps put that structure in place. It does suck the first time you do it, but then it just becomes a routine thing. Now, we’ve got it. You know, once we got past that year of making everybody go through the sucky phase, now we’re into, hey, it’s a really easy meeting. Everybody comes, you know, talks a little bit about where the project is, what the potential for revenue and pipeline is there. And if there’s any bottle in that or a hand off, the account plan, is the glue between the two people who might be doing the hand off or the thing that they go back to. If there’s any kind of interruption, in their sales focus?

Greg Alexander: Very interesting. I love the intentionality of it, in the formality of it, you know, and it, is doing what it’s supposed to do, serving as a communication vehicle for everybody in the account, making sure everybody knows the roles they need to play, and the objective which is to keep the client happy. So the client continues to invest with us on, you know, the next project and the one after that, and the one after that et cetera. So, do you think account planning and this formal process works only with large accounts that might have multiple business units to expand into? Or do you think it also works in the mid size to small account that might not have as much complexity? What, what advice would you give our listeners and our members and as to, should they have an account plan for every account? Or just a few accounts? So I.

Phil Leary: know you’ve done a few of these with matron, and Matt says, and this is another wise little phrases that we use a lot is if it’s not written down, it doesn’t happen, right? Yeah. And an account plan is a great way to write down the intentional actions that you intend to take and then hold yourself or have others hold you accountable too. So, I think an account plan is useful regardless as to the size of the client. You can also think of it as a growth mechanism, right? So, hey, I’ve got an account manager. They’ve never put an account plan together. Let me work with them on this small easy account plan. So they understand all of the concepts, they have, the intentionality, they execute against it. Then when they’re faced with a larger client, as they move up in the organization, it’s it gets easier for them. It’s robe. So, I look at the account plan as meaningful at any level, sometimes for the client, sometimes for additional, sometimes for the account manager.

Greg Alexander: Let’s talk about skills for a moment. So, when I get hired off the college campus and I enter at that point all the way up to this principal stage where a big part of my job is expansion revenue, how long does it take to go from point a to point B? And, and how do you help that person develop those skills so that when they do hit that principal job, they can do it well?

Phil Leary: So typically, it’s about 10 years. We, we have an accelerated promotion program, that works over the first five years that you’re here at in the company. So people can move up pretty quickly to the manager ranks. But manager gets to be really impactful, not just impactful to our clients because they’re managing projects and managing relationships, but they’re also managing our people. So culture idea, intentionality, feedback, all of those things are really important. We spend a lot of time on building up our managers before we allow them to become managers at the manager rank. They may spend three to five years there. And during that time, it’s all pre principal activities. So, we have three different levels, M1, M2, M3 that are the managers. And by the time you’re in M3, you’re really being a principal, we’re just not quite ready to give you that title yet. And any of the M threes that you were to talk to in our firm would tell you that you’re like I’m a principal, I’m just not getting paid for it, which is exactly what we want, right? And when they perfect, a lot of those things that’s when they get to move into the principal ranks. So I’d say somewhere around 10 years is how long it takes and, we do a number of things. One is, you know, we have that advisor dimension. We actually have a relatively large growth framework that, you know, we’ve stood on the shoulders of giants, you know, firms 2025 years back have these expectations or growth frameworks and we’ve modified it to suit what we do as a business and what we want from our folks. But part of that is rooming them to, by the time their principal, they have the soft skills, they have the boldness, and they have the ability to be able to whiteboard a solution, be able to explain a problem, really anything that is needed by the buyer to be able to navigate whatever conversations they might have.

Greg Alexander: You know, and I have had a chance to look at your growth framework, expectations framework. And I love it. And what I love about it is it’s mostly on the job training, you know, apprenticeship model type development. Is there any kind of out of the workflow training, classroom training like that? Or is it all that apprenticeship model?

Phil Leary:  So, the only job training is a big part of it, but we, you might know about four or five years ago, we decided that we’re gonna start taking kids straight out of college who might have a mathematics degree or might have a computer science degree that had never been in consulting. And it’s a little bit different, right? You know, we used to joke that back in the old days you could sit there code in the corner and reel on your cardigan and nobody cared as long as your code was good. That’s a little bit different in the consulting room, right? We might be on a Zoom call, with a client and they expect more, they expect some soft skills. They expect some attention paid. So, for us, we put together a program that we call the ascend program which was to take these kids who had technology skills, sharpen the technology skills over a three month period. But more than 60 percent of the curriculum that we spent time with them on with soft skills relationships. How do I become a really good teammate, work with somebody who might be difficult to work with… as we came out of our acquisition by the private equity firm? And we decided to pivot to things like our near shore organization, or our offshore organization, less of the demand here in the united states for a send. And so, we pivoted our training department in the united states to really focus on continuing education if you will. So for every cohort within the organization up to the vice president level, we now have specific classes that we want people to take and they may be on, you know, relationship selling. They may be just on managing an account plan. Some of those we put together probably about 25 percent. And the other ones we utilize a Udemy professional relationship that we have, and we leverage all of those through a learning management system, allows us to track, the courses that folks take.

Greg Alexander: Yeah, fantastic. You know, the reason why I’m asking that question is it’s a big piece of, you know, being able to consistently generate expansion revenue. It’s not just the account plan, it’s having the skills. So, you know, and if you take somebody who in our terminology grows up in the delivery or, you know, someone who is delivering for the client, they don’t have a revenue generation responsibility and you just throw them into revenue generation without teaching them the skills. It usually doesn’t go very well because, they lack the skill, they lack the confidence, they lack the desire, these people through an apprenticeship model like fill it in the team and let is doing by the time they get there by the time they are in M3, they’re already doing it anyways, right? So it’s kind of, you know, part of how it works well. I could talk to you about this forever. We try to keep the podcast short to 15 minutes. We’re already over that, but we will have a member Q and a session with you. We’ll get into this in more detail and we’ll let the members ask you some questions directly. But on behalf of the membership, thank you so much for coming on the podcast and sharing with us what you guys do as it relates to this critical topic of expansion revenue.

Phil Leary: Now, I appreciate that. I look forward to the Q and a because we’re not perfect of this by any stretch of the imagination, but we are intentional, and we’re well practiced.

Greg Alexander: Yeah. Well, I will tell you better than most. I mean, you know, we have a few 100 members in the collective now. And the reason why we’re profiling you on this dimension is that the definitely above average and approaching that kind of best in class status. So again, thanks thanks so much for sharing all that and, you know, a couple of calls to action for the audience. So if you’re listening to this, you’re not a member and you want to become one, go to collective 54 dot com and fill out an application, and some will get in contact with you if you’re not ready, you know, for that just yet, and you want to just consume some content. I pointed to a couple of resources, so out, how to start scale and sell a professional services firm. You can find out on amazon. If you don’t want to read a book, it’s not your thing. You can subscribe to collect the 54 insights. We publish three pieces of content a week, a blog on Monday, a podcast on Wednesday, in a youtube video on Friday. But until next time, thank you for listening. And I wish you the best of luck is you try to grow scale and exit your professional services for thanks again, Phil. Thanks. Awesome. Thanks man. I appreciate it very much for a.

Phil Leary: You bet. Happy to help.

Episode 168 – Thriving Amidst the Heat: Navigating a Sudden Surge in Industry Competition – Member Case by Brad McAllister

In this session, we delve into the challenges and opportunities presented when your industry segment suddenly becomes the hotbed of competition. With both heavyweight corporations and agile boutiques flocking to capitalize on the trend, how do you ensure your firm doesn’t just survive but thrives? We’ll explore strategic insights, share expert advice, and discuss real-world examples that have successfully navigated these waters. From differentiating your firm to innovating your offerings and optimizing operations, get ready to learn how to stand out and stay ahead in an increasingly crowded market. Join us as we uncover the keys to turning industry heat into your competitive advantage.


Greg Alexander [00:00:15] Hey, everybody. This is Greg Alexander. Welcome to the Pro Serv Podcast brought to you by Collective 54. The first community, dedicated to the needs of the boutique professional services firm. And on this episode, we’re gonna talk about what happens when your sector gets hot, and we have a fantastic guest with us. His name is Brad McAllister, and Brad works in the sustainability space, and he was in the sustainability space way before that was the thing and we want to hear his story and how his strategy has changed as the sector got hot and it attracted more and more competitors. So, Brad, would you please introduce yourself to the audience?

Brad McAllister [00:00:57] Yeah. Hey, hey, Greg. First of all, thanks for having me today. It’s honor to be here. I appreciate you seeing something in our story, work with sharing, with the members and hopefully they get to get something out of it. As you mentioned, my name is Brad McAllister. I’m one of the two co-founders of WAP Sustainability. I serve as the company’s President, COO. If, if you’re familiar with EOS, I’m the Integrator, then the, in the whole system, I know there’s a lot of EOS afficionados on the call. WAP Sustainability – we’ve  been in business for about 15 years as Greg said, you know, early in the sustainability journey. We predominantly help companies kind of navigate that confusing space, of ESG, sustainability and climate change. And we do this through analytics, reporting, and help with strategy and with, in various sectors.

Greg Alexander [00:01:54] Okay. Sounds great. So the reason why I wanted you on this show is because when we spoke last, you told me that in the early days, no one was really focused on sustainability. You know, and it was you, and some mission driven people that had a belief in this sector and you got involved and developed some expertise and had a nice business. And then all of a sudden, you know, the world got interested in what you were interested in and it got really hot and a whole bunch of people entered your space. A whole new set of competitors, everything from other niche boutiques, to mega firms. So tell everybody when that happened, what caused it? And then I want to jump in and hear a little bit about how you reacted to all of that change.

Brad McAllister [00:02:41] Yeah. And, and continuing to react to it. I mean, we’ve all heard that the only constant of life has changed. I mean, that is, you know, it is our market in a nutshell. As you mentioned, we’ve been, in the business for about 15 years. I met my co-founder, in grad school. We were part of the first sustainability cohort at a university here in Tennessee. I had studied Environmental Science. I come from an Ecology background. He too had an Environmental Science background. I was taking, some classes, MBA classes at the time. And so, we had some kind of synergies in the way that we saw, the market. We didn’t really know where it was going. I mean, you know, at that time, my parents were, you know, still clueless on how it was actually going to make money, in life, and, you know, there’s some funny stories about, you know, being in college and, you know, going out and, you know, trying to meet people and, you know, I made a switch from Pre-med to, you know, Ecology at one point and there was a clear delineation on how interested girls were to talk to me at the bar.

So, when I made that, so, you know, long story short, I mean, we really kind of on an early edge and, you know, I was inspired by by some readings and such. And I think, well. my business partner, you know, he was inspired as well. And so we got lucky with a few early clients at the early stage of it all, Walmart kind of came into the picture. We all remember that time when Walmart was, you know, kind of, the demon business, right? Putting out, you know, mom and pop shops throughout the country out of business. And, and they were looking for a way, I don’t know if they would agree with the synopsis. But this is my synopsis that, you know, sustainability was one of the ways that they could help, you know, clear their name, right? Detract from some of that bad stuff. So, what they had done in the early days of this is that… they engage their suppliers for the first time in a way that the suppliers had never been engaged before. And there was the sustainability survey that went out and ask for things like, you know, what your carbon footprint, you know, what are, your social indicator metrics? You know, a handful of other stuff, and companies didn’t know how to respond to that. But just so happened, you know, well, I had a little experience in that and, you know, we got some early clients. And while Walmart had good intentions or had intentions… they weren’t really driving the market, right, there’s a handful of suppliers, and those suppliers, you know, if you looked at the pie chart of their, you know, who they were selling to, that pie chart was, you know, 90-95 percent Walmart, you know, talk about key, you know, key customer risk there. And, and so those were the clients that we initially got. But there’s a whole host of other clients that are potential clients that weren’t really interested in going down that space because there wasn’t much pressure, right? They didn’t have that pie chart where it was 95 percent. So we stayed small servicing that market for quite a while. It’s just a business partner and I, for about six years, I think it was six or seven, seven years.

And then the commercial building space got involved. You may be familiar with LEED buildings. You, you see those plaques sometimes when you walk into, you know, buildings well, LEED started to expand the criteria of their certification to go beyond just energy efficiency, to focus on the materials that we’re actually going into the building. And materials and products, that’s the stuff we were focusing on with those Walmart suppliers. And so some of the services from those Walmart suppliers could be transferred to these building products suppliers. And so that happened, you know, seven, you know, seven years into our existence or so. And, and that caused us to, you know, basically service those two markets: consumer products onto big box stores, and then commercial buildings. And at that point, you know, decided to, you know, bring on another, you know, minority partner into the organization to support the building products space. And then we service that for a while. And then, you know, I guess what is it four years ago now? Or so? You know, it was five of us, we have a little smaller office in Chattanooga and COVID happened, and we shut the doors on that office not knowing what would happen.

Well, fast forward to today, and, you know, various other drivers which we can get to in this conversation, happened and we went from five people March of 2020 to about 55 today, just four years later. And what’s happened in that span is, you know, governments got involved, you know, investment communities got involved. Other big box stores have gotten involved. So it’s just kind of this perfect storm, of interest around, you know, climate change, you know, sustainability, biodiversity. And then, you know, the social elements of sustainability.

Greg Alexander [00:07:54] That was a great thank you for sharing that. And congratulations on, you know, an incredible success story. I mean from five people to 55 people in four years is just amazing. The part of the story that I really want to spend time on, because I think it’s transferable to our other members, it might not be in the sustainability space, is that a lot of competitors rush into the market because there was all this demand. So how did you react to that?

Brad McAllister [00:08:24] Yeah, yeah, we’ve seen other, you know, boutiques come into the space. We’ve seen big engineering firms come into this space. We’ve seen some of the big four come into this space. What we found is, you know, the old adage, “Culture eats strategy for breakfast.” What we, what we’ve done is highly invest in the culture of the company. We kind of create, the foundation of why we do what we do, how we do what we do, and in doing that, we’ve you know, created, you know, a feeling of culture of, you know, being action oriented, having a growth mindset into the organization. And so what we tried to do is empower our employees, to support the development of new services, or foster the kind of the next generation of consultants within the organization. That’s been pretty powerful as we’ve had some people leave for some of those other organizations chasing, you know, bigger paychecks if you will. I mean, it’s hard to compete with a Deloitte, right? But what we found is they’ve come back due to a lot of, the cultural elements of the organization. So that’s one way that we’ve done it. It’s also, you know, because we were early adopters in this space, we’ve positioned ourselves really well in places that other, you know, other organizations, less nimble, less agile organizations, are unable to.

You know, I think one of, the, you know, early successes early learnings that, we found was it’s more important to be where your customers are, not where your competitors are talking about the work, so, you know, if you think about conferences in any industry, sustainability is just one example. You know, you can only be in one place at one time. So do you go to the conferences in which people are talking about sustainability, or do you go to the conferences in which maybe sustainability is just a small little topic that your competitors aren’t there. And so we found success going into direct industry within, you know, those events that are targeted at the industry but not targeted at sustainability.

Greg Alexander [00:10:36] Perfect. Kind of zig when…

Brad McAllister [00:10:40] The zing in on a zag, that’s right, yeah. Yeah.

Greg Alexander [00:10:43] Let me, let me double click on the employee thing for a moment. And actually before I jump into that just to share with the audience—remember when you’re in professional services, you’re in two markets. The first is the employee market. So you’re competing for people to work at your firm. And when you’re in a sector like sustainability, you have a unique skill set, you can pretty much work wherever you want. So it’s a, very competitive market for high quality employees. And they’re also competing for clients. You know, I mean with all these players in your space, clients have options and you’ve got to win the clients, with two very distinct markets. So you use culture as your differentiator in the employee market, you know, to get people to work for you versus the bad guys. So give me maybe I don’t know one or two things that you think is unique about your culture and distinctly unique as compared to maybe, you know, the big firms, the Deloitte’s of the world.

Brad McAllister [00:11:37] Yeah. I find that a hard question to answer because kind of, you live in it, right? And I’ve never been in those other places. You know, some of our kind of core values of the organization, you know, being action-oriented, having a growth mindset, being technical translators and being relationship-focused. I think is really key. I mean, those are the adages, we communicate those continuously through the organization. You know, we say we’re accelerating sustainability through relationships because, you know, we feel like that’s what’s sticky, both for employees, and clients as well.

You know, we’ve… yeah, there’s some other things we do that I think you and I could probably have a debate about it, to be honest with you. You know, tracking hours is something we don’t do within the organization. You know, we don’t ask people to do that and I’ll give a plug to you guys, you know, I’m sorry, one of, your block sessions on, you know, resource utilization. And so I’m gonna have to try to explore, you know, how to actually do that, you know, when we don’t track hours. But that’s a big part of our culture as well. You know, we’re not, you know, we don’t nickel and dime clients. You know, we don’t really use the term scope creep. You know, sales is a bad word up-sales is a really bad word within the organization. You know, we like to think about it as business development, you know, as a relationship development. You know, we don’t do much marketing either as an organization. You know, we see our marketing as setting really intelligent people out into the world, to build relationships through, you know, presentations and, you know, expo’s, and those types of things. So, I think all that stuff kind of leans into it. You know, the other thing is when we made our first HR hire, when was this? I guess three years ago, we found somebody who… you know, I didn’t you know, the HR portion of HR wasn’t her expertise, the culture portion of HR was her expertise. Yeah, diversity was her expertise. You know, we figured she could learn, you know, the red tape of HR, but not everybody can learn, the cultural elements, of what makes a company like ours.

Greg Alexander [00:14:10] You know, those examples are really good examples but maybe for a counter-intuitive way. So let me try to connect the thoughts for some of our listeners. You know, we’re talking about, you know, how to operate a firm and how to change the operations of a firm when your sector gets hot. So for example, in your space, you don’t have to do any marketing because, the word sustainability is marketing in and of itself right? There’s so much demand, right? You don’t have to track hours because you have a different problem. You, you have more demand than you know what to do with. So optimizing around the hour that’s something that people do in a very mature market when growth rates start to slow. In your space, there would be a mistake to do that. You know, all the things that you’re doing right now, are the things due: not nickel and dime clients, focus on relationship building, because there’s so much wind in your sails. Maybe at some point, and I don’t know if this will even happen in my lifetime, because I think what you do for a living is gonna be here forever. But maybe at your point, your industry like others, most in fact, does mature. Demand starts to get reduced, commodity services start to enter the equation. Consolidation starts to happen and clients start to value other things like price over value, or maybe they don’t value relationships as much as they once did. I mean industries do mature.

So the lesson for the listeners is that when you’re in the hot sector and you have the luxury of that, you’ve got to pick and choose what elements of the playbook matter to you. So in Brad case, culture matters a ton in this space right now, that’s the right strategy. When you hire an executive member of your team, in his case HR, you don’t really care about things like compliance because that’s not the big value add. The big value add is the diversity is the culture et cetera. So that’s the lesson. And maybe we can conclude on this because, we try to keep these podcasts short and we’ll save the rest of this is such a rich conversation for the member Q and A. But that’s the lesson. The lesson is, you pick and choose the plays to run from your playbook, you know, based on the context that you’re in at the moment and time. And, and Brad story is a great one. So, Brad, on behalf of the membership, we’re very lucky to have you in our group because you’re an outlier, you know, to go from 5 to 55 people, in four years, is remarkable and there’s so much to learn from the outlier. So, thanks for being there today.

Brad McAllister [00:16:44] Yeah, my, my pleasure. Greg. I’m excited, you know, I’ve been a member of with you guys for just a handful of months now and, you know, your comment there about market consolidation changing in the market. I mean, that will happen in our space. And, you know, I, I’m excited to be part of this group to learn from other members who may be in a market that’s in a different maturity state because we’re heading in that direction. So it’s a great example of the kind of, the give and take that we give each other and, you know, being members, of Collective 54.

Greg Alexander [00:17:15] Yeah, exactly. All right. So I’ll conclude with a couple of calls to action. So if you’re listening to this, you’re not a member. You want to become one, go to Collective54.com and fill it on application. We’ll get in contact with you if you are a member and you wanna double click into Brad story, look for the Outlook meeting invite that we’ll be sending you for his private Q and A session which will be one hour in length on an upcoming Friday role model session. But until then, I wish you the best of luck until the next episode as you try to grow scale and sell your firm, take care. Thank you.

Brad McAllister [00:17:47] Thanks Greg!

Episode 167 – From Timelines to Bottom Lines: How a Consulting Firm Shifted From Time and Materials to Fixed Fees After 40 Years – Member Case by Alan Wyne

In this session, we peel back the layers on how a seasoned ERP implementation consulting firm revolutionized its business model, moving from the traditional time and materials approach to a groundbreaking fixed fee structure. Discover the strategic decisions that led to this bold shift, the challenges overcome along the way, and the significant impact it had on their competitive edge and profit margins. Tune in to witness a story of adaptation, resilience, and success that could redefine the way you think about how you monetize your expertise.


Greg Alexander [00:00:00] Hey, everybody, this is Greg Alexander, the host of the Pro Serv podcast, brought to you by Collective 54, the first community for founders of boutique professional services firms. And on this episode, we’re going to talk about how a consulting firm who’s been around a long time using the traditional time materials billing method, has recently switched to a fixed bid approach. And this firm is in the middle of this transition, which is what makes this case study so unique, because there’s lots of early findings and learnings and lots of motivations. And we’re going to jump into all of that. And I hope at the end of this, you’re all inspired by this story and you consider making a similar journey. And then for the members that are listening to this, of course, you can attend the Q&A session with Alan and we’ll get into much greater detail. But with that, let me bring in our guest. Alan, it’s good to see you. Would you please introduce yourself and your firm to the audience? 

Alan Wyne [00:01:17] Sure. So, Alan Wyne, CEO of Anovia consulting. We’ve been around about 40 plus years. We do ERP implementations and a very specific part of the market from a Microsoft product standpoint. We we do business central and it’s small to medium sized business, even though we’ve scaled that quite large for some companies. You know, most of our stuff is DNA at this point in time and materials and, you know, it’s we’ve had a good journey, but it’s the market’s changing. Everything is changing around us. And we know we’ve got to get the fixed fee to really get our profits growing the way we would like them to grow. 

Greg Alexander [00:01:58] So let’s dive on to that. It’s unusual for me to talk to a firm. It’s been around for 40 years, and it’s had all the success that you’ve had. Be willing to make this change because let’s face it, what you’ve been doing before worked. So what was the motivation to go from timing materials to fixed fee? 

Alan Wyne [00:02:18] You know, it was really a couple of things. The first was we were looking for a new competitive advantage, you know, because because it is a I wouldn’t say it’s a commodity market, but it knocks on that door quite a bit when you’re doing implementations and Ram limitations. And Microsoft on this particular product move from an on prem version. So it was never in the vision and they changed the name and they went to a fully SAS version. You can still put it on prem, but but really what everybody had been software as a service up in the cloud. And that also meant that the revenue I generated about every five years for upgrades, which was significant, or the product sales I was making when we were selling it on prem, is completely going away because the upgrades now happen every six months automatically, and our service numbers while still growing. It’s just a market that’s going to go away in ten years. So how do I how do I and we sold it as time and materials. So how do I get into a market that I’ve already and ironically and become the competitive advantage. And it is most of my competition this TNM, we wanted to say look we’ll do fixed fee on. The one final point also is while there are fixed fee companies out there for our product that we sell with Microsoft, they do small fixed fees, 75 $100,000. We and we do a lot of those small companies, but we do an awful lot of large ones, meaning 250, 500, $1 million implementations of software. Nobody wants to touch that with a ten foot pole, because they don’t have the processes and the discipline to do it. We think that’s a huge competitive advantage. So hence the change to stay up with the market. 

Greg Alexander [00:04:08] Yeah okay. Fantastic. So the the on prem the SAS movement within the Microsoft ecosystem was the stimulant. You are competing with in a mature market with the fixed fee model as a way to separate because and for those that are listening that might not be familiar with this, when somebody like Alan goes to fixed fee, the client is shifting the risk from themselves to the implementer, and that’s what’s in it for the client. Now, what’s in it for Alan is if you really know what you’re doing, you can control the risk. And this could turn out to be very profitable. And maybe you win some business that you wouldn’t have won otherwise because you’re willing to do this and your competitors are not. So that’s kind of the context behind this. So, Alan, when you were thinking about it, what I loved about your story and thank you for sending me this great note, is you’ve taken a very methodical, approach to it. You didn’t just flip the switch and say, okay, everything’s going to fix me. You kind of doing it in phases. So tell us what your your migration path looks like. 

Alan Wyne [00:05:11] So it’s it’s a two year migration path for us. Prior to this year we had already had some fixed fee engagements. So we had what are called planning engagements, which we go in beforehand, look at the customer and go, okay, now we can quote this properly because we understand your business. And those were fixed fee engagements and we had a few other offerings that were fixed fee. We also though a year, two years ago we had spent ten years selling block hours. So blocks of hours. So I’m getting all this money upfront, but then I’m using it, right. We’re using it through the system. And we got away from that and we got much more to what I build. I got collected in the next week or two. And so my cash flow had already changed, and we had gotten a consistent cash flow and not these big chunks. That’s important in fixed fee because you’re going to be billing monthly or however however you’re going to do it. In our case, we’ve decided we’re going to go monthly bills and with a a calculus for it. But you know, we also said, all right, we’re going to practice with our existing, fixed fee engagements, get better at change orders, which are absolutely vital to making this successful, get better at changing the way we bonus our team, because today we bonus our team. On how many billable hours did you generate? Well, I got a fixed fee. My goal is to generate as few billable hours as I can with the same amount of ultimate money that I’m going to charge the customer, and it’s it’s contradictory. Today it it isn’t. Tomorrow it will be if I don’t change that. So so we’re changing how we bonus these existing fixed fees and they’re small. So I can’t get hurt on them right now. If I screw on up that’s okay. It’s not that big of a bite and I can handle it. I screw up $1 million. The TV is slightly different, so I want to be good before I get there. And then finally, you know, we’re spending time reevaluating our processes and procedures not only in our delivery and operations, but in our sales department. How do we go to market with this? How do we get competitive with it? How do we bonus our salespeople? Because again, it was based on what did you sell and how many hours and what was the rate. Because I to then be honest on how good my rate per hour was. And so there’s, there’s several pieces of this that we’re trying to say, look, you know, I made this statement to my team in November last year. In two years, I want to be 80% fixed fee. All across the board. I’d like it faster and more, but I figured two years was a good a good runway. 80% was an acceptable number to get us started on what effectively is a, you know, a five year journey to get completely over to it. 

Greg Alexander [00:07:58] Yeah. You know, a couple things you’ve mentioned there I want to call on because there it’s a real case study. And these two particular issues changing the measurement system from from number of billable hours and then changing the sales incentive system, you know, to incent selling fixed fees versus a traditional way culturally, especially for a 40 year old company. These are massive changes. I mean, these are not incremental moves. So how did the let’s start with the delivery staff first? You know, the folks that are doing the work for the client, how did they receive it? 

Alan Wyne [00:08:33] They’re receiving it. Okay. We’re still working through it completely. You know, same with sales. I mean, this is, you know, we’re I would say we’re in the first 20 to 25% of this journey, but, you know, it’s it’s discussion. And we’ve actually brought certain people in from each department to go look at this. This is coming that the company knows we’re going to actually across the board, I’ve announced it. We talked about it every month at our staff meeting. Certain people we’ve started bringing in and going, how do we structure this bonus program for delivery? It’s I need done faster, better, cleaner. And then I’m going to incentivize you on the profitability of the project. And so this team and we work in teams. So we’re structured okay. To be able to do this with sales. It’s the same way. How did you sell it. What price did you put on it. And then I’m going this back into what was it. How many hours do I think that’s going to take. And what was my real net realized. Right. So our internals are focused on still billable hours even though we’re not building per hour. So utilization and profitability and rate to the customer, we just look at them and go, look, it’s going to be $135,000. And when they go today, we get a little bit, well, wait a minute, what’s my rate? Why do you care. There’s no right here. This is just this is what it costs. Dude, are you happy? And we actually had a successful one with that. That wasn’t one of our pre offerings. And I actually got $15 more an hour rate and probably 100 extra hours than what it would really take, because the customer was perfectly happy with the final fixed fee number. I did. You know, that’s profitability. 

Greg Alexander [00:10:12] Yeah. I mean, the customers love it because what they don’t want to do is get surprised. Right? So the the comfort level of a fixed fee is they don’t have a runaway project on their hands, you know, and their budget gets blown to heck. And they, you know, sometimes they get egg in their face. God forbid they lose their job. So the customers love it. I find that the sales guys sometimes don’t like it because it creates it creates yet another thing they have to deal with with the customer, but feel like the example that you just mentioned, you know, the customer wants to get granular, particularly procurement department, and say, yeah, but what’s your rate? So how did you how did you train the sales team around this new selling motion and how to address the the new objections that certainly came up. 

Alan Wyne [00:10:56] You know, I mean, the beauty of having sold some fixed fee projects or planning engagements and other things. Having those people already sell that they’ve kind of run into those objections and they’ve learned how not. They’ve learned how to say what to say and what not to say. And so we sell based on look, the quality of our work speaks for itself. You’re going to get this, you know, here’s what you’re going to end up with. Here’s the documentation. The planning engagement is going to give you. We’re just translating that into when you you know, when it go live, you’re going to have a fully functional system. Here’s all the things it’s going to do. Here’s the statement of work and here’s the work plan, guys. Here’s all the tasks that are going to happen. And, you know, tell me that somebody else in my industry is going to walk up and say, yeah, for a half $1 million. We guarantee that they don’t exist. So they’ve, they’ve we’re we’re slowly learning and playing training on how to get that going. And then just, you know, getting our getting our nose bloodied every once in a while. But basically practice it’s practice practice practice. It’s really what it is. Okay. 

Greg Alexander [00:12:05] Well we try to keep these podcast short to 15 minutes and then we’ll, we’ll we’ll do a deep dive in this in the member course. I got one more question for you. What has surprised you? So you’re in the first 25% of rolling this out. You this is a multi-year journey. You know what happened that you didn’t anticipate. If anything. 

Alan Wyne [00:12:26] I didn’t I didn’t dissipate the acceptance of the company quite so fast where everybody was just like, yeah, okay, good. Let’s go. And I was I thought I’d have to bring some people kicking and screaming, you know, and, and in reality, from leadership down, everybody is just. And this sounds like a great idea. And I think it’s because we pitched it as look the next the market’s changing. We’ve all seen it. We change the way we modify the software. We don’t have a ten year journey here guys that protects us and grows it. And ultimately a job business. You know businesses primary focus is profitability. So I can bonus and pay you guys better. Can we all be together. And so that that’s been that’s been the real pleasant surprise. The other surprises are still coming. 

Greg Alexander [00:13:13] Well hopefully they’re not too ugly. You know it’s a really good point. I mean what you did there, which was a huge compliment to you as you showed that by making this move, the firm’s going to become more profitable. And when the firm becomes more profitable, there’s better paying jobs for everybody. So it’s we’re all aligned in doing that. All right, all right. Well, Alan, I appreciate you sharing your story of moving from time and materials to fixed fee here after a 40 year successful run. I’m really looking forward to the member Q&A session. So on behalf of the members, appreciate you being here. 

Alan Wyne [00:13:44] Okay. Thank you. 

Greg Alexander [00:13:45] All right. Couple of calls to action for those that are listening. If you’re not a member and you want to be one and learn from people like Alan, go to [email protected]. Fill out an application and some will get in contact with you. Do you want to just consume some more information? I would point you to my book. It’s called The Boutique How to start scale and sell a professional services firm. You can find that on Amazon. But until that and until next time, I wish you much success as you try to grow, scale, and maybe someday exit your firm.

Episode 166 – How to Go From Idea to Implementation Faster Than a Speeding Bullet – Member Case by Gail Doby

In this session we delve into the fast-paced world of an executive coach in the interior design industry, exploring the methods that she uses when it is time to stop studying and start doing. Our role model shares her expert insights on how to deal with a large volume of ideas, how to prioritize them, how to sequence them, and how she includes her executive team to quicken implementation.


Greg Alexander [00:00:00] Hey, everybody, this is Greg Alexander, the host of the Pro Serv Podcast, brought to you by Collective 54. Collective 54 is the first community dedicated to the unique needs of the boutique professional services firm and its founder or founders. And on today’s episode, we’re going to talk about going from idea to implementation. In a nanosecond, and doing so in a way that, you know, compresses time to result. And this is something that I talk to numbers about a lot, and I often hear them say, hey, how do I go faster? So I’m on the lookout for people that are going fast. And we have a great guest with us today, a member, Gail Doby. And Gail runs a company called Pearl Collective, and I’ve spent some time with her, and I’ve gained an appreciation for how she goes from idea to implementation super fast. In fact, I should say ideas to implementation. So with that go. Why don’t you introduce yourself to the audience, please? 

Gail Doby [00:01:24] Sure. Well, I’ve been running this company for 16 years, and I just joined, the collective November of 2023 at the beginning. So I was just in time to join your live event, and I walked up to you at the event, introduce myself, and you chatted with me for a few minutes kindly, and said at the, toward the end of that five minutes or so you said, be sure and check with one of the people on the team and get on my calendar. So I did that while I was there in the next few minutes, and Bonnie set me up for our first call. So we’ve had a few calls since then, and that’s kind of how we got connected. And, I did get connected to you through your book, through Amazon, and that’s how I reached out and became a member of the group. So I will tell you in advance. I normally don’t join groups. I’m not a group person, but I have to say your group is different. 

Greg Alexander [00:02:23] Well thank you. I appreciate you saying that. So. So you’ve only been here since November. So at the time of this recording, it’s the end of March of, 2024. So what is that? Five months, I guess. So maybe we’ll go. Maybe we can start off with some examples of this, the ideas and how you implemented them in particular. So I understand you’ve got a few to share with us. 

Gail Doby [00:02:48] I do, I do, I have so many. And I would start with probably one of the bigger ones, because I’m also the person that likes the financial aspects of the business. And I have a finance background. So what happened was I was looking for somebody that could give me benchmarks for what I’m doing. And you gave some benchmarks, fairly early on. And one of those was working toward an 80% gross margin. So immediately that started me thinking about what did I need to do to to change and to have that happen. And then you and I had a conversation and you told me one of the well, actually, you told me several things in that meeting, and, one was that I should really think about just having one product line instead of three, and that I should consider having just one live event a year. If I had a live event and I went back and I did a model for that, did a financial model for it, and immediately took it to my team, and I said, here’s what happens if we do these things. So I told you that I didn’t know how to drop the two products, but I did figure out that I could combine two. And so once I came up with the idea of combining it, I took it back to the team and I said, okay, here’s what happens if we do this. We simplify our business. We streamline things. We cut our cost of operation for that and also our coaching costs. And we can actually cut down to one big event a year, which can between doing those two things, we can cut about 200,000 out of our cost of goods sold. And guess what? That gets us to that 80% gross margin. So that was one of the very first things that I tackled. 

Greg Alexander [00:04:31] That’s the fantastic example and for so many reasons. And I just want to highlight a couple so that those that are listening to this can get the most from this session. So that’s an example of originating an idea by starting with data. And those are usually the best ideas to rush to implementation because there’s a very clear path. Meaning I should say there’s a clear finish line. And then once you see where you want to get to, the path becomes obvious. So in Gail’s case, she wanted to get to 80% gross margins, which is very doable for a services firm. And she so she reverse engineered her way into that and combined some service offerings, simplified service delivery and presto, you know, she’s on her way to hitting that gross margin target. So the big learning there is kind of starting with the end in mind, using data as a way to determine which ideas to implement and what order. So that’s a great example. So how about another one. 

Gail Doby [00:05:34] Oh gosh. Well I what I’d like to do is highlight some of the advantages of being collective. 54 for one is the people that are in the group. And although I’m not usually a group person, what has happened is I have reached out and I’ve asked a question and I’ve gotten answers immediately from people within the group, or just listening to some of your episodes in your podcasts and some of your sessions. I, have taken some of those ideas and reached out to the consultants and already have been in touch to connect and start using their services. So one of those, I was talking to Tom Schwab, and this is after hearing you talk about, recording your Amazon book and then also starting an advertising, campaign for that. So I took that back to the team and I said, gosh, we should really do the same thing. So we’ve already revised my book. We have new calls to action in it, and we will get back in touch with, the person that you had worked with. And we will get some ads started on that. And then also, I just talked to somebody that Tom Schwab mentioned to me just two days ago, and we’re already talking about recording the book, so I’ll get the recording of the book down, which will be great. So that was another one that I just took action on. And I’ve talked to, Michelle friends about writing a little mini book, and I have that plan on the calendar for the, the, for the summer time. So those are a couple of other things. So the link to that, the second connections are just amazing. I she’s like, I’m trying to think of all the things that I’ve done. You’ve of course, connected me with an acquirer, of possible acquirers, which we will chat more about. But, just really nice people and, really good fit. And I think with our company and we’re just starting the process of having a conversation. So that wouldn’t have happened without collective 54. 

Greg Alexander [00:07:31] And again, I appreciate you saying that. And I want to be careful. And Gail, you being so kind of this doesn’t come across as a collective. 54 advertisement. It really isn’t. What I want to focus on is, is going from an idea to implementation in the in the use case. I want to highlight there. And this is the power of a collective. And by the way, I should mention that Gail runs a collective herself now. It’s a collective for interior design firms. Right. And so therefore she’s skilled at making these connections and organizing group activities. And this whole concept of peer to peer learning and one to many, business models, where you go really fast when you have access to the people that you need to have access to. So often we have a business problem and we don’t know who to turn to or where to go. And in the world of boutique professional services firms, they tend to be highly nuanced problems. So, for example, you want to turn your book into an audiobook. Okay, well, there’s a lot of different ways to do that, but isn’t it nice to be able to go to somebody who’s done that before? For somebody who market, sells and delivers expertise for a living? I mean, that’s a very specific thing. You want to run advertisements on Amazon, going to a generic advertising agency that runs advertising in all of its different forms. That’s one thing going to somebody who absolutely specializes in running ads for a book on Amazon, that’s a such a nuance thing. So plugging into peer networks, whether it’s ours or others, gets you access to this network, and it just speeds up finding the people that you need to find in order to get things done. Which is, just a great example. And I really wanted to highlight that. Question for you on when you take these ideas so you get an idea, you go back to your team and you say, let’s implement sometimes. The team says, oh gosh, let me guess. He just went to another collective 54 event and here comes the IC flavor of the week idea. So how do you how do you deal with the volume of ideas, and how do you deal with the kind of change management component and getting your team behind the ideas? 

Gail Doby [00:09:49] Well, that’s so interesting that you asked me that question. I was just having a coaching call with one of my clients about that very same thing. And what I’ve learned is that you go back with the why, why are we doing this? Why is this important? What is it that we want to accomplish? What is the outcome we’re trying to reach, and what are we trying to solve? And if we can solve the problem with making a shift in what we’re doing, and it simplifies how we’re operating our business, then it’s a no brainer for the team to say yes. And by the way, if I add in another thing that I did, pretty quickly after we and I talked, like within two days, I talked to my, leadership team, and I decided to pull the executive team out of that because you said I needed to have a succession plan that was very well laid out. And I said, okay, fine. And I went to them and I said, here’s what we’re going to do. I need for you two to be on my system, my succession plan. We’ve already talked about this. Here’s how we’re going to do this, and here’s how we’re going to roll it out. So we’re going to have an executive team. And we’ll have a leadership team that’s a little bit broader. So that was another thing I did to make sure that I was positioning my company for exit, and I hadn’t formalized it, and so that it took that moment to do it. And so as soon as I did that, then I started bringing them some of these ideas, and they know I’m preparing for exit. So this is just part of me preparing them so that they can lead the company too, because they need to be able to work with me as a team to solve problems. And we’ve got to go fast. We need to get this done. Yeah. 

Greg Alexander [00:11:26] Another great example, right? I mean, you can only go so fast if you’re one person, you can go a lot faster if you’re a team because you can throw some more horsepower at it. You know, I think it was it was a two people that you included in that conversation is, if I remember correctly, right. So now we have three people working on these things instead of one person working on these things. So the takeaway learning there for all of you that are listening is, you know, if you want to speed up the time it takes to implement all these ideas, make sure that you are distributing the ideas to your team intelligently, and that you have an executive team that enthusiastically wants to implement them. So that’s a that’s another great example. You know, maybe slightly off topic, but since I have you and I know our members are listening to this as part of our weekly programing, you were you were running it firm for 16 years. And you weren’t a joiner of groups. And then after 16 years of running the firm, you decided to do something you don’t normally do and join a group, which is uncommon, I mean normally. After doing something for 16 years. I hear sometimes types people, what am I going to learn? I mean, I’ve been doing this for so long, I know my business so well. Like, why join something like this? So what was happening to you in the fall of 2023 that made you open and, you know, receptive to something like peer learning? 

Gail Doby [00:12:49] Well, a couple of things. First of all, I think if you’re going to be a coach and you’re saying that people should join a membership group, that you should consider doing that occasionally. This is not my first time, but I was looking for something very specific. So I was looking for specific answers. And I hit the jackpot when I happened to talk to you at the back of the room, because you’ve been very kind to help me with a few things along the way in the last couple of months, because I was looking for specific answers, and I knew that if I was with a smart enough later that I would get the answers I needed. That was what I was looking for. In. Your content has been really rich and good, and even today I was not expecting to be on the call and to learn anything about time management, and I thought I got a couple nuggets out of that today. So I think just be open when you are considering what it is that you need, but also be very specific about what you’re looking for it because I knew what answers I wanted, I wanted benchmarks, and I saw that that was part of what you had in your program. And I knew if I had benchmarks, I would be able to come to conclusions faster and make decisions and move on. So that was really important to me. 

Greg Alexander [00:14:01] Yeah. Great answer. And I think the reason why you go so fast and I think you have an unfair advantage here because you do this for a living. You know what it means to be a member of an organization. And you probably have your members and you know which ones, the great members that get the most out of the program. And in the end, you’re doing that yourself now, like you’re you’re modeling the positive behavior that you’ve seen over these 16 years, so that the learning to circle on this one for the listeners is, you know, if you want to go faster, maybe study what it means to be a great member in an organization like collective 54, like, like, how do you maximize, you know, all the value that’s available to you and how do you do so at a time in a cost effective way? And for many of our members, this is the first time they’ve ever been a member of a collective, been a member of a membership organization in a business context. And it’s not intuitive. I remember when I my first experience, I was a member of OEO and a member of Ypo, and I was a member of target 21, and I didn’t really know what it was. I didn’t understand the difference between like a training organization or a consulting organization or like going into like an executive education course and like a Harvard or something, you know, versus a membership organization. I really had to learn what that meant. Any advice for our listeners on, you know, how to learn how to operate within a collective? Well. 

Gail Doby [00:15:31] Well, I think first off, if you are good at identifying what your problems are in your company, then that’s number one. If you can get it written down and figure out what your priorities are, focus on your number one priority and then reach out to the leadership of this group or to the person that you’re assigned to that’s there to help you and connect you with the right people and just start asking questions. Because if you ask questions, the quality of your questions determines the quality of your results, as we all know. So if you are if you have some questions that you need to have answered. Figure out what you need help with and if you’re stuck. I’ve heard this before and I love this statement. If you’re stuck for more than three days, you need help. So figure out who you need to go to to ask the question. And then once you get the answer, then makes the right decision based on like you said, data is very important and you’ve got great resources here within the group. So whenever I’ve had a problem or a question, I’ve just reached out and asked a question of somebody and I’ve gotten an answer almost immediately. That’s all that’s been really good. And, I want to give you another, kudo for the summarization of EOS and how to make this apply to our industry. I’ve been on EOS for about six years, and I took that and I summarized it down into 14 pages, and I went back to my leadership team and I said, we need to make these changes. So we’ve already started and we’ve adapted and we have new KPIs, and we have changed our, structure of our meetings so that we’re doing one data meeting a month and we’re doing the rest of those are issues meeting. So we’ve shortened our calls in order to do that. So that’s been a time saver for our leadership team, which has been great. 

Greg Alexander [00:17:24] Is that’s a fantastic example. I mean, for those that aren’t familiar, EOS is the entrepreneur’s operating system, and it’s kind of a management methodology that a lot of our members use. I use myself and I have for a long time, and I love it. The way to make it most effective is to customize it to your own individual situation, which, is what Gail is talking about. We attempted to give you a running start by customizing EOS to our application, which is for the Boutique Pro search firm. And our little firms are very nuanced things. Right. So a generic methodology applies to all types of businesses of all sizes and shapes and, you know, lifecycle stages. It’s a little too high level. So if you can customize it to your situation it can be that much more impactful. Which is which is what you’ve done. Well, listen, I could I could talk to you about this forever. You know, this podcast is meant to be 15 minutes, and it’s a summary of what we’re going to discuss in the one hour member Q&A session. And I know that our members are going to attend with a lot of questions, because this is an area of struggle. Too many ideas. Not having enough time to get them all in, implemented, figuring out which ones to prioritize, how to measure them after they’ve been been implemented, how to take them from kind of a framework state to make them tangible, you know, to your business, you know, next Tuesday, these are all things that you’ve done very well. So on behalf of the members, Gail, thanks for being here and sharing your story with us. 

Gail Doby [00:18:48] My pleasure. Thanks for having me. 

Greg Alexander [00:18:51] All right. Great. All right. A couple calls to action. So if you’re a member and you’re listening to this and you want to learn more from Gail, look out for the meeting invitation that we’ll be sending you for her, Q&A session on the Friday role model, episode. If you’re not a member and you want to become one, go to collective 54.com and fill out an application that will get in contact with you. And if you just want to learn more, I point you to our book, The Boutique How to Start Scale and Sell a professional services Firm, which you can find on Amazon. But until next time, I wish you the best of luck as you try to grow, scale, and maybe someday exit your boutique. Take care everybody.

Episode 165 – Time Management: Strategies for Maximizing Employee Productivity in Boutique Professional Service Firms – Member Case by Benjamin Edwards

In this session, we delve into the science of time management and the art maximizing employee productivity within boutique professional service firms. From strategic time management techniques to fostering a culture of efficiency, we explore actionable strategies to ensure every hour counts. Discover how to optimize resources, streamline processes, and empower employees to thrive, ultimately driving success for both individuals and the organization as a whole.


Greg Alexander [00:00:15] Hey, everybody, this is Greg Alexander. Welcome to the Pro Search podcast, brought to you by collective 54. On this episode, we’re going to talk about time management and time management in the context of employee productivity inside of a boutique professional services firm. And I got a special guest with us today is a member of collective 54. His name is Ben Edwards, and Ben is with a software company called Cmap that specializes in this very thing. So Ben, welcome to the show. Please introduce yourself to the audience. 

Benjamin Edwards [00:00:48] Hey, thank you very much for having me, Greg. And hello everybody. At C 54. It’s Greg said I’m Ben Edwards, I’m the VP of partnerships here at C Matt and I’ve got a dual role. I get to lead our go to market efforts with boutique consulting in North America and also run all of our partnership opportunities, including being in C 54. 

Greg Alexander [00:01:10] That. But. We hear from members all the time. Is their time starved?  I don’t have enough time to do this? I don’t have enough time to do that. And yet, on the same token, you know, when we look at the benchmarking data, the margins are sometimes where we would want them to be. And then the services business, our inventory is the hour, the billable hour, if you will. So from your perspective, what do you think kind of the basics of time management are in this in the context of what we’re talking about today? 

Benjamin Edwards [00:01:42] Well, you’re absolutely right to address that. But professional services firms people are both the biggest cost and source of revenue. Yet we still find a surprising number of businesses not tracking time. Maybe part of that is down to the fact they use a time tracking point solution, and adoption from the top down and to employee level isn’t particularly strong because there’s a perception that it’s a little bit big Brother Ray. Maybe it’s being used by the execs in the firm to sort of monitor. Performance where it isn’t necessarily the case actually like you address. There’s some benchmarking data in North America and didn’t hear me. I’d suggest those firms that keep a tight hold on time management are more likely to have stronger gross margin, better utilization rates, and be in the growth cohort. 

Greg Alexander [00:02:38] Yeah. So when you’re working with clients of yours to implement time tracking, first off, what is the kind of trigger event that gets them to finally do it. And then when they go to implement it, what are the 2 or 3 things, the obstacles that are standing in the way? What you know, what can we learn from the previous implementations to help our members avoid some common mistakes? 

Benjamin Edwards [00:03:07] Yeah, I think typically they would start to look at time tracking actually, after they’ve used a time tracking point solution on its own and not seeing a huge amount of value from it, unless obviously they do purely chain and work, in which case it directly links to billing. But within C 54 you talk a lot about growth and scale and product ization and being able to repeat business. And presumably that’s fixed fee type engagements. So they come to us because they want to join the time keeping data point alongside financial information, project management information, combinations of pipeline and live engagements. So they feel they’ve realized that actually from a maturity perspective and a sort of growth scale and exit perspective, it’s imperative to connect all of those dots together in terms of some of the challenges that we see with it. The first thing to sort of point out is probably adoption. And actually, this is probably where the most interesting element is quasi 54 members, because you’re a consultancy and part of your skill set is. Delivering value to your clients and how you propose things to people is really important. It’s the same with your employees. How you position it inside your organization is going to be absolutely imperative to the adoption. If I may, I’ll give you a couple of examples. So I guess the starting point is firms who can tie in with KPIs. And that then might lead to a stronger margin, which you can then suggest your employees means that they can have greater growth opportunities inside that firm. They’re going to be part of an organization that’s growing and scaling. And if you want to take that even further, you can even incentivize it to a certain degree, i.e. profit sharing. The other angle from a selling it in perspective to employees that can overcome that adoption hurdle is making it about them. So utilization is a really key metric for any professional services firm. But often employees look at that and think that’s something not going to be judged by, you know, which can be true to a certain extent. But actually if you’re implementing time management, it can be really beneficial to the employee because you can track non billable time, which is how much time have they invested in learning and development. How much time are they doing spending on IP creation or progressing their own career. And you can track that. You can also make sure that people don’t get double booked. People don’t experience, so over being being over resourced onto engagements and then at risk of burnout. So it’s a lot of value that you can give to your employees when you’re actually implementing a solution like this. It really is about how you sell it. The second most important thing to making sure that actually it’s a successful initiative is connecting and with all the other key components of running your operation. So. Analyzing the information to make sure that it’s aligned with your product ization strategy. Tying it into the project financials so that you can make sure there’s no scope creep or delivery and it stays on time, stays on budget. And then you can reinvest that. Hopefully that’s useful. 

Greg Alexander [00:06:31] Yeah. Those are a couple of good, gotchas to watch out for. I particularly like how you sell it, and I think that makes a lot of sense. And showing how it’s to the benefit of the employee to do this. You know, for our listeners, you know, if you think about the challenge, especially with project based consulting firms, the challenge when you have limited forward visibility is matching revenue and expenses. You know, they’re constantly in the situation where they were. They fill the lake, drain the lake, fill the lake, drain the lake, you know, and they’re in there at times. They’ve got, you know, too many people sitting on the beach, so to speak. And then other times you’re running hot at 120% utilization, and they can’t figure out which way is up. And time tracking is a solution to that because you can see where the inventory is going, where all the time is going. And this better allows you to match revenue and expenses and get away from the boom bust cycle associated with project based consulting firms. Now, at what point been in your opinion? Is it appropriate for a firm to kind of move off of a unsophisticated, manual, spreadsheet driven approach to, you know, using a software tool to make this happen? 

Benjamin Edwards [00:07:44] Oh, really? We can split that down into two cohorts. There’s the first time founder an organization which typically adopts it later in the cycle, i.e. somewhere between 20 and 50 employees, depending on usually how much work they’ve got on and whether they can free up a resource to lead that type of project internally. And then there’s the second time founder, who knows absolutely that the operational guardrails that will lead to efficiencies right from the off. And they can embed practices from day one and they will adopt it sooner. 

Greg Alexander [00:08:20] So the person that’s been there and done that tends to adopt it sooner because they’ve seen the error in their ways and they and they know the value of it. Absolutely. You know, you talked about these time tracking systems, connecting with the other systems inside of a firm. So let’s let’s have a conversation around that. So first how does a time tracking tool connect to a CRM. 

Benjamin Edwards [00:08:42] Well, if it’s in a city like ours, an operations platform is part of the tech. So actually, it’s part of the solution that you’re you’re purchasing from a business like Sema. However, quite a few businesses, particularly in the North American market, have already got a CRM, namely Salesforce and HubSpot being the two. And in which case you just have an API based connection between your CRM and your PSC. It’s a two way connection, and that enables you to also do a number of things, so you can actually start resourcing and soft booking people onto pipeline opportunities. But. Okay. And that will help you avoid that boom bust scenario you talked about earlier because you got that forward looking visibility. Let’s talk about the banking finance system. 

Greg Alexander [00:09:33] So how does a time tracking system like yours connect into the financial system? 

Benjamin Edwards [00:09:38] For pure TNM based work, it’s imperative because what people record from a time sheet perspective goes on to the bill and sent to the client, and therefore that connects with your finance system. But I know in C 54 and we wholeheartedly agree moving away from that towards more fixed fee, including performance based, remuneration is still imperative to have that financial connectivity because you want to make sure that as the project is ongoing, you’ve got visibility on where that time that’s been spent by your team tracks against that initial budget, so that actually you’re not going to experience the scope creep that is so common in professional services firms. And often it’s really well-meaning, over delivery. But actually, as an owner founder, if you can instill that sort of clarity and confidence from PMS to address those challenges head on, either with the client or delivery team. That’s that’s margin that you can reinvest in the business for whatever you need. Yeah. 

Greg Alexander [00:10:45] The thing that I always got the most value out of was looking at. The financial information, which time is a component of at the individual product project level. Before the project was over. So a hypothetical example to illustrate my point. You know, let’s say that I’m in a six month project and it’s a fixed fee and the client is agreed to milestone based payments. So maybe they pay a third of the project at project kickoff, a third at the halfway point and the third at the end. It’s very common that we see this in the North American market. Well, in between those milestones, I’m trying to figure out, you know, am I going to turn a profit on this project or not? And that largely comes down to, you know, how accurate was my scoping when I submitted a proposal, and am I tracking to that original scope, or am I off scope quite a bit? And back when I had my boutique, it was very simple. We did a green, yellow, red, green was, you know, we’re on track. Yellow was, you know, we’re starting to see some problems, but it’s not a disaster. And red was, you know, what the heck happened? You know, we have massive scope creep. And if we don’t course correct, you know, early in the project we’re likely to lose money, which would then trigger us to go have a conversation with the client and point out point out the fact that, you know, they’re asking us to do things that weren’t originally scoped. You know, is that was that unique to my situation or it was is that a common use case and a common benefit that you see others realize? 

Benjamin Edwards [00:12:16] Yeah, really come in. And the other one to add to that is having a view in your progress page website, connecting time at a project level against your invoicing so that you know, you can make sure that you’re not. Spending a huge amount of time on a client work that maybe hasn’t been fully invoiced yet, and you need to catch that up. Or the reverse is true where you’ve invoiced a hell of a lot upfront, but actually you haven’t spent a huge amount of delivery time on it, and therefore it’s going to catch you up at some point. So that’s another keenly viewed report in our system, I would say. 

Greg Alexander [00:12:52] Yeah. And for those that aren’t familiar with that, whip is work in progress. So Project Whip is work in progress. That’s some, some industry slang there. I just wanted to clear up, you know, we we then collected $0.54. It’s professional services. Of course, you have the consulting shops and they get the term whip, but others like maybe, marketing agencies and architectural firms and things of that nature may not, may not understand that terminology, but we all should understand that terminology because it’s, it’s relevant across the segments. 

Benjamin Edwards [00:13:21] Yeah, absolutely. So we service businesses across professional services. And what’s always interesting just to know is the differences in the overall strategy, but also the KPIs and the margins and the growth of boutique consultancies versus agencies versus AEC versus life sciences. And there are little intricacies and sort of common stumbling blocks that are pertinent to each of those different industries. 

Greg Alexander [00:13:48] Yeah. We try to keep these podcast short to about 15 minutes, and we’re at the window right here. But then on behalf of the membership, we certainly appreciate you coming on and sharing your wisdom with us. We, we’re looking forward to the associated role model session, which, for those that are not members that are listening to this every week at inside of collective 54, we’ll have a Friday role model session, and Ben will be the featured role model. And one week. And that’s a private one hour Q&A session where members will be given an opportunity to ask their questions to Ben directly as it relates to and improving employee productivity through time tracking. So a couple of calls to action to the audience. So if you remember it, look for the meeting invitation for Ben’s upcoming weekly role model session and attend that so you can ask your questions directly. If you’re not a member and you think you might want to become one to learn from people like Ben, go to collective 54.com and fill out an application and we’ll get in contact with you. And if you’re not ready for either of those two things and just want to learn more, I point you to my book. It’s called The Boutique How to Start, scale and Sell a professional services Firm, and you can find that on Amazon. But Ben, it was good to see you. Look forward to your session on Friday. And thanks for being here. 

Benjamin Edwards [00:14:57] Thanks, Greg. Look forward to it. And to bring you questions, bring you scenarios. We’ll try and. 

Greg Alexander [00:15:03] All right. Sounds great okay. Thanks again everybody. Until next time I wish you the best of luck as you try to grow, scale and exit your firm.