Episode 115 – How a Software Consulting Firm Succeeded by Planting a Flag in Middle America – Member Case by Ashok Sivanand

In a post-Covid world, does geography still matter? Should you pursue clients, and employees, based on where they reside? It used to signal to clients that you were legit when your name was on a building downtown. Is this still true?  On this episode, Ashok Sivanand, CEO at Integral, shares how he thinks geography is still a mission critical element of strategy, but not for the reasons you might think. He moved to Detroit and is building a firm based on mid-western values. And it is these values, concentrated in this geography, which is contributing to his success. Hear from Ashok his remarkable story which started with him driving a forklift in a factory during the graveyard shift. 


Greg Alexander [00:00:15] Welcome to the Pro Surf Podcast with Collective 54, a podcast for leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated exclusively to the needs of leaders of thriving boutique producer firms. My name’s Greg Alexander. I’m the founder and I’ll be your host. Today on in this episode, we’re going to talk about geography. I know that’s a weird subject. Probably weren’t anticipating that. However, strategy and a boutique processor firm is where to play and how to win. And since our community is made up of boutiques, many of them choose geographies that they can dominate. And it’s a very effective strategy. And we’ve got a great example of that today. Middle America, if you will. And we’ve got a great role model to discuss with us how he is factoring geography into his strategy and how he is trying to dominate middle America, if you will. His name is and I’m going to do my best here. My man. A shook, son of honored. How do I do? 

Ashok Sivanand [00:01:28] Cos that’s probably a six out of ten. 

Greg Alexander [00:01:30] Oh, sorry about that. 

Ashok Sivanand [00:01:32] It’s a showcase debate and a shock. Savannah. 

Greg Alexander [00:01:37] Savannah. Okay. Sorry about that. I tell you what, I gave you permission to call me Joe Smith for the rest of the call. We can. We can get even that way. So please introduce yourself to the audience and tell us a little bit about your firm. 

Ashok Sivanand [00:01:51] Yeah, sure thing. So I started in a girl about five years ago, and what we do is help companies with transforming into technology companies. And we do that by building software products with them and using techniques like pair programing, where it’s very much like an apprentice style of teaching, learning almost like a pilot and copilot. Where are the companies that are looking to really transition their operations to being more tech enabled? Can do it at a very grassroots level in service of a strategy that most companies have today of wanting to become more like technology companies. The Fords of the world trying to go after the Teslas of the world, if you will. 

Greg Alexander [00:02:34] Yep. Okay, very good. So I was drawn to your story because to simplify strategy, which I’m dramatically oversimplifying where to play and how to win, where to play can be many things market segments, industry verticals, etc.. But one of the components is geography. And you have an interesting story on your take and geography and and how your focus on the automobile industry and as I understand it, middle America. And we’ll talk about what that means and in particular smaller cities. So just by way of introduction, would you mind explaining that part of your strategic approach? 

Ashok Sivanand [00:03:14] Yeah, sure thing. So we’re based out of Detroit, Michigan, and that’s where I founded the company. A little short history here. I moved to Detroit for what was meant to be a six month engagement with my last employer, and I was supposed to start their local practice here and go back to my hometown of Toronto. There was some reading between the lines about a promotion and everything that was waiting for me at a company that was going public. One thing that I did not factor into my spreadsheet was that I would really like living here. And I remember moving into this apartment in downtown Detroit, opening the windows all the way and looking out at the street and realizing this was never part of the spreadsheet. And we’re going to have to go back and address that. And this was in 2016, and Detroit is in you hear this in the news a lot about the revival story. And I think it’s true of not just Detroit and the auto industry, but can be said about a lot about middle America in many ways. It’s folks that you don’t see a lot in the news when it comes to up and coming technologies or up and coming services and a butt of jokes in some cases. And moving here, I realize that there’s a lot of myth busting for myself and a lot of invalidation of assumptions that I had coming in here and that there’s a lot of smart people here trying to do a lot of cool things with much more of a strong sense of community compared to a sense of competitiveness. But I was used to in the big cities and that’s something that stood out to me and I’ve got a little bit more of a history in the auto industry as well that made these really strong personal reasons for me to jump in and try doing this. 

Greg Alexander [00:04:56] If you wouldn’t mind, I’d love to hear of those personal reasons and your history in the automobile industry. 

Ashok Sivanand [00:05:01] Yeah, sure. I think so. One of my first real jobs was as a forklift driver in a manufacturing plant, and it was nightshift in East Hamilton in Canada. And Hamilton is a manufacturing town. Not too dissimilar from Detroit, was growing faster than Toronto was at a time when Detroit was growing faster than New York. And as manufacturing got outsourced and offshored, the city is kind of gone. The different towns that we know about now. And so the east side of the city is like many cities, the rougher part. And I was an international student. And so let’s just say I learned a lot that summer. And one of the things when it comes to that sort of my professional career was just getting to apply the systems, thinking that most electrical engineers have to do kind of watching electrons move through a circuit. I was able to see kind of how production was happening here and got to learn things like lean principles in terms of I was a forklift driver where I could really bring the most customer value by making sure that all the different parts of the lines were not blocked or starved and so forth, and then went on to work at GM at a plants in southern Ontario where they make the Chevrolet Equinox and now the GMC terrain. I believe it was actually a half Japanese half American plant. So Suzuki owned half the plant from General Motors, the other half. And we had like the movie Mr. Mom, we had like white shirts, blue pants. I had my name embroidered, and it was very different from most car factories that you’d see. And there was definitely a very strong Japanese influence to do how the production was done. I have in fact just this, but I’ve been told by a few people that it was the most efficient GM plant and a lot of folks kind of chalk that up or rationalize it to the the kind of Japanese influence. I, I shut the line down for 8 minutes one time. And at the time, gas prices are really high and these activities are selling like hotcakes. And I thought that I was going to lose my job the next day. And I called in. The general manager kind of conducted what I now know is a five rise exercise, and they made the process improvement right there. And then with all the right people in the room, understood the root cause of how this was allowed to happen. Where we’re burning turned to shut the line on for 8 minutes. And he, instead of firing me and thanked me for my transparency and I got much more confidence and got to learn a lot more about the mean. And so a couple of things that have happened since then. Number one, this was led to thousands. I was really bummed that all the software engineering talent was put on the building and manufacturing the cars more efficiently, and I couldn’t work on the vehicle itself and make it a more compelling vehicle to the consumer. And then flash forward, about ten years, I was working at a company called Pivotal Labs, and number one, they had taken a lot of these leading principles that had originated for building factories more efficiently and to running software teams with more humanity and ultimately getting more value for their customers. So a lot of it clicked for me. I didn’t understand a lot of the jargon, but the first principles were very obvious because it was all borrowed directly from from the Toyota production system and Lean. And the second thing is around 2015 was when that thing changed, where Consumer Reports said that more people were buying cars based on the technology in their compared to horsepower and torque, which were the the traditional selling factors. Right. And that was also the time that I was doing this little thing in Detroit. So the third part of the story was that I had I had I had, you know, be careful what you wish for type of thing, where I wanted to really be part of a compelling value proposition of the vehicle versus being hidden in the back room. And that was a time when when Detroit was really investing and becoming more of a technology town, companies like Ford were making big investments. And and I was at the you know, you could call it right place, right time for something that I’d hoped for ten years prior, understanding a lot of those first principles that somewhat ironically, the auto industry wanted to move their technology teams to working more like their manufacturing teams, believe it or not, in terms of getting the most efficiency and the best customer value out. But looking to Silicon Valley to teach them, even though a lot of it had originated in middle America the first place. 

Greg Alexander [00:09:23] Man, I tell you what, that is an incredible story From driving a forklift on the midnight shift to founding a software company and embracing a new small city, hats off to you mad. Respect for your courage and enjoying it journey. And thanks for sharing it. All right. Well, let’s talk about this concept of geography. So you just laid out what you’re focused on and why does the opportunity exist and how have you been able to, I guess, walk away from the temptation of being the next hot shot in Silicon Valley? 

Ashok Sivanand [00:10:00] Yeah, I think some of it is really values driven. And I know that you talk about iOS. I was lucky to have found iOS multiple years ago and we always knew we had what we had read the Netflix Culture Deck and said, Hey, we got it. We got to build one of our own decks this way. And I’d show up to the office on a Sunday and say, Okay, today we’re going to do culture and I’m going to write the culture down today. And I’d go home with an empty whiteboard. And just having ordered a lot of Uber eats iOS really helped us. Yeah, use a framework to arrive at the values and I think the values that are really important here, how we build software, our values work and melody, accountability and kindness and kindness is the one that stands out a lot to both our talent base as well as our customer base, because they both talk about, Hey, this is something that’s often forgotten. It’s something that’s often overlooked because we need to make a quarterly deadline where we need to hit a milestone, and that’s the first one to get out the door. Accountability is oftentimes kind of front and center. And I think the values that what kept me here in Detroit very much aligned with how I think software should be built. We’re building these code bases not to get one big launch out, but a long term iterative process. And we’ve got to think of the long term and we got to think of the team that we’re building it in the long term, the people that we’re building it for. And so taking the humanness out of it, taking the kindness out of it, really makes it a very short term prerogatives. And I think I haven’t fully understood the causation around it, but there’s definitely a huge correlation between finding folks who can act with those kind of values at the same time, deliver, show up, hold each other accountable. Kindness isn’t the same thing as niceness. Doesn’t mean we’re we’re not. We’re not we’re shying away from having difficult conversations. It means we’re really understanding that the other person I’m trying to problem solve with here is a human, too. And whether it’s a customer or whether it’s an end user that we’re trying to build for and have that rooted back in. And for some reason it’s been a lot easier to find. To find that kind of talent in middle America compared to the cities on the coasts or big cities like Toronto. And I think the customers also start to see that. Where when they engage with us, they see that come through in the engagement and every interaction in the meetings and the weekly cadence where as much as we want to be service oriented, that we do show up and we push back and we do point out some potential flaws in the way they’re thinking and offer them better opportunities as opposed to falling in line just because they’re the customer and the customer’s always right. And and I think that’s that’s something that, you know, exists both on the supply and demand side around here. And and interestingly, there’s folks, especially since the pandemic, is that us folks have kind of moved all over the place and we’ve become more of a hybrid company hybrid in the sense that we hire folks across the country and we come together or very specific in-person engagements or in-person workshops or conferences and folks on the coast to tend to want to come and work in this kind of Midwestern vibe, as you call it. And, you know, more objectively, the values that are that are listed on their careers page despite being based out of California or New York City, because they find that the employment opportunities that they have available to them there don’t necessarily align with who they have. And I think, as you know, I’m not the first one to say it on here. I’m sure that if you can find a value alignment with your colleagues and with your clients, a lot of the other stuff, like salaries and stuff, no longer are top of mind. You just have to pay market, make sure you’re not ripping anyone off. And folks feel like a stronger sense of purpose and community and working together and building is building these products together, solving these problems together. So I think that’s something that I haven’t fully been able to get into a spreadsheet, but it’s it’s a hypothesis that seems to keep paying off. Yeah. 

Greg Alexander [00:14:08] So you answer one of my questions, which was, you know, COVID now makes everybody remote or hybrid. So is geography still as relevant as it once was? It seems like it still is being applied slightly differently. The other side of the geography question and back to strategy, where to play, how to win in geography is part of where to play is. Back in the day, not too long ago, the clients at times would prefer local providers for a whole variety of reasons. You know, and I have read about what Ford Motor Company and the other great companies in Detroit are trying to do to revitalize Detroit. And I admire them for doing that. But now it’s post-COVID, you know, is that does it do the clients still want to do business with local providers or is it now geographically agnostic? 

Ashok Sivanand [00:14:53] I think geographically you still have to be willing to show up. Okay. And we’re seeing different companies come back to the office in different ways. GM is doing it a slightly different way than maybe I would where they’re saying, hey, twice a week, three times a week, we’ve got to come into the office. And that’s one way to go about it. I’ve noticed at Ford they seem to be a little bit more specific about what type of interactions they prescribe for in-person interactions. So they’re like, Hey, we do quarterly plannings, we do workshops. I’d like for you to come in so we can do that on a whiteboard versus trying to figure out how to do it over Zoom. But once you know what the work is and when it’s due and who your stakeholders are and why we’re doing it and everything else, the strategy part is all understand we’re lying and we feel like there’s trust between the team. Then go do it wherever you need to do it. When you put your heads down and get the execution done. And so we were always huge proponents of in-person. The the fact that we were one of the catch 22 is about being in a city like Detroit, is that we there’s a lot of opportunity, but there isn’t necessarily the talent base that you move to meet the demands of that opportunity. And so going hybrid allowed us to expand to a larger power base. At the same time, we set expectations pretty early with our folks that, hey, you’re going to be commuting way less than your last job or you’re going to be traveling a little bit more. And we make sure that every time we start a new engagement that we we go out of our way and make sure that the client’s willing to come in person and do it as well. And we fly in from wherever. So I think in terms of your question, I notice that there are some other firms who are still maybe stuck in that convenient space of just after the pandemic hit where no one had to travel. Travel costs were lower. There was a lot more convenience to it. And I don’t necessarily think that convenience outweighs the community that you can build with those in-person interactions, especially when you try to build trust with a new to meet or with a new client where that trust goes a long way six weeks later, and inevitably you’re going to have some friction. Do you earn the benefit of doubt with the client where they will get into problem solving mode versus people solving mode? Those are all things that we’ve noticed. Go right away when when we spend that time to show up in person. And again, I don’t want to speak for Midwesterner as being somewhat of an impact here, but I do sense that there’s a little bit more of a midwestern value of showing up to someone’s house, breaking bread with someone and building those trusted relationships before really getting down to our own and the bottom line. And so it’s maybe a little bit more metaphorical in terms of does the geography still matter? I think the the Midwest, the Midwestern values are still very much valid, whether you’re local or not. Yeah. 

Greg Alexander [00:17:42] Well said. Well, listen, we’re at our time window here. I could talk to you about this forever. But, you know, just to put an exclamation point on that last statement, we’re in the service business, so relationships matter. And relationships happen when they get face to face. It maybe it’s happening differently now. Maybe it’s not every day, but it does matter. So I think for the folks that are listening to this boutique service rooms, you have an opportunity to differentiate there, you know, and because sometimes big companies like the big auto companies, they do business with smaller firms because of that relationship factor. I mean, who wants to be just another client of Accenture, whereas they can be, you know, your most important client kind of concept. So try to take advantage of geography when you can. Well, listen, on behalf of the membership, just wanted to thank you publicly for being here. I’m really looking forward to the Friday Q&A session with the members. I know they’re going to have a ton of questions on how you learned learned the Toyota production system and the five whys off of a forklift and how that made its way to Detroit. You often don’t hear people say, I live in Detroit and love it, and that’s contrarian by itself. But and we’d love to hear all about that. And, you know, we’re now that it’s post-COVID, we collectively are starting to do some event events. So when the weather gets warmer, I’m going to call you and say, hey, I’m going to get 1012 collective 54 is going to come see you in Detroit. Want to show us around the city. So like fun. 

Ashok Sivanand [00:19:08] Okay, that sounds great. I look forward to it. 

Greg Alexander [00:19:10] Awesome. All right. All right, listeners, let me give you a couple of calls to action. So if you’re a member, be sure to attend the Friday Q&A session regarding geography here and with The Shook. Couple of tools I want to draw your attention to. So in the Boutique companion course, that’s the e-learning modules built around the boutique framework, There’s a strategy template that you can download and it talks a little bit more about geography. We also just wrote an EO slash collective 54 integration plan, got a lot of members that run the U.S. We run our firm in the U.S. We love it. We think it does need to be customized to be relevant to professional service. So if you’re in your iOS shop and want to learn more about that, go to the resource center and download that. If you’re not a member and you want to be because you want to meet really cool people like you did today, go to collective 54 dot com, fill out the contact us form and somebody will get in contact with you. If you’re not ready to be a member but you want you want some more outstanding content like this podcast. Subscribe to collective 54 insights and you’ll get three things. Monday, a blog, Wednesday, a podcast, and Friday a chart. Okay with that. Thanks for listening. And until next time. Best of luck.

Episode 113 – How a Regional IT Services Firm is Leveraging a Client Advisory Board – Member Case by Luke Johnson

Boutique professional service firms need to listen to their clients intentionally. One effective way to do that is a client advisory board.  On this episode, Luke Johnson, CEO & Co-owner at Katalyst shares how he launched a client advisory board recently. Luke shares the early benefits, some mistakes to avoid, and how, exactly, he runs his.


Greg Alexander [00:00:15] Welcome to the Pro Serv podcast with Collective 54, a podcast for leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated entirely to the needs of leaders of thriving boutique serve firms. My name’s Greg Alexander. I’m the founder and I’ll be your host today. On on this episode, we’re going to talk about the Client Advisory Board and why it’s an important tool for all of the professional services firms. And we’ve got a great role model with us today, someone who’s recently implemented this. He’s a collective 54 member. His name is Luke Johnson. Luke, great to see you. Please introduce yourself to the audience. 

Luke Johnson [00:01:00] Hey, Greg, great to see you as well. As you said, I’ve been a member for I think almost a year and a half, and we put a client advisory board in place at the beginning of 2022. It’s been great. I am the CEO and one of the owners of Catalyst out of North Carolina. 

Greg Alexander [00:01:24] And what does Catalyst do? 

Luke Johnson [00:01:27] We are a boutique services firm, Greg, focusing in the technology space and we enable our clients to go faster, further and safer. 

Greg Alexander [00:01:38] Okay. And I tell you, like a MSP, it’s outsourcer type firm. I get that. Okay. You are. 

Luke Johnson [00:01:45] Exactly correct. All right. A lot of cybersecurity work for us as well in that space. 

Greg Alexander [00:01:49] Okay, Awesome. Okay. Well, let’s start with the basics. So would you provide a definition of what a client advisory board is? 

Luke Johnson [00:01:59] Sure. To us. It is a board that we lean on. It is currently comprised of all active clients, although I don’t think it would have to be ours today. It’s someone that we lean on to get advice around what we’re doing as a business and figuring out if that’s relevant to them as well as a board that we lean on to better understand the real everyday challenges in our clients. So I think the distinction I would draw very clearly is this is a board that serves us far more than it does the clients directly. 

Greg Alexander [00:02:37] Yeah, fantastic. You know, we advise our members to stand up a client advisory board for a very basic reason, which is we want to be outward in in everything we do. We want to be listening to our clients as much as possible. And the knowledge we can gain from our clients is extensive. Affects everything from how you market and sell to the types of services that you bring out to the problems you go after is just a really great tool. Look, what I’d love to hear from you is that there was a time in your company’s history where you did not have a client advisory board and you recently installed one in 2022 at the time of this recording. It’s January of 23, so that’s a really fresh use case. So what what prompted the need? 

Luke Johnson [00:03:18] I think it was a few things, Greg. We always struggle with enough very direct feedback from our clients. A lot of times we get a lot of indirect feedback and we’re doing our best to guess what is needed and we put it in place. So we were looking for a mechanism to get more direct feedback. I think also it was a way to draw closer to a specific group of clients, and most of the clients on this board are some of our largest and most meaningful. Not all, but but good, good mix up there. So it’s a way to get really close with those folks and improve the relationships. 

Greg Alexander [00:03:58] Okay, so let’s talk about those folks. One of the challenges of standing up a client advisory board is to figure out who to invite to participate on the board. So how many clients do you have on it and what was your selection criteria? 

Luke Johnson [00:04:14] So we we have seven active members today because we started. Yeah, thank you. We started a little smaller. I think I reached out to maybe nine or ten in the beginning and we started with six. I’ve asked the board if they felt like the number was right. If we could grow it a little bit, we decided we could grow it a little bit. So we added somebody else. And I’m not sure there was a great science around the criteria, but what I did is spend some time looking at years worth of business with a variety of clients, and I tried to make sure that I picked certainly some from the Top End. So folks that have done the most business with us. But I also wanted to accurately represent our client base as a whole. So I sort of looked to that bottom side as well, and maybe not somebody who’d only transacted business with us once, but smaller clients as well. So it’s it’s a real representative group of the clients we are dealing with every day. I also did interject a little bit of personality in there in the sense of some some clients I know really well, some I don’t know really well, But I tried to pick people that I thought would be great, interact with us and share really, really candid feedback. 

Greg Alexander [00:05:31] Awesome. So obviously you had a good pitch because just about everybody you invited said yes, which is an indication you have great relationships with your clients, which is fantastic. But what was the pitch? I mean, why did they agree to be on your client advisory board? 

Luke Johnson [00:05:45] I was really candid, Greg, with them and basically said, I feel a little selfish in asking, but this is for our benefit. I believe that that indirectly benefits you because if we tune our services to be in line with what you need, it should benefit you as well. But we want to pick your brain about what we’re doing. Is it the right thing? Is it in alignment with what you need? We want you to be candid with how we’re doing. If there’s things that we’re not doing well, we want you to call it out and we want to talk about it very directly. And another piece of it is we really pick their brain about competitors as well. And we like to know what are they doing that you like? And. And that may help us as well. So we kept it. We kept it pretty simple. And and that seemed to work well with everybody. 

Greg Alexander [00:06:36] You know, it always this is a great confirmation point, because sometimes when I advise members to stand up a client advisory board, they say, well, none of my clients are going to want to be on it. And I said, You’d be surprised. People generally like to help, and it’s flattering when you get asked to be on a client advisory board. And this is a testament that people are willing to help. Obviously, you’re an important vendor for these clients and they’re probably saying to themselves, If I can help Luke’s firm improve the benefits, may I get higher quality service and new service offerings, etc.. So I would encourage all the listeners to not be bashful there. I think you’d be pleasantly surprised as to who agrees. All right. Let’s talk about the mechanics a little bit. So is it in-person, virtual? How often do you meet and what’s a typical agenda like? 

Luke Johnson [00:07:20] You know, we we’ve kept that simple as well and tried to kind of roll with the times that we’re in. At one point in time, the geography that we dealt with was tighter than it is today. It’s, you know, we have clients all over the place now, so we do it in a in a format very similar to this. Zoom or a WebEx is is how we meet. We meet once per quarter. It is a one hour long meeting and it is a fast moving session. That is probably one of the greatest challenges, is naturally some people like to talk more than others. So you want to make sure you give everybody a chance to say what they need to say. Or maybe you need to prompt a few people along a bit. But we Greg, could sit in that session for 4 hours and it would be wonderful. But we’re being really respectful of these folks time. I mean, they’re really extremely busy people and we’re just grateful to have that one hour from them. So we try and put the agenda out there in advance. We follow the magic a bit on the call, so it’s not terribly structured, but at the same time we try to make sure everybody’s got a chance to give the input that we’re looking for from them. 

Greg Alexander [00:08:33] You know, it’s an interesting tradeoff. So when I had my firm, we had a client advisory board, we did it in person, but it was only twice a year and it was an all day session. The benefit to that, obviously for us was great because we were really able to go deep. And as you mentioned, you could go on and on in these things because the insight is so fantastic. But the challenge we have with that is we add spotty attendance. Sometimes people last minute would cancel on us because it was a big ask. So the tradeoff here is if you do it like Luke is doing it, which is only an hour once a quarter, so you do it more often four times as opposed to two. But each session is shorter in length and it’s virtual instead of in person. You’re probably going to get better attendance. Do you have attendance problems? Is everybody showing up? 

Luke Johnson [00:09:16] We have an excellent attendance, I think one session and let’s see, I think we’re four sessions deep now. In one session, somebody had a last minute emergency that they had to they had to cancel on. But outside of that, now we have we have great attendance. 

Greg Alexander [00:09:32] Okay. And is there any prep work that happens beforehand or you just get on there and wait? 

Luke Johnson [00:09:38] We know we do prep prep with the leadership team. We really try and figure out what is it that we want to take away from this and we try and put an agenda together. We’ll send them generally about two weeks in advance. Here’s the three things we’d love you to answer, you know, on this call. And we’re going to kind of go around the room and ask everybody to give us the input. We may have some dialog around it, and then we’ll invite them, you know, to participate in any other agenda items. Most of the time they don’t. I think people are really respectful and saying, Hey, this is your session. You tell us what you want from us, but we always invite that as well and we give them a couple reminders along the way. So when we get to the session, we’re ready to we’re ready to roll. Right. 

Greg Alexander [00:10:24] And what do you do with the output? So you’re getting all this insight. Then you get off the call and you’re like, holy cow, you know, I just got the keys to the castle. What happens next? 

Luke Johnson [00:10:34] Well, the leadership team and I have figured out we need to clear our calendars immediately following that meeting because there’s so much dialog that happens with us when we leave that session. It’s so great. So we usually try and combine all of our notes. All of us are taking notes throughout. It’s kind of depending on who’s talking and that sort of thing. So we combine them, we put them in a directory where we have them that we can reference back. Our sales leader specifically always takes those notes and shares them with his sales organization and obviously not in an incorrect way, but just more of a guy. As we just left seven companies, good brand representation of the cattle business as a whole. Here’s what’s going on with them. Here’s some of the trends that we see. So we try and get that out within our organization as well. We’re a in a shop, so generally speaking, it seems things that happen in that session usually lead to things that we put on our issues list as well. And a lot of time, the long, long term issues list. So we’re looking to solve or create some new offering based on something that came out of there. Yeah. 

Greg Alexander [00:11:46] That’s a great follow up action. Many of our members are EOC members and sometimes they struggle with selecting the right rocks. Rocks are 90 day sprints recommended by EOC, but EOC is generic in nature, meaning it’s not focused on a single industry. So, you know, it gives you that is great tool in how to run your business, you know, and pick a rock as an example, a priority. But, you know, if you don’t know what those priorities are, can be really challenging and you can pick the wrong rocks and waste time. So something like a climate advisory board, you know, fantastic rocks, so to speak, reveal themselves. Directly from the clients. It’s a fantastic tool for that. You know, you mentioned your team. So who are you leading this or is it a group of people that are leading it from your team? 

Luke Johnson [00:12:31] Yeah, I, I generally lead it. I have two leaders that participate in it with me. So I have our services leader and our sales leader both who join. And they’re they’re a big part, heavily interactive with all these clients as well. But in the boards a lot of times some topic that’ll come up, they’ll be more suited to address or talk to you in that session. So we all participate. But generally I’m the one that sets the agenda and I run that by them and get their input and sometimes they’ll disagree with what I say. You know, maybe the gentleman that leads sales is saying, Hey, we’re really seeing a lot of this right now. I’d love to talk to them about that. And so it’s a very interactive process with the team. 

Greg Alexander [00:13:12] Okay. So it’s fairly new for you, but not so new. I think You said you ran. You’ve run four of these so far. So based on your early experiments. Any any landmines you want to tell members to avoid stepping on? 

Luke Johnson [00:13:28] I think that. There’s a few. Maybe. Be diligent if you can. And picking the right folks. And again, I’m not sure that there’s a perfect science to that. But do you think about the interactions you have with these people and you really need people who are willing to engage. And that’s probably the most important thing. And they have to be fine with candor. It’s not a great place. You don’t want somebody to feel like they need to be polite in there. Just tell you what you’re doing. Well, not doing well, what the competition’s doing well, not doing well, etc.. I think the other thing is set expectations upfront that you may be a bit of a project manager in the session in that you’ve got to give everybody a chance to speak. So you’re not trying to be rude, but if somebody talks a little too much, you may cut them off just so someone else can can talk. So set those expectations upfront so no one gets their feelings hurt by accident if you have to cut somebody off. 

Greg Alexander [00:14:30] Yeah, well, fantastic advice. Well, listen, we’re out of time, but thanks for making a contribution to the collective today. I’m really looking forward to the private member Q&A, which will happen on an upcoming Friday. But Luke, you’re a great member. You’re always contributing to the collective. So thanks for being here today. 

Luke Johnson [00:14:48] Greg. Thanks for having me. Fun, fun topic to talk about. Great day. 

Greg Alexander [00:14:52] Thank you. Very good. All right. I’m going to give audience members a couple of calls to action, if you will. So first, if you’re a member of Collective 54 and you’re inspired by Luke’s story and you want to get a client advisory board going yourself, we’ve got some tools for you. One is called the Service Offering Development Roadmap. And in that it talks about how to listen to clients. And one of the templates there is a client advisory board. And then also if you’re a member and you’re trying to find your successor, trying to replicate yourself and others and maybe remove the founder bottleneck, this is standing up. A client advisory board is a fantastic development exercise for high potential employees. So you might download a copy of the High potential Employee Development plan, which you can find on the portal as well. If you’re not a member of Collective 54, you should be if you’re listening to this. So how do you find out? Join me. So I go to collective 54 dot com and a couple of things there. You can either fill out a contact us form and talk to somebody about applying for membership or if you’re not ready to join and just want to further educate yourself. I recommend that you subscribe to collective 54 insights and you can find that it collective 54 insights dot com as well. Okay with that, thanks for listening and I look forward to our next session. Take care.

Episode 112 – How A Consulting Firm is Scaling by Generating Revenue from Multiple Sources – Member Case by Robin Way

Generating revenue from sources other than the billable hour is a key part of scaling a consulting firm. On this episode, Robin Way, Founder & CEO at Corios, shares how he is generating revenue from training products, licensing tools, and generating reports. He will talk about how he went from a single source of revenue- the billable hour- to four sources of revenue.


Greg Alexander [00:00:15] Welcome to the Pro Serv podcast with Collective 54, a podcast for leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community focused entirely on the needs of leaders of boutique processor firms. My name’s Greg Alexander. I’m the founder and I’ll be your host today. And on this episode we’re going to talk about quote unquote productize and a service. What do I mean by that? What I mean is generating revenue from things other than billable hours. And we’ve got a great role model with us today. And I’m going to walk through three examples as to how he’s done this. His name is Robin Way. He’s a collective 54 member. Robin, welcome. Please introduce yourself. 

Robin Way [00:01:01] Thanks, Greg. Yeah. Good morning. So I’m Robin. I am the CEO and founder of Curious. We’re based in Portland, Oregon, and we build data engineering and data science assets and processes for clients in the financial services, health care and energy sectors. And gosh, I’ve been in this field for over 35 coming up on 40 years now, back when we just called it math and statistics. But it’s a pretty sexy area and I’ve had the opportunity to sort of see this field create and recreate itself probably four or five times over. And hopefully I’ve learned a few things along the way. 

Greg Alexander [00:01:41] I’m sure you have. So this concept I’m going to talk about today is called prioritizing in the service. Again, the benefit of doing so is generating revenue for something, for something other than the billable hour, you know, selling access to an asset as opposed to selling your time. So my team has told me you’ve got three examples of this and I want to dedicate the show to that. The first one is I understand you’ve built a self-paced training product. So my question would be, you know, how’d you come up with the idea? Why did you do it in the first place? Tells the story of this training product. 

Robin Way [00:02:13] Sure. Well, our sweet spot is helping our clients move from a really old discipline of doing analytics and data in their organizations to a much more modern way, using open source programing and cloud computing. And the biggest change that our clients face is not a technical challenge. It’s a human challenge because people write code. Code doesn’t write itself well. As long as chatbots make our entire industry disappear, which I really don’t think it’s going to. So people struggle with learning new things and it’s scary and it’s uncertain and they feel threatened by by gosh, this is the way I’ve done stuff for 20 years. And everybody that we help looks like me. Gray hair, gray beard, you know, they’re older, they’re getting ready for retirement. How in the world do they keep their job long enough without sacrificing, you know, the end of a career? And also, how do they learn how to interact with their with the young startup kids in their twenties and thirties who speak completely different programing languages than they do? So we wrote a we built a training product. Where these students can take what they know. We built the course knowing what they know because I’m one of them. And I walked through the same journey myself five years ago so that they can understand how to write in these new environments, new languages, using what they already know and hopefully make it a little bit easier. And some of the research we’ve done suggests that’s one of the best ways to teach someone something new and scary is provide them side by side examples. Here’s what you know, here’s what it looks like in the new thing on on the other side of the page. And self-paced, because as I watch a lot of these other training platforms like Coursera and Udemy, everybody’s busy. Nobody has the time to sit down in a classroom anymore for 8 hours. Besides, they just be sitting on their phones, you know, chatting and Instagramming. Who knows what they’d be doing. So make it available to them on their pace and their cadence. I let their boss influence how much time they spend every week. But what’s I think more important from a business perspective as an entrepreneur is I also don’t have to sit in a classroom for hours a day. If I can scale the number of students we reach from, say, ten over the course of one business day to, well, gosh, hundreds in the course of a week, that’s a that’s a desired future state for this pipeline, for this new product. But that’s the point is unlike. US from the confines of what a person can do in a billable hours. And because otherwise, you know, we’ll just I’ll be doing this until I’m in my eighties and I don’t really want to do that. Yeah. 

Greg Alexander [00:05:17] So it’s a great example and highlights the benefit of doing this. You know, if you can create a a product, if you will, when I say that term, I don’t mean become a product company, but I mean productize your expertise. Then you’ve decoupled, you know, the billable hour your labor with the revenue stream. And training products are great way to do that. In fact collective averages do the same thing. We’ve built companion courses for the two books, The Boutique and the found a bottleneck and same idea. I mean, if I had to stand in a classroom and teach the concepts in that book, my God, it would take hours and hours and hours these days. You know, with the self-paced e-learning technology that’s available, everybody can kind of learn it on their own when they have the time. It’s a highly scalable activity. So that’s a great example. Let’s go to the second example, which is this, as it’s been described to me, a code translator. So what does that mean? 

Robin Way [00:06:11] Yeah. Yep. Well, this kind of goes hand in hand. It’s kind of like the peanut butter to the jelly of the training product. Okay. So when these students have been writing their data analytics workflows for years, maybe ten, 20 years, or maybe they inherited code from somebody else who was at that business has left and all they know is, oh, I press go on this piece of code every Monday and I get a PowerPoint out the back end of it. So they if they know this, the task that this piece of code is doing. And we ask them right now, take what we just taught you and now convert this this code from one language to another. It’s a lot like like that. You, the translator sitting in the UN building, York, you know, they hear they’re listening to French and they’re translating the Spanish on the fly. 

Greg Alexander [00:07:00] Interesting. 

Robin Way [00:07:00] That’s not easy to do. And it’s tedious, time consuming error. So we wrote these three code translators that basically translate English to French, to Spanish, to Mandarin, to basically the target languages that they’re going to use when they’re moving to their target state, you know, moving to Python or Spark or whatever on the cloud, because that’s the destination where all of our clients are eventually moving. And by doing so, we’re taking the tedious, low value work and automating it. It’s it’s not it’s a it’s an art and a science. It’s not completely automatable. And frankly, that’s where just like with the training product, if we teach the low value skills, that allows us as consultants to be advisors and, and, and people who empower our clients to realize, okay, now I can focus my dollars for the careers consultants on the higher value stuff, which is also a good way of not getting caught up in battling offshore consultants who could do something similar at a much lower billable rate. Yeah. 

Greg Alexander [00:08:12] Another great example, right? I mean, all of us as merchants of expertise, we have to realize that what was once a unique high value activity eventually will become a commodity. And and if you don’t automate those things through technology, the code translate is a great example of that. Eventually you can have all kinds of fee pressure and you’ll become a commodity. So by providing, you know, tech automation and prioritizing and service, you can still meet the need the client has. But but not with labor, with a product which then allows you to push up market and work on more strategic things that they’re willing to pay a high dollar per hour for the labor. Okay, that’s a great example. The third one was less intuitive to me. It was described, I think, incorrectly. So I’m going to give you a chance to describe it to me. It’s called the AWB inventory software. What is. 

Robin Way [00:09:06] That? Sure. Yeah. Let me let me set the stage for this. So this is actually the product that is at the start of the client lifecycle. So you think about classic consulting first come on in and help the client size up what the size of their problem and the nature of their problem is. Then do the work and then teach them how to do the work themselves. That was we’ve sort of tackled these products in reverse order. That doesn’t matter for the podcast. But we this third product is at the the first stage in the client lifecycle. We’re going to inventory. Just how big is your problem? Where is it worst? Okay, what should we do first, second, third. So this is an inventory product that we built know about four years ago. And what we’re doing now is we’re converting it or sort of upscaling it to put into the US marketplace. That’s basically, you know, Salesforce has one and Microsoft has one where basically you can download plugins into your software, you can download software that runs in your own computing environment. They’re up. The upshot of all this is. We want the client to do an inventory. Either way, that gets us to where we really want to be. The sweet spot of our lifecycle is creating value. The inventory itself just tells us how much value there is to create and we want to accelerate the pace of that project the way that we do it today without this this downloadable plugable piece of software that we put up on marketplaces. Instead, we come into their environment. We have to do 3 to 6 months of sale and three months of delivery. By using this upgraded version of the technology, the client can download themself and run themself. We’re basically taking months and months, maybe almost up to a year, and we’re reducing down to a couple of well, because the client can dip their toe in the water, they can try before you buy all those kinds of nice for the client who says, gosh, I don’t know if I can sustain an organization the time to do this inventory. If it’s going to take me six months, I got I got a day job. So if we can crunch that down to a couple of weeks, then they can go, Ah, you’re right. I have a huge problem and I really need you to come in and fix it. That way we get to the sweet spot, the place where it’s going to be hard to dislodge a or or to question the value. So that’s, that’s the third product. Okay. 

Greg Alexander [00:11:33] Another great example. Now, I know some of our members, they’re going to hear that example and they’re going to say, why the heck would I want to do that? I sell a consulting project. I spend three, six, nine months in quote unquote, discovery. I’m billing the client for that work. If that gets reduced to two weeks, I just cut my revenue stream dramatically. I think that’s the wrong way to look at it. But what would you say to those members? 

Robin Way [00:11:59] Yeah, well, inventory. Yeah. So in my line of work, the inventory is not the value. Anybody I mean, the classic complaint about consultants is I pay in my case, I’m paying Robin paying this guy to come in and look at my watch and tell me what time it is. Right. There’s no there’s no value in that. So. Plus the inventory. A lot of that 3 to 6 months of pre-sale is just us sitting around waiting for the client to say that they’re finally ready. So we’re not building that whole time. We might, you know, we have a flat fee for that service. It’s maybe 250 grand. If we do it the hard way, we might give it away. Mm hmm. You know, practically, we might charge a nominal fee of ten, 20, 25 grand for the trial before you buy a service, because that’s the way in the tech space. A lot of software is sold is get me hooked with the freeware, with the shareware. And then when I realize, Oh, I love this, I want more and I want to know more about careers, then they bring us in. And now we’re talking about a much more sort of a platinum level relationship where they see, Wow, you guys know a ton. I had no idea our problem was this bad. Come and help me now. We’re into the the part of the relationship I really want is is is that is implementing the value and bringing them to the promised land and not just reading their watch for, you know, for, you know, for what is. Really should be a cost of sale. Yep. 

Greg Alexander [00:13:37] Excellent example. What I would add to that is there’s probably a lot more demand out there that our members could capture if they could take something like discovery. I use that term broadly from six months to two weeks. There’s a whole bunch of customers in the market, one who will now probably hire you because they don’t have to go through that six month grueling process. You know, the value prop gets done in two weeks. So the demand will go up. And then, of course, as Robyn said to us, what you get to, what you really want to get to, which is fixing the problem, not diagnosing the problem a hell of a lot quicker. Robyn, one more question on this. So these three examples are training product. The translation product and the inventory product are all great examples of products and services do charge for them. 

Robin Way [00:14:23] Great question. Kind of. So we. So I’d say there’s two dynamics in the market for know we are a we are in the ecosystem of Amazon Web services. We are a premier solutions provider in the AWG ecosystem. And RWC is all about commitment to the clients and about delivering time to value. So what that means is the clients have come to expect. I want results fast that I can scale and I want to be able to fail fast. And if an experiment is going poorly, throw it away. Figure out what does work and go with that instead. So. The the realities of this market are you have to bring to the client what they have come to expect. And that means changing the way that you work as a consultant and finding your one niche. Because Amazon will eight of us will tell you as a as a process of company, do not present yourself as, Oh, I can do anything, I can do some data science stuff, I can do some data migration stuff, I can build you a new app, be good at one thing that’s very discretely defined that you are the best in the room app and stick with that. And that’s what we’re trying to do. 

Greg Alexander [00:15:54] So when you say you kind of charge for this, so are you. 

Robin Way [00:15:57] Oh, yeah. Let me come back to that. We call these accelerators, okay. If I tried to for example, we’re trying to take a customer from state A to state B, Once they’re at state B, they have no need for a recurring software fee because they they solve the problem. So we’re not selling it as a SOF, as a recurring software revenue. Now, some people will go, Well, what are you creating these products for their aid, their differentiators be their accelerators. Everybody wants, they want to know. I can just pay you for hours or you’re bringing hours plus something really compelling and distinctive. Yeah. And I want to know that you’re going to reduce the operational risk of the engagement, and you’re going to leave me stronger than I was before. So they’re really accelerators for value. I’m not selling them for a price because because we are trying to sell our expertise, their expertise in a bottle. 

Greg Alexander [00:16:59] And therefore, the reason we are charging or kind of is because you’re getting more deals and you wouldn’t have had these deals otherwise. 

Robin Way [00:17:05] That’s right. Yeah. Got the right to have the right. 

Greg Alexander [00:17:07] All right. Well, we’re out of time. Robin, This was an awesome example. Three examples on how to productize a service on behalf of the members in the collective. I appreciate you being here very much. 

Robin Way [00:17:17] Yeah, you too. Greg, this was great. Thanks for inviting me. 

Greg Alexander [00:17:20] Okay. All right. So as a call to action, let me speak first to the members. So first things you should attend the Friday Q&A session, which is the private session that we’ll have with Robin, and you can ask your questions directly to him. Secondly, you might check out the companion course for the boutique book. In it, one of the tools is called the Revenue Mix Tool, and it teaches you how to develop different revenue streams and therefore have a broader revenue mix, which is what Robin demoed for us today. And then also for those that are playing around with the founder Bottleneck, there’s a template in that companion course called the High Potential Employee Development Plan. And if you’re wondering, Hey Greg, I want to productize my service, but who has the time to do that? It’s a great project for a high potential employee to take on, to develop themselves and create more value for you so directly to that. And then if you’re not a member and you’re listening to this public podcast, first you should consider being a member. You’ll get access to great people like Robin and tools like the ones I just share with you. And you can do that. A collective fifa.com fill out the contact us form and some will get you get in contact with you regarding that. But if you’re not ready to join but you want some more of this outstanding content, join our newsletter which is collected for Inside.com. And if you do so, you get three things. You get a blog on Monday, a podcast on Wednesday and a chart on Friday. Okay. With that. Thanks for being here, everybody. Robin, again, Thank you. And until next time, thanks for listening.

Episode 111 – The Beginner’s Guide to the QOE (Quality of Earnings) Report – Member Case by Elliott Holland

Someday you will sell your firm. After all, none of us can run our firms from the afterlife. When your time to exit comes, you will need to know what your firm is worth. The tool often used to calculate a purchase price is called a QOE, or the quality of earnings report. On this episode, QOE expert Elliott Holland, Founder & CEO at Guardian Due Diligence, will help founders understand what a QOE is, when it is needed, who creates one, how it gets used, and why founders need to get familiar with it.


Greg Alexander [00:00:15] Welcome to the ProServ podcast with Collective 54, a podcast for leaders of thriving boutique professional services firms. For those who are not familiar with us, Collective 54 is the first mastermind community dedicated to the needs of boutique pro firms. My name’s Greg Alexander. I’m the founder and I’ll be your host today. On this episode, we’re going to talk about a tool that you’ll use someday when you’re trying to sell your firm. It’s called the q0e, which stands for Quality of Earnings. And we have a true expert who does this for a living. His name is Elliot Holland. He’s also a member of Collective 54. So, Elliot, it’s great to see you. Would you introduce yourself to the audience, please? 

Elliot Holland [00:01:02] Absolutely. Great to be here. I’m Elliot Cowan, Harvard Business School, former private equity professional. And now I run a business that helps entrepreneurial business buyers vet acquisition targets using an audit like service called Equality of Earnings that we’ll dive into deeper here in a second. But essentially, I try to help entrepreneurs and keep them away from losing money in very happy situations where there’s huge motivations for people to misstate the truth. 

Greg Alexander [00:01:34] Okay, sounds great. So let’s start at the very top. A lot of our members are first time founders. They’ve never been through an exit. Someday they all know that they will sell their firm someday because unfortunately, we can’t run our firms from the afterlife. And since they’ve never been through that process before, this term quote, equality of earnings, they don’t even know what it is. So can you just give us a basic definition? 

Elliot Holland [00:02:01] Sure it is an audit service. So for a public company, what they do each year is an audit which looks through extensive information and makes public stock accessible to everyone. What the quality of earnings is is a mini version of that specifically used for buyers of companies to assess the financials of private companies. Anyone on here who owns their own business knows how difficult tech firms can be and how difficult setting up your financials and keeping them straight can be. So imagine a buyer coming into that environment, and the quality of earnings is a tool that can standardize the business financials of any business owner into a package that any investor can consume and make an acquisition decision. But to sum it all up, it is very similar to an audit specifically for the you are buying a company. 

Greg Alexander [00:02:54] Okay, very good. And when as a founder, am I most likely to need to use or build a q. O. E. 

Elliot Holland [00:03:05] Sure. So the two times that you need to use it, one, if you are looking to grow by acquisition, you see a target company that’s in a market you want to get into. You see somebody you know who’s selling. When you decide to buy their business before you execute that transaction. You want to hire someone to do a quality of earnings. Why? Because there’s. Huge variability in financials relative to what’s presented often times and you don’t want to get had. So that’s one. The second time is if you are approached to sell your business or you decide to take your business to market. Greg talks about this all the time. You’re getting an investment banker or business broker. I would highly encourage you at that moment to get a quality of earnings as well. Here’s why you want to have your own point of view of your numbers before a bunch of picky buyers come in and start hiring the same providers for their benefit. And the pain for an owner who does their own quality of earnings. The pain during the selling process is drastically reduced if they have their own quality of earnings. So those are the two times people should think about quality earnings. 

Greg Alexander [00:04:20] Okay. And it sounds intimidating. How long does it take? And, you know, if I’m a first time founder who’s never done it before. Can I pull it off? 

Elliot Holland [00:04:32] So it’s easy peasy and I’m smiling only because I’m such an entrepreneurial advocate on both sides, buyers and sellers. So essentially, your bookkeeper, your CPA, and the person sitting in my seat as the equality of earnings company lead or accounting lead do 95% of the work. So to make the process super simple and easy to digest, it’s essentially three steps. As an owner who’s going through one, they send you a list of information. If they’re good at small business kilos, their list is 40 to 60 items. Of those items, two thirds will be handled by your bookkeeper or CPA, and the other third will be handled by maybe a half hour to a 45 minute conversation on the phone. So you get a list, you give it to people to fill it out. You get on a phone call for a half hour to 45 minutes to answer business, marketing certain questions about the business. And then you wait for 3 to 4 weeks for the work to be done. Now, there may be questions in between on step three. Those questions oftentimes are not all that detailed. And oftentimes your controller or your CPA can answer them. So for a owner, it may encumber. Let’s just say it takes 3 hours to sort of get your troops going on the day to another hour for a call. You invest between one and 4 hours in this process. And I’ll also say a lot of us as private business owners have done some interesting things in our financials. You should not be scared of sharing those things because the providers who do this are so used to handling it. Just just be honest. Get it all out and it’ll be done in four weeks. 

Greg Alexander [00:06:15] So let’s say I’m a founder and I have a successful firm, so I potentially have an inflated opinion of myself and I think I can do this on my own or I can pencil whip it just by, you know, exploiting my QuickBooks file. And that should be good enough. Am I nuts? 

Elliot Holland [00:06:34] Yes, I’d. I’d respectfully laugh at you. 

Greg Alexander [00:06:37] Okay. 

Elliot Holland [00:06:39] Here’s why. There’s too much money. Okay, So the people I’m speaking to are people who have businesses that are likely going to sell for 1000000 to 40 or $50 million. Right. They’re going to be sold at a lot of cash flow or EBITA. We won’t get into it, but just a multiple a profit to keep it simple. So when you say, hey, I’m going to go cheap and easy and homegrown and I’m going to export my QuickBooks and it’s accounting crap, they don’t care. My business is worth whatever. What you don’t realize is I’m going to be the one on the other side working for the buyer, picking your financials apart at in my 10th degree of detail and then telling you think about things about your financials that are accounting oriented but will affect the price that you won’t understand yet because you have not gone through the process for your own benefit. So let’s just walk you through an example. When sellers don’t do the quality of earnings before, when founders don’t do it, before you get into situations where accounting things, where something is is presented in one way is taken as a big deal, when it’s really a small deal and you’re getting a multiple of profit. So like a 10% difference. So if your profit is a million bucks, if the buyer can go through your front end and shows and show you that your true profit when all the accounting stuff is handled, is even 10% off, right on a4x deal, that $100,000 could be $400,000 worth of lost value. So by, you know, avoiding 22 for a quality of earnings, you just lost 400 K. 

Greg Alexander [00:08:15] Yep. 

Elliot Holland [00:08:17] That’s before I even talk about you have your own financials. You go through less pain through the whole process because people don’t have to ask as many questions. 

Greg Alexander [00:08:25] Yep. Now, so far we’ve been talking about if I, the founder of my firm, is planning on selling my firm, we haven’t talked about the counterparty on the other side of the desk. The firm was thinking about buying my firm and their due diligence process. So it’s likely it’s likely especially, you know, professional acquirers, they’re going to hire their own firm to do their own QE. So there’s really two of them being done. Is that correct? 

Elliot Holland [00:08:52] It depends on the size of the business and the buyer. So I would say in the deals that I’ve seen and I focus on deals sort of $2 million to 25, $35 million is where I live. If the seller does the quality of earnings typically be the buyer who comes in will either assess the quality of earnings and the quality of the firm that’s done it, and they may just get their accountants to review it. That’s most often the case because people don’t want to pay twice for the quality of earnings or if there is a second quality of earnings, it’s a sanity check, not a product, a logical exam. So if you’re going to have somebody go through your financials at that level, you want to be the one paying them. You don’t want somebody that somebody else paid doing that exam. 

Greg Alexander [00:09:38] Yeah. Okay. Now, the the person who’s buying the firm, the acquirer, they’re going to take this QC and they’re going to do what with it? 

Elliot Holland [00:09:48] So let’s just talk about $1,000,000 Eboni business, which is just cash flow, a profit and a four times deal. So you’re selling your business for $4 million. The buyer will come in and do a quality of earnings and say, I’m going to multiply whatever the evil that this found in my quality of earnings by four. So they’re going to go in and look at your income statement, your balance sheet, your working capital, your bank statements, your taxes. Running through that four week analysis. And then they’re going to come back and say, hey, based on our accounting team, your actual EBIT is $900,000. And so now they’re going to say $900,000 times four is 3.6 million, not 4 million. And so our price now just got adjusted, 400 K It also happens in the other way. So they may find that the profit is higher than what was presented, but they’re not in a position to tell you that. So what would buyers do with the quality of earnings is use it as the basis for the EBIT number that they multiply by to get to the value. 

Greg Alexander [00:10:52] Okay. And do they share it with the bank if they’re going to fund it that way? 

Elliot Holland [00:10:58] Oftentimes, sometimes not. But you should assume that the quality bearings will go to all interested investors, even though sometimes it doesn’t. Depending on the buyer, if they have good relationship with their banks, depending on the size of the deal. Also, as you get out of when you get out of sort of two, three, 4 million and get above that, then the answer is absolutely yes. 

Greg Alexander [00:11:22] Correct? Yep. Okay. One last question for you on this. This is a personal pet peeve of mine. Sometimes our members get advice from their broker, the M&A adviser or the investment banker that they got to spend a fortune on acuity and hire a big name firm like a p.w see, which I think is crazy for our members, because those can be very expensive and they don’t need to spend that kind of money because our members businesses, relatively speaking, are easy in simple businesses to do this. So, Eliot, what would you say to that advice? 

Elliot Holland [00:11:58] So I don’t think the big firms like Peter them you see, do strong in meeting business quality of earnings well at all. So my point of view is not only will you overpay for it, but you will get the debt. Not that it would be the C, but the DTI, the kids coming straight out of college. The partner who doesn’t want to spend a lot of time on it. You’re not an important entity in their ecosystem of a lot of private equity firms and multiple buyers. So you’re going to get the last bit of energy they have. And when a transaction is this big for you as a founder, it matters that you get the A-Team and a quality sort of driven firm. So I would highly encourage you to look for regional firms that are more that are priced more cost reasonable or due diligence firms like mine that focus on just quality of earnings that have great reputations in the marketplace. You don’t need a quarter million dollar, $100,000 quality of earnings. You need one that solid by a reputable firm. Yep. 

Greg Alexander [00:13:00] And not to put you on the spot here, but I know you do this for a living. Give me a range. What’s a ballpark budget figure for something like this? 

Elliot Holland [00:13:08] Sure. So 20 to $60000 should cover it for companies that are selling for 1 million to. 25, $30 million. When you get above that, you may ratchet that upper end of the range up a bit, but that is a very reasonable range. You get your quality of earnings done. 

Greg Alexander [00:13:26] Okay, Fantastic. Well, listen, we’re out of time. But Elliot, you and I have recently gotten to know each other. You’re a relatively new member. I’m so glad that you’re in the community. Your energy and enthusiasm is infectious, and your area of expertise, as we just learned today, is desperately needed for our community. So on behalf of all the other members, I appreciate you being part of Collective 54 and in particular for making the deposit in the Collective Knowledge Bank today. Thanks a bunch. 

Elliot Holland [00:13:52] So excited to be here. Thank you for having me. And I’m glad to be in collective 54 as well. 

Greg Alexander [00:13:58] All right, very good. So let me give the audience members a couple of call to action. So let’s say you’re not a member, but you’re thinking about it because you want to meet really interesting people like Elliot and learn about these tools like quality of earnings. Go to collective 54 dot com, fill out the contact us form, and one of our representatives will talk to you about being a member. If you if you are not ready quite yet to be a member and you want to educate yourself further, subscribe to collective 50 for insights and you going to get three things on Monday. You’re going to get a blog, on Wednesday, you’re going to get a podcast, and on Friday are you going to get the chart of the week? And that’s a good way for you to learn more about this if you are a member listening to this, my call to action is a little bit more precise. So the first thing I want you to do in the new Boutique Companion course, there is a Kuo e template I really want to emphasize. It’s an introductory basic template that will get you familiar with kind of what something like this looks like. Of course, to execute it, you’re going to need a professional like Elliott. And then also if you’re not quite ready for a cue because you’re not ready to sell your firm, but you’re really interested in what your firm might be worth on the website. Under resources, we have a tool called the Firm Estimate here. That’s a really fun tool. Takes about 15 minutes to fill out your answer ten questions. It gives you a ballpark range as to what your firm is worth. I really want to emphasize here a ballpark range. It’s not a precise valuation, but check that out if you’re interested. Okay. So that’s the end of today’s show. Thanks for listening. Thanks for being here. We really look forward to Elliott’s private Q&A with the members on one of our upcoming Friday member sessions. But until then, we’ll talk to you on the next one.

Episode 105 – How a Do-It-For-You Marketing Agency Evolved Into A Consulting Firm Getting Paid More For Advice – Member Case with Kyle Romaniuk

When starting a boutique, it is best to begin with the problem you will solve for clients. Why? There are lots of boutiques with solutions that no one is going to buy. On this episode, Kyle Romaniuk, CEO & ECD at Vantage Studios, sheds light on the process of truly understanding the problem he’s solving for clients.


Greg Alexander [00:00:15] Welcome to the Pro Serve podcast with Collective 54, a podcast of founders and leaders of boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated exclusively to boutique pro serve firms who want to grow, scale and maybe someday exit their firms. My name’s Greg Alexander. I’m lucky guy gets to lead this group. I’m the founder of this company, and I’ll be your host today. And on this episode, we’re going to talk about identifying a problem worthy of solving, which is a precursor to developing in launching a new service. And it’s often overlooked and done incorrectly, and it causes great harm. So we’re going to try to share some wisdom on avoiding some kind of dumb taxes, if you will. And we’ve got a role model this week, Kyle Romanek, and he is a collective 54 member. He’s been one for a while and he’s always got lots to share. And he’s going to share part of his journey with us today. So, Kyle, it’s great to see you. Welcome to the show and please introduce yourself. 

Kyle Romaniuk [00:01:27] Thanks for having me. So great to be here. So I’m kind of outgoing. The president of Vantage Studios here with Air Canada. We’ve been doing a lot of agency marketing work for over 25 years, and I’ve had the privilege and honor to use the boutique as kind of a guide or role model myself to help us look at defining a problem that we want to solve, that we’re excited about and will motivate us for the next few years. 

Greg Alexander [00:01:57] Okay, fantastic. So I’m going to set this up a little bit. And then, Kyle, I’m going to ask you to talk to the audience about this new service you’re you’re launching and how you thought through the problem. So in our perspective, we think a problem that is worthy of solving has four characteristics. So first, you can state the problem clearly. For example, I like to state it to my wife, my parents, even my dog to see what their reaction is. And if they get it, then I know I’m not talking in industry jargon and it’s something I can state clearly. Second, I need to prove to myself before I invest any time or money in pursuing it that the problem is pervasive. And what I mean by that is that it’s not just a small number of people that have it. There’s a large number of prospects that are dealing with this problem. Third, I need to confirm that clients are willing to pay to solve it. There’s a lot of problems in the world that could be characterizes, nuisances or inconveniences, and that’s not a problem to go after if they fall into that category. But if the problem is big enough and clients are willing to pay to solve it, then maybe you got something. And then lastly, lastly, you want the problem to be urgent. You want it to be something that you never hear a prospect say, Yeah, I’m interested, but call me back in six months. You want them to say, Where have you been all my life? If you can solve this problem, let’s go. So those are kind of the four screens. So call my team and prep for this interview. Told me that you’re planning on or have launched brand new service and you’ve given a lot of thought to the problem. So could you share with us what you’re up to? 

Kyle Romaniuk [00:03:39] Yes. So over the many years, we’ve done a lot of things for different clients and there’s certain areas of that that we definitely love doing and other areas that don’t really get us anymore. So what we did is as a group, we started going through the boutique chapter by chapter, starting off with chapter one, looking at what is the problems. So we’ve been able to define that for ourselves and then go and ask friends and family and other people to see if this seems like something that they totally understand or if it’s really complex. So I’ll start off by sharing with you what we’ve defined as a problem. 

Greg Alexander [00:04:17] Great. 

Kyle Romaniuk [00:04:18] So we help organizations with a focus on community based not for profits and government. When they feel meeting a deadline or expectations are at risk because they’re in their in-house team, isn’t sure where to start or how to take things to that level. And they don’t have anyone to guide them or give them direction of how they’re going to make that possible. Often when we talk to a client, they have a very specific item or priority or project or initiative, this specific to marketing. And we see that all of the services that we were offering our clients before, we can package that into like a fractional CMO offer so we can work with their to help them understand the opportunity or the challenge and build a plan together with them, execute that plan with them, reach their goals and set new goals. 

Greg Alexander [00:05:15] Okay. So let me ask a question on that. So I heard the problem statement and then the assumption that we made is that the reason why they’re going to miss the deadline is because they don’t have a leader, the CMO. And so and so that’s the root cause. So you’re going to solve that problem by providing a fractional CMO. So the word fractional makes me think not only do they not have a CMO, but they probably can afford to have a CMO. So renting a fractional CMO makes a lot of sense. And my understanding this correctly. 

Kyle Romaniuk [00:05:47] That’s right. And we’d be targeting any organizations that are large enough that they have at least one full time marketing coordinator or a small marketing team. 

Greg Alexander [00:05:55] Okay, got it. So that’s a very clearly stated problem statement. So I like that. So that clears the first hurdle. Let’s go to determining if the problem is pervasive. So these community based organizations, governments, nonprofits, I have no idea how many there are and how many fall into this category of needing a fractional CMO. So how have you thought through that? 

Kyle Romaniuk [00:06:27] I guess going through the question by question, we started off with this is probably similar to one industry. 

Greg Alexander [00:06:32] Okay. 

Kyle Romaniuk [00:06:34] We felt. Yes, it does. Any business that implements marketing or hires an individual marketing coordinator or builds that small in-house team, they have a finite amount of experience about what they’ve done for marketing in the past. We find that there’s there’s usually a talent pool to go from to hire those people in-house. And usually the strongest talent from that pool is usually attracted to go work for an agency because of the diversity of the work that you can get there and the quality and caliber of the clients, the esteem related to that work. So it’s harder for them to pull in the talent experience that they want, especially if they can’t afford to hire the top ten, which a large organization like Procter and Gamble or someone that has a full suite of brands. For them, marketing is an engine to really scale that business, and you can see how it works. But for most smaller to medium sized organizations, they’re dealing with a really strong, passionate team and have a mandate or purpose business worth doing. But their experience will find a moment in time when they’re limited. And it’s in that specific trigger point where they’ve got something that feels a lot bigger than it did before. Or it might have a deadline that see that. How can we achieve this deadline? That’s when they feel like they need to reach out to someone or somehow. 

Greg Alexander [00:08:04] Okay. Very good. So that that I would agree with you. I think it is a pervasive problem. So let’s move to number three, which is usually where the rubber meets the road, as they like to say. Is the prospect willing to pay to solve this problem? So what have you learned there? 

Kyle Romaniuk [00:08:25] So we’re thinking about the problem that’s being solved. There’s a chance that it’s pretty simple and it’s on the surface and they’re aware of what the problem is. So when it is an issue where someone that had the knowledge before leaves their organization, so if they had a marketing person that was taking care of this before, but now there’s a void that has to be filled. It’s very easy to see what the problem is. Sometimes it’s very below the surface and it’s hard to see. And if you let it go too long, the chance is that you’re going to end up with a lot of very severe problems doing that. Really harder to unravel and resolve. We get a lot of thought to what those types of issues could be from the surface level and as it goes deeper. So I believe it’s sort of like a snowball rolling down the very beginning. The problems and the pains are very small and minor and you can live with them and it doesn’t really bother anyone. But if it goes unresolved and you don’t identify what’s going on early enough, the problems can become more complex and more devastating to disappear. 

Greg Alexander [00:09:32] Okay, so then the assumption there, using the snowball analogy, the bigger the snowball, the more willing to pay they’re going to be. 

Kyle Romaniuk [00:09:39] Yeah. The longer you let it go, the bigger the problems that are going to start to snowball together and small problems become bigger problems and eventually they’ll smash into something. Right now, our hope is that we can actually work for that. That happens. But often people don’t see the problem until it’s smashed into something. So, again, if it’s as simple as someone’s left, there’s a knowledge gap. We can step in and fill that gap very quickly, a lot faster than maybe hiring someone and a lot more cost efficient than hiring CMO or CGI for itself. 

Greg Alexander [00:10:16] Okay. Got it. 

Kyle Romaniuk [00:10:17] In addition, we are also looking at helping that internal team actually increase their capabilities, increasing knowledge, their skills, so that our clients are actually investing in their own internal team when we work with them, as opposed to hiring an agency or consultant to do it for them. They’re hiring us to do that with them. So we’re actually pulling their team up with us. And eventually we might actually they might outgrow us where they have the capabilities in-house to see things going forward or they’re able to say, you know what? Now that we’ve got this thing under control, what’s next? How can we help you escalate what you’re doing now and do more? When we’ve talked to a lot of our clients that we’ve presented this new service opportunity right now talking to past and existing clients, some of them have said, Wow, this is exactly what we need. And they could be already down the path of implementing a plan that they’ve realized doesn’t really have a plan, that they’ve got their team feeling lost, overwhelmed, not sure what to do. Doing a production on elements that they don’t really have a marketing plan of where they can use it. And they’re now down the path. And the boss in that organization is saying, My team doesn’t really know what to do. They’re kind of lost. They could use some guidance. Kyle, I know that you could come and help us. Please give me a proposal to get going on this right away. 

Greg Alexander [00:11:46] So that’s positive feedback for sure. 

Kyle Romaniuk [00:11:50] Yes. You’ve also heard of that. We’ve seen this in our own company as well, where there is a lack of motivation or engagement from the team. There’s a high attrition rate where you’re losing staff and you’re not sure why. What we found is we’ve almost developed a system that goes deeper for those clients that have something that is below the surface where the lack of consistency of their brand through multiple departments because they don’t have a brand guide, that’s a pretty simple thing to fix. But if it goes on down for five or ten years, the problem can go beyond that. You might not have a purpose driven brand or organization. You just kind of have the job day to day and the staff starts to kind of drift away where they’re not as motivated and engaged as they once were. So for some companies, again, it could be really simple on the surface that some knowledge has been taken away, or they can see the structure or splintered brand identity because it’s multiple departments or partners implementing something that consistently. Again, this problem surfaced easy to fix. But when someone feels like, you know what, we’re losing a lot of people. We’ve got lack of engagement. Performance isn’t there, and we’re not sure how to fix it. It might be more of a cultural thing, but we can go through our system of looking at understanding what’s the final process of that. So we can start with understanding what’s the purpose of the brand? How do we get everyone motivated? How do I get everyone on board and a part of this plan? How do we build out the goals? What are the key areas to focus on? What are the key activities that maybe need to be done in each of those areas? And how do we achieve all that out of the whole team and get them onboarded and engaged and motivated and choosing the things that they want to do and be a part of implementing to get that motivation back and get it participating in all the synergies of their team and the external partners that maybe they don’t know how to give really good direction to to get the most of those external partners like other agencies or consultants, where we could kind of coordinate the whole system together. Okay. 

Greg Alexander [00:13:59] So when you went out and shared this idea with your current and former clients, how did you assess their urgency? 

Kyle Romaniuk [00:14:09] Well, in in one instance, I was just reaching out as a friend. It’s like I’d like to bounce off of in your past client of ours. And for over a decade, we’re looking at shifting our business and moving away from the execution offering into the consulting side and fully doing the workshops and the plans and working with the existing teams to help them implement it and not be the do it for you agency that we once were. And the response from that was, Wow, my team right now is lost. COVID put us down a different kind of set of tracks and now things are kind of merging back to the norm for them that their team doesn’t know how to go back to their normal. How do we stop doing what we’ve been doing for the past few years and now go into something new? In that instance, they actually lost someone that went to a different career path that used to do a bunch of stuff that was never documented, never cross-trained. And now we’re going to go back to doing those things that nobody in the organizations that we’re part of do. So they need someone with some more experience to come and help guide. And even that might just be help build confidence in the internal team to make them feel like they do have good instincts. They do know what to do. They’ve just never done it before. And we might just need to work alongside them to enable them to do that. Other clients that we’ve spoken to about this day, we’ve produced, for example, campaigns for them and we’ve talked to them about what’s going on. We started working with different departments and we’ve had one of them say, We’d like you to look at our entire brand. How is it organized, where the assets that are maybe used across the whole organization and how do we create consistency across all of our departments? And we talked about like your brand guide and this is something that they’ve never really been exposed to a lot of benchmarks of how brand guides can be produced and how they can be used and go beyond just the basics of Here’s our full color logo, or Here’s our one color, and it can really look at even getting everyone on the same page. If you start talking about it as type in including brand stories or scenarios that are a little bit softer but get more depth into the understanding of their brand, more so than only some general rules of how to use it. And then now is suddenly getting inspired and excited about, well, this could actually improve our organization in a way even more so than what we knew about. So if we can find opportunities to understand and listen to what people are going through, listen for them to tell us what their pain points are, and then find ways of weaving it into Here’s how we can help or Here’s how someone I know can help, even if it’s not us. But it really starts to just listening. And I think something else that I’ve learned recently was sharing with others when we’re going through change, if I have a challenge and when I share those things with other people, suddenly there are some connections to start getting made and solutions on to present themselves. Yeah. 

Greg Alexander [00:17:26] It happens all the time. I mean, it’s fantastic that you went out to the market before launching, got all that real positive feedback and that’s how you save time, energy, money, effort, etc. So what’s going to happen? Are you going to launch this fractional CMO thing or are you guys still thinking about it? 

Kyle Romaniuk [00:17:42] We’re launching for sure. We actually, out of all the clients that I’ve been talking to, one of them we were actually building a plan for during this whole transition strategy thinking. And they pose to me, would I be their fractional CMO before they knew that we were planning to do this? Because in building the plan, they’re like, we don’t have anywhere to implement this plan, but we don’t have anywhere to do this. Could you implement it for us? 

Greg Alexander [00:18:11] Awesome. So you got a client, it sounds like, before you even launched? 

Kyle Romaniuk [00:18:16] Yes. And I actually had a follow up client today, which I have a weekly call with him. And I have mentioned to him about what we’re doing here. I have told him that we’re basically modeling what we do after what I’ve been doing with him for the past three years. I have a one hour call with him every Monday. Once in a while we’ll skip a week. But for the most part, we’re meeting every single money for an hour, talking about what’s happening, where things are going so that we have things to design. Some things we just talk about what’s on Netflix. Yeah. But for the most part, he’s. We’re just keeping everything moving. And we’re his marketing team. And I’m, they’re. They’re fulcrum on everything that’s getting done. 

Greg Alexander [00:18:58] Yeah, that’s awesome. I will. Listen, we’re running out of time here, but this was a great story. It really was. This the chapter one? The problem is something that often gets overlooked. The way that you went through that was textbook up to the point where you’ve got a client before you’ve even launched, which is just a fantastic thing. And I wish you the best of luck with this new offering, and congratulations on doing it the way he’s supposed to do it. 

Kyle Romaniuk [00:19:20] Thank you so much. 

Greg Alexander [00:19:21] All right. Okay. So for those of you listening that are not members and you might want to be a member and meet great people like Kyle and become part of a community of peers, check out Collective 54 dot com. You can see a form to fill out there and apply for membership. And we’ll get back to you.  If you’re not quite ready to become a member but you enjoyed this episode and want to consume additional content. Again, at Collective 54 dot com, you can subscribe to C54 insights that give you some some benchmarking data. Weekly Podcast The Blog Access to our bestselling book, How to Start Scale and Sell a Professional Services Firms to check that out. Okay, so great episode today. Thanks for listening and we’ll talk to you next time. 

Episode104 – How a Mid-Western Social Media Agency Reached Scale Quickly By Launching New Services In A Crowded Market – Member Case with Beth Trejo

Generating new revenue from existing clients is critical to scaling a boutique professional services firm. This requires developing new services based on the needs of your clients. On this episode, Beth Trejo, CEO and Founder of Chatterkick, takes us on a journey of launching a new service line. Beth shares how she identified the client need, validated the opportunity and launched the new service model.


Greg Alexander [00:00:15] Welcome to the Pro Serv Podcast with Collected 54 podcast for founders and leaders of boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated entirely to helping you grow, scale and maybe someday exit your professional services firm. My name is Greg Alexander. I’m the founder and I’ll be your host today. And on this episode, we’re going to talk about the need to launch additional services when you’re trying to scale your firm. And we’ll discuss why that’s important. And what I hope to accomplish today is to share some things at work, share some things that don’t work, and maybe help you avoid some mistakes when you are brave enough to launch new services. We’ve got a fantastic role model with us, Beth Trejo. She’s a member of Collective 54, has been for a long time, has been on this show before. And it’s great to have her back. And Beth, if you wouldn’t mind, please introduce yourself and your firm to the audience. 

Beth Trejo [00:01:19] Yeah, well, thank you for having me. I always enjoy this conversation. My name is Beth Trejo. I am the CEO and founder of Chatter Kik. We are a social first digital agency. And yeah, we’ve been in business for about ten years and our goal is really to help brands leverage that human connection behind their logos to drive growth and relevancy. 

Greg Alexander [00:01:44] Okay. And what’s a kind of an ideal client for you? Someone that is right in your sweet spot? 

Beth Trejo [00:01:50] Yeah. So the brands that we’re working with now are typically those that are either in B2B professional services or have multiple business units and complexities. Social media isn’t just one thing. It’s so many things these days. And so when brands need a higher level of sophistication or strategy in terms of what they’re doing on social, that’s when chatter comes in. 

Greg Alexander [00:02:13] Okay, fantastic. So the reason why we wanted to have you on this show on this topic is because from what I understand, you recently launched a new service offering, and you learned a lot in that process. And I thought maybe I could maybe facilitate a conversation and and pull your wisdom out of you. So my first question would be regarding this new service is how did you first identify the opportunity for it? 

Beth Trejo [00:02:43] Yeah. So we’ve launched a couple of new service lines this year, and one of them that we can chat about today is really our employer branding, executive social. And so this is something, you know, we’ve been running social media for businesses and even individuals for the last ten years. But what has happened in the space is that it’s become a lot more complicated to run social media. You need someone who can do analytics. You need someone who can do visual creative elements, video editing, engagement writing. It just doesn’t live with one individual anymore. So as we grew, we’ve added more people to surround our clients. And therefore the value that we’re providing our clients have gotten larger. But also, from a business perspective, our costs have gotten a lot larger because now we have to put four people around each account. And so if I was running, let’s say your LinkedIn account, Greg, it would be pretty expensive to have us do that because we have all the people involved. And so one of the big needs that we’ve noticed and we’ve done this a lot in the health care or professional services space where relationships really do drive so much of the business is we saw these individuals, especially executives, are, again, those people that are very like thought of as a leader in real life and an influencer in real life. And they needed somebody to help them keep the consistency and the presence out there on, let’s say, LinkedIn. But they just didn’t really have a lot of places to turn. Their marketing team didn’t want to run it, they didn’t really feel comfortable. And other agencies don’t usually do a lot of the personal brand management that isn’t just a whole bunch of bots on LinkedIn. And so we found kind of that opportunity zone to say not being done currently and we already have the skill sets. Now we just have to reengineer how we do it on our end. So it doesn’t the price doesn’t become a barrier to success. 

Greg Alexander [00:04:46] Okay. And did you spot this because you’re working with your current clients and you recognize this need? Or did you see this opportunity outside of your current clients and kind of the broader marketplace? 

Beth Trejo [00:05:00] You know, we saw it with some of our current clients, specifically the physician group, because, you know, people want to connect with their doctors and their providers. And it was so evident. And even though the price. The point was when we would be like, you know, that doesn’t fit with chatter cake anymore. Like, this doesn’t work. But we still saw those accounts being successful. Both the employees like to work on them as well as the physicians were like, This is all I need. I don’t need to get it overcomplicated. I don’t don’t care about the reports at this point. And so we saw like indications of that. But then from a market perspective, we saw a lot of just people turning to like people are just sick of dealing with logos. They want real people and they’re craving this at the B2C level, which isn’t always the norm. Right? Like you didn’t always need to know who the president of your toothpaste company was, but people are really craving that connection and purpose and vision and values on across the board. So that’s really where we saw, okay, opportunity, we’ve done this before. We knew that it worked, it was profitable, but we just really didn’t define it and put it together into a service line until this year. 

Greg Alexander [00:06:07] Very good. You know, the product world, let’s say a software company, there’s a very well thought out way to experiment with a new product. For example, the minimum viable product, agile, rapid iteration, lean, you know, it’s very well won territory, but it’s not as well-worn in the service space. And sometimes I see members making make a mistake and that is they go and they overengineered this massive solution before they even have a single client for it. And then they take it out to market and all their assumptions get blown up in the first 30 days. And then they’ve got to go through another engineering process. And and I really want to help members that are brave enough to launch new services as part of their scale strategy. Avoid that mistake. So when you were thinking about this particular opportunity, because it’s a wonderful use case, how did you make sure you didn’t over engineer it to start? 

Beth Trejo [00:07:04] Yeah, well, first I made those mistakes so many times in the past how I used to do new service like was I pitch it, I’d make something up that I thought would be a valuable and that we could do. But I wouldn’t do a lot of testing. I would just pitch it, we’d sell it, and then I’d figure it out in the background. Okay, well, that was fine for a while, but that’s exhausting to your team. It can be completely chaotic at times, and it really wasn’t. It didn’t define it in the way that we needed to, to scale it. And so how we did this differently and really the thing that I think I’m the most proud of is that we kind of isolated it. We took it away from our normal work space. We didn’t have it live with our other teams that have done it. And some of us, we kind of let it live in this little incubator with a specific type of team member that could kind of handle a high level strategy as well as like a tactical deployment. So it was just a really good fit of that individual. And then we tested it. We figured out what’s working, what’s not working, what’s costing us, where are we saving money? Where is this going? And we’ve been able to move faster because it were just a handful of us working on that, as opposed to when I used to do it, when I did it wrong, I kind of involved too many people, too many things at once. All knew no definition, no operations. And it just it didn’t feel good, especially in the back end. So that was something that has really been helpful how we did it this time. And we’ve done this for several other new service line deployments this year. 

Greg Alexander [00:08:33] That is really interesting, is having a separate group, the world that I came from in my early career was a technology world product company, and we literally had a launch group and it was a set of product marketing and sales and service people. That’s all they did, was launched, had come out with a new offering and they owned it for like a year or two. And then and then once they got the reference ability and they worked out all the kinks, then it went over to the main group and then they took it over. And then the product roadmap dropped and none. Another new thing, I was in this group, into the launch group, and so it went and it worked extremely well. And it’s really interesting to apply that to a service firm, as you have done. That’s fascinating. Sometimes members are afraid to launch new services because they don’t know how to scope it. And they they pitch it, they get a gig, and they’re all excited because it’s a new revenue source and they end up losing money on it because they underestimated, sometimes dramatically, what it actually takes to deliver the service. So. So how did you did you run a pilot? Did you like how did you figure all that out? 

Beth Trejo [00:09:37] Yeah. I mean, I think those are the type of conversations that you’re that if you give yourself a little more time, which is what again, I would try to go so fast, didn’t want to a missed opportunity. But if you give yourself a little bit more time, you can reiterate on that, you know, and you know, probably took us a year or so to kind of get, okay, this is where we think it’s at least the baseline price, right? Like in the beginning, you’re I’m not trying to like get too big and crazy, but like you don’t want to lose money on something, right? Right. So like, what are the baseline resources that I need to use to do a good job and you know, and then what are the. No one’s that I’m going to have to figure out. Can I re-engineer the process? Can I use new software and tools? Can I put different levels of team members involved in this? Is this an executive role or is this something that I could train and teach someone at an entry level? And so those were kind of the bigger items that we figured it out and it really did about. I thought it was gonna take about six months and it really did take about 8 to 9 months to kind of get some of the kinks worked out from an operations perspective. 

Greg Alexander [00:10:42] And then how did you take it to market? I mean, did you go to a happy client and say, I got this new thing? Will you be my guinea pig? Or did you take it out to the broad market? Like, what was the launch plan? 

Beth Trejo [00:10:52] Yeah, so it really relied on strategic partnerships. I think that those in the professional service world, those are so key and to diversify your strategic partnerships in some regards, but that allows you to kind of build this stuff with trusted partners and not do it all alone. And that’s really been really helpful for us. We’re lucky because we kind of have a marketing background, so we have, you know, some of that talent on our team. But regardless, the more you start spending, even if it’s a new service line, the lower that you you have from a profit perspective. So it’s kind of one of those things that we’re we’re going a little bit slower on that. On the other side, we’ve done we launched a new service line this year, which is tic tac scaling. Tic TAC has been really challenging for agencies because it’s so much video content. And so one of the things that I’ve really learned on doing some of this is only sell what you can do. Well, yeah, because if I’m selling, you know, 250 videos a month, like that’s just unreasonable for even clients to approve all that content. So how can we still be successful for them but not maybe overdo it, right? Or like or or not make it so completely out of reach that it’s not a good customer experience. So there’s definitely been a lot of learnings all around this year for chatting. 

Greg Alexander [00:12:14] So you mentioned strategic partnerships. Most of our members are underweighted as it relates to strategic partnerships and it’s a big miss in the context of what we’re talking about today launching this new product. Give me an example of two of a strategic partner. 

Beth Trejo [00:12:32] Well, I mean, I think Collective 54 is a perfect example. But the other thing that I think is so valuable is how can you track the differences of your strategic partners? So is there a software company that every client that you want to have pairs with that software company, is there a, you know, another service provider like in that in the health care space, when we were working with providers, it was like the reimbursement companies, right? Because they needed high reviews across the board for customer satisfaction. And so is there an alignment that you can have with some of those engagement companies from a health care standpoint? So it’s just trying to get creative and not just thinking like, who’s going to get me leads, but whose audiences are already built that I can just add value to. And all of a sudden now I have access to hundreds of opportunities instead of one, two, three, four. That’s a lot more work. 

Greg Alexander [00:13:33] Yeah, a really interesting well thought out approach. You have certainly mastered this and it was a big contribution made today. I’m really looking forward to the Friday Q&A member session. When that comes up. Our members are going to have a lot of questions about this, but we’re running out of time. I appreciate you being here and thanks for contributing. 

Beth Trejo [00:13:52] Yes, thank you so much. I really appreciate it. 

Greg Alexander [00:13:55] All right. So if you’re a founder and leader of a boutique professional services firm and you want to meet great people like Beth, consider joining Collective 54, apply for membership at collective 54 dot.com, but not quite ready to join yet. You just want to educate yourself on this topic and others. Check out Collective 54 Insights. You can find that on the website. You got a podcast, a blog, a book, some benchmarking data, etc. All kinds of interesting things to keep yourself educated. So thanks for listening and I look forward to our next episode.

Episode 103 – How a Young 5-Year-Old Firm Became Consistently Profitable By Productizing and Automating The Service – Member Case with Julian Lumpkin

Many boutiques are conventional in their approach. They convert their expertise into a methodology and train staff members on how to use it. They are then reliant on expensive labor that ultimately constrains growth. The firms that accelerate growth take a different approach. On this episode, Julian Lumpkin, Co-Founder & CEO at SuccessKit, shares how they drove profitability by leveraging technology to streamline, productize, and automate their service delivery.


Greg Alexander [00:00:15] Welcome to the Pro Serve podcast with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated entirely to helping you grow, scale and maybe someday sell your professional services firm. My name is Greg Alexander. I’m the founder and I have the pleasure of being your host today. And on this episode, we’re going to talk about prioritizing your service in the rabbit hunting business. And I will explain that to those that aren’t familiar with our terminology in a minute. And what I hope to discuss with you and share with you that if you’re going to if your business architecture is one that says you’re going to have lots and lots and lots of customers. But each customer is going to spend a little time versus a business that says you’re going to have a small number of customers, relatively speaking. But each customer spends a lot. If that is your strategy, what I call rabbits versus hunters, then productize your service becomes incredibly important because the unit economics of delivery requires it. You know, if your clients are going to spend a little, but they’re going to do it over and over and over in kind of a volume model, then you need to productize a service. If each time you have to deliver for a client, you’re doing a piece of custom work. It becomes almost impossible to scale and to be profitable in that space. So we’ve got a great role model with us today. He’s a member of Collective 54. His name is Julian Lumpkin. Julian, it’s good to see you. And please introduce yourself to the audience. 

Julian Lumpkin [00:02:09] Thanks, Greg. It’s great to be here. My name is Julian Lumpkin. I’m the founder and CEO of Success Kit. We started the company six and a half years ago, and I’ve been running it ever since. 

Greg Alexander [00:02:18] It’s very good. And I should say, as a full disclosure, I am a happy client of Julian’s. Julian’s company produces case studies and testimonials, and we are in the community business and we often get asked, are your members happy? And it’s it’s nice to have before and after case studies to share with them. And that’s what what Julian’s company does. So, Julian, let me let me start off with kind of a 30,000 foot question, which is how did you create your service? How did you productize your service? 

Julian Lumpkin [00:02:57] I initially came up with the idea for Success Kit when I was the sales manager at a tech company. And what I realized while working with our marketing team is that there was one particular part of marketing content that was extremely important and extremely underserved course, and it wasn’t getting done, and that was case studies. So we can talk about how I was able to productize the service, but I think it really started with honing in on a problem, a very specific problem that I recognized from the very beginning could be process oriented. I looked at everything the marketing team was doing and so much of it was custom and difficult and there are some great marketing agencies can help with that. But I saw this one part that didn’t need to be ultra complex and didn’t need to be unique for every single company. It was very standardized and companies still weren’t getting it done. So I focused on that problem early, and that’s what led to our company being, you know, very productized in about 95% of the work we do. 

Greg Alexander [00:04:07] Okay. So you crystallize around a problem. I love that that’s always the place to start. And then you provide a solution to that problem, which is the steady production of quality case studies. I would imagine that. Marketing departments don’t have a big budget set aside for case studies, which they probably should, but they don’t for whatever reason. So did you. Was the next step that you said, okay, how much? How much is somebody going to be willing to pay for this? And then you reverse engineered your service model. I mean, how did you go from identifying the problem to figuring out what your solution is going to be? 

Julian Lumpkin [00:04:48] Well, when we first started, we identified companies that we would even putting the budget aspect it aside, really bought into the idea of having a high volume of case studies. Most companies know they need, you know, at least three, six or 12 case studies. But we started with power users, companies or leaders within a company that saw the value of making their case studies and their competitive advantage. And they wanted to get to 40 or 50 case study. So by doing that work for them early on, we essentially. Productized it for each individual client because we’re running the same project ten, 20, 30 times as we kept doing that for more companies. We? Realized and saw that even company at company, the process didn’t need to be that different. There are a couple of options they had upfront, but ultimately we could run that same process. But we learned about it by essentially doing the same or very similar project for the same company over and over and over again until it was until it was a type process. 

Greg Alexander [00:06:05] So starting with the power user, that makes a lot of sense. You know, somebody who wants 50 case studies is more valuable than somebody wants. One case study, of course. So let’s talk about how you structured the engagement and maybe we’ll use that hypothetical as our use case. So now you’re talking to a prospect and they completely understand the value of having case studies. They understand where to use them and their sales and marketing efforts. They understand that they need to be kept fresh, you know, with new case studies, that if you’re going to use case study, kind of bottom of the funnel to try to overcome objections as an example, they better be of the highest quality. Like they get all of that. When someone says, I want 50 of them, how would you structure your engagement? Because that’s part of the product design process. 

Julian Lumpkin [00:06:54] Yeah, it was always very important for me to not let success get become a regular marketing agency, and that’s based on the skill set that I had coming in and what I wanted the company to be. So when I started setting up these arrangements, people were used to dealing with marketing agencies where it was very customized, and then they would maybe agree to pay a little extra for revisions. From the very beginning, I knew I wanted a productized service. So what I said to my clients and we actually maintain this policy to this day, is we’re going to do an upfront. We’re going to do a flat fee per case study paid upfront. And that’s going to cover everything. And that will be and we’ll offer unlimited edits and revisions, no additional charges. And that allowed us to work with the clients, first of all. And. It made it easier for them to say yes to working with us because that’s not something they were used to hear from marketing agencies. And it also forced us to really productize our service because we weren’t custom making each proposal in terms of the deliverables and the pricing for the client. So it forced us to be productized from the very beginning. 

Greg Alexander [00:08:12] Okay. So I understand how you prioritize on the front end, you know, the way that you positioned it to the marketplace as an example and standardized proposals. Couple of choices. You want a you want be and then everything flowed from there, standard flat fee, etc. That makes a lot of sense and it does make it easy to buy in having someone who bought. So it was very easy to buy. Then you got to figure out how to deliver it. So was it did you create kind of a step by step color by numbers type of method to deliver the service? How does how does that work? 

Julian Lumpkin [00:08:49] We did and we in the very it earlier on, we were more flexible and we were getting more information about our clients requirements and being more customized, willing to customize it more. But ultimately, we were just concerned with delivering great work. So earlier on I was a little more willing to be customized, and then I would create a process for that specific company based on what you know, what they needed and what we’re doing for them. But as we progressed, we became comfortable enough in our recommendations that it became far less customized. And we could say anything that was different from our recommended process is an upcharge. So we really created it by being willing to be flexible in the beginning and act a little more like a kind of custom marketing agency. And then by doing that, we developed such strong opinions on what each of our clients needed when they when they came to us and told us a little bit about their company, that we were able to fit 95% of our clients into this productized service now, and only about 5% of them requiring customizations, not because they don’t come in with different ideas, but because we are the experts and we have strong opinions on what their content should look like. And that lines up with our our product offering, of course. 

Greg Alexander [00:10:24] Okay. So then you you handed off to the delivery team, like literally like what is the what is the thing? Is there a manual? Like, how does your team know what to do? 

Julian Lumpkin [00:10:35] Got it. Yeah. So from the very beginning, we managed everything in Trello. And initially we would create a new Trello board for each client. 

Greg Alexander [00:10:48] And for those who don’t know what Trello is. What is that? 

Julian Lumpkin [00:10:51] Trello is a a project management system where you can create a card and it has different steps and you can add different information to it. So in the very beginning when we were just learning how to do this, we would understand what our client needed, build out a little process based on what we thought it was going to take to get there. And we’d create a unique Trello board for that client, having the different steps in the process to create the content they needed. After 3 to 6 months of doing that and maybe ten of those boards, which is what I was saying before, we were able to get to the point where this process is changing so little that we can combine it all into one process. And that’s the same Trello board and process we use today and we have the ability to make small customizations on it. But the team member who’s working on the project can see very clearly this is the stage that it’s at and then it goes to the next stage, the next stage until it’s complete. 

Greg Alexander [00:11:53] Okay. For those of us who talk about this stuff for a living, we use fancy words. We would call that that that’s a tech enabled solution, which is the next piece of prioritizing your business. So we’re talking with Julian and we discussed, you know, he focused on a certain type of customer in pursuit of prioritizing his offering. That was a power user. Somebody that was going to need lots and lots of case studies. Then he talked about how he structured his engagements with the clients standardized proposals, 95%, the same shop, the shop paid up front, etc. Then we came back to the process itself so that, you know, average human beings can actually perform and deliver these world class case studies. And that was done through technology in this case an application called Trello. So that’s a blueprint for those that want to productize this service, for those that want to sell the type of engagement that Julian is selling, where it’s it’s relatively speaking, inexpensive, but it’s volume based. And if that is the business of that’s the customer set and that’s what they want, you can build a very successful, highly scalable services company if you follow those steps, if you prioritize. Because Julian, I would imagine in the early days you weren’t nearly as buttoned up as you are right now, and it was probably a lot more difficult to make any money in the early days. Is that accurate? 

Julian Lumpkin [00:13:17] Absolutely. We had to go through a real learning period. We wanted to. Get into the market by being a lower cost than a marketing agency was paying, was charging for case studies. We did not just want to become a marketing agency that did case studies. We wanted to be we wanted to show the world that we’d figure out a better, more efficient way. See case studies and their idea of what it cost to create a case study wasn’t true anymore. So from the beginning we had to offer low pricing before it was fully productized while we’re figuring it out, which was not particularly profitable. But now because everything is so standardized, like you said, I can have regular people do the process. If we needed to, we could sub different people in from the existing team, add to it very easily and more and more of it’s done by automation. So for example, now when each step is complete, since it’s the exact same for each client, we can have an automatic update email, go out to that client each time a step is complete without doing without lifting a finger and providing a great service. 

Greg Alexander [00:14:30] Yep. Now, when somebody reaches this point that you’re at right now, sometimes the next step they take is that they move the labor offshore. So it’s so standardized, it’s so automated that you could leverage a global talent pool and lower your cost to deliver even more. Did you experiment with that at all? 

Julian Lumpkin [00:14:56] It’s something that we are considering for certain parts of our process. What we do is very simple in some ways, but when it comes to a company’s case studies, it’s not just that we’re creating a $2,000 piece of content for them. They’re introducing us to their best clients. So from the very beginning, it was important for me to show new prospective clients that were not outsourcing the work to a whole bunch of different people where you don’t know what you’re going to get. So we want any any part of the process that is us interacting with the client’s client. So doing the interviews to be done by the same person or same small group of people that are likely going to stay us based. But once you’ve done that interview and you created the core piece of content, then there are other steps of designing it and repurposing it that are can similarly be productized and can be done by almost anyone. Those are the areas we’re considering offshoring. But our core service, we think it’s important to stay us based. 

Greg Alexander [00:16:09] Okay. And when you have this highly productized service, you can sell it to the client at a very attractive price point and still earn healthy margins. And that’s a win for the client. It’s a win for you. And normally what happens in that scenario, I don’t know if this has happened to you. I’d like to hear about this as that. That’s called demand elasticity. And what that basically means is as you lower the price, demand increases, for example, there’s probably a lot of clients out there that would love to have professionally created case studies, but have not been able to do it because it was cost prohibitive up to this point. They me, Julian, they’re like, wow, this is actually this is affordable. I can do this. So the market itself expands because of the lower price point. Have you seen any demand elasticity in your space? 

Julian Lumpkin [00:17:02] Absolutely. You’ve hit the nail on the head and appreciate the reminder to my economics degree from college. Yeah, it’s exactly what happens because case studies are the type of thing that. I don’t know too many B2B company owners that don’t want case studies. It’s always a time and cost tradeoff for them. If it was free, they would have every single one of their clients in a case study. So yeah, part of my offering and working with clients is showing them that they had to take an initial step because not necessarily the cost of buying the case study, but just bringing in a new vendor to talk to their biggest clients was a bit of a step. So I convinced them to take that step by showing them that once you’re set up in our system, this can be different. You don’t need to settle for just six case studies. We can get you 12, 18, 20 and 30 or 40 for a reasonable price. And I have clients who’ve gone on record and said, initially, we’re planning on getting to 3 to 6. You just kind of check the box and be solid there. But once we understood how efficiently and effectively you could do this, we opted to go to 20. And now we’re seeing the results of that. Yep. 

Greg Alexander [00:18:13] So this is a very, very important point. And it’s one that often doesn’t get spoken about when we talk about prioritizing a service. And let me spend a moment defining this point. This point is called economies of scope, which is different than economies of scale. Economies of scope in professional services says that the cost to sell. Goes down. When you’re able to sell the second and third product with one person. So I’m now selling to a client and I’m selling product X if I want to sell more of product X and I can do it by setting up the client in such a way that Julian is talking about. Then I effectively have one customer or client acquisition cost that now can be spread out over 50, 60, 70, 100 individual transactions. That’s called economies of scope and sales and marketing costs are expensive, and professional services, anywhere from 20 to 30% of revenue is consumed in pursuit of new clients when you consider time dollars, opportunity cost. So if you can set it up in such a way and you truly have a productized service where you have one expensive upfront client acquisition cost, but that cost then stays fixed and you now sell unit after unit after unit against that in perpetuity, forever. Then your client acquisition cost cost plummets and your profitability goes up. Now to pull that off, Julian, you’ve got to get your clients to consume at a rapid rate, which can always be a challenge. So how do you get somebody to go from three case studies to 30 case studies in a fiscal year? 

Julian Lumpkin [00:20:07] 3 to 30 in a year is really aggressive. We’re typically recommending people aim to get, you know, for our high volume clients like you’re talking about will typically say let’s get you somewhere between eight and 12 in the first few months and then try to move to a1a month after that. Now how we get them to do it? I always explain to people that I try not to be in the business or the position of convincing people that they need more case studies. Now, sometimes I push on this a little bit and I have some traction, but the vast majority of my business comes from people who already understand how important case studies they already want case studies. They just didn’t know there was an efficient and effective way to get them done. Right. So I will I can talk all day about how if you’re a sales rep, just how valuable it is to have a true repository of case studies instead of just a few good ones. So that is and this is what I’m trying you know, the CEO of a company, your sales reps there, they’re out there selling. They’re learning about what their prospects care about, what their challenges, what’s on their mind. You’ve probably already helped someone with that exact same problem. If you only have three case studies, it’s very unlikely your sales rep is going to be able to make that connection and show them that you’ve already helped with something like that. So I do sell this big picture idea of getting a repository of 20 or 30 or 40 case studies. Not only does it look great on your website, it allows your sales reps to sell on a more effective way. Mm hmm. I’ll I’ll talk about that. But mostly it comes from the person working with us already understanding that case studies are important, but getting to that volume is really important. And if they’re at that level, the alternative is hiring a content writer and devoting 20 or 30% of their time to case studies. And when they start to do that math and can compare it against it, they can see that not only is it effective to do case studies, you know, do get a few case studies done, but it’s effective to do it at scale with us. 

Greg Alexander [00:22:21] Yeah, you know, and we’re discussing here there’s a term for the business model. It’s called consumption based pricing. So let’s let’s use an example. Everybody could understand. Let’s say you got an Uber account and you have a credit card on file and you don’t pay Uber anything until you start riding around in their carts. You’re consuming it and then they charge you for that. This is a very effective monetization practice. When you are selling a product as offering. Like Julian, for example, he’s charging a flat fee on a per case study basis. So it’s consumption based pricing. Now, in that environment, the benefits of that are this when you sign a new client, you don’t have the sales difficulty of getting them to commit to a big deal upfront. They say, okay, I’ll try a few of them out and it’s a little investment and then they have a lot of success with it that salespeople are really happy with the case studies. Maybe their close rate goes up, they start making their number, etc., and they start consuming more and more and more of it. That’s called consumption based pricing, and that is the best monetization. If you are a services firm that’s selling a productize offering in that rabbit model, we have lots of clients, but each client only spends a little and you eventually get them to spend a lot by getting them to consume. That’s where the term, the name consumption based pricing comes up. You know, if I can, I’ll tell you why I bought from you is that in our sales motion, we would have a candidate for membership. Always say, can I talk to some members? And my members are super busy and I used to have to be a pain in their you know what, to get them to get on the phone with somebody. And they were happy to do it, but it was an inconvenience and I hated inconveniencing them. So once I got to case studies, I had to document it. And I would say to a candidate in that scenario, I got one better, you know, tell me what the perfect reference looks like. And then we would have a library of them and provided by you. And then we said we should share the case, study with them. Nine times out of ten that satisfies their need. On the odd case, they say, Hey, this is a very kind of, you know, sterile control type thing. I want to I want to get on the phone with somebody. But it dramatically reduced the effort that I needed to put in to do references. So that’s why I did it. All right, Julian, we’re at our time window here, but this was a great use case, a great interview to discuss how to productize your service in that rabbit type business. And you’ve done a great job with it. And I know that you’re going to have a bright future. So thanks for being on the call and thanks for sharing your story. 

Julian Lumpkin [00:25:03] Thanks for having me. It’s been an R&B on the podcast and it’s great to be part of Collective 54. 

Greg Alexander [00:25:07] Okay, great. All right. So for those of you that are not a member, but you want to meet really cool people like Julian and learn from your peers, consider applying for membership and you can do so at collective54.com. If you’re not quite ready to be a member yet, but you want to consume more educational content, check out Collective 54 Insights. And you can subscribe to that. Get a weekly podcast, a blog, you’ll get some benchmarking data. We even have a best selling book called The Boutique How to Start Scale and Sell a Professional Services Firm. I encourage you to do so. So with that, that’s the end of our show. And thank you for listening and I look forward to our next episode.

Episode 102 – How A Young and Small Firm Became Monday.com’s #1 North American Partner in Less than 3 Years – Member Case with Noah Berk

Marketing and selling professional services as you grow and scale your firm is one of the most popular topics at Collective 54. You must focus on attracting new clients while generating additional revenue from existing clients. On this episode, Noah Berk the Co-Founder of OBO shares how he has mastered his go-to-market strategy to accelerate revenue growth.


Greg Alexander [00:00:15] Welcome to the Pro Serve podcast with Collective 54, a podcast with founders and leaders of boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated exclusively and entirely to the boutique professional services space. And for those that are looking to grow, scale and maybe someday exit. My name is Greg Alexander. I’m the lucky guy who founded this place, and I’ll be your host today. And on this episode, we’re going to talk about leverage, all kinds of leverage, financial leverage, operating leverage, and how to use process and people and technology to increase the leverage ratio that you have in running your professional services firm. And we’ve got a fantastic role model, Noah Burke. And Noah is a member of Collective 54 and he’s got a lot to share with us on this topic. That’s why he was selected for this. So, Noah, great to see you. Please introduce yourself to the audience. 

Noah Burke [00:01:18] Thanks for having me here. Greg My name is Noah Burke. I’m one of the co-founders of OBO. We specialize in digitizing sales, marketing, service and operations for clients using CoSport, Salesforce one, an icon working with everyone from young venture backed companies to Fortune 500 firms. 

Greg Alexander [00:01:37] Okay, got it. Okay. So this topic of leverage, let me let me set it up a little bit. So. Couple of people hanging shingle. Start a firm. They know something that the rest of the world either doesn’t know it, doesn’t know it as well as them. And they shake the trees and they generate some referrals and they get their first set of clients. And every time they’re doing something, they’re doing it for the first time, which means it takes forever and it costs a lot and it’s lots of mistakes. And then over time the firm matures, the quality of the client improves. You start hiring some people, you start training them, and you wake up one day and you say, You know, I want more than a lifestyle business. I’ve already proven to myself that I don’t need a job to work for the man. I can work for myself and make a living. But now that I’ve cleared that hurdle, you know, I want to build a real firm, not a lifestyle business. And what that means is I need leverage. I need to create ways of doing things so everything isn’t dependent on me. Other people can do what I can do as well as I can do it. And therefore it frees me up to do other things to make money. That’s what the leverage is. And in the professional services space is actually a ratio for this. It’s called surprisingly the leverage ratio. And what it basically says is for every senior person, typically a partner at our world of boutiques, very often, if not almost always an owner, how many people can they keep busy? So for example, let’s say one person and I have ten people that I’m keeping busy. You know, my book of business is keeping ten people busy. I have a leverage ratio of 10 to 1. And how you create that is the key to to scaling your firm. And there’s lots of ways of doing that. So no, let me let me throw it over to you at 30,000 feet. Given that definition of leverage, how have you created leverage at Obio? 

Noah Burke [00:03:50] Well, I think it’s similar to what we do for our clients. I like to think of as a force multiplier and to create leverage in a couple of different ways. One is accountability and efficiency inside of the organization itself. So is having the systems in place to measure work, assign work and distribute work to individuals? Two, It’s also the type of people we have. So you just mentioned, you know, obviously senior people with perhaps junior people. So in our organization, we have senior people and then we also have junior individuals. And we spend a lot of time through what we call our residency program, training individuals to be able to take on the type of work necessary. And this particular residency program that we have. What’s really great about it is that they go through about four months of training and this is actually classroom training several hours a day. They go through real world examples, they take on assignments, and eventually at the end when they graduate from the residency program, they get assigned to a team that has more experienced individuals on that team. So they’re able to leverage those resources once they get on the team. Is how do you organize work in an effective way that your team is is billable and that you’re fully utilizing the team at any given time? That means now you need to have systems in place that you can actually measure work, that you can hold individuals accountable, but also see how work is getting done. So you can start creating systems and processes in place that make things easier to do. So I think you had mentioned earlier that when you’re just a two person shop, it’s it’s kind of simple, but when you have 45 people, it gets a little more complicated because you can’t do it all yourself. So you have to have people who you trust in a position who can do the work and assign the work and be able to follow through on what they do. And in this particular case, in our organizations around process, as much as training, as much as the team structure. So we work more in a team environment. Over here at OBS, there’s always a junior person, senior people who are working together. 

Greg Alexander [00:05:50] So the thing that kills leverage and let’s go there first and boutique process firms is two things. Number one, you have senior people who in theory cost more doing work that junior people could do. So therefore that work is expensive or more expensive needs to be. And that crushes margins and that ruins leverage and gives you a bad leverage ratio. And that happens all the time. Then you have the opposite of that. You have junior people doing senior work and they don’t have the experience for it. And the client gets upset because quality, depth and you end up losing revenue and that’s just as bad. You know, if we if we simplify it to that and I know it’s way more complicated than that, but if we simplify to that for a 15 minute podcast, what does OBO do in the first instance? How do you make sure that senior more expensive people aren’t chewing up their hours on kind of commodity stuff? 

Noah Burke [00:06:52] Well, I think it comes down. We understand what work is, quote unquote commodity. We also understand what work is senior. Sometimes what we don’t necessarily want to do is miss an opportunity to train or teach our junior employees. So sometimes we do eat. Some of that time when a junior employee is working on the senior employee lesson integration project or a particular migration project that they’re learning in that particular experience where we may not actually be billing for their time. We’re really going for the senior person time and the junior person is participating with that individual on it. But I think. 

Greg Alexander [00:07:32] I’m sorry to interrupt you, but I actually do that, and I’m sure you do too. That’s why you’re doing it. I view that as an investment. Like to me, that’s what it is. That’s a positive strategy, not a negative strategy. So let’s stay on that for a moment. Is there ever a situation where that senior person is doing junior work? Not for the purpose of developing an apprentice. They’re doing it anyways. 

Noah Burke [00:07:54] Yeah. I mean, in any professional service organization, sometimes that can creep into the mix where they may be doing work that really they shouldn’t be necessarily doing themselves. They’re doing it simply because it’s either easier. The transfer knowledge is going to take a while and they’d rather just get it done right. And so they’re just going to do it. I think in any organization it’s human nature to be like, Well, I know how to do this, so let me just go ahead and do it. Yep. Versus well, let me spend a little bit of extra time here, not necessarily billing the client for the time, but working with the junior employee to help them get up to speed. And we try and really through our four month residency program, get the team members up to speed on what is that, quote, commodity work. So we’re trying to teach them how to learn, try and teach them how to fend for themselves and where to get information and knowledge and how to grow themselves. Because you can keep showing them and showing them and showing them, but eventually they have to be able to figure out things. On their own. So we hire for a certain degree of curiosity. Everyone in our organization will be curious. They have to want to learn. They have to want to absorb new information. They also have to be okay with the unknown. So the unexpected, especially when you’re new inside organization. Almost everything is new and you’re not comfortable with those situations and experiences. It’s very difficult to rise and grow inside a company like ourselves. So it is part of the culture of the organization to have people who want to learn and want to grow. And you are constantly looking for what else can I do to further my own career? And the senior people gravitate towards them. Because if you’re going to teach someone, you want to teach someone who has a thirst for knowledge. I mean, yes, quote part of your job. But it’s easier. The other person is really receptive to what you’re sharing with them. 

Greg Alexander [00:09:38] Now, a four month residency program, that’s a big investment. And I love it. 

Noah Burke [00:09:42] Because. 

Greg Alexander [00:09:43] Yeah, and most of the process firms at scale have some version of that. It’s a grow your own approach. Now the people that are in the residence program during those four months, are they completely on the bench. No bill ability at all. 

Noah Burke [00:09:58] On a yeah. On the bench and availability. Wow. So it is it’s an incredible investment that we made our program. Just give me an idea of the number of applicants. We’ll get anywhere between 800 to 1000 applicants for four open positions. Sure. And even then, sometimes even higher four. That’s how exclusive it is to get in. So we’re looking for people who have the right attitude, who have that desire to learn and who’ve excelled somewhere else. Hmm. 

Greg Alexander [00:10:28] Interesting. 

Noah Burke [00:10:29] And in in our space, it’s really difficult to find talent who while we’re in the technology space, we did have technology deployments where we’re HubSpot elite partners for money dot com North American Partners of the year we’re Salesforce partners. And it’s not just how do you implement and how do you take a task, but how do you think through process? How do you align people, process and technology? And that’s very difficult to find. It’s easy to find a pure dev, we’ll say is maybe easy to find a pure analyst. You can just say people. It’s hard to find people who can think through not just what the requirements of an individual are, but how that process should work and flow. And then how will that be translated to technology and how do we implement? And we have special specialists in and organization. So we have individuals who are more project manager roles versus individuals or individual contributors, all equally valued inside the organization. And individuals can pick their path. But more often than not, they have to have some customer facing ability. And that’s a really difficult skill set. It’s something you learn and you have it. And then you also need that type of fortitude as well. 

Greg Alexander [00:11:40] Yeah. Now, when we have the Fri member Q&A, I guarantee you all the questions are going to come around this residency program probably. Yeah, because it’s very unique. And so let’s give them a little taste. So maybe think like, I don’t know, a table of contents where you would spell out to me one of the chapters of this program or the components of this program at a high level. 

Noah Burke [00:12:04] So depending upon where and what particular path we’re looking for, so sometimes we have needs for more project managers versus individual contributors or how we gear the program. So I took my business partner, Rob, my co-founder, about nine months just to develop the curriculum. So the full curriculum that each week, every day they’re working on different items. There’s guest speakers coming in within the organization or lectures and it’s geared towards the different applications we work. And so you’re not necessarily and the reason why is four months is partly thinking through it. You know, we work with several different technologies and most of our clients have two or more of them. I mean, HubSpot and Salesforce, maybe they have Salesforce on Monday, they have HubSpot on Monday. And so they have to be able to understand how these technologies work, what’s the principles behind them? What is a deployment look like? What are the needs of the organization? So it kind of walks them through what is a sales organization, what’s a marketing organization? What’s a customer service organization? How does operations and project management work? What does that flow look like in the customer journey process? What are the needs of the different individuals and each side, each of those individual departments? So as you can kind of start building on top of one another, it becomes a it’s an entire education that they’re getting into the space. By the time they get on team, they can generally handle about 50% of the use cases that are thrown at them. But one of the beautiful parts of the power structure, there’s always someone on there who can help them. They get stuck. 

Greg Alexander [00:13:42] Your clients, do they know that you put your people through this process? 

Noah Burke [00:13:47] Sometimes I do talk about it. It’s very exclusive. We have incredibly high retention rate inside the organization. Both. I think that’s due to our culture, our training, our development and also the people that we tend to hire are just brilliant. I mean, we have brilliant team members over here. And they like the level and the type of work we do there, like how we structure our work. They like how they get to structure their days and how they get to work on these individual items. And there’s it’s always new. Yeah. For what they’re. 

Greg Alexander [00:14:17] Solving. I mean, if I was a prospect and I was considering you and, you know, 20 other firms that claim they do what you do and you explain to me that process, I’d be like, Damn. I mean, I would view that as a real differentiator and probably pay a premium for it because I would the implied quality lift that comes with that is is very real. How about your technology partners, the Mondays, HubSpot to Salesforce? Do they know that you put this program together? 

Noah Burke [00:14:44] Yes. Yes. So we’re one of hotspots. Half percent of partners worldwide. We’ve built a reputation inside the community as being the go to company for think of their biggest engagements, their most complicated engagements, simply because we built a reputation that not only can we get done what we need to get done, but we got the team to be able to do it and reposition ourselves as a really technology company for implementations. Whereas most of our competition in that particular space isn’t the same thing applies on Monday. Same thing applies to Salesforce. Salesforce the idea of companies like us is more, I’d say, readily known. Whereas in Hotspot on Monday less so. But the needs and requirements are expanding and our clients are now our clients. Our partners are aware of our talent. They know what we’re investing and we’re making enormous investments. And so our people, the training, development, getting them up to speed, we’re also one of the very few companies to have enough pipeline of talent to actually handle the work coming to us. Very few companies simply have the skill sets and have the it’s almost like an aptitude inside the organization. And I give a lot of credit to my my co-founder and his background being very tactical, process oriented and like to be problem solvers. So it’s definitely helped us considerably with our partnerships with all three of them because they are aware that we do and we make these investments. And it’s also important for them to know that their partners are making these investments. 

Greg Alexander [00:16:18] Yeah, and I would imagine that’s why they’re throwing you work because they know you’re going to get it done. I mean, that’s how you win the award. North American Partner of the year. I would imagine. 

Noah Burke [00:16:29] We pretty much our entire businesses via referral. Yeah. From from partners from travel our clients as we call them, people finding us through inbound you know, is a real it’s an awesome thing to have just all these opportunities coming our way, but that also means we have to deliver every single time because our partners revenue is based on how good are we at what we do and our partners leverage us to help and close more business. So we’re also known as closers. In that sense, when a client generally comes to us and they’re trying to sell them on working with that individual partner, we actually end up becoming a benefit to have on their call. And so it’s in our training, our team and just how we do work is, is a critical component of our success. 

Greg Alexander [00:17:19] Yeah. I mean, if I was a sales rep for one of those tech providers and I was trying to convince somebody to buy my software package and all the licenses that come with it, I would bring you guys on that call because the the prospect is probably wondering, like, am I going to be able to pull this off? And then they meet you. And there’s a great sense of comfort and it gets them over their fear. 

Noah Burke [00:17:42] All the time. Yeah, all the time. And there’s not very many of us that can do what we do. And so they when they when they get the opportunity, they do. 

Greg Alexander [00:17:53] Yeah. Okay. Listen, is is you have it is exactly how you have it. You want to create leverage in your business. You want to scale, you want to increase margins. This is how you do it. I mean, this one example and no problem has got 25 others of this residency program is how leverage is built directly into the business. I mean, just think about the recruiting number. A thousand people apply for four spots. You know, we’ve got a lot of members and collective 54 that their biggest problem is they don’t have enough people. And here you are, you know, turning away, you know, hundreds of people. You don’t have that problem. And that’s what leverage is all about and that’s how you scale an organization. So, no, I could talk to you forever. I can’t wait for the Friday Q&A with the members, but we got to cut it short here. But thanks for being here today and sharing a little bit of your story with us. 

Noah Burke [00:18:41] You got it. Thanks for having me. 

Greg Alexander [00:18:43] All right. All right. Well, if you’re not a member and you think you might want to be because you get a chance to meet folks like Noah and be in a community of real peers, go to collective 54 dot com. You can fill out an application for membership and we’ll take that seriously, if not quite ready to apply. But you want to consume some more content and educate yourself. Again Collected 54 dot com. Subscribe to C54 insights. You’ll get you get a weekly podcast like this one, you get a blog, you get access to our bestselling book and you’ll get some, some charts which visually represent some benchmarking data that I think you’ll find interesting. So check that out. Okay. So thanks for listening and I look forward to our next episode.

Episode 101 – Chief of Staff: A Role You Can Leverage Today To Find The Time To Work On The Firm – Member Case with Bryon Morrison

Scaling a boutique professional services firm requires effective replication of the founder and a focus on delegation. On this episode, Bryon Morrison, Co-Founder & CEO at Proxxy, talks about the power of replication to remove the founder bottleneck so they can work on this business.


Greg Alexander [00:00:15] Welcome to the Pro Serve podcast with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated entirely to helping you grow, scale and someday exit your boutique processor firm. My name’s Greg Alexander. I have the pleasure of leading this group and I will be your host today. And on this episode, I’m going to talk to you about how to scale yourself, how to replicate yourself and others, how to delegate, determine who to delegate to when to delegate, how to delegate, etc.. And what I hope to accomplish on this call with my esteemed guest, who I’ll introduce in a moment, is to first just draw awareness to this issue that when we run a professional services firm, sometimes the founder or co-founders can get in the way. They they continue to do things the same way they’ve always done them. However, their firm has progressed beyond a practice. They have a real firm, large numbers of employees, etc. And in order for them to continue to scale and maybe someday exit their firm, they have to get to the point where the firm can run without them. They’re not the firm is not entirely, completely dependent on the founder. So that’s the goal of today. We’ve got a great role model with us. He’s going to share his experiences. His name is Bryon Morris and he’s a member of Collective 54 and the founder of proxy. Brian, great to see you. Welcome to the show. Please introduce yourself. 

Byron Morrison [00:02:01] Thank you, Professor Alexander. Good to be on the podcast and I appreciate you letting me talk through the bottleneck with everybody. So, yeah, I am the co-founder and CEO of proxy and you know, it was just like you said, I spent enough time working in large Fortune 500 companies watching these executives. And what I learned was they have this support system around them that makes it impossible for them to fail. And I always looked at them and I said, why? Why isn’t that available to the entrepreneurs of the world, the small to medium sized businesses that are in high growth mode that really, really need it. And so I you know, a few years ago, I stepped back and and said, you know, I’m going to see if I can solve that problem. And so met up with a couple of other my other co-founders and we developed a proxy. And I’ll tell you, it’s been an amazing ride for we’re entering our third year and, you know, it’s just natural for us to be able to help these companies because we just have this servant leadership mindset and we believe in entrepreneurs and we believe that they’re capable. So we’re excited to be able to help anywhere we can. 

Greg Alexander [00:03:25] Okay. I was really excited to see that you were on the show today because you provide something that I think our members would benefit greatly from. And this is not just a blatant sales pitch. I really believe this and that’s something is a professionally trained, remote chief of staff. And first, I want you to explain what that is. And then I’m going to offer the audience my opinion as to why they should care. So would you explain what a professionally trained remote chief of staff is? 

Byron Morrison [00:04:00] Yeah, we’re essentially an executive multiplier. You know, there’s such an important need for an executive to be able to, as you said, replicate yourself. And so it’s what we provide is a solution to automate some of the routine tasks that you see. But the reason we do that is because it frees up the executive to listen to and work with the strategic counsel that we can provide. And so will help drive strategic initiatives, help them identify where and how to prioritize those. But the chief of staff role is something that, you know, you see it coming up more and more. And it’s often misunderstood. Some people think of it as, you know, an executive admin or a support role that is really more task oriented, but it’s a really strategic role. And the thing that’s a little bit unique about how we do it is, and I would argue it should be a third party most of the time because we trying to grow budgets, we aren’t trying to build a fiefdom and get more hires. We are only focused on helping that executive. And so that’s why we built this as a remote model, so that we could keep somewhat separated from the rest of staff and really stay focused on that executive that we’re working with. 

Greg Alexander [00:05:33] Someone to tell the audience a little story, and it’s somewhat comical and embarrassing, but those are usually the best ones. So when I had my boutique firm called SBI, my wife and I were really into a television show called The West Wing. And we would we’ve been this thing I’ve probably seen every episode, I don’t know, five times. And what I learned through that show, which is crazy, that this is how I learned this, is that the way the presidents of the United States and the White House operates is the president has a chief of staff and the chief of staff is a senior person, maybe the most senior other than, you know, the president’s direct reports. And the contribution that that chief of staff made to the president was enormous. So I said to myself, with that inspiration, maybe I need one of those people. So I had one. And what I what I started with, which is what I would recommend everybody here is I did a time on it and I said to myself, Where is all my time going? And if I hold myself to a standard and the standard that I came up with was what was called a key contribution. A key contribution was the things that I did for the firm that significantly moved the needle. And if I stripped everything else out of my life and my work life, how much more time would I have to invest in key contributions? And as a result of that, could I scale myself and then by default, my firm? And really, that’s what the chief of staff did. So I, I said and I would use that word, shed all kinds of habits and things I was doing that I thought I needed to do, but I really didn’t need to do. And I had to take a leap of faith. The chief of staff had to prove to me that she, in this case, was capable of doing it. But I got to tell you, you know, today we’re talking about how to scale yourself. And that was a major moment for me. And what I love, Brian, about what you’re doing is that a lot of our members don’t have that person internally. They might not be 100% convinced that they should do this or they could do this. And by engaging with proxy, it’s a flexible model. It’s a variable model. And it’s a way to get started and see kind of what the return is. So that personal story that I just share with you, do you see that story in your other clients and do you have a couple stories that you are examples you might want to share with the audience? 

Byron Morrison [00:08:13] Yeah, yeah. It’s everybody needs a Leo. I actually wrote an article on that because everybody needs Leo McGarry. But, you know, you’re right, Greg. I think one of the challenges that people have with this is they think of it as an all or nothing role where I’m going to make this hire and man, I’m going to invest a lot in that hire. And, you know, I feel like a better place to invest that time is in the long term hire that comes up that you’re going to invest and you’re going to grow your firm around. And so that’s that whole point of succession. But you always need somebody there who you can talk to. And, you know, we have a. Every rational promise that we make to everybody, and that is that we focus on giving back or reclaiming at least 8 hours a week. Now, if I just do the math here, your point about going through your personal efficiencies and identifying where your hours going and your key contributions, you’re probably burning some time in areas that are really helping the firm. So we recognize that. And and frankly, that’s why we don’t have long term agreements, because we really don’t. All we’re focused on is helping you succeed. And each week we come back and say, did you feel it? Did you feel the impact of what we worked on? Because if not, we should change the focus. And so sometimes that’s a collaborative process where we’re working together to identify that. Sometimes we bring that to our clients and say, you really ought to reprioritize and focus on something else. And they know that it’s coming from a good place. So the rational promise is you get some time back, you know, change what you’re doing. The emotional promise that we focus on is. Being that confidant. That you can talk to and you can say anything to because, you know, if you’re working with somebody, you say something to a staff member. There’s a ripple effect no matter what because of personal biases, concerns. So we actually, you know, one of my friends and clients told us I love what she said. She goes, you know. In business as a CEO, I have speed bumps all the time and so I’ll look at lots of different lanes I could drive down and some speed bumps are higher than others, and I don’t even want to get near it. She goes. You guys just shape the speed bumps. It’s just gone. Like we just execute. We keep moving forward. And so I thought that was a great metaphor. But yeah, we see that. We see tons of issues around succession planning. We see issues around management methodologies. You know, do we have the discipline and consistency in that, the wrong people in the wrong roles, people being mismanaged because of their site makeup or their natural strengths, just poor initiative management. And sometimes it just comes down to like that hero, the CEO. You know, we see that all the time where it’s hard for us to see that. And you know, your point about funny stories. I was that guy. Yeah. I’ve absolutely been in that role where I was like, I didn’t know I was doing it, but I would set it up so I could come in and save the day. Mm hmm. And so once you’ve done that, you’ve realized it. You go, don’t let anybody else pay that dumb tax. Yeah. Then, you know, we’re. We see it all the time. So. 

Greg Alexander [00:11:46] So part of scaling yourself to the listeners is the distinction between kind of cost of doing business items and strategic mission critical key contributions. So the hard part is once you understand what your personal key contributions are and you say to yourself, okay, I’ve got to teach somebody else how to do this as well as I do it. And I talk at length in my book, The Founder Bottleneck How to Scale Yourself and How to Do That. And that is the long term multiyear process of succession planning. And it is absolutely, positively mission critical. And you can’t go cradle to grave as a founder of a boutique process firm unless you master that. What Brian is talking about and what his firm offers is a different type of service. And I would argue equally important, because it is a multiplier to use his terminology, and that is there are cost of doing business items. There’s things that we all have to do that we do not want to do, but they have to get done. If they don’t get done, the firm doesn’t operate the way the way that it should operate. And when I suggest to founders that they need to scale themselves, they always come back to me and they say, Hey, I can’t just stop sending out invoices. I can’t just stop automating this or automating that. Like, all this stuff has to get done and I’ve got to give it to somebody in my staff. They’re early, they’re already 80, 90% utilized right now. So I can’t load this stuff on top of them. I need somebody else. And that’s where I think a chief of staff can come in. Not that they’re just relegated to mundane, boring task work. These are cost of doing business items. So they’re critical that they get done. But that’s the stuff that I think can go to a chief of staff. And this is a you know, this is a new idea for many of our founders, is the idea of having this person on staff, you know, a real right hand. The objection that comes up when I suggest this, Brian, I want to give you a chance to address it is I don’t have the money. It’s I’m not going to invest in doing this. I know what I say, but I’d love to hear what you say to that objection. 

Byron Morrison [00:14:04] Yeah. I just it kind of comes back to the old argument of, hey, I’m the CEO, but I’m also the chief model washer. Well, when I hear that, I’m like, then you’re really doing a poor job for your stakeholders in that business because you should not be the chief bottle washer. I get the point of what you’re trying to get across, but you’re using your time ineffectively and that time is worth a lot. You know, we do an ROI calculation. When we start working with a client, we start the same thing. We look at personal efficiencies. Where can we save that individual time? A lot of those times they might be administrative functions like that. We identify how to automate those and make them go away, or we identify how to make those routine so that you can hire to it a less expensive resource. Then you move on to the next thing. And those tend to become more and more strategic as we eliminate the tactical issues that you’re dealing with. So you’re right. I mean, you know, a lot of people I came up in consulting and advertising and marketing and, you know, some people were like, oh, I don’t like doing that kind of work, you know, because it’s, you know, that’s for somebody else. We believe that those are the things that stop you from becoming great. So we eliminate those things. We work, focus first on the personal efficiencies, but then we move in to team assessment. What’s your team look like? Are they capable of taking on those roles? Are there spaces where we can improve upon the processes that you’re currently doing? Then we get them to the stage of growth. So where is that company at? Should we introduce, you know, like you do a great job in the boutique of laying out what you should be thinking about in each of the stages? We go through a similar process. We just break that down a little bit more granularly so that we can actually focus on what should be prioritized first and where do you spend your time. So I agree with you the little things that when people say I can’t afford to do that, that’s because they don’t really understand the role of the CEO yet. Yeah. And so most of the companies that are larger, they’re like, I have I want to have an Office of the Executive because they know exactly what that amplification or that multiplier effect is. 

Greg Alexander [00:16:25] What I say to people say, listen, I don’t have the money for this. I say, you’re missing out on the most important cost and that’s opportunity cost. So Bryan says it gives you back 8 hours a week. So what’s that worth? So let’s say you build a client, I don’t know, $250 an hour. Right. So, I mean, right there. What’s that? 2000 bucks per week. That’s eight grand a month right there. So I don’t when I hear that, I’m I don’t know, I just call B.S. on it because very often people think they think about the cash. They don’t think about the opportunity cost. What would you do with those extra 8 hours? You know, pull open your to do list. Stack, rank the things top to bottom based on the areas that you want to dove into that you’re not getting to because you don’t have the time. And if you had a chief of staff, you’d be able to get to those things. And if you pull them off, one of those worth. So the opportunity cost is just astounding. It’s it’s a real big issue. So. 

Byron Morrison [00:17:19] Yeah. You know what we also see, Greg, is just this. They get into it and they go, Well, I don’t have that many other things on my list. So a lot of times they aren’t just they just aren’t aware of what else could be done. Or when they implement something, they go, No, no, no, I did that well, they did it in their head or they did it half way and they haven’t made sure. Are they tracking it over time as a longitudinal value? Am I working through the communications that are necessary to get that out? Is there an ongoing effort to make sure that it sticks? So there’s this difference in entrepreneurs from people who are doing work because it matters and they know it. And then the individuals who are doing checkboxes. 

Greg Alexander [00:18:04] Yeah, for sure. 

Byron Morrison [00:18:05] And they go, Well, I finish that. I’m on to the next. Yeah. 

Greg Alexander [00:18:08] All right. Well, we’re out of time here. I’m really looking forward to the Friday Q&A session that we’ll have with members I this is a hot topic. Our members are time starved. I hear it all the time. And they’re going to really probe into this as a possible solution for that. So thanks a bunch for being on the show. I really appreciate it. 

Byron Morrison [00:18:25] It was my pleasure. Thank you. 

Greg Alexander [00:18:27] All right. So if you’re a founder of a boutique processor firm and you want to belong to a community of peers and meet great people like Bryon, consider joining Collective 54 and you can apply for membership at Collective 54 icon. And if you’re not ready to join, but you just want to educate yourself some more on topics like this and others. Subscribe to Collective 54 for insights, which you can also find on the website. This gives you benchmarking data, a weekly podcast, a leading blog. We actually have a bestselling book called The Boutique – How to Start Scaling, so a professional services firm. So that might be a place to start as well and until the next episode. Thanks for listening and I look forward to the next time we get together. Take care.

Episode 100 – How A Communications Agency Is Beating The Recession Today By Focusing On Key Clients – Member Case with Todd Rapp

Have you defined your growth strategy to build a sustainable firm? On this episode, Todd Rapp, Owner and CEO at Rapp Strategies, Inc., speaks on how the firm continues to grow and flourish by focusing on their key clients.


Greg Alexander [00:00:15] Welcome to the Pro Serve podcast with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated exclusively to helping you grow, scale and someday exit your professional services firm. My name is Greg Alexander. I’m the founder of this wonderful group and I’ll be your host today. And on this episode, I’m going to talk to you about strategy. And I’m careful with that word because it’s the most often used word in the business lexicon, I guess. But at the time of this recording, it’s early November and we’re getting ourselves ready for 2023, which by all measures looks to be like an interesting time. So it’s a good it’s a good time for us to have this conversation and we’ll define it, and we’ll discuss what to do with it, how to build it, etc.. And we’re very lucky that we have an exceptional role model with us. We have Todd Rapp with us and he’s going to share about things about his firm and and how he has built his strategy and how he uses it to achieve the success that he’s had recently. So, Todd, welcome to the show and please introduce yourself. 

Todd Rapp [00:01:33] Well, thanks, Greg, and I appreciate the kind words. I’m Todd Rapp. I own a public affairs firm, which is really a specialized public relations company in Minneapolis. We are it’s been a company that’s been in existence for 40 years. But in in my case, I’ve been an owner of this only since 2008 and the sole owner since 2017. Our focus is on helping clients basically in two different areas. The first area is that we help clients with a significant number of either public issues or maybe they’re involved in, say, public construction projects and we help them with strategic communications. And then the second type of client, or those who who also are fairly public facing and they’re really focused on reputation management and risk mitigation. And so we provide strategic counsel and communications services for them. 

Greg Alexander [00:02:27] Okay, fantastic. You know, one part of your journey that I really love and I’d like to spend a moment on, it’s slightly off topic, but we don’t get a chance to speak as often. So I want to put this out there. You know, we have members of Collective 54 that have done what you have done, meaning that there is an original founder, a group of founders, and they start the firm and that’s kind of the first generation. And then somebody takes over for them initially, partially, and then eventually in totality becomes the founder. That’s generation to to use the academic terminology, and then they carry the firm forward. I’d love to hear from you just briefly kind of how that happened with with your company. And if you have any advice for people like you maybe a few years ago that are working for a firm, want to own it someday. 

Todd Rapp [00:03:16] Well, first of all, Greg, how long do you have? Because this is I mean, you know, I think, you know, for for me, I mean, this was a firm that was really highly successful in the marketplace. But I think you could also argue that the reputation maybe exceeded the footprint, if you know what I mean. That is that it was a lifestyle firm for the two owners, and they brought me in 20 years ago to be the managing director. And one of the first things I decided was that I better learn pretty quickly about how the financials work, how we drive revenue, how we build efficiencies inside the office and and try to capitalize on those. And that may have been more of a lucky choice than it was a strategic choice, but it really helped as I got to the position where I became president. And then, you know, eventually I was in a place where I could succeed. Each of the owners at different times. Yeah. It was also really a siloed business and all that stuff. Something we talked about, Mark Collective 54, that you really have to owners who have their own business operations, but then they shared a staff, administrative services account, team, things like that. And the and it worked really well for them. But as I took over the firm and started thinking about things, I decided we needed more of an integrated strategy, that if it was okay to have people become part of the firm who have their own book of business, obviously, but we still needed the firm to be well connected in terms of the mission and in terms of everybody’s alignment on what the financial success would look like. 

Greg Alexander [00:04:56] Interesting. You know, we people ask me sometimes, what does Collective 54 do? And if I’m at a cocktail party, I give them a single sentence. And that is the business of expertize. And what I mean by that is, is that our members are all experts in their domain and they’re brilliant, but sometimes they could use help on the business side of that. You know, for example, today we’re going to talk about strategy. You mentioned understanding the financials. There was an equity event that that happened. There’s all these business components that are just as important as the expertize. So and it was maybe a topic for another day, but I just I knew that about your journey, and I just wanted to ask you about it. Okay, let me frame up our conversation regarding strategy, and I’m going to use an old kind of framework to position this. So the literature on strategy would say that a company or firm of any size has four options of a strategy. So the first is they can choose product differentiation. So in our case, that would be service differentiation. And therefore all their resources, their time, money and people are dedicated to towards being different, maybe, maybe not even bigger, but just different. So that’s one strategy. The second strategy is I’m going to win on price. So I’m able to operate my firm at a cost structure that’s lower than my competitors and therefore I can charge less to my clients. And I went on pricing. There’s lots of examples of great companies that do that. For example, Wal-Mart in the retail industry. The third one is service. So I’m going to overinvest in the client experience, and that’s how I’m going to differentiate, you know, a company that comes to mind. There would be maybe the Four Seasons hotel chain. They they sell a commodity product, a 500 square foot hotel room. But because of the the guest experience that differentiate it and in the fourth one is called the focus strategy. And this is where a firm picks a an industry and a segment within that industry. And they understand the needs of those customers better than anybody else. And they tailor their entire. Company and value chain, if you will, to meeting the unique needs of that particular customer segment. And because of that, they win. So put you on the spot here a little bit. What of those four? If I forced you to choose one, which is an unfair thing, but I’m going to do it today anyways. If I forced you to pick one, which one does your firm embrace? 

Todd Rapp [00:07:32] I would say more likely the fourth. And that is that we provide a very what I think the market understands is is a pretty clear value to our clients. And we work through a lot of different industries. We’re fortunate to work for the the largest health system in the Twin Cities, the largest health insurance company in the state, several of the largest electric utilities of the upper Midwest. I mean, we we’re fortunate to be in that space with the market for that type of customer where they really value what we provide in terms of strategic advice and and communication paths. It’s interesting you talked about that. You know, starting off, I immediately thought about, well, how can we use price as a better differentiator? And what I learned was it’s about value, right? People will make an investment in a partnership with a firm if they if they know that that you’re focused on their business results, first and foremost. And we’ve been really lucky in that way. I would say that a majority of the revenue that we receive, probably a substantial majority, is from relationships that we’ve had more than ten years. And and those are those with organizations who will consistently need to be in the public space, in some cases at smaller firms, so that they were on a growth path. And they needed somebody like us to come in and just and be good counselors and advisors for them. And, you know, one of the relationships I’m proudest of, there’s a small engineering firm that grew up to be large enough that they attracted the interest of Blackstone and and ended up being acquired. Yeah, I know. We played at least a modest role in that as we helped them position themselves in the marketplace. That’s what’s kind of fun, but I think it ends up therefore being the last category that we’ve differentiated ourselves and the services we provide is different than, say, pure public relations and really focused on reputation and also our business growth in a highly public setting. 

Greg Alexander [00:09:37] So tell me about reputation, and I’m interested in that as an area of your focus, because professional services are what is what known as Credence Goods. And what I mean by that is when clients hire a professional services provider, they they have to make a leap of faith. They can’t test out the service usually before they buy it. You know, sometimes when you buy a product, maybe you can have a sample. You know, you go to a restaurant, you look at the wine list, you order a bottle of wine and the waiter pours you before you commit to the entire bottle. With services, you don’t really have an opportunity to do that. And so it’s called the credence good. So therefore it’s largely bought on reputation. And the reputation of your firm is what moves through the word of mouth channel and leads to the growth. So since you’re an expert on reputation for our listeners, your peers, founders, leaders of boutique professional services firms, what should their what should the basics of their reputation management approach be? 

Todd Rapp [00:10:45] For their own firms. Obviously, number one, I think above all, the rest is integrity towards client goals. I mean, I think that’s the if you understand the what your client needs and understands the uniqueness of them, then you can apply your experiences and your knowledge in ways that help them out. And that’s really that’s what we do. It’s value add. I think a second thing that’s that’s really important is is a level of honesty. We’ve told our clients that we are we are passionate advocates, but we’re dispassionate advisors. And by that, I mean we have to be able to tell the clients when they’re going down a path that that’s not going to be successful. And we have to have their trust that the that the advice that we’re giving is based on what their needs are and not necessarily what the financial needs are of my firm. I think the one other issue about reputation is that you have to know what it is you’re trying to do. I, I do a lot of information, interviews with students, and I tell them that we’re not here in this market because we can help target sell stocks or we can help them open stores. But we’ve been fortunate enough that at times when a company like a Target has had some significant reputation challenges, they call us and say, Let’s talk through them and let’s figure out the best path. I think if you’re going to have a solid reputation, you better know exactly what you do well and be willing to accept. There’s other things out there that you don’t do well and don’t just chase contracts because you want to you want to grow immediate revenue. That’s not going to help you, I don’t think grow long term orbit. 

Greg Alexander [00:12:31] Interesting. Okay. One more question. My team, in preparation for this interview, told me that you’ve had a banner year here in 2022 and congratulations on that. And in your already prepared for 2023, with two months left in the year to go and you’ve got your strategy laid out. So a lot of firms right now, given the uncertainty of the economic environment that we’re in, aren’t doing as well as you’re doing. And in they’re reacting to what their strategy is going to be in 2023 and making lots of changes to their original assumptions, which strategies are filled with assumptions? So what were the drivers around your success for 22? And and what is the source of optimism for 23? 

Todd Rapp [00:13:18] Well, Greg, honestly, I don’t know if I started 2022 with the right plan. I was thinking I was focused on geographic expansion and I started down that path. And after a few months and a couple of failures in doing that, I stopped for a second and I just said, you know, the market that we’re in right now still has a lot of room for growth. And coming out of COVID, there’s going to be client demand for services just because know the nature of public issues, the client demand was going to grow. And so I rethought how, both in terms of my staff and in terms of my time, how we should spend that time. And it worked out. It’s been it’s been a successful last, say, eight or nine months of the year. And I now see I’ve got a pretty clear vision as to the client work we have going into 2022 and where I think the growth is now in saying that I haven’t put away that geographic strategy in any way, that’s still going to be part of the growth in 2020 324. But I think what I concluded was that our firm was in a position where we needed to make sure the home base was as strong as possible before we started looking at either partnerships or acquisitions or that are outside of our direct market and it’s been working. 

Greg Alexander [00:14:40] It’s interesting. Congrats on being able to pivot. You know, that’s a key component of strategy formulation. You know, in Todd’s example, he went into the I think in geographic expansion, that was probably a lot of energy and effort around that and passion around that. And then, you know, the market reacted differently and there was an opportunity to stay closer to home and double down on that. And the strategy has to be flexible enough to be able to make those changes. So I could talk to you about this forever. Thank God. We’re going to have our member Q&A on Friday on an upcoming Friday. So we try to keep these short. So unfortunately, we’re out of time here and I’m going to have to bring this to a close. But on behalf of the membership, you know, the way these things work is we we make deposits in the knowledge bank. That’s why it’s called the collective. And then and then therefore, we were able to do kind of withdrawals from the knowledge bank because the knowledge bank is so robust from all the partners. And you made a huge contribution today and it was wonderful to hear your story and and congratulations on all your success. And I wish you the best in 2023. 

Todd Rapp [00:15:43] Greg thank you. Thank you. Not just for this opportunity to thank you for the support that you give entrepreneurs and professional service firms and the great work of your staff. This has been one of the better decisions I’ve made in the last few years as joining the collective. 

Greg Alexander [00:15:57] Well, thanks for saying that. I appreciate it. My staff and I love to hear those those feedback. Okay. So if you’re a founder of or a leader of a boutique professional services firm and you would like to belong to a community of peers and meet great people like Todd, consider joining Collective 54 and you can apply for membership at Collective 54. Com And if you want to educate yourself some more on topics like this and others, think about subscribing to Collective 54 Insights, which you can find at Collective 54 dot com. And this provides a chart of the week which is our expression of benchmarking data, a weekly podcast like this one, a leading blog in the industry, and lots of other things. Like I’ve got an Amazon eBook that was a bestseller on Amazon called The Boutique – How to Start Scale and Sell Professional Services Firm. So if you want to educate yourself what’s great resources out there and consider, consider subscribing to Collective 54 INSIGHT. So to the audience, thanks for listening and I look forward to the next episode.