Author: Collective 54

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Episode 94 – How A 3rd Generation CEO Drives Change Inside a 40-year-Old Management Consulting Firm – Member Case with Peter Bilello

A boutique requires different things from its leaders and partners as it scales. On this episode, Peter Bilello, President & CEO at CIMdata, shares his journey as a non-founder to becoming President & CEO. He will dive into how he championed the culture shift to drive scale and put the firm in a position to be able to sell one day.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique 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 to helping you grow, scale and exit your pro server. My name is Greg Alexander. I’m the founder and I’ll be your host today. And today we’re going to talk about stakeholder alignment and how difficult that can be at times when you’re attempting to scale and maybe someday sell your firm. And what I hope with the help of our role model is discuss ways to do this from a non founders perspective. We have really two kind of broad people that are in our community. We’ve got founders of boutiques and our founders and I was one of them have a certain profile and then we have presidents slash CEOs who took over founders at some point and are growing, scaling and selling those firms. And they have a different perspective. And we’re going to hear from Peter Bilello, who is a member of Collective 54. He’s our role model tonight and is someone that is in that category as the CEO non founder, if you will. So, Peter, would you please? Well, first, welcome to the show and you introduce yourself to everybody. 

Peter Bilello [00:01:35] Thanks. Happy to do that, Greg. Peter Bilello, CIMdata President and CEO. CIMdata is a boutique firm, of course, in the area of product lifecycle management. But we told people that this is where global advantages were global because we have the travel last two years hasn’t been as much travel, but it’s definitely cranked up again. And as a company, we do management consulting work across companies that make just about anything, anywhere. And as a company, we’ve done work in about 50 countries, and I’ve been on six of the seven continents. 

Greg Alexander [00:02:07] And where are you today, Peter? It sounds like maybe you’re one of those. 

Peter Bilello [00:02:11] I’m in northern Germany today. I traveled from India yesterday, and I’ll spend a couple of days here and then go back to the States. But I was in India and a couple of weeks ago was in India and that trip ended a week or so in the Netherlands, so you never quite know. But then I’ll be home for a couple of weeks and go back to India again. 

Greg Alexander [00:02:29] Well, you’re a great member and thanks for squeezing us into that very hectic international travel schedule. Peter, I’d love to hear a little bit about your personal journey because as I mentioned in the intro, you’re the CEO of the firm but are not the founder of the firm. I’d love to hear when you took over and who you took over from and what and how all that happened. 

Peter Bilello [00:02:49] So give a little bit of background. The organization itself was founded in 1983 by three gentlemen. Two of them I never met. The third one was the chair chairman when I joined the company in the late 1990. So 97 or so when I joined the organization and I came on board as a senior consultant. I had already a number of years in industrial experience in the area of product lifecycle management, what we call today and became at some point, because my background in system integration work and large scale projects, I became our director of consulting services for industrial companies. We work with industrial companies and with software providers and service providers. And then by the present at the time was not a founder either. But we reported to the chairman, of course, the chairman passed away back about 20 years ago, and I was made vice president by the CEO at the time or president we would call him at the time. And then he passed away, unfortunately, about 12 or 15 years ago now. And I was promoted to president and then netted the title about three or four years ago of CEO, as we’ve recognized the expansion of the business and also the the way we present ourselves as an organization. So it’s been a progression, as, you know, starting as a senior consultant, moving into director position, moving into vice president and then president. I think if the previous president had not passed away, probably by this point, I would be president. He would be chairman. What we ended up doing is doing some restructuring after he passed with responsibility. Our one of the other nine can not founders because the other founder. Passed away as well. So we haven’t had a founder in the organization for about 15 or 20 years. But most of my colleagues, like the chairman, has been with the company since 1990. CFO A little bit less than I’ve been. I’ve been 25, 26 years. CFO About 24 years or so. And there’s a few others, you know, ten, 15 years with the organization. But they’ve shifted from the founder’s role. 

Greg Alexander [00:04:51] You know, you’re working too hard. The two previous leaders both passed away. I hope that doesn’t happen to you. 

Peter Bilello [00:04:56] Well, there were some of those circumstances. The first one was 96, so I’m okay with that. Second one was quite a bit younger. But, you know, significant health issues that it was he lived a lot longer than his siblings, but it still was a young life, unfortunately. 

Greg Alexander [00:05:11] Yeah. Well, all right. Well, I wanted to talk to you about culture, stakeholder alignment, particularly, as, you know, you try to get you try to drive scale of the storm. But a firm like yours has been around a long time. The leader in that space and maybe put yourself in a position to sell something the challenges associated with that. So would you mind sharing some of that with us? 

Peter Bilello [00:05:36] Yeah, one of the one of the key challenges I’ve had is with some of the ones that have been around for a long time. You know, they, you know, great, great people, great experience, great now. But they have historically seen a company as a group of individuals, even though we’re a C Corp and we manage like a C Corp for quite a long time, but it was still more of a, I want to say, club or a pyramid. I mean, as you know, a lot of founders kind of run things and they don’t look to scale. So that was probably the biggest challenge is getting people to realize that scale is important and to develop out the way we manage, the way we’re structured, not just adding cost because that was attempted in the past, it did not work well, but adding structure for repeatability and scalability. And it took some time to convince some of the ones who’ve been around for as long as I or longer than me, that we actually have to shift and change because it’s better for us, not just today, but it would be better for us if there was ever an exit. 

Greg Alexander [00:06:37] So how do you get old dogs to do new tricks? 

Peter Bilello [00:06:41] Give them some responsibility that they didn’t have before. Show them other examples. You know, it’s going to be organizational change one on one, right. Get get them to understand why they should care about it. What does it mean to them? The remember the days when it was feast or famine. You know, getting them to remember how difficult the pain is during, you know, early phases that we had for a long time. And we didn’t go the five years and try to start the company when for probably about 20 years in that feast or famine mode, because we weren’t scaling. We weren’t doing the things that were necessary to produce repeatable revenue and other streams that we really need. So again, education is probably the key to that, just like any other organizational change and then giving responsibility and some accountability as well, which was. Lacking the organization, which still, even though was formed as A and C Corp. The structure was more based on individuals selling and delivering, so it was really more of a a collaboration among individuals rather than a organizational structure that created roles and responsibilities. So. One of the things he did very early on is actually develop a role as a responsibility definition that didn’t exist. We had people that had different roles and responsibilities in theory, but nothing was defined. So that was another element that had to be done to give greater appreciation to those that have been around as long as me or longer that what we were trying to accomplish in. I was valuable to them to be on board and virtually all of them bought into it. We didn’t have to lose anyone, any of the ones that have been around as long as I have and longer Allstate and they have they’re more plugged in, they’re more focused and they have it. We all have a better understanding of what the vision is for the organization instead of just getting together and. You know, selling something, delivering something. It’s a bigger picture about building something. Not just as individuals, but as an organization. 

Greg Alexander [00:08:34] You know, a question that I’m going to ask on behalf of the members, because I know when they listen to this and when they get to the Friday Q&A, they’re going to ask this question. When you ask, you know, senior people that have been around a long time to do, quote unquote, firm building activities that don’t necessarily drive personal ability, could be perceived as taking a hit to personal compensation. Did you have to make any adjustments to the program? 

Peter Bilello [00:09:03] But actually, it’s funny you ask that. We dismantled. What’s what? What happened is we had, like, three phases. We had one that was, you know, eat what you kill. And everyone was basically commissioned based. So you were selling and you were delivering. There was no business development. So we took that away basically, and created a business development group as one of the first business practices that we created. So that changed the way people were getting paid, but it was also getting people more focused on what they did, and that helped actually. So people have a more consistent pay actually than before. But then so that’s one change we did. But there was an interim period where previous management team thought we had to put in a pay structure, which on one hand you do in order to gain access to other people that wouldn’t come if it was all pay for what you do. And but unfortunately that was done without actually understanding where the money was going to come from. And it, quite frankly, put a big dent in the ability to go invest in anything in the organization and create a lot of debt, which, you know, we’re all totally paid off and actually have quite a bit of money in the bank now. But that took quite a number of years. It was almost it was about a ten year period of just dealing with debt, which we were able to out come out of last three or four years now. So we first thing it did is I killed that structure, totally went back to partially to the pay for what you do, but restructured it because I added a business development team in so that people weren’t so keen on just selling and delivering their own stuff. But you know, we had a group just selling and then groups just delivering. So while we did minimize any kind of base salaries for senior level people, we didn’t. So we all create the debt by having it and having people do anything. But we removed their responsibility for selling so they can actually do what they really enjoy, which is delivery. So the number of changes we made. 

Greg Alexander [00:11:01] That’s a great story. Of course, it sounds like it was painful for you to go through that ten years of dealing with debt. That’s a big burden. Unfortunately, I hear this all the time. So I’m glad that you’re sharing that with us because, you know, part of the reason to learn from peers is to not repeat mistakes others have made. You know, when you peak ahead to possibly exiting the firm someday in any form, that that may happen. How do you get all these people on the same page? 

Peter Bilello [00:11:27] Well, we have had discussions in recent years about what does it mean, what what’s the criteria? Let’s say we’ve gone through some analysis as well. We have a reasonable understanding of what we’re probably worth. There was a look through the acquisition a couple of times in the past one well around the time I joined or a year or so out there, and I know what figures they were looking for and the figures were ridiculously high. So it never went through. After the president, the last president passed away, people approached us, but they didn’t understand what we did. And we never got to the point where there was an offer. But in recent years, you know, there has been some inquiries. So we did some decided to do some due. Allegiance. But three years ago, to understand tangible value, not tangible assets, tangible assets, all those types of things to understand what could possibly worth. And we probably have a better understanding of what value is and how we would position ourselves. But then there’s other things that people think are really important to that still kind of working through. For example, some may say, well, the only way will sell is that the name stays. Well, I, I could care less if the payments. Right. I don’t care what they call the company. It’s kind of irrelevant to me. So again, we’re site we’ve done some prioritization there. But again, there are some people that are more attached to certain things than I probably should be. And I like your story about, hey, you don’t even you stepped aside and let people go figure out what things are worth and everything. And not because we get so emotionally tied to things. And there are some. Some of my colleagues are still emotionally tied. I hope I’m not I hope any of the factors are right. Then we would go do it because it’s the right thing for us to do. 

Greg Alexander [00:13:10] Yeah. Alright Peter, my last question is for the group of members and at Non-Filers, maybe they’re working with the founder, they’re handling that founder transition, having been somebody who’s come up through the ranks, so to speak, and has had several promotions and ultimately landed in the top spot. Any any words of wisdom to that group? Anything that if you were to do it over again, you would do differently? 

Peter Bilello [00:13:38] Do differently? Probably not, because as I’ve gone along, I’ve besides getting more responsibility, I’ve got more ownership, which I wouldn’t have done if it wasn’t for the ability to go get something at the end. Now, quite frankly, I don’t really care if if I exit. I mean, I’m happy with what I’ve been doing. I have the flexibility. I want to have a lot of other benefits. Being in a boutique that we all know about and getting paid, paid as I want and so on to get the cash out at the end. Yeah, I wouldn’t mind doing that if it’s the right situation for the organization. It’s not about me, it’s about the organization. And we did our acquisition a few years ago and the founder of that company came to me and said, I want to find a place for my people. And I thought that was a nice, a nice thing to do and it was a great opportunity. Didn’t cost as much, but we got a number of really good resources, which we still have to to this day, that type of thing. And it was a fire sale because he was he was dying, unfortunately, and he wanted to fight. It was nice that he found it to find a nice place for his people. We’re not in that situation. I hope we’re not never in that situation. So if we were going to be acquired, then it has to be the right fit and the right pay out all the wonderful things that could go along with that great kind of connection. But, you know, I would I would do the same thing I did before, as you know. Get the right type of ownership, the right type of control and the right type of people around you. When the previous president passed away, we decided what as a group of a few of us that were already owners, how would we split that up? Because it would start coming back into the company. How would we divide that up? And I got quite a bit of increase, so I have a reasonable share of the company. We have a stock plan, though, that no one can have more than 50% of the company, actually, no, 49 and a half or whatever it is. But I have my fair share, my other two other colleagues that have their fair share, and then there’s two others that have a small share. So that to me, that’s important. I was always simple and it still is important in order that one have control and the other one has to have not just control, like from a role of responsibility perspective, but also from an ownership perspective. I really honestly can’t think of what I wouldn’t do. Maybe, you know, the ten years were painful and they had very little ownership at the time and very little responsibility. But I think in the end I still had the flexibility that I wanted to have. So it was okay. I could look for other job and probably gotten paid more at the time, but I still wouldn’t know how to. Much fun and hard to control that I have to this day. 

Greg Alexander [00:16:10] Yeah. Alright well listen, I thought you would try to keep these shows short, so we’re at our time here, and I know that it’s probably late in the evening where you are. So on behalf of the members, this is a really interesting subject to hear from somebody like yourself who did not found the firm but is running the firm and that generational story that you share with us, getting stakeholder alignment was really important. So thanks a bunch, Peter. I appreciate it. 

Peter Bilello [00:16:33] Alright, you’re welcome. 

Greg Alexander [00:16:36] Okay. So for those that are in professional services that are listening to this, I want to belong to a community and meet really interesting people like Peter. Consider applying to Collective 54 and you can a Collective54.com. And if you want to read about this subject and others, you can pick up a copy of my book, The Boutique How to Start Scale and Self, a professional services firm. You can find that on our website Collective54.com or you can buy it on Amazon. Thanks for listening and I look forward to our next episode. 

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Episode 93 – How the Founder of an Accounting Firm Has Grown by Acquiring Multiple Firms  – Member Case with Matthew Lescault

Scaling a boutique requires scale capital. Adding more headcount, entering new markets, launching new service lines, and other initiatives require capital. On this episode, Matthew Lescault, President & CEO at Lescault & Walderman, shares how he has financed his new acquisitions and how he has been able to successfully integrate the acquired firms into his processes and culture.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community dedicated exclusively to helping you grow, scale and exit your pro search firm. My name is Greg Alexander. I’m the founder and I’ll be your host for this episode. And today we’re going to talk about growing through acquisition. Very often we talk about selling your firm, but there’s another side of that equation, which is buying other firms as part of your growth strategy. What I hope to accomplish today is to put this on your radar as a possible growth avenue to discuss maybe how to finance it. The strategy behind acquisitions and how to integrate it successfully after you’ve bought the firm or firms. And we’re very fortunate to have a role model. Role model with us today. His name is Matt Lescault, is a member of Collective 54, is going to be sharing parts of his journey with us. So, Matt, welcome to the show. 

Matthew Lescault [00:01:17] Thank you, Greg. Great to be here. 

Greg Alexander [00:01:20] Would you provide a intro to the audience? Tell us a little bit about your firm and yourself. 

Matthew Lescault [00:01:26] Yeah. So my company, Lescault & Walderman, the outsource accounting firm, providing bookkeeping controller, CFO services as well as system implementation of ERP level accounting software and third party products. We’ve been around since 2006 of formula services, but I would say that really the iteration of the company as it is today, the model that we have as that is today, really started in 2017 and was with a big change in how we’ve done things in the past. Just as a quick sidebar, you know, we went from really a siloed model to a firm model and that really changed the game for us from a scalability component. 

Greg Alexander [00:02:09] Tell me about that. What do you mean by siloed model to a scale model or firm model? 

Matthew Lescault [00:02:15] So, you know, in professional services, you know, there’s two, two kind of models that can be that. You see that in a lot of ways. So silo model is each partner kind of has their book of business, operates their book of business in a way that they see fit. They might have different processes, might have different billing rates, might have different focuses. And it’s really, you know, and a lot of times that you put your kill mentality for a model really takes the idea of one collective vision, one collective strategy and deploying that firm wide across all partners and all staff. 

Greg Alexander [00:02:54] Okay, got it. And what caused you to make that rather substantial change? 

Matthew Lescault [00:03:00] I call them glass ceilings. I’ve hit a number of glass ceilings over my career. What I mean by glass ceiling is sort of a barrier that you kind of put put in your own way, a barrier that that can be broken through. But you have to be able to self-reflect and understand where your where your strengths are and where your real weaknesses are. So what we noticed is that, you know, when we were in that kind of siloed mentality, we didn’t have processes that allowed for the real growth to bring in middle management, to bring in the ability to take on more work and take it off of the owners to be the main points of contact. And so when we were able to take it away from us and create this process, that strategy that’s firmwide, we were able to empower our staff to be the points of contact and not fall directly on the ownership group. 

Greg Alexander [00:04:00] Yeah. That is a really big change that graduations are making that change. You know, that’s that’s a pretty common path, the approach that firms go through and sometimes they get stuck and they never make that change. So congrats on that. The team wanted you to come on the call today for a particular reason, and that is you’re one of the few firms inside of our membership that has made some acquisitions, and that’s part of your growth plan. And that’s where really my line of questioning is. And I guess my first question would be maybe a 30,000 fee, kind of what’s the strategy around growing through acquisition? 

Matthew Lescault [00:04:35] So our strategy is twofold. I know we’re here to talk about acquisition and I won’t spend much time on this, but I truly believe in organic growth coupled with acquisition growth. You can say the other way around, you know, acquiring growth and or acquisitions as a growth strategy and having an organic component. What we looked at as we saw in our industry, in the accounting industry, a lot of role grow ups happening in a lot of books of business out on the street and some general industrywide issues around hiring and what everybody’s talking about. So from from our perspective, when we understood how the financing worked, we thought that the way that we could solve kind of two components, one, or gaps within our own capability structure and two, and in creating deeper trenches within our industry focuses in our what we what we consider our niches. Acquisition was a it was a way to pump a big chunk of clients in at one time. 

Greg Alexander [00:05:41] Yeah. So I love the fact that your strategy is, is to protect, you know, you have your organic growth, which for obvious reasons is very important, but you’ve augmented it with inorganic growth, meaning grow through acquisition. And this is a real area that you can contribute because a lot of our members are boutique pro firms and they haven’t gotten to that second leg of the stool yet. They’re relying almost exclusively on organic growth. And I do believe that in some niches yours is an obvious one, that there is an opportunity to augment that growth and plug some gaps and deepen some niches, etc., through acquisitions. But the challenge is some of them have, practically speaking, especially those that haven’t done it before, is a how do you find the deals and B, how do you pay for them? So what advice would you give our listeners on those two dimensions? 

Matthew Lescault [00:06:37] I hate to do this, but I want to take one step back because I think that there’s a real key component to being able to successfully go go into an acquisition strategy. And doing one acquisition is not what I would call strategy, and I don’t think that you have to have the infrastructure. But if you want to go into a into a the acquisition strategy, do multiple ones, which is what we’re doing. I actually started this path back in 2019 and which I identify a lot of shortcomings within our company that would stall the ability to scale. And so we spent from around November late 2019 to mid 2021, building our infrastructure up in preparation for the acquisition. Now part of that goes into some of these you’re talking about right now is understanding the overall playing field that you’re dealing with. For me, a lot of a lot of firms are represented by business brokers that are akin to investment bankers, and they didn’t really understand the understood the industry, the accounting industry and how that worked and didn’t understand what a good book look like. And so what I started doing through through my research is really trying to align myself with people that understood and work specifically within the accounting and accounting consulting industry. And really started to pick those people’s brains of what successful what other firms had done and create a strategy around that. What’s going to be the most successful for us? So it really started well in advance and saying, okay, we need to have really good H.R. processes for onboarding multiple staff at one time. We need to have great client onboarding experience because we’re going to be switching all of these new clients over our engagement letters in our process, and we need to have the appropriate level of staff from a again, middle management, upper management, so that it didn’t fall completely on the owner. And so we spent we spent a good year and a half just creating that infrastructure to get into the acquisition mode. The next thing was really understanding the financing component. You brought this up. I went and found a bank that all they did was finance for accounting firms and actually our firms. But I don’t know a lot on that side of it, but they really they they’re a bank that understands the accounting world, understands what makes the value of the firm, how cashflow works from a seasonality. And I go one about the process in a very unique way. So I didn’t go through SBA. This wasn’t SBA lending. This was underwriting through the understanding of our entity. So they came in, look at our profits, they looked at the way that we structured our client relationships, and they underrated us for a certain amount. And basically they understand how how we fund and finance through the acquisition process. 

Greg Alexander [00:09:51] Okay. Very good. You know, that’s interesting. A couple of things that you mentioned there. I want to just double click on. It’s really fascinating to me that your strategy from the get go was to do multiple acquisitions as opposed to a single acquisition and the prep work that’s needed to be put in place to make that happen. That’s a real lesson to be called out. And I want to underline and circle that for our members that are considering growth through acquisition. And then the second thing regarding the financing, so if I’m from to understand you correctly, given the fact that you went to a bank, it sounds like these deals were done through debt. Is that correct? 

Matthew Lescault [00:10:25] Yes. 

Greg Alexander [00:10:26] Okay. So regarding the debt, maybe just broadly speaking, what are the structures? What’s the structure of a loan or a set of loans used to execute this strategy? 

Matthew Lescault [00:10:40] So the way that the way we’ve structured this from the actual banks perspective was we took the valuation that we agreed to with the seller and we split into two, two buckets, basically your asset purchase and then your consulting for retention. So there’s always earn outs and that’s a big, big component, especially in accounting. But I think professional services in general is that you really need to make sure that you have a strong earn out clause within your agreement. And so from the banks perspective, we got the 50% from them financed that over a ten year period and then it will pay out from consulting for a three year period after that. That’s tied to the retention of the client base. 

Greg Alexander [00:11:27] Okay, very good. So half the deal. So if I’m selling my firm to you, I’m going to get half the deal, a cash at closing, then I’m going to be in a three or and I’ll turn largely to client retention. And then you as the buyer just a. Everyone listening. You’re funding that really with 100% of other people’s money, the bank is providing the cash at closing and then the business, based on their performance, is funding the rest of it through the three arena. That’s really a brilliant strategy regarding the debt itself. Do you have to personally guarantee it? 

Matthew Lescault [00:11:59] I did. 

Greg Alexander [00:12:00] Yeah, I thought so. And that makes me admire you greatly. Obviously, you’re convicted. You really have a lot of conviction on this strategy. So some of our members are reluctant to extend themselves in that way with personal guarantees. So how did you get there emotionally, psychologically? How did you accept that risk? 

Matthew Lescault [00:12:23] And that’s an interesting question. I guess I just I just kind of realized that if I wanted to get my goals, there wasn’t going to be a bank or a no or to get debt that wasn’t going to ask for a personal guarantee. I didn’t want to give a personal guarantee. I had to get a private equity. And my goal is to not sell out private equity, at least this early on. And if I ever do, it’s going to be I want to be on my terms. And also with sort of planning out the strategy of the debt financing, I really understand the cash flow of what I’m doing. And again, when I haven’t when I have an earnout, you know, and I know what the profit margins are, I know what they’re going to be consistently. You know, we can we typically are purchasing books of business that we believe we can get 20 or 30% gains out of out of the out of the gate. You know, every every time that we’re financing these, we’re actually picking up additional gross profit that is allowing us to go back in and get more lending. And so at the end of the day, I feel very confident in our ability to do this. I’m not too concerned about my personal guarantee because, you know, that’s the best way to put it. I got the funding based on my current EBIDTA. And so every time I purchase a new book of business, an increase in my EBIDTA from a dollar amount, making me more or less risk because I have more cash. 

Greg Alexander [00:13:52] Yeah. And making you more bankable. Right. 

Matthew Lescault [00:13:56] Well, my joke my joke to the bank was, you know, was lets make me too big to fail. 

Greg Alexander [00:14:02] Yeah, exactly. I tell you, it’s a really innovative strategy. I have to tip my hat to you. I’m not seeing a lot of this. I don’t know if it’s sector specific or not. Is there is there a general kind of sector roll up happening in the accounting space right now? 

Matthew Lescault [00:14:18] Big guys are are buying up firms left and right. It’s. I’m going to say this, so I’m going to start with I believe that you have to have a Y for growth. Everybody wants to grow. Everybody talks about growing. But what’s your why? And so I think this is really started for me as I saw what was happening in the industry. And I saw that really you as an organization or us as an organization would need to have investment into technology, technology development, not just buying technology, but innovating new technology, integrating new technology. We would also need to invest in professional development paths for learning paths to for staff retention. And we need to be able to compete. We don’t to be the size of of the Baker Tilly’s of this world or the RSM or the clay is. We don’t need to be that big, but we need a capability perspective. We have to be able to be competitive. So with that being said, the Y is what really drove the reason for the growth and why we wanted to go down that path. I did not want to be forced at any time. Again, the other side my way is I want to make the decision. I want to be able to say I want to sell because I want to sell. I feel like I have to sell or I don’t want to sell, period. And I’m never going to sell. I want I want at the end of the day to have the choice. And I really believe that if we didn’t invest in being at a certain level, at a certain size, that my hand was me force at some point. 

Greg Alexander [00:15:58] Yeah, well, that it’s such a great story. And we’re at a time when to where we try to keep these episodes short. But this is a real contribution. It’s something that I don’t think a lot of members are thinking about. Those that are thinking about it might be thinking too small, maybe one deal, as opposed to doing several deals. They probably aren’t ready infrastructure wise to do a lot of deals, and maybe they’re not confident enough to go on the line with a personal guarantee. So all those things, you provided a great role model this week and hopefully it’s inspirational for the other members. So you have on the membership, really appreciate you sharing part of your journey with us today. 

Matthew Lescault [00:16:37] Thank you very much. It’s great to be here. 

Greg Alexander [00:16:39] All right. Okay. So for those that are in pro share and want to belong to a community and learn from great people like Matt considered applying to Collective 54, you can find us at Collective54.com and if you want to read more on this subject and lots of others, pick up a copy of our book, The Boutique How to Start Scale and Sell a Professional Services Store. Thanks for listening and I look forward to our next episode.

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Episode 92 – How a Financial Services Firm Is Scaling Beyond a Lifestyle Business by Building a Sales Engine  – Member Case with Hamid Akbari

There is an inflection point that all boutiques run into head-on. This is when sales generation happens by the employees and not by the partners. On this episode, Hamid Akbari, President & CEO at Blanc Labs, shares how the firm built its internal sales engine in 18 months and his key takeaways.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique 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 exit your pro search firm. My name is Greg Alexander. I’m the founder and I’ll be your host today. Today, we’re going to talk about scaling beyond a lifestyle business by building a sales engine. What I hope to accomplish today is to give those listeners the courage to make the investments required. To go beyond a lifestyle business, particularly by investing in sales. It takes a lot of courage to do so, and it’s a big inflection point. And getting through that inflection point requires lots of courage and skill, and hopefully we’ll be able to share some of that with you today. And we’re very lucky to have a fantastic role model who is in the middle of this. His name is Hamid Akbari, and he is going to share with us a little bit about his journey. And he’s a member of Collective 54, and he’s in the middle of this right now. So welcome, Hamid, and would you please give a proper introduction to the audience? 

Hamid Akbari [00:01:30] Hi, Greg. Thank you so much for having me on this show. This is Hamid, my company, Blanc Labs is serving mid-size enterprises, typically defined around 500 and higher. Employees primarily market in the financial service industry. Typically, you know financial services company at about $10 billion assets under management and their boss and we started a few years ago at around five years ago and view their technology boutique so we’re serving our clients by helping them the technology helping them reimagine the future, transform themselves and grow from there. 

Greg Alexander [00:02:11] Okay. Very good. All right. Let me set this up a little bit before I jump into to the questions that I have. So start ups become boutiques by having the founder of the partners generate referrals and then boutiques become market leaders by building a commercial sales engine. That’s when they go beyond being a lifestyle business. And then someday when you go to sell your firm, a potential acquirer is going to want to see this in place. They want to see that the sales process has the ability to scale. And there’s an inflection point that all boutiques run that run into head on. And that’s when sales generation happens by the employees and not by the founder or founders. The old Preskill firms do not invest in building a professional sales engine because they don’t have to. The founder of the experts said, got large personal networks, and his personal networks expand as they gain more exposure to their niche. And then they can harvest these networks for business. And successful projects lead to happy clients, be clients lead to more word of mouth and word of mouth leads to more referrals. More referrals leads to more business. And this virtuous cycle, so to speak, produces enough business for quite a long time. The founder model can carry the firm through, let’s say, the first five years or so, but then sales flatlines. And this is the inflection point that we’re going to talk about today. Now, why is this? Well, there’s only so many hours in the day and the founder or co-founders are either selling or delivering work. And there’s a constraint. There’s a time constraint. And when when an A founder reaches this point, there’s really two options. So option A is that the is the founder led model. And this means really adding more partners to the equation, recruiting expensive partners who bring with them their own personal networks. And then you repeat this cycle over and over again. The problem with that is that to recruit partners, you’ve got to dilute your equity pool and profits get distributed to the owners. So there’s a price to pay for that. Option B is the opposite, and that is don’t recruit more partners, equity holders with personal networks, but rather build a professional sales model. And this has its own pros and cons. The biggest pro is you keep all the equity. And once you get through this expensive investment and you get on the other side of it, things are really good. But the process of doing it can be difficult. So we’re going to talk to Hamid today about how he’s going through this right now. And it’s a really interesting role model. So, I mean, would you maybe expand upon what I just shared and tell everybody exactly where you are in this journey and and how you got to this point? 

Hamid Akbari [00:05:09] Absolutely. Exactly. As you’ve said a few years ago when you started it primarily kind of like promoted our services to our network. So we landed on and the first client to people who knew me, know myself or know my senior member of your team, or they’re a friend of their friends or to referral line of the first few client. It was obviously very expensive to build a commercial sales and marketing team. They’d not have enough revenue and profit to invest in a commercial team. So I took it on myself as well as my senior team, to reach out to netball, to learn. And the first few clients, once we landed, the first few client really entire focus but deliver significant value to those clients because there is no point to bring your client if you cannot maintain your existing client, keep them happy. So they invest a lot of time and effort and then invest a lot of capital in, you know, like making sure they get most value from our technology services. And then from there, we start expanding our services because landing on a major client is noisy. And once we landed, not only we wanted to keep them happy, we wanted to understand what are their pain points. They have an amount of pain points for the pain point. We can serve them better than anyone else. That allowed us to expand our business. Be those client on churn, say a treatment contract where a longer term contract and you know, let’s let’s say a $200,000 contract to a million and so forth that gave us the scale and the team size and the capital to think beyond the next level. And that was about how to bring more client like this one, as you said. Each of us email kind of like out of our existing referral. Our next book is only a finite number of people. I can know personally, obviously, and my team can know personally. So that’s that about the time I started to think about and also engage my senior team, think about how we should escape, how we kind of scale beyond what we are today. And obvious that you could not only expand as expand your business with existing clients, but also acquire new clients. And I cannot operate fair to Greg on my journey they took on to be able to attract new clients. 

Greg Alexander [00:07:32] That’s a great set up and thank you for sharing that. As I understand it, you’re about 18 months into this journey of trying to bring on these these next set of anchor accounts, if you will. So what have you learned in the last 18 months? 

Hamid Akbari [00:07:48] So one of the things I’ve learned is that from process prospecting, there’s a process pressed on team perspective. From a team perspective, obviously it’s no easier team to to build a commercial team. I define commercial team by a sales team. People can be relational instead of directly a marketing team, but that also required to make sure the client see the value product clearly and in our case, our partners. My last name. Because in technology you can do it alone. You need to rely on big as well as niche size partner to offer the best value to the client. So the first thing I learned is that to build a team as a good fit for our culture and that would be like external hire is noisy team. You can’t really talk to definition of job description type full definition of KPI, but it’s about by takes what this took to be successful. Because then you hire someone you want to, you want to make sure you set that person up for success that doesn’t hit the quota take home drive contrast for for and that color experiment experimentation as well as a lot of that a lot of working after that you have to write higher. Obviously the second kind of process I learned that landing on you will measure a client is no easy thing as well. And to break down that big problem for smaller chunks, for example, one of the things we did is that you know how to focus on the first asset to find, bring in those new leads, how often those leads to the next stage of the funnel so that we have a discovery side to showcase our value to the next client. And then it’s about, you know, how to close and how to once you landed on that account at that new client, how to how to actually expand the business with that client. But other offering they can put on the table to really expand our business because the client as well and so forth. So really it’s a team on the team. Sighs. I learned a lot about how to build a team. Austin I’m learning because they’re growing our team as well in the process as well. I learned a lot by look at that complex problem of sales, which is really not an easy team to sell to many similar clients. Break it down to Chong’s. I’m kind of trying to conquer each stage of that process quarter at a time so that we nail it and we can escape iyon at least twice this time. 

Greg Alexander [00:10:04] So I want to probe on the team a little bit and also ask for further commentary regarding experimentation. The reason for my line of questioning here right now is when I speak to members of Collective 54 who are on this journey. They they have the initial courage to try to scale beyond a lifestyle business. And they know that to do so, they got to build this commercial sales and marketing engine, and they have the courage to invest the dollars and then they run into some trouble. You know, the first hire isn’t the right one or the second hire is the right one, etc., and they give up too early. And that’s a mistake because most of our members are domain experts, as you are, and maybe they didn’t grow up in sales and marketing. So it’s it’s realistic to think that you’re not going to get it right the first time. So in thinking about this as an experiment, my question for you would be what advice would you have for the members to set up the experiment correctly so that if they don’t succeed the first time, they don’t quit? 

Hamid Akbari [00:11:13] So that’s a very good question. I think it has two parts. Number one is the mindset. So I think building a commercial team for scale is not a quick thing. So we need to set our mindset that it’s going to it’s going to take like quite a bit of time. So we need to be patient around it and to trust the team, and it will give it some time for it to actually like fight on all cylinders and get to breakeven and also generate significant amount of profit. So if we’re fixing fixing our eyes on it very, very quick or quick out and be very quick sells. They may not get there if you’re building a new team, if you’re building it for the first time. That’s our own mindset, obviously. The second thing on the team size and experimentation is the first part of the challenge is that find the right people and honest is not easy to take. So if you had that role in the past that has worked, replicating that high and similar, that may not be that difficult, but building a self esteem for the first time, building marketing team for the first time require record not only being thoughtful, but some experimentation because we need to make sure these people join our boutique for the right motivation. It’s very different from joining Microsoft for a massive enterprise. So do they have the right motivation? Do they understand the KPI? Do you understand why takes to succeed kind of set them up or succeed? Or are they the right fit for the culture? And most importantly, do they have transferable skills that you know, because they have never broken a particular like this? Each of these particular kind of like my boutique, for example, to kind of like a unique. So do you have enough transferable skills and smarts to task? Forget a skill set and grow from there? So I think that’s that’s one part. And as thoughtful as the person is in trying to select the right person because you can’t afford for the first time for sales or marketing team or partnership team. That’s an experiment, right? And if it’s not working, obviously. So it’s in a ways, it’s a paradox. On the one hand, we’ve all heard it hardest, slowly, if it’s not working out to to a very, very quick in terms of the right person. The other part of this paradox is that you also need to trust trust the team, give them time to prove themselves. So. So how do you how do you manage this paradox? What are the KPI or the leading KPI? So that be not this is walking down the right track, you’re making progress and to give it more time and to keep learning versus this specific high of a never make it in this company. Obviously the decision not always is trivial and easy. 

Hamid Akbari [00:13:52] So that’s on the team side now on the process side, to build a scalable sales process, being the right tool, right process to qualify leads and so forth. That second process there, that’s quite of learning. If you haven’t done step on marketing before, like I haven’t haven’t done it before. It’s new stuff that you open to learning. Obviously you can go to college and I suspect, but there are certain best practices that you can follow so that the learning becomes organic learning and become better at kind of like building a sales funnel. And maybe it’s very different from every like from farm to farm by really the idea at least my idea is that like minute to minute to tackle it one at a time, right? You need to tackle the big problem, sell break, break it down to smaller part. And every month, every quarter is a piece of the puzzle until I find out you finally make it. And that’s how we did it. I built a sales team initially, the first hire, and I made it really neat for that salesperson. I did not give him the mountain. I give him like a piece of the offering. And I keep building and expanding on the sales team, on the marketing team, on the partnership team and learning so that they make incremental progress towards our goals. 

Greg Alexander [00:15:09] I love the emphasis on building the process and the experimentation. And you know, for those that are listening that are in the IT services space as a meet is sales and marketing is a process just like developing a piece of software is a process. And if you can break it down to the fundamental tasks and think about gating the process and leveraging the body of knowledge that’s out there right now, it can get a lot easier. It’s very well-worn territory. Building a commercial sales and marketing team inside of a process boutique that’s been done over and over again. So if you haven’t done it before yourself, you know, don’t go it alone. Tap into those that have done it before. I want to come to the next obstacle that I hear, which is let’s say that I’m a father of a boutique and I’ve got myself to some success and I’m making a lot of money. I like what I’m doing because I enjoy the, you know, the practice of my craft, if you will. Where’s the funding come from? How do I invest in this? Do I take it out of my pocket? Do I use operating profits to fund this? Do I go raise capital? How did you fund this? 

Hamid Akbari [00:16:22] That’s a good question. So it really depends on the offering. So if what you’re selling the offering is service offering, the solutions you have is not very profitable. It might be difficult to generate the fund to justify to invest in sales and marketing. In my case, we the VA, we made our offer and sold our offering at a price point and we made our offering of value to the client so attractive for the client that we could generate like a reasonable amount of profit to invest and grow it. And then we keep investing on more solution offering to existing clients. That means that the total contract value, the length of the value, the length of the length of those contract, the value of those contracts and the customer lifetime value are significant enough to justify investing, says our marketing team. It also means that those contract bought size and value on profit gave us the oxygen to be able to invest in our own growth, investment and our growth. But investing in that in IP new offering said they serve the customers better as well as the dollar value available to invest in a commercial to number one. It gives us cash to invest in our growth, including investing in a commercial team. And number two, it justify our eye on that to invest in the commercial team because we know the lifetime value of a new client is very significant. So as expensive it is to invest in a commercial team to try to justify your choice. 

Greg Alexander [00:17:56] Yep. So the lesson for those that are listening is you’re probably asking, well, when do I do this? Will you do this? After you’ve established a service offering in an ideal client profile that allows you to earn a substantial amount of profit so that you can redirect that profit, that earned profit towards an investment in building out a commercial sales engine. If you have not done that yet, if you’re still struggling with profit margins or maybe the lifetime value of a client is not where it needs to be, it’s going to be tough to do this. So tackle that first, as Amit has done, and then use those dollars to invest in the commercial sales engine. Okay. I mean, I have one more question for you, and that is this issue of temptation. I know that’s a strange term to use on a business podcast such as this, but the temptation of the founder who’s running a highly profitable lifestyle business is to pull all the money out of the business and stick it in the bank account. The temptation is to not reinvest those dollars into building a commercial team. And when that happens, when we fall victim to that temptation, we get trapped in a lifestyle business we never break through to become a boutique at scale and to build that asset that someday we might be able to sell for the real dollars. So how did you resist the temptation? Where did your courage come from to scale beyond a lifestyle business? 

Hamid Akbari [00:19:23] So it does start with a vision. All of us. Then we found a company. We have a vision. And if you don’t have one, that’s a problem. We need to go back to the whiteboard and build that vision, be there single handedly, or with the team and the vision to paint a picture of the future they want to be. What do you want to achieve? And that’s like guiding a staff for us to make the decision. That’s number one. Now, if the vision is to have a fairly small lifestyle company, well, then that’s okay to have a drive to profit. But if the vision is build something more scalable, then it’s then it’s questionable to big draw a profit potential lifestyle. Then when we have to have the vision for skinny the second the the other side of the coin with the vision is that the confidence it’s easy to have a vision but be very scared and frightened that we can’t achieve it. We also need faith and confidence in our vision, obviously, and the faith and confidence I need to be a bit more data driven, need to be with more market, do that. So if I, if I or any founder have a vision to achieve a certain outcome in a certain number of years, then the hard work of building that confidence if actually doing the hard work of seeking out how we can realize that vision, like you said a few minutes ago, like who is the ideal customer for five? Like, how do we serve them by their pain point? How do we differentiate once we have confidence that this idea of Customer five have a true pain point for which they’re keen to pay and we have a real value prop that we can serve them better than anyone else along those offering. Then we have the confidence, and then we can communicate that the team can communicate that to the client, and then we can overcome the temptation of withdrawing money because simply they’re scared that if you say or be scared that the vision didn’t deliver, realized. Because I’ve figured out it’s easy to have a vision. But you don’t have the hard work the. Build a road map toward achieving that vision. Then it’s become hard to have that confidence. Then it’s easy to get tempted by just like short term opportunities. 

Greg Alexander [00:21:31] Yeah, well, this is fantastic. I could go on and on forever. I got about ten more questions to ask you, but we’ll will save those for the live Q&A session when we get together with the other members. But I mean, I wanted to make sure that I publicly thank you for your contribution today, the way these collectives work as we make deposits into the knowledge bank so we can all benefit from that. And from time to time we’re able to make withdrawals as well. So today you made a big deposit and knowledge back on a subject that is of particular interest to most of our members. So on behalf of the members, I mean, thank you so much for being here today. 

Hamid Akbari [00:22:06] Great for having me. 

Greg Alexander [00:22:08] Okay. So for those that are in professional services and want to belong to a community and learn from great people like me, consider applying to Collective 54 you could find as a Collective54.com. And if you want to read more about this subject and others like it, pick up a copy of my book, The Boutique. How to Start Scale and Sell a Professional Services Firm. You can find out at collective54.com or on Amazon. Thanks for listening and I look forward to our next episode.

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Episode 91 – How the Founder of an Architecture Visualization Firm Built a Culture That Produces Zero Employee Turnover  – Member Case with Jing Johnson

Culture can be described as how things get done in your firm. Intentionally focusing on culture is critical to the success of a boutique professional services firm. On this episode, we invited Jing Johnson, Founder & CEO of PRISM Renderings, to share how she built a highly effective culture and the positive impacts it has had on retention and the success of her firm.  

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique 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 exit your pro search firm. My name is Greg Alexander. I’m the founder and I’ll be your host today. And today we’re going to learn from a fantastic entrepreneur and a woman who I feel has achieved outstanding business results due in large part to the unique culture of her firm. And what I hope to accomplish today is to highlight how the culture and the uniqueness of it can translate into outstanding business results and why culture is more important in a processor firm than it is in a corporation. Because a processor firm is really a collection of people and therefore culture is of the utmost importance. We’re very fortunate to have a fantastic role model with us today. Her name is Jing Johnson, and she’s going to share parts of her story, which is a rather unique one. So, Jing, welcome to the show. 

Jing Johnson [00:01:26] Thank you, Greg, for having me. 

Greg Alexander [00:01:28] Would you please provide a introduction of yourself and your firm for the audience? 

Jing Johnson [00:01:34] Of course. My name is Jing Johnson, the founder and CEO of PRISM Rendering Space in Houston, Texas. Greg, we help commercial real estate developers raise capital, get entitlement and pre-leasing their buildings. We accomplish that by creating photo, realistic renderings and videos so our client can preview their visions with their stakeholders before the building get built. There are a couple of unique differentiators about our business and our team. First, unlike most of competitors, we can we can help our clients on early stage projects with new images or sometimes no design information because of all architecture backgrounds. Secondly, we are the only all women team in this male dominated field. I think we are going to talk more about that later. 

Greg Alexander [00:02:40] We are adjourned. You know, I’m going to share some stats for the audience and I’m sharing them because Jing is so modest. She would never share these on her own. So I’m going to I’m going to brag on her behalf. But for the members that are listening to this Jing, Jing’s gross margins are about 50% higher than the membership. She doesn’t do much hourly billings at all. Most of it’s fixed bids. She has 100% employees. No, no. 1099 are kind of freelancers, if you will. Remarkably has 0% turnover. Just let that sit in for a moment. 0% employee turnover. She’s running at about 80% of our revenue is coming from existing accounts. So just put those two things together. 80% of revenue from existing accounts, which would suggest an incredibly high client satisfaction score and no employee turnover, which would suggest an incredibly high employee satisfaction score. And those two numbers, employee satisfaction and client satisfaction and profits are really only two that count to get those two right. Everything else takes care of itself. So your numbers are outstanding. And I want to connect the dots here because as I understand it, you employ moms. Is that true? 

Jing Johnson [00:04:02] Yes. We are a team of all working moms. 

Greg Alexander [00:04:06] So tell us how you landed on that very unique employee strategy. 

Jing Johnson [00:04:13] Well, as come from my original story, I started a business at 25. I was struggling between my career and my family life. Basically, I work in a big architecture firm. It’s very demanding in terms of my schedule, my time and a time I had two boys, five and eight years old, need a lot of time from me as well. So I was just struggling between getting, you know, the balance between both and why I started this business is my goal is to, you know, first to provide a sustainable service provider to our clients. In the meantime, I can have the flexibility to raise my voice. So that’s how everything started. So when I started to hire employees, I realized that, you know, other working moms can benefit from this business model, not just me. So that’s my mission now, is to help even more clients and also help more working moms. 

Greg Alexander [00:05:31] Very good. And I also understand that you’re working. Moms are truly global. They’re all over the world. Is that true? 

Jing Johnson [00:05:38] We actually the our team, U.S. is all here. Some most of us are in Houston and one in Arizona. But we do have production teams overseas. 

Greg Alexander [00:05:53] Okay. So maybe that’s what I was thinking of. So what are the production teams do for you? 

Jing Johnson [00:05:58] Every day they create those images and they basically are our creative team to take the information we get from our clients and create those images and videos for us. Our team in us are, you know, basically our management, you know, members. 

Greg Alexander [00:06:24] Okay. Very good. All right. So how is it that you have 0% turnover? 

Jing Johnson [00:06:32] Well, I think it’s it really comes to our culture. I’m trying to create this culture that I want to be in. Right. That can allow the opportunity for our team members to realize their potentials in in a professional career. But in the meantime, they have that flexibility to take care of their families and their kids. And so we are very intentional in create this environment to feel safe, to feel appreciated and respected. And they they learn every day. It just we we tried to create this, you know, environment. Everybody feel that they are they have this opportunity. They can do whatever they they can to realize their full potential. 

Greg Alexander [00:07:31] Yet these brave working moms are also highly skilled. So share with us the typical background in terms of maybe professional credentials or education levels, etc.. 

Jing Johnson [00:07:46] So our team members range from, you know, M.D., have a master’s degrees to have just have no, you know, university degrees, but highly, highly skilled and and, you know, into like intellectual have an intellectual, you know, skill to and, you know, do their best to serve our clients. So for me is really not about your degrees, your your education, right? Is your excuse is how you can have that people skill. You can, you know, serve the clients and serve your team members the best way you can. 

Greg Alexander [00:08:32] Yeah. Now, Jing, when I was reading about you and and your story, I was I was really surprised at the juxtaposition of some of these numbers. So, for example, you run a pretty high utilization rate north of, let’s say, 80%. But you also have this remarkable 0% turnover. Those think those two things are usually in contrast with one another. You know, normally if somebody were working that much as your employees are, there’s some turnover because there’s burnout. How do you balance this requirement to satisfy employees and kind of log the hours, so to speak, but also not make to also make sure that your employees don’t get burnt out? 

Jing Johnson [00:09:18] Well, I don’t. I mean, I work long hours sometimes, but I don’t require my employees to. For example, I like to spend a few hours a Sunday to Sunday afternoon or evening to plan my next week I would set up. So, for example, if I have a few things I need to each team members to pay attention to, I will schedule those emails, send it out first thing Monday morning. I’m not sending out or doing the weekends. So they feel anxious to, you know, reply to my email, which is not necessary. I’m trying very hard to, you know, not taking their family time away from from, you know, just from work is really when during the weekend or evening time they should focus on their families and not on the work, but doing the work hours. So we are a very productive and efficient. 

Greg Alexander [00:10:20] Yeah. And I’m imagining when we get to the member Q&A on Friday, you’re going to get this question, which is it sounds like you’ve tapped into this hidden labor pool, these these moms, so to speak. How did you find them? Did you know the ball or what did you recruit? Like, how did you locate them all? 

Jing Johnson [00:10:41] Yeah, mostly either, you know, I met those ladies, wonderful ladies from my church or from work, some professional events or you know, they are highly recommended by somebody I trust and respect. So it’s pretty much from our inner circle. 

Greg Alexander [00:11:04] Yeah. Okay. Got it. You know, it’s always the hiring success goes up dramatically when the person that you’re considering joining your team. 

Jing Johnson [00:11:17] Yeah. 

Greg Alexander [00:11:18] It comes from a trusted source like you’re mentioning. 

Jing Johnson [00:11:21] That’s right. And also why you create that, you have that reputation of helping working moms and, you know, in the meantime, create some really beautiful, you know, work, you know, works get around and people notice. So it helps us recruiting. 

Greg Alexander [00:11:40] Yeah. Now, during the great resignation, which we’ve been living through the last couple of years, you know, there’s been a lot of poaching going on. Employees are getting lured away with bigger paychecks. And you’ve been able to not let that happen to you. Have you experienced any kind of wage pressure at all? 

Jing Johnson [00:12:04] Not really. We did increase our salary at the beginning of the year. You know, we kind of keep it that we usually have a salary increase every year. But we were able to no, we were not able to do that 20, 20 and last year, just trying to see how things going. But this year we did. And then we have a good. Benefit package used for one case and other benefits. But also, we actually I was just told a couple of weeks ago by a respected advisor that one of my team members was approached three years ago before Covid. It was a wonderful opportunity and it was perfect for her and she turned it down. She said, I just I love work here. I’m not going anywhere. And this advisor told me she’s he was saying that that says a lot about your culture, that, you know, this individual has a great potential. It was a great fit for that company. But she chose to stay with you. And and it says a lot. 

Greg Alexander [00:13:26] Yeah, it does say a lot for sure. You know, the the the point I really want to emphasize here for the member is that I learned from this is to remind ourselves that we have to value propositions. Mhm. We have a value proposition that tells clients why they should hire you. Right then we’ve got a value proposition that tells employees why they should work for you and founders of boutique pro. So firms are really competing in two markets, the competing in the market for clients and they’re competing in the markets for employees. And it’s just as important, maybe even more so they have a very compelling employee value proposition so that when somebody comes knocking, as was the case and one of the things employee three years ago, they don’t take that enticing job. They evaluate working for you in totality, the culture, who they’re working with, the type of work they’re doing. Yes, the compensation, the benefits package. But the whole thing in totality. And you’re just a remarkable example of putting that to work and and having it translate into these remarkable results that I just shared with the members. So it was it was wonderful to have you on the episode today, and you’re an inspiration for the rest of us. And thank you for being part of Collective 54. 

Jing Johnson [00:14:48] Well, thank you. We I just have learned so much from this community, and I appreciate that you include me in this episode. 

Greg Alexander [00:14:58] Okay, great. All right. Well, for those that are in professional services, who want to belong to a community and get a chance to rub shoulders with great people like Jane Johnson, consider applying for membership, which you can do at collective54.com. And if you want to read more about topics like this one, pick up a copy of my book called The Boutique on a Start Scale and sell at Professional Services Firm. Thank you for listening and I look forward to our next episode.

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Episode 90 – How a Marketing Agency Packaged 15 years of Knowledge into a Proprietary Methodology – Member Case with Randell Mauricio

Strategics are usually filling a gap. Either the market shifts or the market leader’s service portfolio is lacking. This gap can be filled by building a practice internally or through an acquisition. On this episode, Randell Mauricio, VP of Operations at WorkerBee.TV, discusses how they built a sustainable firm to attract market leaders.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. My name is Greg Alexander. I’m the founder and I’ll be your host today. And today we’re going to talk about the buy versus build conversation and in particular, how to build a sustainable firm with the intention of attracting a potential acquirer at some point down the road. And what I hope to accomplish on this show is to reveal with the help of our role model, which I’ll introduce in a moment, that the buy versus build conversation is happening with or without you, whether you know it or not. And in the event that you do want to sell your firm someday, there’s things that you should be doing right now as you’re growing and scaling your firm to put yourself in a good position to make that happen eventually down the road. We’re very fortunate to have Randall Mauricio. Randall, did I pronounce your last name correctly? 

Randell Mauricio [00:01:31] Mauricio. 

Greg Alexander [00:01:32] Mauricio. Excuse me. My pronunciation is terrible. I’ve known you for Randall for quite a long time, and I don’t think I’ve ever, ever said your last name. So I’m problem. And he is with WorkerBTV and they are in the process of doing exactly what it is that we’re talking today. So, Randall, would you please provide a proper introduction to the audience? 

Randell Mauricio [00:01:55] Yeah, absolutely. First and foremost. Thanks for having me, Greg. And you’re right, we are in the process. In fact, the last meeting I was just on was actually just scratching at the surface of this bigger evolution of our company. But we’ve been around technically 15 years, and I’ve been with this company for, I think coming up to 12 years. I say 12 years because there was a reinvention. The 2008 crash in US significantly hard, but company’s been around for 15 years and we predominantly serve the association marketplace and we’re both a services provider of media production, videos, podcasts, that sort of thing. We aim to be a content machine for our clients and the other division of our company is is SAS and we have some platform services that help associations of that on our mission or our our core competencies and value. We help associations recruit more, retain more and drive revenue. We call those the three R’s. We’ve been doing that for 15 years. And as I mentioned, we’re looking at that next stage. 

Greg Alexander [00:03:04] Yeah. All right. Well, very good. So let me introduce some concepts to the audience. So what do I mean by buy versus build? So when a market leader, a potential strategic acquirer, thinks about buying a boutique, they ask themselves a question, Should I buy a firm? Or Can I build this practice myself? And they really analyze that across three dimensions. So the first dimension is how long is it going to take? The second dimension is how much is it going to cost? And the third dimension is what’s the probability of success? So if I was a large firm in the media production space and I wanted to build out a practice that served associations, I would say to myself, okay, well, I could build this practice myself. And that’s going to take, you know, X number of years cost me y number of dollars and I would swag a probability of success percentage at it. Maybe I’ll give myself a 5050 shot or I could pick up the phone and call the good folks at WorkerBTV and say, Hey, you’re already doing this. You’ve been doing it for 15 years. I could get there a lot faster if I bought your firm. It’s it might not be cheaper. But if I consider the time value of money and opportunity cost, maybe it is. And certainly with a 15 year track record, I got a better than 5050 shot at pulling this off. And that’s the key, right? The key is to is to build the firm that you might get one of those calls. Now, you don’t have to accept it and you might say, well, I don’t want to sell my firm, but you do want it to be your choice and not theirs. So I’d love to hear from you as to, you know, what it is that you’re doing with your company that puts you in a position to maybe someday take that call and be able to prove to a strategic acquirer that buying you is better than building the practice internally. 

Randell Mauricio [00:05:09] Absolutely. Greg, we’ve been talking a lot with the collector. Talk about, you know, what is a method firm, methodology firm? I really do think that it’s about the methodology, not just the institutional knowledge, but the way that we do things. And furthermore, for an acquirer, the partnerships that we have. And so let’s let me dig into media production for a moment. We have I think we just crossed over the 60 staff members, Mark, and predominantly most of them are here in Canada. And and I get it know, one of the things that we’re looking to do in the coming years is leverage the global workforce. There’s a lot of incentive for doing that. But or 15 years we’ve developed some some unique partnerships that allow us to do things a certain way better, faster, many times cheaper. I’ll give you a really good example right on the onset of our company, the first few years when video production was still a new concept and the association clients, we, we, we serve, they’re not local. I would dare say that 98%, 99% of them are in the US and they’re their business is international. So there’s times where we need to film in the US or in the UK. Here in Asia we’ve developed some partnerships and abilities and acquired some abilities to be able to dispatch the demographers just about anywhere in the world. But we’ve done that over the years. Harping back on two methodology that was in the first few years, in the last recent years, actually, fortunately enough for us, in late 2019, right before the pandemic, we actually acquired a technology. So going back to buy versus build, we actually invested in a technology in a company based out in New York that allows us to decentralize the process of filming. And so we can we’re able to film now using smartphones, iPhone 13, that are capable of filming in 4K. So what that does what that initiates for our clients is you can be in Singapore, your interviewer or somebody could could log in from London. We could have a recorded interview or a podcast conversation just like this that we’re having right now, record that immediately. And at the push of a button, those files are uploaded to our cloud. And later on that day we at WorkerBTV could very well be editing and producing that content. And so to wrap it up in certain partnerships have enabled us to have certain capabilities that, quite frankly, are really unique. 

Greg Alexander [00:07:57] You know, it’s a great use case that you just share with us, and I’m going to share with the audience a story. So I was last July 4th, I was in Telluride, Colorado, with my family, hiking and WorkerBTV, was producing some content and they asked if I would be willing to be on the show. And of course I said yes. And one day I came back from a hike and there was a box at my garage and I opened the box and there was this iPhone 13 and a stand in a light and all this. And in 10 minutes I had it set up. And next thing you know, I was being interviewed by a television host and it was there was a little laminated card that said, okay, when you’re done with it, hit this. And literally I hit send, I guess was the button and went on to my my day and had a cup of coffee with my wife. And we went on with the rest of our activities. And it just it struck me because I’ve been around video production companies before and the legacy providers are large firms. I mean, that process, they would have had to have either found a local crew which in a place like Telluride, then maybe there is, maybe there isn’t, but it’s a small town of 2000 people, or they would have to fly in a crew with all the equipment, etc., and it would have been really, really hard. So in this new world we’re living in right now, where everything is decentralized, where virtual everything it seems like is the way to go, virtual office space, you know, you name it. This is an example of a a methodology. And to use Randall’s terms, a capability that a large acquirer might say to themselves, hey, we need to be able to do the same thing. 

Greg Alexander [00:09:40] There’s a segment of our market that wants to buy our service in that way, and we don’t have it. So we could figure it out and hire to it or we could go make a deal with WorkerBTV and overnight I have that capability in my firm that’s it’s a great illustrative example to make the point here on developing a capability and methodology that might be attractive to somebody. Now, the challenge here, Randall, is that the large firms, which all of us, members of the boutique tribe, so to speak, compete with the large firms, have to be aware of the fact that they have a gap that needs to be filled. And then when they are aware that they have a gap, they need to know that you’re a best in breed. And whatever that niche is and partnering a buyer, you guys is the right thing. And the best way to make them aware of that gap is to compete with them head on, head in new client acquisition and actually win. And that’s that’s how they become aware of who you are. And they say, geez, how did we lose to that company? I never heard of them before. Maybe I should do some investigation. So has that happened to you? Have you competed with some of the bigger firms? And and have you beat them? And has that got you some attention or is that not happened just yet? 

Randell Mauricio [00:11:03] It’s an interesting conversation, an interesting question, Greg, because I dare say it hasn’t happened yet and I’ll give you the context. We’re a bit of an anomaly in that because of the services we provide, but also the platform services that we provide, the SAS platforms where we believe there’s no one out there quite like us. Now, we’ve been seeing in that same zone for the last ten years or so. I think in the last year we’re starting to come out of the woodwork and we’re starting they’re starting to register on our radar where, hey, this actually might be something similar to what we do. And it wasn’t it wasn’t a surprise. We we both know that media production has been around for. For years. We’ve seen over the years how that the pendulum is starting to swing more towards our tech. Right. Ten, 12 years ago when I when I started with this company, by the way, I’m not the founder of this company. But as I alluded to earlier, we’re starting to plan out that next evolution so that our our founder takes on a chairman role anyhow. Ten, 12 years ago, it was I would dare say we were 80% media production. Hmm. 

Randell Mauricio [00:12:17] We’ve swung now to about 5050, and I believe it’s it’s going to be 80/20 the other way, 80% tech. And we’ve been very conscious of that. We’ve been very strategic in our staffing and how we’ve structured our offerings and capabilities. We know that there is a certain type of genre that we can produce media for, and we and we’re very clear on that and we try to go after that business. We also know that we are in a global marketplace or workforce, and it’s really difficult to completely to compete with the agencies out there based out of New York, Dallas or wherever, shipping a bunch of work to India or to to the U.K. or to Asia or wherever that may be. So we’re trying to get ready for that. So a long way of saying we haven’t quite experienced that yet, but we’re gearing up for it in are silver bullet, if you will, is to focus more on our tech and hence why we’ve been investing largely in our SAS platforms. 

Greg Alexander [00:13:27] And the tech. Just to be clear, the tech is what enables this unique way of capturing video via the iPhone. 

Randell Mauricio [00:13:35] That’s part of it, actually. And we’re. Or we’re. Whether it’s a curse or blessing. We, too, just like you, Greg, in your in your prior business, we have a lot of offerings and service lines, but that’s just one. But our our SAS platform is actually video hosting and maybe for for a lack of better terms, I’ll say this, it allows our association clients to do what YouTube will not let you do. And I’ll explain that YouTube won’t let you serve your own banners for a click through. We can’t. YouTube will not let you gather data. We can. YouTube will not outright give you the data of whoever is subscribed to your content names, email addresses. We can do that for you. And if I were to relate this back to our live versus build conversation, we, we over the 15 years of developing this platform. And as you know, it’s it’s a body of knowledge. It’s a body of code and programing. We’ve always had to make the decision, are we going to build this internally or is there something out there that we can either buy or rent or partner with? Yeah. And one of the most one of the more interesting partnerships which we’ve secured is a data analytics firm, basically a data management technology or software. We’ve partnered with this company. If we take that capability layer on top of our existing I.T infrastructure, we’re excited about this because later on this year we’re going to have the ability to manage data preferences and become a rec and recommendations engine, just like YouTube or Facebook. And that’s going to be really powerful for our clients. 

Greg Alexander [00:15:19] Yeah, that is powerful. You know, I’m struck by you said that video production been around a long time and it certainly has. But the way that you’re doing it, it’s just a great example of a new way of doing something old. I mean, this whole distributed video capture, the way that you’re hosting some of those examples of how you’re different than of an earlier approach on YouTube. You know, these are all the things that make your methodology, your capabilities attractive and somebody that wants to be able to do that in the future. If you guys do decide that you want to sell, you know, it’ll be an easy decision for them because it’s a it to your point, it’s 15 years of accumulated knowledge and that that is what a strategic acquisition partner would think about. If I’m going to build this myself, am I willing to invest 15 years or am I willing to throw some money at it and get there tomorrow? And that’s the takeaway from from this session, from the membership is whether you plan on selling or not, you want your firm to look great to a larger firm who might approach you for an acquisition. When they think about buy versus build across the three dimensions, how much is it going to cost? How long is it going to take, which is the big one, and what’s the probability of success? And Randall, you’re your role model. Today was fantastic. We’re at our time window here, but I just wanted to thank you for coming on the show and and sharing your story. The WorkerB story. It’s quite a story. And we look forward to the member Q&A. 

Randell Mauricio [00:16:57] Thanks, Greg. Appreciate you having me on. This is a pleasure. 

Greg Alexander [00:16:59] Okay. And for those that are interested in this topic and others like it, pick up a copy of the book, The Boutique How to Start Scale and Sell a Professional Services Firm. You can find that on Amazon and our website. And if you’re not a member and you think connecting with a group of peers in a mastermind setting would make sense for you, consider joining Collective54.com. Okay. Thanks again. Take care. 

Randell Mauricio [00:17:26] Thanks Greg.

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Episode 89 – How an Investment Bank Generates a List of Potential Buyers for Your Firm  – Member Case with David Jorgenson

Supply and demand will impact your ability to sell your boutique.  On this episode, David Jorgenson, CEO at Equiteq, shares how the leading global investment bank for professional services firms has uniquely positioned themselves to understand acquisition needs, and how they are able to add value to founders who want to sell their businesses. 

TRANSCRIPT

Greg Alexander [00:00:16] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. My name is Greg Alexander. I’m the founder and I’ll be your host today. And on this episode, we’re going to address our members who would like to sell their firm some day. I want to talk to them about the concept of developing a deep universe of buyers, really understanding who might be interested in acquiring your firm and how to go about doing that. And we’ve got a great guest, David Jorgenson, and he is the CEO of Equitq and he’s a member of Collective 54. And for those that aren’t familiar with Equitq, as they’re really the leader in the space, they probably do more transactions for professional services firms than anybody else. And they’ve developed a way to really develop a deep and broad set of potential buyers. So with that, David, if you wouldn’t mind, please give yourself an introduction to the audience. 

David Jorgenson [00:01:20] Great. I appreciate it, Greg, and happy to be here. And thanks for thanks for inviting me to this conversation. It’s a very interesting topic. So as far as as far as an intro to me and Equitq, I’ve been doing this for about 25 years in various and various forms. And when I say this, I mean helping founder owners and other owners of of knowledge, economy businesses understand and approach the market for their firms. And so we always do this in the context of knowledge economy firms, which are and what I mean by that is firms that are delivering expertize to the to the marketplace. Equitq is a firm that does this globally. So we we have about 70 professionals doing this work in North America, Europe and Asia. And we’ve been doing it for about 15 years now. As you said, we do we consider ourselves a leader in the space and we consider ourselves to be specialists in helping founder owners, entrepreneurs understand and address the community of potential buyers out there. 

Greg Alexander [00:02:30] Okay, fantastic. And thanks for that. So this idea of developing a universe of buyers, most of our members are first time founders and they’re so good at what they do because they’re very, very, very focused. However, when it comes to selling your firm, there’s such a thing as too much focus. You can be it can know a little tunnel vision and opening yourself up to exploring, you know, people that might be interested in you that that they didn’t normally think about. This is a foreign concept to them. It was to me when I sold my firm and I now have the power of retrospection. And thank goodness I did throw a wide net because the firm that ended up buying me was someone I never knew before. And that was because the investment banker did a fantastic job. So could you maybe start at, I don’t know, 30,000 feet and explain to our audience why this is so important and your experience 25 years doing this, what normally happens as a result of throwing a wider net, so to speak? 

David Jorgenson [00:03:30] Yeah, I think it’s a good point that you started with to talk about tunnel vision because, you know, when we say that, we don’t mean it in a negative way because there’s a lot of focus that is required for for successfully, you know, growing a business. It’s difficult to do. It’s hard to do. And it requires a lot of laser focus. And so what that means is that you typically understand, you know, a narrow slice of the market in which you compete. And so when you think when the first thought about who might be interested in my company is probably the firms that you compete with or that you know or that do what you do. And we always think about it and sort of try and think about it in exactly the opposite way, which is you can’t do it. You do want to. And so that is typically where our best deals come from. It’s it comes from a combination of of two firms that can’t do what, you know, can’t can execute the strategy separately. They need each other to do it. And the reality is that nobody knows who that is or you wouldn’t have to run the process. You wouldn’t have to go ask the market what they think, if you know who, if you know who the only buyer is and you just call them. So we always think about starting with, you know, call it whatever cliche you want to say, call it a blank sheet of paper. But you as a as a market participant, the the point is that focus helps you grow, but it doesn’t help you sell because there are the best deals are built from putting two to pieces together that may not seem like they fit right off the bat, but they make a. To make a bigger strategy possible in the future. Hmm. 

Greg Alexander [00:05:17] That’s interesting, you know. One plus one equals three. Another cliche for you. You know, one thing that I’ve learned from Equifax research in particular, which I think you guys do a great job of, is this concept of adjacencies, which is maybe an expanded explanation of what we’re just talking about. So like, in my case, SBI, my old firm, we were in the sales consulting space, but they were marketing agencies, which was an adjacency that we interested in us. There were product development firms, that was an adjacency that were interested in us and so on and so on. And sometimes these boutique providers in and of themselves want to expand their business by expanding into an adjacency, and therefore you become more attractive. And we use well, my banker use this thing called a market map as a way to identify who those adjacencies are, because you do use a tool like that or something similar to it to try to identify who these buyers are. And if so, would you would you mind explaining to our audience kind of what that tool is and how it works? 

David Jorgenson [00:06:17] Yeah, I think we do. And the way we think about it is in sort of axis of of customer relationship and then service. And so there’s, there’s two, two ways in a very, very simple framework to think about adjacencies. One is doing something different for the same customer and the other is doing the same for a different customer. Hmm. So if you can think about, you know, a two dimensional chart showing how those things interrelate. And so adjacencies can be in either one of those axes and they can be taken equally or either of them or both can drive transactional interests. But if you think about the, the, the easiest way to start a conversation with potential buyers on one of those two dimensions, which is that, which is to say we can help you do more to your current client base. Or on the other hand, we can help you access new clients. And if you dig down deep into the most, you know, sort of immediate buyer interest, when we’re selling a business, a lot of times it comes down to one of those two things, which is I want to I want to be in those logos or I want to do what you do with my clients. Yeah, because if I can do what you do, well, then I can double my revenue per client. Yeah. Just in this category. So the, I think the simplest way to think about adjacencies in mapping a market is, is, are those two dimensions do you expand my clients yet or do you expand my my product set at current clients? Is that is that kind of thing you would say? 

Greg Alexander [00:07:56] Yeah, that’s a great way to frame it. What I love about it’s easy to understand and it makes common sense. Let’s let’s stay on that for a moment. Our members are boutiques, which we define as 25 to 250 employees when they get bought by a larger firm market leader. Usually the reason the rationale for the deal anyways is I don’t own pick a company, Accenture or somebody like that. They’re their pitch to the founder. Entrepreneur is we don’t do what you do, but if we had you inside our firm, we could walk you into all our clients, which due to our size, we have a lot more reach than you do. You know, we could 2x3x, four x or business or whatever it is over a period of time. That’s usually what happens when they get approach. That way, our founders get a little intimidated by that. They they love being an entrepreneurs and founders. So the idea of working for a mega company and having a boss and things like that is, is a little unattractive. But they balance that out with, my goodness, imagine if I had access to those clients, you know, that many more people would get exposure to my brilliance, my expertize. So for the founder, that’s a little hesitant to go there. What counsel would you give him or her? 

David Jorgenson [00:09:13] Well, you know, a lot of our clients reach that stage. It’s a very common stage to get to in I call it distribution. So what you’re looking at, what you need is, is better distribution. So you hit a ceiling and the ceiling is comprised of the who you know, who your network is, you know where your offices are. You know, you need if only more like you said, if only more people could learn about what we know and what we do, you know, our opportunity is unlimited and that’s distribution. And so Accenture’s a good example. It’s a it’s a it’s an incredibly powerful distribution platform. And so I think what we counsel our clients to think through very carefully is if that’s what you need, then that’s how you get it, you know, need it. And it’s it becomes a less of an emotional conversation when it is seen, you know, in the framework of, well, it’s just a necessary step. Every company goes through it. And it’s it’s a it is an absolutely universal developmental step in professional services. There’s no people business that can’t that doesn’t have to find a way to break through that. Now, they don’t they don’t all need to be bought by Accenture. That’s not the solution to everybody’s distribution challenges. But there’s no there’s no there’s no quicker way to increase your. Your distribution network. And there’s lots of different there are lots of different scales to that. So there are lots of distribution solutions that can be a lot less intimidating than an acquisition by Accenture. Yeah, that is a that is a an easy and easy example to, to, to contemplate. But it is also quite an extreme. Malcolm, if you think about the universe of potential acquirers, there are distribution networks out there that are much less. Less intimidating. Less. Less extensive, maybe. But also maybe a better custom fit. And that gets back to the question of finding, you know, building violence. You know, you can you can build a list that has a company like Accenture on it and then a much more user friendly middle market, you know, slightly smaller firm that that can offer a choice. Mm hmm. 

Greg Alexander [00:11:40] Yeah, you’re right. There are scales to distribution, and then you correct that in the evolutionary cycle of a boutique, eventually you get to that point and you can build that yourself, which is going to cost a lot of money, take a lot of time, or you can partner by selling all or part of your company to somebody that has a distribution network already in place. You guys have done so many deals and if if the hypothesis of doing a deal is distribution and these founders and members are deciding whether to sell or not to sell based in part on what life will be like as part of a new firm, a larger firm. You know, looking back on all the deals you’ve done right now, the founders happy inside these larger distribution networks. I mean, how is it working out for them? 

David Jorgenson [00:12:30] Most of the time, if it’s set up properly, there is satisfaction. Hmm. It when we see when we see a founders owners, sellers become unhappy. It’s when they there was a misunderstanding or miscommunication about what life was like. You know, it’s that it’s that this isn’t what you said it was. And you know, that, you know, that has happened. It’s rare. It has happened. Where where a buyer will paint a picture that turns out not to be accurate. And so, you know, our job is to provide a range of options in a range of choices so that, you know, a seller or a founder knows what they’re stepping into. Mm hmm. And as long as it doesn’t have to be a, you know, a situation that they want to be in permanently. Mm hmm. But it has to match up with what they thought. Mm hmm. And really, the issues come in, and they’re quite rare, actually, but they. They happen when. When the expectations don’t meet the promise or the reality doesn’t meet the promise. And so the. The point of a process. The point of a buyer’s list is. One to provide certainty of an outcome, casting a wide net, as you say. And the other is to provide choice and to provide alternatives. And so you as a seller should be able to balance and match up multiple options that include all of the variables that drive a deal price structure. But also, what does this company like to work for? You know what? What are the do I want to work with these people for three, five, ten years into the future? Do I want my team to work here? Is is this a place where my team and I think that’s part of the part of the process. But really, it doesn’t have to be the kind of company you would build. It doesn’t have to be the kind of company you already built. But it has. But it has to be what you expect. Yeah, it has to be accurately described. 

Greg Alexander [00:14:47] Yeah, that’s good advice. You know, one of the things that you’ve helped bring, as well as your peers in your industry is a whole new universe of buyers known as the private equity buyer. For the longest time, professional services, most of the buyers in the activity was in the area of a strategic buyer, but lots of deal activity is in the private equity space now, and our members are constantly getting called by these people with, you know, big promises, etc.. And there’s confusion around one particular thing that I’d love to get your perspective on. Maybe this is the last topic we can talk about today, and that is there’s the platform. You know, a PE firm comes to you and says, I’m going to back you and want you to be the platform, and then we’re going to go do a bunch of acquisitions underneath you as a platform provider or platform, the platform, I should say. And then there’s the other scenario where there already is a platform, and that platform is now coming to you as a smaller firm. And they’re trying to use you as a as a token, so to speak, this this difference between a platform and a tuck in and getting these inbound inquiries from private equity investors. Could you help maybe bring some clarity to this confusing thing? You know, who are these private equity people? Why are they now all of a sudden interested in professional services when you might you consider being a platform when it might be okay to be a token? 

David Jorgenson [00:16:11] Yeah, it’s a it’s a great topic. It’s a big topic. So I think what’s important to recognize about private equity is that it has changed a lot in the last ten, 20, 30 years. So it isn’t at all like it was in the eighties and nineties with leveraged cap, leveraged financing, corporate raiding, kind of, you know, buying and restructuring inefficiently run companies. It just isn’t like that anymore, particularly in this market. So what private equity firms are that are interested in professional services are is they’re very experienced professional business owners. They’re not completely different from founder entrepreneurs themselves. So private equity firms care about the same things that founders care about, and they want their companies to be healthy and growing and they want their companies to be excellent places to work that attract talent. That’s the first thing to recognize is they’re not a different species. They approach the world slightly differently. They think about different things. They’re they’re they’re unique as individuals often, but they’re not a different species. 

David Jorgenson [00:17:27] Second thing to know is that they’re ten years ago. There weren’t as many private equity firms and there were a lot more companies to buy. And so they didn’t have to do anything. That was either it was seen as difficult. So ten years ago, there were, you know, professional services, people dominated business models, particularly those that didn’t have recurring revenue that sort of worked on the contract basis and had to sort of resell all their revenue every year like consults some consulting firms do. They didn’t need to worry about that part of the market because it was a lot of other markets to go, you know, build a business there. So we’ve seen in our business, we’ve seen private equities become much more interested in in professional services and knowledge economy businesses in the last five years. And I think that’s great for the market, is great for the participants and the entrepreneurs in this market. And so what that means is that private equities have started to make sense of people driven business models, and they’re not afraid of them, which is, I think, to their credit, because I don’t think there’s anything to be afraid of if you understand it. So we’ve gone from having two or three PE firms that kind of got it to, you know, a few more that get it and a whole lot more that are trying to get it. And so what that means is they’re flooding the market. They’re flooding entrepreneurs with outreach and with cold calls. And it’s very confusing as a business owner to make sense of it all. 

David Jorgenson [00:19:00] And I sympathize. And I think that’s it’s difficult to to break through that confusion. What I will say about private equity firms is the business model is to is to find companies at a reasonable price, grow them, combine them, make them bigger, and sell it as a larger entity that requires them as a core component of their business model to explore the lowest price at which you will sell your business. That’s what they’re doing. So when they’re when they’re reaching out to a business owner, they are prospecting for somebody who will be interested in the conversation and then they will be trying to explore. They’re not trying to cheat you. They’re not trying to to. They’re not trying to trick you because they want to work with you. They want to partner with you. But they are trying to understand at the lowest price at which you’ll sell their business, sell your business. And so you have to you have to just approach it in that spirit. As far as the the difference between a platform and a tuck in, it’s critical to the strategy. So when I say that they’re looking to acquire, grow and then sell a bit, you know, a business, they usually do that by buying one anchor anchor company so that what you call a platform, which is what we call it as well. So the platform company or the anchor companies, the first investment in a strategy. So if they say, for example, we want to build a company in Salesforce consulting, they will they will try and find a platform which is the first investment, which is the which is what they will then use as as the focal point for adding on to. 

David Jorgenson [00:20:41] And they will try to add on to that, to that first investment through organic growth, through, you know, business operations and strategy as as any as any owner would. And by buying other companies as tuck ins and combining it with that platform company, I tend to think that, yeah, it’s neither better to be the platform or the tuck in. Both can be very attractive and very reasonable exits for a founder entrepreneur. I think there’s a fair bit more pressure with with being the platform you’ll be asked to to work harder than you did when you were when you owned the company yourself, probably. And so you need to want to really dig in. You need to want to chase 30, 40, 80% growth per year. And so you have to be excited about. Yeah. If not, then, you know, potentially it’s better to to, you know, to if you were to sell your business, to sell it to a, to a platform business as a tuck in because you might, you know, it might allow you some more flexibility in what you do after the deal. 

Greg Alexander [00:21:49] Very educational. Thank you. Listen, we’re we’re out of time. I could go on and on with you here, but there’s a lot of confusion around this. And I think our members would benefit greatly by spending more time with Equitq. And David and his coworker, Greg, who is also a member. So if you have any interest in exiting your firm and you want to talk to them about building a universe of buyers, you can see them on the member portal and reach out to them directly. But David, on behalf of the membership, I appreciate you being here today and sharing what you’ve what you’ve learned over the years. It was very valuable and thanks for being here. 

David Jorgenson [00:22:23] Great. And thanks again. I enjoyed the conversation. 

Greg Alexander [00:22:25] Okay, great. And for those that are interested in this topic and others like it, pick up a copy of the book, The Boutique How to Start School and Sell a Professional Service. This firm. And if you are listening and you’re not a member and you want to meet exceptional people like David and learn more about these types of things, consider joining our mastermind community. You can find it at collective54.com. Thanks again. Take care. 

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Episode 88 – How a Founder of a Training Firm Scaled his Firm by Scaling Himself – Member Case with Tom Abbott

Scaling a boutique takes a team but firms are often started by a single founder. On this episode, Tom Abbott, CEO and Co-Founder of SOCO Sales Training, shares how he transitioned from being involved in every aspect of the business to focusing on team development. 

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. My name is Greg Alexander. I’m the founder and I’ll be your host today. And on this episode, we’re going to discuss how a founder of a boutique processor firm is able to scale the firm by replicating himself in an executive leadership team. This is a really fascinating topic because we’re combining a couple of different chapters from our book, The Boutique, and we’ve got a great role model with us today. His name is Tom Abbott, and Tom is in the throes of this as we speak. And he’s had the courage to attempt to do this. And we’d love to hear his his story. So. So, Tom, welcome to the show. And and if you wouldn’t mind, please give the audience a proper introduction. 

Tom Abbott [00:01:20] Hey, thanks for that, Greg. Yeah, a real pleasure to be here. Tom Abbott here, co-founder and CEO of So called Sales Training. We help companies to optimize their sales performance, so we do that through virtual instructor led training, through webinars and through our e-learning platform called SOCO Academy. So anything about sales, we help B2B companies particularly to optimize their performance. 

Greg Alexander [00:01:44] Okay. Very good. Okay. So let me set this up a little bit. So sometimes founders and co-founders like Tom suffer from what I call the hero syndrome. And the hero syndrome is that we as human beings, we love to feel needed. We love to feel like the hero. We have our personal identity wrapped up in the firm, and it feels good. We get validated when when clients say, Hey, you have to be in the key meeting, or when employees come to you all the time with major decisions that get made. And this insecurity can get in the way of scaling a firm. And the fix here, if your aspiration is to scale beyond a lifestyle business, is to build a firm that is not dependent on you, a firm that can run without you. And this requires, you know, being able to kind of check your ego, so to speak, and surround yourself with an executive leadership team that can do what you can do as well as you can do it. And if you’re able to do that, you’re you’re able to overcome the founder bottleneck and scale yourself by replicating yourself and others. And this is a big stumbling block for many. So so, Tom, as I understand it, this was once a stumbling block for you. And it’s either no longer or it’s in the process and partially no longer a stumbling block. So would you would you share with us kind of where you are in your journey and how you first became aware that maybe you had this problem and maybe what your first steps were, etc.? 

Tom Abbott [00:03:18] Wow. Okay, so there’s a lot to that question. The first the first part is it’s always a work in progress. I think the first key is realizing that you suffer from hero syndrome. And that’s the first part is the awareness. And then sort of realizing is this is this working for me? Right? Is this really helpful? Does this help me grow the business? Do I feel like a hero that I can swoop in and save the day, but at the expense of doing other things like actually growing the business and thinking about strategy and expanding and doing the kind of, you know, boss stuff. So, you know, typically, you know, that’s always a challenge. But I came to that realization, you know, probably about three years ago, I imagine, where it just became really apparent that this this company won’t grow beyond me if I don’t kind of get out of my own way. So the first step for me was to say, look, I’ve got to stop doing sales and I’m awesome at sales. So that was very difficult and I’ve got to stop delivering training programs and I’m a great facilitator and trainer, so that’s really hard, you know, you know, I’m still available for keynotes for companies still engaging to come in and do the big, you know, motivational rah rah as a thought leader. But when it comes to the training for a half day or one day or a two day program, we’ve done a really good job of of of getting freelance trainers certified through me and our training program, which I can talk about later to deliver that on our behalf. And that’s just been honestly a game changer because the training is happening all over the region, all over the world. Sometimes when I’m asleep, it’s just it’s just been a game changer. All right. 

Greg Alexander [00:04:56] So I want to I want to probe in a little bit because you are great at sales and you are great at facilitating. But one of the reasons why you’re great at both is because you love it. So I think founders don’t do what you did because they they love what they do and they don’t want to. Doing what they love doing. So how did you reconcile the conflict between, Hey, I can go out and sell the next client, which I love doing, that I get energy from it it feels good with. Yeah, but that’s in the way of me trying to scale my firm. Like, how did how did you how did you put those two things together? 

Tom Abbott [00:05:35] I think what I did, Greg, was I realized that there were other things that I also love to do. So I love to train. But then I could change my love for training sales teams to training my own sales team. So I can I can do that. I can change my love for, you know, sales for well, let me let me coach my sales team and then they can bring me in for some deals. On some cases, if there is, you know, three or four C-suite people on a call, they’re like, hey, Tom, if we get you on this call, you know, you sprinkle a little founder’s magic 3 minutes. That’s all I need from your time in and out. And you’re good. That’s fine, because then I can still have the team do the grunt work, the follow up to put the proposal together, to send the brochures, to answer the questions, to schedule meetings, all of that stuff that I should not be doing. Because something I realized a long time ago is I was the most expensive trainer on the planet. I was the most expensive salesperson on the planet, probably the most expensive data entry clerk on the planet, like everything we’re doing as founders. And I realized a few years ago, I always ask myself, Is this making me money? And if the answer is No, this isn’t making me money, then I’ve got to stop doing it and get someone who’s, you know, cheaper to do it for me. Yeah. 

Greg Alexander [00:06:49] One of the primary, if not the primary reason why boutiques don’t scale is they have senior people doing junior work, which is what you were just talking about, because in the most senior person in the firm is the founder who happens to be the most expensive. So if you’re doing something that a junior person can do, by definition, you’re eroding all your margin. And that’s a great realization and a great reminder. So I love your answer around how you didn’t sacrifice job satisfaction to make this happen. You just redeployed your love in other areas that lended itself to scale. For example, instead of training clients, train your own staff. That’s a great example. What would you say to founders who say this to me all the time? And it’s somewhat of a religious battle between me and them at the moment that says, Well, I’m special what I do, nobody else can do. So it’s impossible for me to replicate myself. Junior people can’t do X, Y, Z. What do you say to that? 

Tom Abbott [00:07:46] Well, the first thing I say is two things. One, I totally get that because I struggle with that. And you’ve got to get over yourself, because if no one’s going to be as great as you and I’ve realized that I feel, you know, and maybe, maybe we’re wrong, okay. Founders maybe were wrong. Okay. There’s a slight possibility that maybe we’re not as amazing as we think we are. However, we’ve all taken our businesses to a certain point, which means we’re great at a lot of things. But the point is, and I’ve said this to people, my 80% in front of a classroom in a workshop selling my 80% is probably most people’s hundred. Right? So if you can get someone who’s 80% of what you’re able to deliver, that’s pretty darn good. So do you want to have 100% of a small piece of the pie or get someone who’s 80% but you’re able to scale? So if I can get, you know, three salespeople who are 80% my level, that’s still better than me at 100%. There’s no comparison. If I can get three, four or five, six trainers around the region delivering training at 80% of what Tom Abbot would normally do, that’s fine. Now, a good way to solve that problem and we started doing this this year is we charge the same rates for our training across the board with a so-called certified sales trainer. But if they’re insistent on having me hey, Tom, you know, you worked with us last year. We’d love to have you back. I’m happy to do it. It’s at 50% more than our usual rate. 

Greg Alexander [00:09:22] Wow. 

Tom Abbott [00:09:23] Yeah. And I’ve had some people take me up on it, which is great. Okay, I’ll get out of bed for an extra 50%, like, why not? Yeah, you know, because I still love to do it. So don’t get me wrong, all the founders out there, we still love to do what we do. We’re still great at it. But we have to realize that if we want to scale, we need to get more people on the team doing what we do. And look, there’s there’s no magic. You can document this. I can talk about that, too. You can document the process. You can train people to do it. So let’s get out of our own way and leave the ego at the door. It can be done. But in the event that, you know, people are like, We really insist on having you, the answer is yes. And here is what the investment is. Take it or leave it. Yeah. 

Greg Alexander [00:10:05] Which is a great way to quantify it in the eyes of the customer. And some people will say, you know what, time, yeah, you are worth it. So here’s the premium. And some people will say, okay, you know, I’m okay with. You’re a certified person and that gets you out of it gracefully. Right. It’s a it’s a really excellent example of that. And 50% is a big number. Okay. So here so I’m going to play the role of of these. 

Tom Abbott [00:10:24] And let me tell you, I a 50% is a big number, but it has to be big because I played around with that. And if it’s too close to the regular rate, they’ll just pay that all the time. And then you will never get out of doing that delivery ever. 

Greg Alexander [00:10:37] Okay. So here’s the next objection that when you speak to our members in the future about this subject, this is what you’re going to hear. They’re going to say, okay, I get it. However, I’m time starved. So the time it takes for me to teach somebody to do what I do as well as I do, it just takes forever. I can just do it myself in half the time. So I’m going to scale that way. What do you say to that? 

Tom Abbott [00:11:02] I say that’s actually going to take a really long time. And the reality is the quickest way to scale. Get someone to follow. You want a sales call? The quickest, easiest thing to do. You’re already doing it. Get someone to shadow. You want to call, get them to follow you on a sales call. That’s number one. Number two, hit the record button on Zoom. Super easy. That doesn’t take any time. You can. Then what we’ve done is we’ve recorded all of my sales calls over the last two years. And look, we’ve been in COVID for so long. If you haven’t been recording your Zoom sales calls, you’ve missed out on a tremendous opportunity to start this learning bank. So it’s a lot easier than you think. So we’ve got literally dozens to hundreds of different sales calls that we label and tag. Oh, this was an inbound prospect. This was a discovery call. This was a follow up call. This had multiple stakeholders, you know, whatever. This was a follow up call. So you can tag those. And then when you’re onboarding your reps, you just send them the link. Hey, watch this, watch this, watch this. So it’s not as hard as we think. And then you just start documenting. So you’ll notice that with your emails that you send out, you’re probably doing your own kind of a copy paste almost every time. So it’s just a matter of, you know, you save those, you put them in a folder, you copy paste, he put those on on a note, you put it in Dropbox or put it on Google Drive before you know it. Before you know it, you’ve got the makings of a sales playbook. It’s not as easy. It’s not as hard as we think. And you could be doing it right now and you don’t even know it. 

Greg Alexander [00:12:29] A lot of our members have handled this issue in the sales function, meaning other people are now selling work on their behalf. Most of them have done that because they’re not like you. They don’t enjoy selling. You know, if I’m a management consultant that specializes in cybersecurity, I can geek out about all the possible hacks that I might deal with. But I don’t want to talk to a client and sell it. So they they delegated that just out of the fact that they didn’t enjoy doing it where they really get nervous about delivering the work. So a client hires me to go to do X, Y, Z. I’m supposed to be an expert with charging them a lot of money, and then I’m going to trust somebody else to deliver the work. It scares them. So how have you overcome that? 

Tom Abbott [00:13:12] Well, there’s a couple of ways. The first thing we do is we we certify all of our facilitator. So how do we do that? One is, you know, knowledge. So we’ve got testing. So I’ve written two books on sales, for example. So we make sure that they read the books, they watch all of our videos and so called Academy, which is our e-learning platform, and then we actually test them on content. Are you a sales expert? Are you a subject matter expert? I can’t teach you to do that. I don’t have time for that. So are you competent and confident in training sales? Do you know your stuff? That’s number one. Then number two is the the skill of actually facilitation. So that’s what we need in our business. Number one is you’ve got to have the sales acumen and knowledge. But the second is you need the delivery skills, the so-called platform skills. Can you engage an audience? Are you good, coach? Do you know how to answer tough questions? Can you put people in breakout rooms and facilitate discussion and role plays? So that’s all part of my world in the training world. So preferably we get people that have had some certification in training. They’ve gone through a training program. They understand about curriculum development or they are or were an internal trainer within a large company. So they’ve got their chops. Having done that, I don’t have to teach them how to do that. So we would test them. So test them in knowledge, which is a written test, some multiple choice, some, you know, short answer as well as delivery. So we get them to actually deliver a sample session with our team and we recorded on Zoom and then internally we look at it and give them feedback so we can see them in action if they’ve got a demo video even before they come to the interview process. Even better. So that’s how we can guarantee that, okay, we’ve got good people. Then they’ll work with me personally and I will train them. Okay, so this is how I handle this situation. This is how we do it here at SOCO. So there’s you as a sales trainer, and then there’s how do we do it here at SOCO? So then we just have to be able to guarantee to our customers that the experience will be the same. So a lot of people think that it’s about the trainer and in a sense it does have a lot to do with the trainer for sure. However, what most of our customers want is a consistent framework or a consistent methodology for all of their sales teams around the region or around the world. We’re able to do that through the certification program. So that’s that’s been really helpful for us. 

Greg Alexander [00:15:32] Okay. And then the last objection I get sometimes is, hey, if I hire these people to do what I do, I got to pay them. I’d rather just put the money in the bank account and not pay anybody to do this. So what do you say to that? 

Tom Abbott [00:15:46] I mean, you can do that. But again, it’s you know, do you want just like a mom and pop, you know, like a hobby business or what? But do you want to grow? Right. So if you actually want to grow and you want more business, you have to find a way to meet the needs of customers. And there’s just not enough hours in the day. I know that. There’s just not enough hours in the day to to service everybody. Now, maybe you’re happy just having a lifestyle business and maybe say, look, all I want to do is this many hours and and that’s fine. But if you actually have aspirations of, you know, reaching as many people as possible, like, you know, I have a goal. I don’t want anybody on the planet to lose a sale because they can’t sell. That’s that’s my mission. So I want to reach as many humans on this planet as possible. Tom Abbott can’t do it all by himself now. It took me about eight years to realize that, but I can’t do it all by myself. So I got to work with people. Yeah. So and it’s very hard when you feel like you’re really good to actually start bringing people on because there’s a danger in going, Yeah, but she’s not exactly like me or I wouldn’t have done it that way. That’s your biggest problem right there? Yeah, maybe they do it their own way, but following a framework, if that makes any sense, kind of, you know, you’ve got some things you need to do, but you do it your own way. You focus on the what and the why and let them focus on on the how in the sense. And and, you know, that’s just going to help you grow. You’ve just got to build that team and just trust, trust in your process. So what I’ve done, Greg, is I’ve been able to say, look, I’m going to take my energy away from sales. I’m going to take my energy away from training and put it towards training my team and becoming a leader and developing them. And I see my number one role as a CEO is to step up and be a CEO. Yeah. And run the company the way a CEO would. Yeah. Get out of my own way. 

Greg Alexander [00:17:36] Well, listen, you have a tremendous amount of self-awareness. You know, being an entrepreneur is a journey. Right. And you’ve been on it for eight years, and you probably didn’t know what you know now back then. And you now know. And it’s just a wonderful pleasure to have you in the membership because of your level of self-awareness, your humility, your modesty, because you’ve had a tremendous amount of success. And just on behalf of the membership, we’re up at our time window here, but I just wanted to thank you for your contribution. You know, the way the collective works is we’ve got to contribute to the collective body of knowledge, and you’ve just made a great contribution. So thanks, Tom. 

Tom Abbott [00:18:11] Hey, my pleasure. And thank you, Greg. I’ve gotten a lot from my membership in Collective 54, and I was just thrilled to be invited on the podcast to kind of give back because I’ve gained a lot already. So thanks to you. 

Greg Alexander [00:18:22] Okay, fantastic. And for those that are interested in this topic and those like it, you can pick up a copy of our book, The Boutique How to Start Scale and Sell a Professional Services Firm. And if you’re interested in joining our mastermind community and meeting great people like Tom, check us out at collective54.com. Thanks again. Take care.

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Episode 87 – Why Hiring an Investment Banker is the Right Move for First-time Founders Trying to Exit – Member Case with Frank Williamson

The value of your firm is influenced by the comparables for recently sold firms like yours. On this episode, we invited Frank Williamson, Founder & CEO at Oaklyn Consulting, to share details about comps, valuation, and the benefits of an investment banker. 

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that are not familiar with Collective 54, we’re the first mastermind community to help you grow, scale and exit your firm bigger and faster. Specifically for pro serve firms. My name is Greg Alexander and I’m the founder and I’ll be your host. And our topic today is comparables. Otherwise known as comps. And this is for firms that would like to sell themselves at some point. And it discusses how being in the right category or being compared correctly to others like you can have a big impact on the purchase price and the terms of the deal. And to help me with this conversation, we’ve got an exceptional role model this morning. His name is Frank Williamson, and Frank runs Oakland Consulting, which is somebody who helps clients with this particular item. Their services include acquisitions, transaction management, private equity, capital service and so on. And and he and his firm probably know more about this than any any of us ever will. So we’re really lucky to have him with us. So. So, Frank, it’s good to see you. And would you please properly introduce yourself to the audience? 

Frank Williamson [00:01:37] Oh, Greg, it’s great to be here, and I really appreciate what you’re doing for the audience and for the founders of professional services firms. So, yes, we do just what you described, which was well done. We are we’re an investment banking boutique. We work with small and mid-sized companies, nonprofits, professional services firms and others. When there’s a major transaction to navigate, maybe it’s an incoming offer or maybe it’s a very planful strategic sale. You know, maybe it’s the need to raise capital to grow. But we try to be good guides to people through that process. 

Greg Alexander [00:02:17] Okay, fantastic. So, Frank, many of our members are first time founders and entrepreneurs. They haven’t been through an exit before. They probably have listened to guys and gals like me and read all the books and tried to educate themselves. But when I have this conversation regarding comparables and positioning yourself in the proper category, sometimes it’s deer in the headlights. It’s for some reason it’s an abstract idea that’s tough to understand. So I’m wondering if you might offer the audience your perspective on this topic. Maybe share an example or two just to bring some greater clarity to it. 

Frank Williamson [00:02:55] Well, the chapter of your book on comps does the really nice analogy of a real estate broker, and I think a lot of us have more opportunities in life to think about, well, how do I cut the cost per square foot of something? Then how do I comp the whole business? And and we might even wonder why that comping things idea make sense since businesses are so different from one another. But you know, you brought up the in the chapter, I thought, you know, some really good ways to look at it. One of them amounts to saying, well, who are you relative to other similar firms that someone you’re talking to might seem. And and I think importantly. Who are you relative to the kind of firm that in the bigger acquisitive. Company might buy you. Are you like them or unlike them? And I think that having a beat on that really gives people a chance to start talking with their exit. Or it’s a succession partner about how do we fit and what could we do together. And it you know, it’s easy for all of us to go into those kinds of conversations with some kind of analogy. Yeah. And that’s what I think comps are most useful, as is the analogy that gets the conversation going. 

Greg Alexander [00:04:24] Yeah. So for, for listeners that haven’t had a chance to read the book, let’s just stay on the real estate example because it’s easy. You know, let’s say you want to list your house and you hire real estate agents to represent you and you say, well, what’s the house worth? Well, they consider your neighborhood, your street homes that like yours, that have sold. And they boil it down to a metric sometimes, like in Texas where I live, it’s it’s cost per square foot. Then there’s other metrics that we use. Well, in the business world is very similar. If you have a firm that you want to sell, you would hire somebody like Frank’s company to help you do that, and you’d say, What’s it worth? And they would go out and and do some homework and come back with some comps and say, you know, this is this is a range of what your firm might be worth. And here’s what it will trade on. Sometimes it’s a multiple of revenue, sometimes it’s a multiple of immediate. There’s a bunch of different ways that you can value a firm, and getting that incorrect can cost you a lot of money. And I share my story in the book where at one point when I sold my firm, people thought we were a sales training firm and that carried a much lower comp. And we weren’t. We were a management consulting firm which carried a higher comp. And just moving into that category and being able to prove that that’s a category we belonged in, you know, got me a higher price in better terms. And that’s what’s so important. Now, Frank, it’s hard for founders to identify who their comps are, and that’s probably why they hire your firm and partners to figure that out. So how do you how do you find this difficult to locate information? Because these transactions are private companies. The data is not readily available. How do you learn what the going rate is, so to speak? 

Frank Williamson [00:05:56] Yeah, well, there are two parts that good question. One is who to be comped against. Yeah. And then the second one is we’ll get given that I did that, then what’s the going rate. If you don’t mind I’ll just do the, the first 1/1 because I think it’s a little bit easier. Bite of the apple, too, you know, to get in your mouth and you go in and we see many people who haven’t just figured out who are who is comparable to me, who are other people like me. And that I think people can do often on their own by just sort of scanning the business landscape. Who do I compete with? Who else is sold? Who I compete for staff with? You know who who is like me? And who do I want to be like? Like in the case of your story, do I want to be like a management consulting firm? I want to be like a sales training firm. And how will I prove that? Then comes the hard part, which is how do I get to a real number that makes any sense. And and as many people know, you know, price is. At least half the equation. Terms of the rest. You know, if I went out and heard a friend of mine. Tell me he sold his business for 20 times last year’s epitaph. But upon further. Probing with him or with the buyer. You know, I realized that it was eight times at closing and a big profit share that came along. And it was equally 12 times after that. And in any event, the buyer thought they were going to make twice as much off the business as the seller did. And so really the prior year’s earnings weren’t the right number two for the multiple against anyway. It wasn’t how the deal came together, but it makes a great headline. I sold my business for 20 times while going and using that 20 as the basis for account isn’t really going to. Help anyone beyond a great story over dinner about what a great negotiator you are. So it really is hard to get an honest bead on. What are firms like mine selling for in reality? And, you know, our experience is there are few good sources of data around the marketplace, number one. Number two, people who are active in the market have an anecdotal sense that add something important to the data. And number three. Even with that, there’s a big element of small operating companies trading in a market that just, you know, is a you don’t know until you ask kind of market. And finding the way to ask the right questions. It is a lot is a lot of what we do on behalf of clients is a lot of what people get out of investment bankers is can you find a way to ask what the terms really were such that you feel like you’ve got an honest answer? Yeah. 

Greg Alexander [00:09:22] You know, a little bit more about my story and how I stumbled into this because I was a first time father myself and this was a foreign world to me. So as we were gaining some some traction, one of the big consulting firms approached us and said, Hey, we would like to buy you or consider by you. Your firm is worth 1.25 trailing 12 month revenue. I didn’t know any better and I said, okay, well, that’s really not that interesting because we’re growing at 30% a year. So I just hold on to it and then we bid on a company. So we were on the other side of the desk and we participate in an auction run by an investment banker. And we lost. And I was surprised we lost. And when the banker called me and told me we lost and he said we were one third the price we offered, like I think it was like $20 million. And he sold for like 60 and I couldn’t believe the number. And I said to the banker, I said, My goodness, if you could get that for that business, what could you get for mine? And the banker did a great job and they said, Well, they’re adjacent to you. Not exactly like you, but you know, if you probably can get a little bit more because you’re bigger than them, but the only way to really find out is give it a try. So we hired them because they were the experts and they went out. And as luck would have it, thank goodness they got a number that I never thought possible. But what I learned from that experience is. Your business is worth what someone’s willing to pay for it. Right. 

Frank Williamson [00:10:47] And I think that’s such an important lesson and one that one that is hard to have come across when any business owner does probably their first encounter with getting their business valued, which is for some wealth planning purpose or tax planning purpose. They don’t get a valuation report and that uses a wide or very broad set of comps and describes a theoretical transaction to the satisfaction of the paperwork that the IRS needs. That’s you know, that’s a whole different way of thinking about it than what’s the actual transaction, the actual buyer, and what does that actual person need. What really jumped out to me about your story was that you went to develop a bid as a buyer. I assume you did it at what you thought would be a fair price. It would make sense after the deal and you came back with feedback that when you weren’t off by 20%, but it was X to three X. Yeah. In that range. And I think that so perfectly illustrates the question of, well, there was somebody in the market who really wanted that company that you were looking at to the tune of three times more than you wanted it. Yeah. And getting in the zone of what do people really want? What would they pay for is such an important part of really having good dialog. 

Greg Alexander [00:12:18] Yeah. You know, you talked earlier about terms and this is something also I think is underappreciated by our membership. You know, when they think about selling the firm, obviously the first question is, what’s it worth? Excuse me. But they they they don’t put enough emphasis on terms, in my opinion. The example that you gave earlier, you know, when you peel the when someone said, I sold over 20 times last year’s profit, but then you peel the onion back and not really. And I think comps also inform what the terms are. And there was an old phrase, I forget who said it, but you name the price, I’ll name the terms, something along those lines. Great. 

Frank Williamson [00:12:54] Great, great, great. 

Greg Alexander [00:12:55] Yeah. What what does comps and running a process with someone like yourself reveal about terms that typically surprise first time founders? 

Frank Williamson [00:13:09] I would say. I would say that people get surprised by two things. One is because we all talk about multiples and comps as if it were a clean price. Yeah, that’s one. One surprising thing is that buyers and for that matter, sellers don’t make the decision about the price on the basis of last year’s earnings. People are getting together to make a decision based on what’s going to happen after the deal. And it’s a convenient way to express it to say, well, it was some multiple of last year’s earnings that wasn’t really anybody’s decision. So that, I think comes as a surprise to people is, oh, the multiple. Wasn’t the reason that the multiple appear. The other related part that I think is surprising to people is, is for all you know, all of us do sales in the normal part of building our firms. Selling your business. In the end, it’s sales, you know, and it’s it’s it’s best done in my experience as a consultative selling process. When you’re sitting down with someone else, the topic is, What can I do that’s going to impact your business? And then how can we share the results of that? Yeah, and that conversation, in my experience, does as much influence terms as it does to influence price. Interesting cause that’s the point at which you accommodate. Well, was the day after the sale all about the buying company taking over operations and letting the founder leave? Or was it all about providing a new platform for the selling company’s founder so that. She could go run three times as fast as she was able to do alone. Hmm. It’s that kind of business plan that really drives terms and and it may also drive price but a little bit jokingly it can those things can get conflated right in my mind story which by the way, is a true one about the you know, about a client who sold for a price that he they in this case could honestly go say to their friends was 20 times and the buyer could honestly go say to their board, it was seven times because their respective views of what was going to happen afterwards were just different. Hmm. 

Greg Alexander [00:15:49] That is a great story. Well, listen, we’re at our time window here, but Frank, on behalf of the membership, this is an area that our members lack. Experience with so happy because their first time fathers, they haven’t been through a transaction before for the most part. So having an expert like yourself in the community is really helpful in the way the collective works is we all make deposits to the collective body of knowledge and we all learn from it. So on behalf of the members, thank you for doing that today. 

Frank Williamson [00:16:18] Well, thank you so much for having me. I’ve really valued being part of collective group. 

Greg Alexander [00:16:23] And if anybody is thinking about selling their business, I tell you, I say it in the book, I say it on the podcast, don’t go it alone. Hire somebody like Frank to represent you. It’s a mistake when you’re doing this to try to do it on your on your own. And usually a representation like Frank will make your life a lot easier and make you some more money, get you better terms, and just hold your hand through the process. So if you want to get a hold him, do so through the member portal. Okay. So for those that are interested in this topic and others like it, if you haven’t read the book yet, the boutique artist art scale and seller professional services firm, I’ll direct you to that. And then for those that are listening that are not members but would enjoy being part of a community of peers and meet exceptional people like Frank, consider joining our mastermind community. You can find it at collective54.com. Thanks again, Frank. Have a good rest of your day. 

Frank Williamson [00:17:19] Thank you, Greg. Goodbye.

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Why a Mastermind Community is Better Than Executive Coaching

Man with grey hair, beard and glasses, drinking from a mug at his desk, surrounded by co-workers.

Knowledge is power. In the modern business landscape, there are plenty of potential pitfalls for founders, owners and leaders. But a breadth of experience and insights can help you make the most informed decisions.

Leaders often seek guidance from executive coaching. However, when it comes to getting your hands on a true breadth of experience and perspectives, a mastermind group is the way to go. 

What is a mastermind group?

Before comparing executive coaching and mastermind groups, it’s important to get the terms straight.

Executive coaching is straightforward. You bring in an executive coach and they share their knowledge and experience with you. For many executives, however, the information isn’t the point. An executive coach often takes on the role of a “business therapist.” Executives want someone to teach them how to change their leadership behavior. 

A mastermind group is a more pragmatic option for gaining a greater breadth of perspectives and experience. For those new to the term, a mastermind group is essentially organized peer mentoring. That “peer” part is where the real difference from executive coaching comes in. 

A mastermind group is a group of people who want to accelerate their business and personal growth and help their peers do so. They do this by forming a community where they can share their experience and expertise. This could be through live expert instructions or peer group meetings. 

So the assumption is that an executive coach is (hopefully) someone who has progressed further along in their career and is now sharing with you how they got that far. Whereas, a mastermind group is composed of diverse peer experts who feel they’re in the same boat as you. They all want to improve, and they all want to grow. 

Why choose a mastermind group? 

An executive coach does have their place in your planning. It’s important to understand that the executive coach has a purpose specific to you. Their goal is to change your behavior and working style.

When you’re ready to get down to work, a mastermind group will provide you with tangible benefits. Here are just a few.

Diverse opinions

The best executive coach is still a single person. They have their own opinions, biases, and methods of work. These can be wonderful opinions and methods, but they’re still limited.

A mastermind group presents you with an array of diverse opinions and points of view. You’re already good at your specialties. So why not get the opinions of those with different specializations and experiences?

Immediate brainstorming

Building good leadership habits in the long term is a laudable goal. What you’ll often find you need today is solutions, not habits. And you need those solutions immediately, not five years down the road.

A good mastermind group can provide you with constant brainstorming sessions that give you immediately valuable and actionable feedback. This helps you start implementing solutions as soon as possible and is one of the major benefits of a mastermind group.

Relevant information

An executive coach might have tons of business experience. But at the end of the day, their current occupation is just that — executive coach. They’re advising on business, not being an active part of it. 

In a mastermind group, you get to touch base with people working in a similar capacity to you, in the same business environment. This means you can more quickly access information that isn’t just immediate but highly relevant. In this regard, the benefit of a mastermind group is that everyone else is in the same trenches as you, fighting the same battles.

Motivational

A good executive coach will teach you ways to self-motivate. But there’s something to be said for group motivation as well. When you work with a mastermind group, you have an extra impetus to produce results to share with your colleagues. This is why famous writers and thinkers throughout history have assembled their own mastermind groups. This encourages everyone to get questions and answers to contribute. 

Time-efficient

You want a return on your investment, whether in money or time. Mastermind groups are some of the best returns on investment regarding the number of hours put in. They can be incredibly flexible when it comes to giving results, letting you progress at your own pace.

Customized 

An experienced executive coach will try to adapt their program to you. But in the end, that’s exactly what they’re offering — their program, their menu. The benefits of a mastermind group should be thought of more as a buffet, less a menu. You have the power to decide what to use and what to offer. 

Practice mentorship

Getting mentored is always a valuable opportunity. But it’s equally valuable to be able to hone your own mentorship skills. A mastermind group allows you to hone your abilities in either the role of mentor or mentee. This means you can rely on others for the skills you don’t have, and sharpen your existing skills through teaching and mentorship. 

Networking and cross-promotion

You’ve heard it a million times. It’s not what you know; it’s who you know. With a great mastermind group, you can have your cake and eat it, too — you get the information and fantastic networking and cross-promotion opportunities. 

Work with the best mastermind group for boutique firms

Many business owners seek out a mastermind group to get skill sharing more suited for their business. Collective 54 is dedicated to that tailored approach, specializing in assisting founders and owners of boutique professional services firms to grow, scale and sell their firms bigger and faster. If you want to make more, work less and sell your firm faster and for more, we have the mastermind group for you. 
For more insights into how to upscale your consulting business, listen to the Collective 54 podcast today or join our mastermind group.

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Episode 86 – How a 43-year-old Marketing Agency Handled a Generational Transfer – Member Case with Rob Rankin

Decision making evolves as your firm scales and the founder must be replicated in the successor. On this episode, Rob Rankin, CEO at Clarity Coverdale Fury (CCF), shares his perspective on developing the next generation of the firm, with a focus on succession planning and how decisions are made. 

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. My name is Greg Alexander and I’m the founder and I’ll be your host today. And on this episode, we’re going to discuss power. And when I say power, basically what I am referring to is how decisions get made inside of a boutique. And how that changes over time as we move through the lifecycle of a boutique from growth to scaled exit and even beyond. When the first generation is transitioned into the second generation and the second generation is transitioning to third generation and so on and so on, the decision making power dynamic tends to morph when that happens. That’s really important because decisions in a small firm are easy. There’s not a lot of them. They’re simple. They’re not complex. The founder who’s making the decisions can play the role of dictator because he or she is still really close to the business and has great instincts. But as you get bigger in, the founder or co-founders might be two or three steps removed from the day to day or the clients, you know, they might not be the best people to make decisions anymore because their inputs have changed quite a bit. So that’s what we’re going to discuss today. And we have we have a great role model, Rob Rankin, and Rob is in the middle of this. He has a really great perspective because he has been through a generational transfer and has a viewpoint from that standpoint. So, Rob, welcome to the show. It’s great to have you. And would you mind, please, giving a proper introduction of yourself? 

Rob Rankin [00:02:06] You got it. Thanks, Greg, and thanks for having me today. My name is Rob Rankin and I’m president and CCO of CCF, we’re a marketing communications firm that was founded in 1979 based in Minneapolis. And our sole world headquarters are still in Minneapolis. 

Greg Alexander [00:02:23] And what type of clients do you serve? 

Rob Rankin [00:02:26] About 60% of our book of business is in health care and health and wellness. And what we like to call we know health care from all four angles. So public health manufacture, payer and provider. 

Greg Alexander [00:02:39] Okay. Got it. And Rob, we wanted you to speak on this subject because as you just mentioned, your firm was founded in 1979, and right now it’s 2022. So there’s been a journey. And I’m sure the decision making power has changed over time and there’s been generational transfer. So if you wouldn’t mind, maybe kind of walk me through briefly that history from then till now and how the power dynamic changed. 

Rob Rankin [00:03:06] Yeah, so I joined the firm in 1998 and it was founded in 1979 by three Gentlemen’s Clarity, Coverdale and Furey. And in 1978, I was just an account guy and then grew up into a more leadership role account supervisor and ultimately running a department. It was also at that point in time where the gentleman who founded the company were getting ready to retire. One was very ready and the other two weren’t very far away. So over probably a 3 to 5 year period of time, we started to have discussions about a transfer. A few of us, what we call Gen two, formed a team and moved into that and we bought that firm in 2014. We’ve been running it successfully ever since. I’ve since lost one of my partners to retirement and another just is trying to retire this year. And we’re we’re going to get her out of the door to her own accord shortly here. And we’re building that Gen three team that can ultimately take it over from myself and my two other partners. 

Greg Alexander [00:04:13] Yep. And this progression. Gen one, gen two, gen three. You know, this is very common in professional services because it’s a people business. And very often there’s the next generation that wants to stay and wants to continue to do what they’re doing. And there’s an opportunity, if you handle it this way and handle it correctly, you know, for each generation to benefit for not only financially but in other ways. Rob When, when Gen one was transferring to, to Gen two, you and your partners, did it go as smoothly as you had hoped or was there, were there any bumps in the road? And what type of lessons might we learned from that, from that tale? 

Rob Rankin [00:04:59] Yeah, I’m super blessed in that it did go what I would say, relatively smoothly. Perfectly. Absolutely not. And the founding partner, Tim Clarity and myself used to say, because we intended at least to keep the name the same, that if we wake up five, seven years from now and no one know you guys bought it, it worked. And it worked really, really well. And that actually happened. I will say that there were some speed bumps early on as we were forming our Team Gen two and there was a person in place who just wasn’t going to be partner material. And so there were some really, really hard discussions that had to be had to let him know that. And to say that was what was easy. It wasn’t it wasn’t easy at all, but it had to be done or we would have been setting ourselves up not for success, but for failure. And so that was probably the most difficult thing. And then the other thing, at least from Gen two, is perspective being patient because we had we had a kind of a phased approach with each of the partners where they wanted to phase out over time for different reasons. And we allowed that to happen. And from an outside looking in perspective, it still appeared like they were in charge even though they weren’t. And that was important to them and it was okay with us. You know, it wasn’t something where we needed to be seen front and center. We also didn’t want to reinvent the enterprise. We didn’t want to rename it. We didn’t want to rebrand it. We didn’t want to blow the whole thing up. They had a model that was working and had worked for a really long time. And we felt the blow up, that type of equity in the marketplace would have been a big mistake. So that required a little bit of discipline, but we were able to do that as well. 

Greg Alexander [00:06:38] You know, what jumps out at me about your story is that, you know, you joined as a young account person and grew up to where you are right now, which means that those that Gen one did an excellent job of identifying high potential employees and grooming them to take over bigger and bigger responsibilities. That that happened in the typical kind of apprenticeship model where it was just through osmosis or was there some formal system put in place? 

Rob Rankin [00:07:05] It was really more of an apprenticeship model. Tim Clarity I tend to be the type of person that if you give me a lot of room to move, I work better. If you constrain me, I’m not good being micromanaged. And so that’s kind of the philosophy in the culture here. We hire really responsible people and let them do their way, do their job, and we do our best just to get out of their way. That doesn’t mean they don’t need coaching. It doesn’t mean they don’t need training. It doesn’t mean they don’t need mentoring of sorts. But but we let them do their job. And Tim allowed me to do that and allowed our media director at the time, Danny there to do the same thing and in and of it. She and I both kind of grew up together in the business and became somewhat area parents at the end of the day. Diane was probably interested in retiring sooner while she was. She’s already retired sooner than I and and she’s since moved on. And because of that, she didn’t want as big a share when we transitioned. But we had a third person internally who also had really was a finance person and had really great, great credentials in that space. And so she worked in that and she was interested in buying in a little bit more. And between the three of us, we found we found a good balance for each of us. 

Greg Alexander [00:08:21] Now, you mentioned buying, so I’m assuming there was some type of transaction that happened from Gen one to Gen two. And was it the traditional way where the first generation kind of set up, maybe like a sellers note and they transitioned a piece at a time based on profits that were being generated by the business? Or did you guys have to go out and raise the money to pull this off? 

Rob Rankin [00:08:42] No, we were really fortunate. There was an owner financed buyout over a five year period of time with an option for a year, six and seven, if needed, at the seller’s discretion. So we didn’t control that, and then we did have to have some skin in the game. So there was a certain percentage of the overall price that we agreed upon that we had to we had to go to a bank and we had a we had to find financing for that. And based on our individual percentages, that’s what we had to put up. 

Greg Alexander [00:09:13] And they structured that way because they wanted skin in the game. Or was that the only way to close the gap in price? 

Rob Rankin [00:09:19] They wanted to know that we were serious and 100% owner financed buyout, I think and I believe that it was the right decision for us. It was the right decision for them. They wanted to know that we were serious and that, you know, being able to have needing to go to a bank and taking out some form of a loan, you know, it it ratcheted things up just a bit. 

Greg Alexander [00:09:40] Right. And during that transition, let’s call it five years. Back to the main topic here, which was how decisions are getting made or the power structure externally. It was important to them to still be perceived to be in charge. But internally, you and your partners were running the firm. Sometimes this gets messed up because the generation that’s on their way out, sometimes they don’t want to give up control and they they stick their nose where it doesn’t belong at times. How did that happen at all? 

Rob Rankin [00:10:09] And in not to a not to a degree where it was terribly difficult to the partners that simply wanted their name still on the door, it was more that they just wanted to be seen as still the important person that started the company, and rightfully so. They’re fantastic gentlemen, their friends and mentors to this day. There was one that loves to do the work and is just passionate about the work and was an in 30 until the day he walked out the door. But it wasn’t difficult and there wasn’t anything that was acrimonious or needed, lawyers or anything like that. 

Greg Alexander [00:10:46] Okay. You know, and then Gen2 takes over and some of them are retiring, as you mentioned. Is there like a mandatory retirement age or is there some some rules around when somebody can walk out the door there? 

Rob Rankin [00:11:02] There aren’t, other than once you decide to walk out the door. The firm has up to ten years to purchase your stock at the firm’s discretion. I say so we can do that over time. But you can’t hold on forever. And you also can’t be the one that drives that. You can’t walk out the door and say, I want to get paid tomorrow. 

Greg Alexander [00:11:23] Very good. I mean, that makes a lot of sense. That keeps everybody on the same page there. It sounds like to me you had some great legal counsel that held your hand here and put these things in place to make sure that, you know, there was no unnecessary tension and drama. Is that fair to say? You had great counsel. 

Rob Rankin [00:11:40] We we had fantastic counsel. And my only disappointment is that he moved on and went and worked for his dad’s company. So he’s no longer my lawyer. So. 

Greg Alexander [00:11:52] And would you advise our members that might attempt to do this, not to do it themselves and find the right attorney to help? 

Rob Rankin [00:12:01] 100%. I would say that unless you’re an attorney yourself, and even if you are, it would be a mistake to try to do this without the one. Putting the structure in place from a legal standpoint. Kept us all in line. Yeah, we all knew the rules. We agreed to the rules, and we knew we had to follow them. And we did. Yeah. 

Greg Alexander [00:12:18] And that’s the important thing. And everybody agrees upfront, right? So there’s, there’s no surprises. And when I’ve seen this and I’ve seen it several times now, it’s very rare. Does a dispute wind up in court because of this? I mean, it was it’s friends cell and a friends, so to speak. And it’s a very natural, organic thing to do. And this is well-worn territory. This isn’t something for those that are listening. You don’t have to go invent the wheel here. I mean, this has been going on for a long time period just because it’s the first time that you may be doing it members. It’s not the first time that it’s been done. Okay. So now let’s fast forward a little bit. So your partners are retiring. At some point you’re going to retire and you’re going to have to go to June three. Do you plan on using the same approach or are things the world is different now than it was back in 1979, 1998, even 2014 does is the process still workers? Is it changing? Does it need to be modernized? 

Rob Rankin [00:13:13] I think it can work, but we have to be sure that certain components are in place. So right now we have one gentleman who’s actually a member of Collective 54 as well, because he’s brought in and is a partner and and he’s a candidate to take that lead. Now, we have to do a few things. We have to surround him with people just like I was surrounded with great team members to be a part of that. And so if we can do that over the next 3 to 5 years, then we’ll have a gen3 and I think it can work pretty seamlessly. If not, we do need a plan B, you know, whether that’s a merger and acquisition selling, where we’re bringing on talent to help round out that individual or surround him, I should say, with others that can help him with the day to day business. And then that’s an option too. So I’ve seen several people in our space, specifically marketing communications, be left at the altar by that internal person who was supposed to buy. And so I know that we do need a plan B. 

Greg Alexander [00:14:14] Yeah, I’ve seen that happen too, you know. And then also, I mean. Can you go so far as to think about zero on Jan three? Can you peak down to Jan four? Is that too far of a stretch? Too many years will pass by by then. 

Rob Rankin [00:14:27] I think for me I don’t I think by by the time I hand off the torch it’s it’s then there’s to have and I think that’s part of what really worked with us is the guys never came back and wanted to be back in the business. They let they let Jan to run it the way they they saw fit. And there’s also just a spirit and a culture here that’s been built, starting with Jan one, carried on by Jan two. That’s really important. Yeah. And it’s why I know that while it’s likely, maybe even probable that we could get more money if we did an external sale, it’s not in the spirit of the enterprise and what the guys were gracious enough to do for me and my other partners, we want to do for those that have been working with us side by side for years as well. 

Greg Alexander [00:15:11] Yeah, well, this is a great story. You’re a fantastic role model. This topic is underrepresented in the world. It’s not talked about enough. And the way these collectives work, ours and others, is that, you know, people have to make a deposit into the collective body of knowledge, and that’s how we all get smarter. And you did that today, and I’m very grateful. So on behalf of the members, thanks for being here and sharing your story with us. 

Rob Rankin [00:15:37] You got it. Thanks so much, Greg. And I’ll see you at the boutique on Friday. 

Greg Alexander [00:15:41] Okay. Very good. And for those that are listening to this and they want to learn more about this topic and all the other ones related to growing, scaling and exiting, if you haven’t already, pick up a copy of the book The Boutique, How to Start Scale and Sell a Professional Services Firm. And if you’re not a member and you’re listening to this and you want that type of tribal knowledge, which is very tough to come by and meet, really interesting people like Rob consider becoming part of our community and you can find that at Collective54.com. Thanks again, Rob. 

Rob Rankin [00:16:15] All right. Take care.

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