Episode 114 – How the Founder of a Marketing Agency Dealt with Key Employee Risk – Member Case by Kimberly Kraemer

Key employee risk is a very real threat to founders of boutique professional services firms. Small, people driven businesses are overly dependent on key employees. If a key employee resigns, the pain inflicted on the owner is intense, and the financial impact on the income statement is large.  On this episode, Kimberly Kraemer, CEO at Waterhouse Brands, shares how she suffered the loss of a key employee and how she survived it. In addition, hear how Kim re-engineered her firm to prevent this from ever happening again.  

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Preserve podcast with Collective 54, a podcast for leaders of thriving boutique professional services firms. For those that might not be familiar with us, Collective 54 is the first mastermind community dedicated entirely to the needs of this unique group. Folks at a leading boutique processor firms. My name is Greg Alexander. I’m the founder and I will be your host today on this episode. I hope to make you aware of a really big risk. And that risk is called key employee risk. And simply stated, what that means is, as a small service firm, we only have X number of employees, so each employee’s contribution is very important. However, we also probably have the 8020 rule, which would which means 80% of the value, so to speak, is generated by 20% of the people. And sometimes one of those great people walks right out the front door. And when that happens, it can have a disproportional effect on a small firm just because the law of numbers would say so. Now, there’s lots of things we can do to mitigate key employee risk, and that’s what we to talk about today. We’ve got a fantastic role model, someone who lived through this and is thriving as a result of it, which is somewhat counterintuitive, but that’s why she was chosen for the show. Her name is Kim Cramer. Kim, it’s great to see you. Thanks for being here. And please introduce yourself. 

Kimberly Kraemer [00:01:45] Hi, Greg. Thank you. And thanks, everyone in the collective 54 community. I certainly have learned a lot from watching everyone else describe the journey they’ve been on. And fortunately for me, Collective 54 helped me navigate my key man risk journey. So a little bit about myself. I’m Kim Cramer, founder and CEO of a boutique firm called Waterhouse Brands. We were formed in 2017 and our focus is on helping life sciences companies build, define and build their corporate and their employer brands. We launched based on what I saw as a key gap in the market, which was for a brand communications firm that could really do more than just come up with a logo and an identity and a website. It was really about telling a company scientific story in a way that put their most valuable asset, which is their employees at the center. Science is complicated. We’ve spent a lot of time and helped these companies really translate that science into English that Wall Street can understand. And what we found is that so many companies just really focus on investors and they focus on partners and they focus on patients, right. All the players in the health ecosystem. But the last in the bottom on their list was employees. And so we wanted to come up with a solution based on a methodology that we had created called ALIGN, that help these companies feature their employees and build a culture that enabled them to go not just from great science and innovation and smart team, but have a culture that helped them become a successful well executing business. And so that was the genesis of Waterhouse Brands and really put my close to 30 years of experience on the corporate and agency side in communications and brand marketing in an industry that I’ve basically grown up with love, biotechnology, put it all together and put it to work. 

Greg Alexander [00:04:01] Well, very good. That was an outstanding description, I can tell you. Very good at your craft. I have a clear definition of of who you serve and what you do and how you do it and how you do it differently. So that was really, really good. All right. So I’m going to ask you to tell us a story. I understand that you suffered from key employee risk, and I’d love to hear, you know, what happened. You know, to the extent that you’re willing to share it and and how you dealt with it and the lessons learned along the way. 

Kimberly Kraemer [00:04:33] Sure. Well, like many start up boutique consulting firms are really growth strategy and build the team strategy was based on tapping our network. It was about who did we know, who had skills and experiences that could help us take our services and bring it into defined categories. In terms of employer brand, having a competency there in terms of digital brand and activation. And so we put together this team based on our network and. One of those people was more of an operations person. So we if you follow the EOS methodology like we’ve been trying to, you know, there’s a visionary and that was kind of the role I serve, you know, that there’s an integrator and my co-founder who is more of a linear thinker and kind of get stuff done. She really served that role in helping us build out our client services competencies. And we had more of an h.r. Person who was really helping to spin up employer brand. And then we had the manager of operations who was more of a jack of all trades person, but she was so competent and so efficient that I just let her do everything from financials to our h.r. operations. So onboarding off porting manuals, benefits comp, all of the different aspects of a business that in the earliest of stages you’re trying to fill those boxes. So that worked well for a while. We went from 2017 where we were consultants to 2019, making the decision to scale smart. So every year I have a theme and scale Smart was converting from independent contractors to FTE eyes, and she took care of all of that. 2020 Just as we coincided with the pandemic, we had a theme of play bigger, and that was really about owning and amplifying what made us unique in our industry and in our as a service provider. And we were fortunate that we were able to really expand our our client base. And with everyone working from home, you know, we were very well utilized. We were building we had not much else to do but work and drink in our off hours. And there weren’t many of. That’s right. So. Fast forward, we we had a banner year in 2020. We grew our revenue by something crazy like 38% top line growth. Wow. And profitability was strong, too. And then we got out a little over our skis. I would say that the the there were tensions in the system in all levels of our organization. Our ops person felt like she should be the ceo. Our h.r. Person didn’t feel like she really wanted to work on the business and in the business, but we didn’t need a full time h.r. Person. So we were starting to just kind of I think we were all going crazy from the pandemic, frankly. Yeah. But i’ll get to this key man risk and what happened in just a moment. In 2021. Our year of going from play bigger. Hey, we did it. We added all these clients to Now let’s level up, let’s go to scale. Let’s figure out how to hire some more people to help increase our capacity and service clients. Well, we made some really dumb mistakes in 2021. We hired, I’d say, four people, five people that were experienced, but they weren’t right for the role. We didn’t know what the roles should be. And as a result, as the wheels were falling off the boss at a leadership team level and we were hiring more mid-level manager people and people that do the work. It wasn’t working. There was culture. There were the wrong people for the wrong for the roles. And so we had to take a giant step back. We let go of three key people, including the head of h.r. Who was also working on the business, and that had a devastating ripple effect. And then things really came to a head with the ups person and we parted ways and we let another senior person go who just wasn’t able to hunt. They were great at doing one thing and one thing well, and that was it. But that wasn’t the role that we needed. So long story short, as this was going on at a leadership level, culturally, the the more the worker level, there was a lot of negativity, toxicity and drama. So we had to really press the reset button hard. And 2022 became all about the theme of right sizing. And so I’m happy to report that although we had common risk in these two several departures, but the h.r. And ops person departed. What happened to me was that i ended up picking up the slack, me and my co-founder, so i would have given myself a b at best on a good day of how I can do operations. It’s just wasn’t really what I was born to do. So I’d say that going through this transition, we decided we needed to diversify. We hired an outsourced finance firm which also had a bookkeeping arm. We professionalized our h.r. Capabilities by hiring a outsourced h.r. Business partner, and we got a great employment law firm to help us structure things correctly from the get go. And so now we’re in the mode of coming off of a year of we’re not going to focus on growth, although i’m happy to report that even with not focusing on growth and while bumbling along through the year doing h.r. And ops on my own with my co-founder, we had achieved 20% topline revenue growth. We were pretty good ability by 3%, an additional 3%. And we had made the decision by the end of the year to hire in-house a director of finance and operations. And lo and behold, today is his first day. And I think he is an example of the purposeful process that we put in place to make sure we knew exactly what the role would be, exactly what the qualifications and the phenotype and experience should be, and had worked with a recruiter to help us. Scour the universe of who’s good and get the right fit. Not just from a skills and capability standpoint, but from a culture standpoint. So the jury’s out. But in this key man risk, how do I mitigate this in the future? I’m going to keep our outsource resources. And so I have that strategic advisor. But he will now be the point person for H.R. operations, because he also, in addition to being a financing accounting person, has a advanced degree in organizational development, and he comes from a digital agency. So I don’t have to teach him the agency business, which is great. 

Greg Alexander [00:12:39] He’s a keeper. That’s a rare combination of skills. 

Kimberly Kraemer [00:12:43] So I don’t know. I think that may have been too long of a story. No, no. 

Greg Alexander [00:12:46] No, no. You kidding me? That was absolutely fantastic. So many things that you said in the journey. They’re going to resonate with our members. They’re going to have all kinds of questions on the Friday Q&A that they’ll be able to have with you. The main thing that I wanted to highlight and underline and Ken story is that this is what happens, right? I mean, rapid growth. And Kim, who is obviously a fantastic practitioner at her craft. And when you when it when key people leave the firm, next thing you know, you’re not practicing your craft. You’re working on all kinds of other stuff, finance, H.R. ops. And guess what? She was giving herself a B if I asked you. Kim, we having a good time while that was happening, you probably would have said, I want to jump out the window. Right. It’s just not fun. Not only is it is it painful in terms of the business and the drama and, you know, the toxicity that you talked about personally, you just not having a good time and you scratching your head saying, hey, why am I doing this? I mean, he had a 30 year career. You probably don’t need to do that. So you’re doing this for reasons beyond money, etc.. And that’s what happened. So the the solution that you talked about, which is strategic outsourcing, you know, certain functions, I think is a great solution. And there’s all kinds of high quality providers out there, many of which are in the collective that you can rent, if you will. And because you now hiring a vendor as opposed to employee, the vendor has multiple employees, so you’ve diversified your risk right there. It’s a firm, not a person. The other thing that I would I would mention and Kim, I want to talk to you about this, is that, you know, I just wrote an entire book on this very subject. It’s called The Founder Bottleneck How to Scale Yourself. And it talks about how key men risk in the role of founder. I mean, if something, God forbid, happened to Kim, what would happen in water house brands probably wouldn’t be good. And you have to build a succession plan for yourself, not only to protect the business in the event of some tragic outcome, but also eventually. There’s other things you’re going to want to do with your life. Let’s say you want to sell the firm someday. Well, if the firm is completely dependent on Kim, she can’t sell it. Let’s say she wants to become chairperson instead of CEO or managing partner and work on visionary items as opposed to growing the day to day. Then someone’s going to be able to do what she can do and what a co-founder can do as well as she can do it so she can delegate and elevate to use the U.S. terminology. So succession planning is so mission critical for the boutique service firm. And it’s one of those things, unfortunately, that you can kind of kick the can down the road because it’s you know, it’s not a 90 day rock. You know, it’s it’s actually a multi-year journey to pull off a real succession plan. So it’s easy to just say, I’ll get to it someday, and then all of a sudden one of your key employee quits and you’re like, Oh my gosh, like, I need to get to that now. Or not Only is the business going to suffer, although in Kim’s case, it actually performed quite well during that environment. But you’re going to be miserable in your job. You’re going to have to start doing things in the weeds that you don’t want to do. So, Kim, have you thought about succession planning? I know that’s a big subject and probably out of scope for today’s call and we’ll talk about it more on Friday. But has this torch anything regarding succession planning 100%? 

Kimberly Kraemer [00:16:07] I do think that. I mean, you talk a lot, Greg, about the here being the hero and the ego, right, that comes with as a founder or a leader, that nobody can do things as good as I can. So I’m just going to do that. Right. So I’m past that. I would love to have great people that can do the things that I do and do them better. Like everything you talk about on your Friday calls, Greg, and that you’ve written about in the boutique and in the Founders Bottleneck, so resonates with me. So I am in the process right now working with our HBP on succession planning and really thinking about. So this year, our whole theme is about synergy rising, synergy rising our teams capabilities. We have a diverse mix of people with marketing and communications and digital and design expertise, but it’s how can we work together smarter and better and how can we as a group look at the kind of work we’re doing, the kind of client engagements we take on and think about where the gaps in the organization are and not only how can we fill the gaps, but how can we strengthen the the areas where we as individuals all perform well so that we have some relief and some redundancy. Otherwise, we’ll never be able to scale. And we know. 

Greg Alexander [00:17:34] Yeah, exactly. Well said. Okay. We’re at our a time window here and I want to save, you know, this rich conversation for the Friday Q&A session. But, Kim, you’re a joy to talk to. I’m not surprised that your firm is doing so well. Your generous spirit. That story was absolutely fantastic. On behalf of all the members, thank you for contributing and giving back and being here today. 

Kimberly Kraemer [00:17:55] Thank you, Greg, for doing the work that you do. You have helped so many entrepreneurs and founders, and I’m really blessed to be part of this community. So thank you. 

Greg Alexander [00:18:03] Okay, great. All right. Let me give the audience members some calls to action here. Okay. So if you’re a member and you’re running on EOC, which we fully endorse, we run off collective ITV4 in the U.S. We just wrote a U.S. collective 54 integration plan that might be helpful. For example, you know, EOC advocates are running your business off a scorecard, but what should the metrics be? You know, professional services metrics are very different. What should the benchmarks be? We have the benchmarking database, etc.. So go to the resource center and download the EOC Collective 54 integration plan. That’s one thing. Secondly, if you want to, you know, start implementing some of the concepts and the final bottleneck and succession planning, there’s a companion course tied to the book that should be out by the time this recording gets released. There’s a tool in there called Roles and Responsibilities. I highly recommend you download that and get familiar with it. So those are a couple of things that you can do as a member. If you’re not a member, your calls to action are to become a member. Go to collective 54 dot com and fill out the contact us form and a representative will get in contact with you. If you’re not quite ready to join, you can subscribe to collect the 54 insights. You get three things every week on Monday, a blog on Wednesday a podcast an on Friday, a a chart that talks about some of this benchmarking data. All right. Boy, that was a lot in 20 minutes. I’m exhausted. I need a break. But for those listening, thanks for tuning in every week. And thanks for being here. Until next time, we wish you the best of luck as you try to grow, scale and sell your firm someday.

Episode 110 – How a Software Development Firm Structured an Equity Incentive for a Key Employee – Member Case by Michael Daoud

Hiring, or promoting, a person into an executive role often requires the Founder to offer an equity incentive to the key employee. This requirement drives a need to understand what the firm is worth today, and how much of the future value should be shared with the key employee. On this episode, Michael Daoud, CEO at Visus LLC, discusses how he valued his firm, and how he structured the equity share with the key employee. 

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Pro Serve podcast with Collective 54, a podcast for leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated entirely to the needs of leaders of thriving boutique producer firms. My name’s Greg Alexander. I’m the founder and I’ll be host on. In this episode, we’re going to talk about negotiating an equity incentive for hiring an executive into your firm, something that we all run into a little bit of a tricky scenario and multiple ways to do it. And we’ve got a great role model with us today. Collective 54 member Michael Daoud. And Michael, as recently gone through this is going to share a little bit of his story with us. So with that, Michael, welcome. Good to see you. And please introduce yourself to everybody. 

Michael Daoud [00:01:09] Thank you, Greg Yes, has a great side. I’m Michael Daoud. I’m the founder and CEO of Visus LLC. We are a professional services company focused on software development and our target market is mid-level enterprise companies and we help them improve their operational efficiency and customer experience. And we do that through developing custom applications, content management systems and business intelligence solutions. 

Greg Alexander [00:01:37] So it’s Daoud. Not dowd. 

Michael Daoud [00:01:40] Correct. 

Greg Alexander [00:01:40] Okay. Sorry about that. 

Michael Daoud [00:01:43] Problem. 

Greg Alexander [00:01:44] Okay, So let’s set it up. So describe the situation. So as I understand it, you’re thinking about adding a member to your team in a pretty important role and you had a need to think about an equity incentive. So give us the backstory, please. 

Michael Daoud [00:02:00] Yeah. So I’ve got an opportunity to bring on a very well experienced person, and that can help us with our growth and scale. And part of that incentive is to provide some sort of equity and or that process been trying to determine valuations and things like that. So can probably provide the right balance of things. Always have grown the company so far over the years and it has a certain value. And so we want to figure out what that value is today. So when the equity equation is figured out with this gentleman, then we can determine, you know, targets based on today’s valuation and future valuation. 

Greg Alexander [00:02:42] Yeah. Okay. Very good. And that’s an important distinction. So for those that are struggling with the same issue, remember all the value that you created up to this point is yours because the executive coming into the company didn’t help you create that. So establishing what the firm is worth today and then what the firm might be worth in the future, and that gap between its valuation in the future and the valuation today, that’s the value that was created. And the question is how much of that value do you share with a new hire? So determining what the firm is worth today is a tricky thing. So my client is stand that you have an advisory board and they suggested to you that you get a valuation. So first, why did they think that that was worth doing? And then secondly, as you explored the possible ways of doing that, what were your options? 

Michael Daoud [00:03:31] Yeah, that’s a great question. Great. So we have a fractional CFO that works with us, and he recently had a client go through an indication of value, so rather than a full valuation. Is this person here in town can do indications of value. Just to kind of give you a rough idea of what the valuation is. The reason the board pushed me to do that, because you and I spoke and you had shared some averages for software development companies in professional services. We have some pretty strong benchmarks. We have strong gross margins, strong EBIDTA. A lot of good processes in place and they felt those all those things put together would provide a stronger valuation. And so as a result, they said, well, maybe getting a good valuation done, and this is prior for me getting the collective 54 estimate, which we can talk about. They thought that it would be a more what’s the word I’m looking for, a more accurate to the actual valuation, if you would, just because of those strong numbers that we have. You know, we posted our numbers in collective 54 and always gotten good feedback of how really strong our margins and EBITDA are. And we work very hard at that every day. Yeah. 

Greg Alexander [00:04:59] Yeah. And you’ve got your board gave me great advice because you’re right. Given your performance, your firm is probably worth a premium over similar sized firms because of your outstanding performance and therefore you don’t want to give that value away. You created it. So getting kind of an accurate value is really important. Now, there’s a lot of ways to do this. You can hire a professional appraisal firm, which if you have the money I recommend this is what they do for a living and they’re fantastic at it. That can run. Yeah, they get a really good one done. What you would want to do for a situation like this, since it’s going to dilute your own ownership percentage or potentially dilute it, it’s going to run you around 15 grand. In my experience, the ones that are cheaper than that aren’t really great. So if you’re going to spend the money, my opinion is, is do it right now. If you don’t want to spend the money and you’re looking for, you know, let’s say call it an educated guess, I guess we have a tool collective 54 does called the Firm estimate and it’s free. Now, I want to caution you, it’s not a professional appraisal. It’s an estimate. And, you know, you can use it and determine whether it’s worth anything or not. And Michael and I are going to go over some of the basics of it today, just as a way to help everybody think through this and also just use this as a outline for the broader conversation on on negotiating equity incentives with a new hire. So the inspiration for this was the Zestimate. I don’t know if any of you have used the website Zillow, but you can go to Zillow and you can plug in your home address and they give you a Zestimate, which is, you know, the word estimate with the letter Z on the front of it to represent that it came from Zillow and it’s shockingly fairly accurate. And then if you’re looking to move and you want to maybe make an offer on a home, they can do the same thing for you. So I said to my team, Well, let’s build the equivalent of that in the principles where it’s got to be super easy. So let me walk you through just real high level what it is. And then, Michael, I’d like to get your thoughts on some of this. 

Michael Daoud [00:07:05] Sure. 

Greg Alexander [00:07:06] So first off, our estimate pivots off of EBITDA. And for those that aren’t familiar with the term EBIT, it’s simply pretax profits. And we establish a range. The range starts at five times EBIDTA and taps out of 15 times EBITA and everything pivots off the EBITDA multiple. There are a series of variables that add to or subtract from the multiple multiple of EBITA and the addition and subtraction are done in one times EBITDA increments per variable. So for example, one of the questions is revenue growth. So if you are growing your top line 30% plus, then you get an extra point of EBIDTA. If you’re growing your firm less than 30%, it’s neutral. You don’t get a subtraction, but it’s neutral. Another example, profit margin. So if you a pretax profit margin is 30 plus percent, you get an extra point of view. But no, if it’s between ten and 30%, it’s neutral and it’s less than 10%. You subtract the point of EBITA and the dimensions we look at are EBITA revenue growth, profit margin. Recurring revenue as in what percentage of your revenue is recurring? Client concentration. Client tenure. Employee tenure. The dependency the firm has on the founder. In the age of the founder, there’s ten variables, that’s all. And you plug those, you answer those questions and out pops an estimate as to what your firm is worth. And then you can play around with those variables. Let’s say you plug them in and you don’t like what what the answer is. And you can say, Well, if I fix this and I fix that, what does it do to me? Or you plug it in and you say, Holy cow, my firm’s worth a ton of money. Maybe you don’t believe it. And then maybe you go back and play around with it. That’s kind of the concept. So Michael, I know, is a little short notice, and I’m not sure if you’ve had a chance to kind of use that tool yet, but did you mess around with it at all? And what did it what did it reveal? 

Michael Daoud [00:09:09] I did and it was great. I really enjoyed it because it confirms some things that were doing well. And and I highlighted some of the things that we need to do better. Right? So I know over a collective 54, I’ve heard people having valuations that are companies, as you said, anywhere between five and 15. I even heard 17 ones. But in general, somewhere in that range and five being conservative. But it was a pleasant surprise to me that when we plugged in our numbers, our multiple was seven. So, you know, I was using five and it was nice to see that. And so I think once we put it in. So on the revenue growth rate. You know, that highlighted how much more we need to spend on sales and marketing to for accelerated revenue. And that’s part of the of the offer with this executive to come on board to help with that. But with our strong gross profit margins and other numbers in here, it really helps. One thing that it did highlight for me, we’ve been getting more and more into recurring revenue. Yeah, through support contracts. But you know, having to do the calculation, put it in here. I didn’t realize how small it was compared to the overall revenue, even though it’s been kind of front of mind to work on that. So that’s an opportunity for us to do even better in our multiple by adding more and more of those support contracts. 

Greg Alexander [00:10:42] Okay, good. So I’m glad that it was, you know, a reasonable estimates and it confirms your belief that your firm is worth more than five times. The tool says seven times, maybe it’s eight, maybe it’s six. I don’t know. But, you know, it did confirm that belief for a lot of the reasons. Now, what would happen from here, whether you use a free tool and you kind of back of the envelope, it’s like what we’re talking about now. Or if you hire an appraisal firm as now you go back to the executive and say, okay, this is our jumping off point. So just to use easy math, our firm’s worth $10 million and I’m going to hire you, Mr. Executive. And over the next five years, we’re going to go on a journey together. And our hope is at the end of those five years, we double the value of the firm. So let’s say it’s worth $20 million. So therefore, $10 million of value was created. The $20 million end state minus the $10 million jumping off point is 10 million. And then the conversation with the executive coming in is what percentage of that 10 million do you think is fair to share with that executive? And this is where it gets really hard because sometimes there’s not clear attribution as to the executive’s contribution to an extra $10 Million in Value creation. And this is where it gets tricky. So Michael, do you have any thoughts on kind of what a an approach might be to figure out how much of the extra value created should be shared with the executive? 

Michael Daoud [00:12:08] Yeah. I mean, you know, in thinking about this and, you know, preparing, you know, some kind of package. You have I as a founder, reflect on say, okay, can I do this on my own without this person? Yeah, probably answer probably is yes. And I believe in myself that I can do it. So what what is the what will this person help me achieve that will get achieved a little bit faster? I think the answer to that is yes as well. So what’s the value for achieving that faster? And, you know, I’ve discussed this with him as well. And I feel that, you know, 10% of that value is fair or that acceleration. And so that’s kind of where we can come to. Yeah. 

Greg Alexander [00:12:56] Okay. So I think 10% is fair in your in your situation. And I think the insight that you just share with us is you feel that it’s worth it because this is the key component of Michael story, is that this executive can help him get there faster as he stated, he can do it on his own. He can get there. But this executive might help him get there faster. And then then it’s a judgment call for the entrepreneur or the founder. Do you want to get there faster? Well, if you’re 25 years old, you might not care. If you’re 55, you might kill a lot. So this is where the tradeoff comes in. And 10% is actually generous. You know, if if this was a corporation and somebody was issued stock options as an example, you know, the employee that’s going to get stock options might get, I don’t know, 1% to 2% of the company. And they would vest over time. So 10% is is pretty generous but fair. You know, given what Michael is trying to get done now, as you share this information with this executive, who was it well received? Was there a disagreement? Was it a point of negotiation? Like how did you approach this? 

Michael Daoud [00:14:08] Yeah, that’s a great question. So when we start our talks some time ago and it’s been some time it was proposed by him at first as to what he believes his value would be. And in exchange for that and, you know, I felt from day one when he did that, that it was fair, especially for he brings a lot of technical know how and can help us, you know, not only accelerate through the valuation but accelerating some of those some service lines that would help us attain that valuation we’re looking for. 

Greg Alexander [00:14:44] Okay. Very good. All right. Well, listen, we’re at our 15 minute mark here. We’re going to continue this conversation and go in much greater depth on our member Q&A sessions with happen on Friday. And I’m sure because I get asked this question all the time by members, I’m sure that’ll be a well attended session. Michael, you’re a great member. You’re always contributing to the collective installing knowledge into our knowledge bank. You did that again here today. So on behalf of the members, I just wanted to publicly thank you for your contributions and for being part of our community. 

Michael Daoud [00:15:17] Thank you, Greg, and thank you for starting Collective 54. It’s been an awesome journey to be together with you and the other members. 

Greg Alexander [00:15:24] Okay, Awesome. All right. Let me give you a couple of calls to action. So if you’re a member, go play around with the firm estimate at all. Attend Michael’s Q&A session on the Friday when it gets scheduled. If you’re a nonmember again, this tool is free. You can download it off of our website, collective 54 dot come under resources. And then also if that type of content is of interest to you, you can subscribe to collective 54 insights, and if you do so, you’ll get three things per week. You’ll get a blog on Monday, a podcast on Wednesday and a chart on Friday. And if you want to skip all that and just become a member and you want to apply, fill out the Contact Us form on collective 54 icon and somebody will get in contact with you. But great episode today and thanks for listening. And until next time, good luck to you and we’ll talk to you on the next show.

Episode 109 – How To Avoid The Devastating Fall Out Of a Botched Reorganization Inside of a Professional Service Firm – Member Case by Mike Desjardins

The design of your boutique’s organization can either aid or hurt a successful exit. Any astute buyer will factor this into their decision-making. This is why simple integrations are attractive. They are cheap, quick, and have a high success rate. On this episode, Mike Desjardins, CEO at ViRTUS, shares their firm’s best practices for a successful reorganization, including the much-awaited backstory of how his team redesigned key roles to keep their top individual contributors.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Preserve podcast with Collective 54, podcasts from 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 maybe someday exit your boutique pro search firm. My name is Greg Alexander. I’m the founder and I have the privilege of being your host today. And on this episode, we’re going to talk about organizational development, but we’re going to do it with a twist. And the twist is what to do when you have a top performing individual contributor and you promote that person into a supervisory or managerial job. And for whatever reason, it doesn’t work out. And you’ve got to bring that person back into the fold. And the tricky situation to handle. It’s one that our members deal with a lot. It’s a common issue, and we hope to give you some insights as to how to handle that. And we have a wonderful role model this week who has firsthand experience with this. His name is Mike Desjardins, and that was my best French impression. And he’s a member of Collective 54, and he’s going to share his his wisdom with you. So, Mike, it’s good to see you. Welcome. 

Mike Desjardins [00:01:43] Yeah, thanks. Great. Thanks for having me on. 

Greg Alexander [00:01:45] Would you mind introducing yourself and tell us a little bit about your firm? 

Mike Desjardins [00:01:50] Yeah, sure, I’m happy to do so. So my name’s Mike and I live in Vancouver, B.C., Canada, and the firm is Vertis and we’ve been around for 22 years and our focus is 90% on leadership development for medium to large enterprise. So and I’d say medium to large enterprise for us is about 100 million in revenue. That’s usually when a client hits that number where they start to the issues around leadership development that are at the scale that that we operate at. And then 10% of our work is in strategic planning. And that is we do obviously executive team development. So we also work with those executive teams in doing their strategy work as well, which is an annual and quarterly cycle that can go on for 10 to 15 years. 

Greg Alexander [00:02:40] Okay, got it. Very good. So as I mentioned, I set up the problem with this promotion of these individual consumers, and I just had a little bit more color to that. You know, we serve entirely boutique professional services firms. And I should I should define that as you have defined your medium size companies. For us, that means more than ten, but fewer than 250 employees. And in that single industry of professional services, that’s the reason why the number 54 is in the name Collective 54. That’s the industry code for pro serve. And people join professional services firms for careers, not jobs. They they value their expertize. They’re motivated intrinsically by things like the job content, the intellectual stimulation, the variety of the problems they may get a chance to solve, the types of people they’ll meet as very, very specific type of person that joins. And it attracts folks that are driven by competence and achievement and they excel at individual achievement. And then when a firm scales, which is what you’re doing, what most of our members are trying to do. The Law of numbers says is we got to promote some people. They get promoted and sometimes it doesn’t go so well. And then we’ve got this issue where we have this almost demoralizing effect on, unfortunately, one of our stars and we get stuck and we don’t know what to do with it. So my team told me that you are the master at handling this. So I’m on I’m on the edge of my seat. 

Mike Desjardins [00:04:19] I may have misspoke. I think it would be closer to the truth is that I screwed this up and recovers. And so I have a story to share. I think that’s closer to the truth. All right. 

Greg Alexander [00:04:31] Well, let’s hear the story. 

Mike Desjardins [00:04:33] And so yeah, the story is, is that I have a team member who is an executive who I have worked with for over 20 years now. And she’s been with me from almost from the very beginning of the business. And her name is Shannon and she is her title right now is director of Learning Strategies as a business group. One of the things that I read was EOS traction. And through reading about U.S., I learned about an integrator role, which effectively is a chief operating officer role. And I started thinking about restructuring the firm in a way where there was a single person in this integrator role. And to me, that logically is Shannon. Now with Shannon, I thought, well, she did great in the integrator role. And I started thinking about the structure of the business and thinking about how well-respected she is in the business. And I thought, you know, everybody would love to report to Shannon. She’s fantastic. And so she moved from having two direct reports to having really effectively almost all the direct reports except business development and accounting, the controller. And so I figured this would be great. She’s going to love this. And as I started chatting with her about the future of her career and what she wanted, she started saying to, I think what I really want is no direct reports. And I love to really focus on being a director, but focus on the future of learning for the business. And that will take me all of my time. And right now I get I sort of get pulled into projects, and I also have. I also direct reports. And so I don’t really get a lot of time to spend on our strategy and on what the future learning is going to look like. And I think that to really achieve this ten-year strategy that we had set out, I need to be able to focus on that. And so in my infinite wisdom, she went the other direction and convinced her that no, she would be great. 

Greg Alexander [00:06:40] Of course she did. Class. I got to go out there. 

Mike Desjardins [00:06:44] And, you know, offer her the salary and all that kind of stuff to go with it. But what I said to her was, Listen, I think you’re going to be amazing. I know that everybody in the company would love for you to be in this role. And would you be willing to give the role if jobs for six months? If it doesn’t work out. We’ll go back. We will restructure the company and we’ll figure out something different for you. But it won’t. It won’t harm you. You’ll be back. You’ll be financially in the same position you’re in right now prior to being promoted. And and we’ll figure out what that structure is going to be if it doesn’t work. In my mind, I’m like, this is just she’s going to love this. It’s going to work great. I think one of those classic entrepreneurial mistakes that that can get made equally when there’s we’re thinking of profit sharing programs or equity programs. Right. As an entrepreneur, I think about it from my lens. But the reality is that isn’t empathizing with what the other person wants. And in this case, I did the same thing with this promotion. So Shannon got four months into it and we were sitting down for lunch and you know, how’s it going? You know, this is a on I’m. She’s like, I don’t like my life right now. So my grand plan wasn’t working out the way I expected. And I said, Oh, okay, like, what’s going on? And she’s like, I’m back and I love the people I work with and but I’m back doing more of the things that don’t really bring me joy. What brings me joy is working on the future of this business and the strategy, and I’m not getting time to do that. And so, you know, I’d really like to take you up on your offer. I know it’s not six months yet and it’s only four months. And I said, no, I think it’s been long enough for you to figure out whether or not this is the right fit for you. And so I said, okay, well, how do we structure this team? So she and I work together on a newer structure that had her as director of Learning Strategies and had one of our returning teammates who was coming back from maternity leave. After a year, we get a little bit longer in Canada than kid in the States. And we said, okay, well, why don’t we make that role? Director of People in Operations. And her name is Nadia. And so Nadia will roll up the content team and the project management and logistics teams will report to her, and that will free up Shannon to be able to focus on actually on our learning strategies and on this future scale mode of our business, which there is a lot of work that we still have to do on that. And so we did that effective October 15th of 2021. So it’s been a year and almost a month of that structure in place. And what I can say to you is that. What ended up happening is Shannon has dotted line responsibilities to the content team that used to report to her, but she is able to focus on building out the future of the business. And that’s what her day to day looks like. Researching what’s happening in adult learning, researching what’s happening in e-learning and blended learning, and slowly helping to convert what we’re doing into a model that we know will scale more effectively and and also fits really does fit the needs of learners today, particularly post-pandemic as a result of what’s happened and the changes in how people are wanting to learn. It’s quite different than it was prior to March 2020. And Nadia, who’s in her role, is thriving and the team that reports to her loves reporting to her. And so yeah, so it’s actually worked out really well. It’s just worked out differently than I would have expected. And we ended up promoting some people as well. As a result of this change in strategy and a change in approach to our organizational structure. So that’s why I say I would love to take credit for this being some sort of grand plan. I’m definitely not the master, but we kind of scaled our way or I failed my way through it and with Shannon empathizing with me as I had my grand plan and it didn’t work out, we were able to make that change. And then ironically, we put it in an equity based compensation strategy this past June, which level sets everyone’s compensation mark to market every June. And for Shannon, her salary went it went back down when she took the role, but then it went right back up to the level that she would have been asked as the integrator. And so it took a little bit of time for that to happen from October to June when we did that. But when we went to market to look at an individual contributor director role and her salary was actually the same salary it would have had with the direct reports as an integrator in a different capacity, more of a chief operating officer versus director of strategy and saying that’s to bring you full circle of how that worked out. It worked out great for for Shannon, it worked out great for ViRTUS and it ended up working out great for me as well. So yeah, that’s the that’s the full story. 

Greg Alexander [00:11:51] And worked out great scenario. 

Mike Desjardins [00:11:54] Yeah. Well, right. Sorry for Nadia. Which is why it worked out great for ViRTUS too. So it worked out great for Nadia. She’s just thriving in her role. And then a few other people got promoted as a result of this whole structure change. So, you know, it’s another good lesson. Great for me. I can always have these grand designs of how things are going to work out. And then I go to the team and I ask them about what that’s actually going to look like. And sometimes they just tell me like just plain no. Yeah. And when enough people say that to me, and particularly people that are senior and tenure, then it’s important for me to really like listen and try to understand why they they feel that strongly about this. 

Greg Alexander [00:12:37] You know what strikes me about that story and thank you for sharing that. It is a fantastic story and a great use case is obviously you and Shannon had a fantastic relationship built on trust because sometimes when this happens, the person who gets promoted, they don’t feel comfortable sharing with the boss, for lack of a better term, that maybe this isn’t exactly what they want to do. It comes usually with an increased responsibilities and compensation. So they get excited about that and then they take a job, right? And then it doesn’t work out and they feel like they’re failing. And instead of raising their hand and saying, Hey, I want to go back to the old job or let’s reorg around a new job. They leave the company and we’ve been dealing with now it’s changing. It’s moderating now, thank heavens. But we were dealing with this great resignation where a lot of people lost a lot of employees during this time. And sometimes, like, I would call that a an unforced error. Right. I mean, it’s like that was avoidable, I should say. And how did you develop this relationship with her and the culture of your company that we’re. It tolerated the experiment. It didn’t work out. No one’s feelings or egos get bruised and you were able to pivot to a new solution. 

Mike Desjardins [00:13:53] You know, I think it’s really taken a village to build to build this culture. And. We we really ought. Brené Brown talks a lot about vulnerability. And in that she’s really talking less about rampant self-disclosure and more about authenticity and transparency. And and we’ve had that in this business the whole time. I think, you know, when we hire, we’re really careful to hire really smart people who are emotionally intelligent and have these qualities that are they’re great to collaborate with. And we’ve run an open book company since 2008. So other than exact salaries, everybody has every other piece of information about this business. So it’s really kind of baked into our culture to have these types of open conversations. And what I’ve noticed it’s happened as a result of that is that there’s really no surprises, right? So when somebody has a review, they’re not surprised by the review because we talk about feedback pretty openly all the time. I think. Inherent in the fact that we’re a leadership development company. If we weren’t doing this and we didn’t have a great culture right. It would be ironic if we were out in the marketplace talking about how leaders should show up. And so I think it’s deliberate. It’s a choice that we’ve made, and it hasn’t hurt us. I can’t think of a scenario in the past where being this way has been to our detriment. Now it means people have their tenures here, and but a short period of time working here is five years that’s growing fast. Whereas I have there’s team members that have been here like Shannon’s 20 years, 12, 14, relatively long period of time. We’re growing now. So we have some, some new people that are joining the company. And when we hire, because we’ve been around for a while and we’ve had these longer term relationships, we take quite a bit of time to get to know people in advance because we’re thinking about this as a long term relationship. When somebody joins our team, we’re not thinking about like, let’s see how it goes over the next couple of years and we’ll see where things are at. We are really thinking long term. 

Greg Alexander [00:16:04] And the candidates that you’re interviewing, are they thinking long term as well? And how do you how do you judge that in an interview setting? 

Mike Desjardins [00:16:10] I mean, it’s hard, right? Like I. It’s hard because you could say, oh, look at somebody’s LinkedIn profile or look at their resume and have they moved around a number of times? That’s not fair because I think, you know, I look back at where like I turned 50 this year, so I look at where I am right now in my thought process and my decision matrix and and how I think about life. And I think back to when I was 25 and my priorities and my values have shifted as of aged and I’ve had experiences which have helped me to figure out what I want. Now, luckily for me and I only really had two main jobs in life so far away, like I was with a group of companies from 18 to 28, and then I did this from 28 to today. So but not everybody had that. A lot of people are people are trying to figure out what it is their career is going to look like. And they may have to go through different jobs and different companies to sort out what that’s going to be. So I think it’s less about. It’s less about trying to determine whether somebody is interested in a longer term career, and it’s more about creating a culture where that happens. And that’s the decision that we’ve made, is less about trying to figure that out on intake, but instead provide a culture in an opportunity where people actually really do want to stay and grow their careers here. When people have laughed and they’ve laughed and said, a lot of the times are really sad to be leaving, they don’t want to go. But maybe our company isn’t growing as fast as they want to grow. And so even though they’ve been here five years is an opportunity and I’m excited for them because I think that is an awesome opportunity and we don’t have that opportunity here so I’m pumped. There is something like that available and so we would kind of refer to people as alumni and we’re excited that they’re out there in the world doing great things and that we got this unique opportunity to work with them for whatever period of time. We had a chance to do so. 

Greg Alexander [00:18:09] Yeah, that’s wisdom there for sure. Let’s come back to Shannon. So the professional services space is one built on apprenticeships. So junior people learn from senior people and then they kind of move up along the way through the apprenticeship model, at least historically. That’s how it’s been done. So our members are more than likely going to fill the promotions that become. Get created because of the growth with internal promotions. It’s a grow your own model, which works really well in the context of a professional firm. So there’s those that are listening right now that are going to want to go promote somebody internally, much like you did with Shannon. And looking back on it now, a year later. You know, what would you have done differently? What lessons would you want to share with those that are getting ready to go promote their Shannon’s today? 

Mike Desjardins [00:19:09] You know, I think my mentor, Walter, actually said something to me in as we were talking about this and reflecting on this. He’s mentored me for the past six years, and we were chatting about this exact scenario and he said, you know, the learning here is when people tell you what they really want, believe them. 

Greg Alexander [00:19:27] And they’re telling the truth. 

Mike Desjardins [00:19:29] And part well and part. Yeah, well, they’re telling their truth. Right. And park what it is that I would want if I were in them because that doesn’t matter. Now there is, there is a piece of it where. So here’s the piece where I think it’s challenging. The balance of that is sometimes I will see people and I will see some that they are capable of, something they haven’t seen yet. And so they might not like. So for Nadia, Nadia was coming back to come into a program designer role. And but Shannon and I in chatting saw she could come back and the director role sounds like she’s the chief the next most senior person here. So why would we why wouldn’t we offer her this director of people in operations role? And she’d be fantastic at it and she’s ready to take that step. And so we went to her saying, Hey, we think you’d be amazing at this job. And and so sometimes it’s it’s it’s seeing the to for people and what they could grow into. And but the flipside of that, of course, is the situation I ran into with Shannon where I, I wasn’t hearing her and I was thinking too much about what I would want if I were her and and why it would be such a great role for her as opposed to really deeply empathizing with what she knew she truly wanted. I think that’s the lesson, is that there’s always going to be this balance of trying to do both, right? Like help somebody along who you might think isn’t, like, ambitious enough for what you see they’re capable of. But tempering that with really hearing them when they say what they want. 

Greg Alexander [00:21:17] Yeah, for sure. You know, when we have our Friday member Q&A with you, they’re going to ask a lot of questions about this and and the way you set up the what I would call a job trial. You know, you said let’s try it out for six months and and how you monitored that, etc.. So it’s just a it’s a great use case. It’s a very real issue for our members. So thanks for being on the call today and for sharing your story. And my pleasure. It was very informative. Thank you. 

Mike Desjardins [00:21:44] Yeah. I appreciate being on. Thanks. Great. 

Greg Alexander [00:21:46] All right. All right. So if you’re listening and you’re a founder of a or a leader of a boutique processor firm, and you’re not yet a member and you want to meet great people like Mike and learn, you know, around stories like this one. Consider joining Collective 54 and you can apply for membership on our website, which is Collective 54 dot com. If you’re not quite ready to join, but you want to educate yourself, we got lots of resources called Collective 54 Insights, so podcast benchmarking data, a blog or a book, etc. And you can also find that at Collective 54 dot.com. But thanks for listening and I’ll see you on the next episode. 

Episode 108 – How a Brilliant Founder Expanded Margins By Repositioning His Software Development Shop Into A Strategic Consulting Firm – Member Case by Phil Alves

The quality of the fees earned by your firm is a top priority as you scale and exit. All revenue is not good revenue. Poor fee quality leads to poor margins. On this episode, Phil Alves, CEO at DevSquad, shares how he improved margins and fee quality by repositioning his firm.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Pro Serv Podcast with Collective 54, podcasts from founders and leaders of boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated entirely and exclusively to helping you grow, scale and someday exit your professional services firm. My name is Greg Alexander. I’m the lucky founder of this group, and I’ll be your host today. And on this episode, I’m going to talk to you about improving your margins and how the importance of that changes over time as you develop your firm. And we’re very lucky to have a great role model with us. He is a collective 54 member. His name is Phil Iles, and he’s going to share a little bit of his perspective with you. So, Phil, it’s great to see you. Thanks for being here. And please introduce yourself and your firm to the audience. 

Phil Alves [00:01:13] Yeah, it’s great to be here. Yeah. So my firm is Dev Squad. We specialize in building SaaS products, and I’m feel I’m the CEO of the firm. 

Greg Alexander [00:01:23] Okay, very good. And how long you guys been at it? 

Phil Alves [00:01:25] Eight years. 

Greg Alexander [00:01:27] Eight years. Very good. And your journey? Are you a software engineer yourself turned entrepreneur, or did you come at this from some other way? 

Phil Alves [00:01:34] No, that’s it. Yeah, I started as a soft engineer. From their eye. They love product to the product side of yeah. Like creating things and solving problems. And I moved to Utah. I am originally from Brazil. I got a lot of job offers. I decided I would start this company. Of course, having the connection to Brazil helped me have access to talent that wouldn’t be too expensive and interest to the market. And I was part of the first thing they help us have like higher margins. Yeah, but, but a lot of other things that we did after that. 

Greg Alexander [00:02:09] Yeah. So let’s jump into that. So the topic today is margins. And I would say the the space that you’re in which I’ll broadly categorize maybe incorrectly as software development tends to be in relation to other professional services, tends to be profitable but not as profitable because software engineers are scarce, they’re in great demand and the labor cost in this space tends to be high and the end client is squeezing fees a little bit. So margins in software engineering tend to be a little bit low. But in your case, that’s not true. So what are you doing to deliver exceptional margins? 

Phil Alves [00:02:49] Yeah. So I believe, like you talk about in the book, it cannot be a body shop. You have to when clients come to us, what they’re buying, they’re buying process, they’re buying our culture. So we were very specific about how we do stuff. We do stuff differently. We made it. And then as we keep doing that, we were able to prove that we can do it in a better way than they will be able to do just themselves. So when they hire us, I’m like, You’re not hiring developers, you’re right. But I’m trying to position myself not just as another software development company, but I’m trying to position myself as a consulting firm. They specialize. I have my own way of doing things, and my way is better than you could do by yourself. And you’re going to pay a premium for that. And another thing they like to say, when people are paying us their opinions to tell them what to do, not the other way around, like we are really the experts. And like I think another thing that’s very important for our margins, so we start like kind of like in a platform play, people would hire us because we’re experts in a certain programing language, but we had to move out of that to, to charge more money, you know. So now people hire us because we own a vertical. Our vertical is like we specialize in building SaaS products. We have with a lot of successful SaaS products where people went and have exits. So it’s about you can be selling just the people, just the bodies. You have to sell process and you have to be in a vertical where there’s enough margin for people where people are going to pay for the expertize. 

Greg Alexander [00:04:25] Okay. So there was a lot there. I want to unpack that a little bit and congrats to you for having clear command over this subject. I think some of our listeners might not be as advanced, so let’s go slowly here. So one thing you mentioned to me, I call it positioning and you’ve positioned yourself as a consulting firm that specializes in software development as opposed to a software development firm. And that move alone gets you into a different category and it gets the client willing to pay a different fee because they’re comparing you to other consulting firms, which tend to charge more and it gets you out of that category now. And we’re going to go through the other ones that you just rattled off. Well, let’s stay with that one for a moment. Sometimes when you try to reposition yourself in such a way, the client says, give me a break. You know, you might be trying to reposition yourself as a consulting firm, but you’re not really a software development firm. So how did you overcome that perception and how did you convince the world that you really are a consulting firm? 

Phil Alves [00:05:22] I think it’s like actually when you are coming up, you’re going to have some customers that you’ve actually got to do consulting and other companies way of actually doing development. And the more of those customers that you actually doing real consulting, it’s the more a track record that you can show. So we are to a point right now that when I meet with a customer, I explain to them, Look, when you hire us, you get a product manager, you get a UI designer, you get a playbook of how we do stuff. And that was developed over the years. So we didn’t start here. Sometimes we did to customers that were less than ideal, but as we kept growing, we just kept getting more and more picky about our customers. If the customer doesn’t believe what I’m trying to sell him, I’ll be like, You’re not a fit. Because at this point we have a funnel. And like last month alone, I had 40 people that reach out to us and then they came back. And if they don’t, if they don’t, it becomes a peaking game. And some people don’t believe or like they don’t. That’s not why they are buying. And that’s okay. We have the software people that are what we are. Sally Yeah. 

Greg Alexander [00:06:26] I mean, just a great demonstration of sticking to your ideal client profile, you choosing who you’re going to work with, people that recognize your value and are willing to pay for it. I’m sure there was a time when you were coming up in the early days that you couldn’t pick, you know, all revenue was good revenue. You had to turn the lights on and pay the employees. When did that happen? When did the when did the paradigm shift to where you you have a just a huge funnel and you get to choose who you want to work with. 

Phil Alves [00:06:57] I think like when the money was coming and I invest that money in building that funnel, in building the positioning, and it changed when I realize that we’re going to get leads no matter what it like my pay per click and my CEO are delivering what they’re supposed to deliver. And then when I could trust that this I’m going to get customers. That’s when I start to change. And then we can start to replacing. We have customers that work with us maybe for a long time, but there was no ideal customer and then we just replace those customers for your customers. But I think it’s about putting your money in, investing your money in creating the channels and creating the positioning so you can be where you want to be. 

Greg Alexander [00:07:37] Okay, so let’s talk about investment. So sometimes founders of boutique process firms, they see excess money in the bank account and the temptation is too strong. They pull it out of the bank account, buy a new car or something like that. You didn’t do that. You kept the money in the business and reinvested it in these ways, which ultimately resulted to where you are today, which is a very successful, thriving firm. So how did you how did you overcome that temptation and how did you resist the urge to build a lifestyle business and decided to really go for it? 

Phil Alves [00:08:09] Actually, I read a book called Profit First, and I had some money that I took out, and then that money I could do whatever I want. So I did buy a nice car. 

Speaker 3 [00:08:19] A Porsche. I didn’t want an airplane. I have look a lot of it, but most of the. 

Phil Alves [00:08:24] Business, the money actually stay in the business and they got to reinvest that money on the business. So it was about having processes like the same way they have a process of how we run the business like fulfillment. I had a process about what I’m going to do with this money and I was only a small portion and it gets smaller as the company get bigger, you know. But there was only a small portion of that money that would go around us play money because you still want to get the rewards of what you were doing. And it was just about sticking to that process. They allowed me to have the money to reinvest in the business. 

Greg Alexander [00:08:56] Very good. When I asked about margin improvement, the first thing you said was not being a body shop. And when somebody hires you, they’re not hiring an extra pair of hands. They’re hiring process, playbook, culture, which is a really compelling package. I’m assuming because the margins are where they are, that you’re able to charge a premium and that your target customer is paying a premium for process, playbook and culture. And that’s why that’s why I not the Body Shop. So how were those things developed? How have you protected them? How do you prevent your competitors from stealing it? 

Phil Alves [00:09:40] I think it’s very hard to steal culture. 

Greg Alexander [00:09:42] Yeah, that’s true. 

Speaker 3 [00:09:43] Yeah, good point. You know. 

Phil Alves [00:09:47] And that’s kind of like the thing that we from day one, I really emphasize the culture that we want to build and how we want to be. And they have different interactions, like we improve their culture. One thing they really help us do, we start with us. As we grew in the US does cover culture, the covers process, they have ways that you can use to implement those like. So like the same way basically I didn’t try to reinvent the wheel. I read a lot of books. I found processes that work, including your book, and I just replicate it. 

Greg Alexander [00:10:21] Yeah. Okay, very good. And tell me a little bit about your culture. And I know iOS covers culture and it suggests how to build it and track it. But each company has its own unique culture. And you’ve mentioned that word so many times here. And in the context of profit and margin expansion, I don’t often hear the word culture, so I’m intrigued by this. Tell me about your culture and how does it contribute to your success? 

Phil Alves [00:10:49] I believe that the teams that build amazing software products regardless, it’s not because of the talent, it’s because of the culture the team has. So the team, the culture that we develop is a culture that we say make it happen. Simplicity, we are about simplicity. So we want to be very simple play as a team and the value of your expectations. Those are our four values. We talk about them all the time. We have a lot of softness to the track and people can rewarded or people for keeping the values. When you’re making decisions inside the company, you make decisions based on those values. And I think the biggest one, it’s like make it happen in simplicity. We want to keep it simple and to get things to to the other side and get it done. And like, for example, we work with ADP, big Fortune 500 company. And the way the ADP, this thing you can, they overcomplicate everything. So they come to us and they’re like, wow, you got this done in six months. We had expected doing two years. It is because our culture it I could get the same people to work for ADP but inside my system, my process is if they follow how we work, they also would get the process done in in six months. So like I like to say, culture is the way that we do things around here. And that’s kind of like what we try to to pass down and to always talk about and to develop. And sometimes we have to understand we get bad things about our culture to cultures like how we do things. It’s not only the good things. So like recently we have a lot of people in Brazil or I’m originally from and people are showing up late, late to meetings because that’s part of Brazilian culture. Like you show up late and I’m like, That’s not acceptable. And then we, we correct the things inside our culture. So it became a high performing culture, you know. So yeah, yeah. 

Greg Alexander [00:12:34] Now one of the things that you talk to your leadership board about recently was. The the push pull between or the the tension between doing really good work for your current clients, which obviously is very important in taking on new clients. And at some point and this happens to all of us, you have to do more of one or the other. So how do you decide? And how do you balance those two? You know, decide when to take on new clients, when not to take on new clients, when to focus on the existing clients that you have. How do you how do you think through that? 

Phil Alves [00:13:10] Yeah. I think it has to be. Do I have the leadership inside my company ready to onboarding new customers? Do I have the customers inside the idea of customers all happy? Because there’s no point in losing the customers that I have just to onboard some new big customers. And we have been growing a lot year over year, but frequently I’m going to be like, we are not taking customers this quarter and we able to sometimes get people to put a deposit down and then start the next quarter. And I was the first time someone paid me a bunch of money not to work. I was like, What? 

Speaker 3 [00:13:48] You went out and bought a plant? No, but I played. That’s funny. 

Phil Alves [00:13:54] So. But it’s kind of like it is how we work right now. It is. Because if I’m not a body shop, I have to have the time in the consulting. You get the people from down the pyramid, move them down to management. And if I don’t have that person training it, it’s about having the actual leadership ready to onboard customers and add value to understand their culture and understand their playbook. And sometimes I cannot develop these people fast enough. If that’s the case, I have to wait. I’m taking your customers. Yeah. 

Greg Alexander [00:14:25] I tell you, that’s a that’s a great problem to have. I mean, you have so much work. The limitation isn’t finding clients. The limitation is developing the talent quick enough. Speaking of talent, you mentioned that you’re from Brazil, but you live in Utah. Is your talent spread out all over the place or is it in one location? Do you use a remote workforce? Does people come to the office? How does it work? 

Phil Alves [00:14:47] Yeah. So how about after you had a remote first culture? There’s about ten people that live in Utah. They come to the office if they want to. We do have customers fly here for us to do some workshops. We call the design sprints, so the workshop sometimes will happen in person, but most of our work is remote. And the workforce in Brazil with about 100 people now. Wow. They are they’re all remote anywhere in the country. So there’s no physical location around Brazil. There is one here in Utah, but it’s a remote first. Like you don’t have to always come to the office. You come to the office if you want to or if you have a customer flying here. Like sometimes we do have customers fly for us to do like their two days workshop before we started a project. 

Greg Alexander [00:15:29] Now, since culture is connected to the margin expansion that we’re talking about today, you have a remote workforce, remote first. Some would say you can’t build a culture in that environment. You’re clearly proving that not to be true. So is there anything about building culture in the remote workforce that’s different than building culture in an on prem situation? 

Phil Alves [00:15:52] Yeah, I think you have to be a lot more intentional when you have a remote workforce, you have to really spend the time. Culture has to be a priority. You have to talk about culture. You have to. I have this thing called the Culture Squad and this people are their own responsibilities to make sure people are understanding and getting the culture and they’re holding events and they’re doing stuff because it’s harder. Like people get to know each other, but. I think there are some of the basic human needs there for fuel and go to the office that are not automatically fulfilled when you work remotely like you want to have connection and you want to have a couple of things that’s a little bit harder. You never want environment and we have been doing that before with Cool to do it so we know how to do it. 

Greg Alexander [00:16:38] So tell me about the Culture Squad. I love that idea. So how many people are on the Culture Squad? What do they do for you? How does one earn a spot on the culture squad like that? That sounds like a fun a fun gig to have. Tell me about that. 

Phil Alves [00:16:52] So it’s a select group. There’s probably like six or seven people in that group. They get kind of like once a month and they have a budget and their goal is to put together events and things that will promote the culture. So they usually they’re doing workshops where they’re not just themselves, they’re getting someone from the overall company to do a workshop. So they’re promoting their workshop and people are coming, they’re participating. They are like deciding who is the employee of the month and they are running surveys to figure that out. They’re looking at like the reviews that employers give to each other. They are looking at problems that we might have in the culture because like I told you before, I think culture is the good and is the bad and you have to realize when the bad is happening. And so they are responsible to to point that out. So like the leak thing, I didn’t notice that they brought to me and they’re like, hey, people are getting like and their solution was for me to go into the whole company to stop doing, but that sucks. 

Speaker 3 [00:17:54] But they will. 

Phil Alves [00:17:55] Figure out those problems and they will sometimes have ideas of how to address and how to shrink the culture in different ways. Like so they say, hey, this month we’re going to talk about simplicity, what, what, what, everything that we can do to, to get people to understand what simplicity is. And they’re going to share kids studies. They’re going to do whatever to to get people to understand and put their get to this what I decide. I personally like got together with my management team and we just got people from different areas of the company that really understood the culture to represent who we are and we put those people in their squad. Yeah. 

Greg Alexander [00:18:33] You know, one thing you mentioned also was that you guys build SaaS products. That’s your core business. You know, every time you pick up the newspaper, turn on the TV, go online. These days, you know, talk about the SAS industry going through a tough time. Have what’s your take on that? Have you seen any any pull back and is that affected your business or not? 

Phil Alves [00:18:53] No, that has an effect on our business. These are mostly public companies that were overall average, in my opinion. A lot of our customers, they’re like smaller in the B2B space. They are like running profitable business and they’re doing this just fine. And we have even more people that are coming to view their SAS products because they are an expert in a niche and they’re building a product for someone just like themselves. Yeah, like we just to start a product for a guy that has I think he has close to a bunch of car washes. I won’t say the number, I’ll say wrong. Well, let’s say more than 100 car washes in the whole country. And then he knows how to run car washes and he knows all the software out there are not great. So he wants to build a software for other business just like his. And of course, he’s very profitable and he’s going to be just fine to the recession or whatever is going to happen in the coming months. 

Greg Alexander [00:19:44] And people still get to wash their cars. 

Speaker 3 [00:19:47] Yeah, exactly. So. 

Greg Alexander [00:19:50] All right. Well, that’s good to hear. I mean, I this is my second company collected 54. My first one was started during a different era back in 2006. And I can tell you, I’m rooting for the SAS industry because the ease that I can run my business now, I mean, I run my entire business off my phone and the cost to run my business has plummeted. And it’s because of all these fantastic SAS products that are available and just cloud computing, cloud computing in general. So I wish you much continued success. I love having you in the group. I love to hear that that a consulting company that specializes in software development can run healthy profits because of things like process and culture and playbooks, you know? And it’s a great counter-example to some who feel the space you operated in has been completely commoditized. So congratulations to you and all the success that you’ve had. 

Phil Alves [00:20:44] Thank you very much. It’s great to be here. 

Greg Alexander [00:20:46] Okay. All right. So for those are the listeners that are not a member. And you might think about joining because you want to meet really fun and exciting people like Phil go to Collective 54 dot com and you can fill out an application and be considered for membership. If you’re not ready to be a member, but you want to keep educating yourself and consuming content. The same website Collective 54 dot com. There’s a resources section and you can subscribe to insights. You get a weekly podcast blog. We produce a chart of the week, which is a visual representation of benchmarking data. We even have a bestselling book called The Boutique How to Start Scale and Sell a Firm. So I encourage you to to check that out as well. But that’s the end of this show. And thanks for listening. We’ll see you next time.

Episode 107 – From Rookie to President in 7 Years: Why Digital Agencies Need To Develop The Founder’s #2 Right Now – Member Case by Amy Pyles

Acquirers buy the management teams first and the boutique firm second. The due diligence process is heavily weighted to assess the quality of the management team to make a sound investment. On this episode, Amy Pyles, President at Saxum, examines her experience as the person replicating the founder. She will share what has worked and what didn’t work and how they continued to collaborate. 

TRANSCRIPT

Greg Alexander [00:00:14] Welcome to the Pro Serve podcast with Collective 54, a podcast for founders and leaders, boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated entirely to helping you grow, scale and maybe someday exit your boutique. My name is Greg Alexander. I’m the founder and I will be your host today on in this episode. I’m going to talk to you about how to build a firm that is not dependent on you for its success. But we’ve got an interesting twist. We’re going to do this from the perspective of the president, the person that you as the founder have entrusted your firm with to run the operation. And we have a fantastic role model today. Her name is Amy Pyles. Amy. It’s good to see you. Thanks for being here. 

Amy Pyles [00:01:09] Thanks so much for having me. I’m glad to be here. 

Greg Alexander [00:01:12] Would you mind introducing yourself and your firm and what it is that you guys do? 

Amy Pyles [00:01:17] Absolutely. So, like I said, I’m Amy Pyles. I am the president of SAC. We are a marketing and PR agency based out of Oklahoma City. But we work with clients all over the U.S., helping them balance purpose and profit and just communicate their story well. 

Greg Alexander [00:01:36] Okay, fantastic. For those that are regular listeners, the word sex will sound familiar. One of our members, Renzi Stone, was a featured guest, a role model for us on this show several months ago. And he shared his story of how he built a firm that isn’t dependent on him. He built the firm that has an executive leadership team where it’s about the firm, not an individual. In addition, if you’re reading my new book, The Founder Bottleneck, How to Scale Yourself, you’ll see in Section three where we provide ten role model examples. Renzi story is documented in greater depth there as well, so I would draw it to those two resources. But Amy, we’re going to talk today about, you know, from the perspective of the president, you know, the number two, for lack of a better term. And it’s an interesting perspective and it’s an interesting challenge working with an entrepreneur and I am one and I know how hard that can be. So I’d love to hear from you kind of when this happened, why it happened, and kind of like what was your first, I don’t know, 90 days. Like. 

Amy Pyles [00:02:49] Yeah, good questions. So I’ve been with the firm for about seven years now, so it’s been a progression. It wasn’t an overnight discussion, it wasn’t an overnight. You were this and now you have these responsibilities. So that’d be the first thing I’d say. So the first 90 days weren’t all that different because we had been working together towards different responsibilities and giving me exposure to different elements of the business. And we do have a really great leadership team in place, so it wasn’t like the baton was only passed to me to go figure that out. It had been a journey of setting up a really great structure so that Renzi could take on different things, but also to make sure I was ready to step into this role and have the right level of just experience and mentorship over the past seven years to prepare me for this. 

Greg Alexander [00:03:45] Yeah, you know, I advocate for this approach, which I call or I don’t call. It’s known as Grow Your Own. And I want to make sure that I mention this to those that are listening. The success rate and the numbers on this are pretty clear. The success rate is much higher when you’re passing the baton internally to someone who is a great culture fit, someone who has earned it versus making it external hire. Because small boutique services firms, the very unique things, the culture is very strong. There are people, businesses, fit matters a lot. And I’ve seen several times where an external hire that was highly competent come in to a firm and it doesn’t go so well. And usually that’s because that’s external hire feels the need to come in and change things. Well, sometimes things don’t need to be changed, sometimes they just need to be tweaked or they need to be done more efficiently or what have you. But you know, the firm is successful in handing the baton over to an internal person. Is is really good. So, Emma, you talked about how you had been getting ready for this. So the first 90 days wasn’t really a major departure. I’d love to hear more about how you got ready for this. 

Amy Pyles [00:05:09] Yeah, absolutely. So when I started with the firm, this wasn’t necessarily the progression that I joined for or that we thought I would take. I joined in the delivery side, so I was leading our digital services. So I immediately got good exposure to the clients, to the work that we’re doing and understood not just a methodology but the client side and how we delivered. Now my brain is naturally wired for operations and for business, so I gradually morphed into various different hats and different roles within the agency and moved into our chief operating officer role. And so that gave me a good expansion outside of just one service line and into the business on the executive team and understanding the financial aspects of the business, getting more exposure to the sales side and the client service side. So all of that and all the different hats I got to wear over these seven years really set me up for a well-rounded view of. The business. So it wasn’t coming in, just siloed into the area that I was passionate about or that I had expertize in before that really expanded that view. So I was thinking holistically about the business, not just about how do I make digital more successful here or any other facet of it. I was really looking at it holistically and I think that was some of the best preparation I got was just that exposure and the different hats I wore. Yeah. 

Greg Alexander [00:06:36] Sometimes our members, the founders. They have a hard time letting go. This is their baby. It’s their life’s work. You know, they have almost all of their net worth tied up in the firm. You know, their family is dependent upon the income the firm generates, etc., etc.. It’s really hard to let go. And this is one of the obstacles. You know, they they have to find and trust in Amy. How did you earn the trust of Renzo? 

Amy Pyles [00:07:06] Oh, gracious. Probably a question better geared towards him, but I can say it from my perspective was lots of conversations. Also, I think entrepreneurs want to be able to pass the baton to somebody who will disagree with them, to somebody that will dove in on an idea or challenge an idea. And I think one of the things that I was able to do is push back at the right ways when it needed to be to show that we could form ideas better together rather than being an order taker or just doing exactly what he had set out. And I think we discovered that we could do things better when we collaborated. And I think that that started to instill trust that I could make decisions, that I could jump in to a big vision idea, but I could also figure out how to tactically make it happen so that we weren’t living in two different worlds all the time, where I wasn’t just doing exactly what he said, but showed that I could make those decisions and lead a project through to completion without him having to hold my hand or be right there with me. Mm hmm. 

Greg Alexander [00:08:13] Very good. Another question I want to ask you is that, I mean, the benefit to the founder of delegating strategic items to somebody like yourself is they now free up their time and they can amplify themselves and really go pursue the vision. These entrepreneurs, these visionaries, they have a vision and they want to go after it. But very often that vision never materializes because there’s just not enough hours in the day to go after it. But if they have a great partner like yourself and you can run the firm, they’re now working on tomorrow’s business. While you’re working on today’s business, then that sounds great. On paper, where it breaks down oftentimes is the founder has one foot in the old way, one foot in the new way, and he or she keeps sticking his or her nose where it doesn’t belong. And what’s required there is the partner you in this case has got to manage up. It’s got to get the founder out of the day to day because they make it up when they jump back in. So how do you manage up and what advice would you give others to do so? 

Amy Pyles [00:09:24] Yeah, absolutely. You know, I think it has been a journey. It’s not an overnight shift that takes a lot of conversation and it takes having the right places to pull the founder in so that they can have a voice where they should and where they want to. So I think that there’s some strategic managing up of this would be a good opportunity to bring Renzi in or to have him lend his expertize, but quickly know how to transition it out of lending an idea to managing that all the way through. And so I think that that’s the the art of it is knowing those right touch points for input, for collaboration and for vision, but making sure it’s clear that the team is going to take it from there and actually go execute it or let it fall to the wayside, if it should, for the client or whatever that is. So I think that there’s just those strategic elements that you need to be able to pull them in on so that you’re feeding what’s important to them. And they don’t feel completely disconnected, but you’re not letting it linger for too long. 

Greg Alexander [00:10:32] Yeah, you know, Saks.com is what we refer to internally as a power member, and that’s defined as a firm that joins as a team as opposed to an individual. And they do so for the things we’re talking about today. So I’ve had a lots of conversations with your peers, you know, the the partner to the founder. And one of the frustrations I hear from them and I want to kind of put you on the spot here is the visionary founder is an idea machine. I mean, they have ten ideas a day and they think every idea is the next great breakthrough idea. And they keep firing off these ideas, you know, to their execution partner. And the execution partner starts to say, oh, my gosh, like, first off, how do we prioritize these? Some of these are crazy. We shouldn’t be spending time on this. Oh, by the way, there’s a finite amount of money of people of hours in the day. Like, how am I going to get all this done? So how do you deal with the crazy entrepreneur who has too many ideas for his own good? 

Amy Pyles [00:11:35] We don’t always get it right. I’ll say that first and foremost, we’re not definitely the perfect model student for that. But you know. One of the things that we’ve been trying to work on is a standard language of prioritization so that we can have a matrix where we can say, we’re going to strategically invest here. We’re going to drive daily over here. And then we’re going to delay some these other things that may be great ideas, etc.. So let’s put it in a delay category. And when we’re done with something that we strategically invested in and it’s now daily operations, we can look at what comes in next, or we can stop doing something here because a better opportunity has come. So we’re working on that right now is how do we get that common language that focuses us as an executive team but also gives a place for new ideas to come in and be evaluated against this finite set of man hours and resources and things that we could do. There’s a lot of could but should is always our question. And how do we weigh that in a way that is efficient and business oriented? And we take in a little bit of emotion out of it so that we can weigh those and make better decisions. 

Greg Alexander [00:12:46] I like that. That’s a structured thinking towards prioritization, a matrix, if you will. That’s a really good idea. Okay. My last question and then we’ll wrap it up is let’s talk about money budget. So staying on this theme of this visionary founder with a ton of ideas and then he comes to you and says, go execute all these things. Or some of these things, take money. And then there’s a conflict because the founder is pulling the money out of the business and paying himself and then to go do some of these ideas he has, you know, he’s going to make less because it’s going to require investment. And usually these founders don’t want to go to a bank or don’t want to go to an investor. They’ve got a funded through operating cash flow. So how do you reconcile, you know, all the things that your founder wants to do with the hard truth of what the PNL says? 

Amy Pyles [00:13:35] Yeah. We are very aligned on what some of our core KPIs for the business are and those metrics. So that helps from the get go of what’s our profit margin, what’s our people ratio that we’re willing to have, what is investment in business development? So we have a lot of predefined and agreed upon metrics that we set that gives us a good rubric to make decisions against. And if an idea comes from anywhere, whether it’s from us up to him or him coming in with an idea, the investment conversation comes with We can’t do it within our metrics. Are we willing to sacrifice one of these? Are we willing to take less profit for a period of time in order to fund that? Or do we want to bring that in in a different way? Ours is typically been we’re willing to sacrifice profit to invest in a way, and we take those out of our kind of KPIs and metrics that we’re measuring the success of the business on. So we can we come to alignment and agreement around how much we’re willing to invest and what’s the sacrifice to profit. And if we can exceed that, then, you know, great for all of us, but we at least have some alignment right there at the metric level. 

Greg Alexander [00:14:42] Yeah, fantastic. Okay. Okay. Listen, as I’m going to pointed to a couple of resources. So first, if you’re a founder and you don’t have an army, you need to get one. And the best way to do that, in my humble opinion, is to read my new book, The Founder Bottleneck How to Scale Yourself. And it’s going to talk about how to identify a high potential employee and how to determine what to delegate, how to delegate it and when to delegate it. So that would be step one. Step two would be if you want to take it to the next level and you want to build a firm that doesn’t depend on you, you should enroll your Amy or Amy’s into collective 54 and and specifically have them master the boutique framework. And I’m proud to say that we’ve invested heavily and we now have a detailed how to online training. Chapter by chapter with new exciting tools, you can go do that. So I would point you towards that when that comes out, which should be in the first quarter of 2023. So get yourself an Amy and invest in Amy’s development so that she can help you build a firm that doesn’t depend on you. So, Amy, I could talk to you about this forever, and I’m sure we’ll have a chance to continue our dialog. I’m really looking forward to the Friday session where we’ll have the member Q&A. I’m sure you’re going to get a lot of questions there, but really appreciate you. I love having you in the group. It’s I’ve had a chance to get to know, you know, you here recently and you’re a shining star. And it’s just great to have you in the in the collective. 

Amy Pyles [00:16:15] Well, thanks so much. I enjoy it as well. 

Greg Alexander [00:16:17] Okay, fantastic. All right. So if you are a founder or a leader of a boutique processor firm and you would like to belong to a community of peers and meet great people like Amy, consider joining Collective 54 and you can apply at Collective 54 dot com if you aren’t ready just yet to join but you want to educate yourself on topics like this and others. I’m going to suggest you subscribe to Collective 54 Insights, and there you’ll find benchmarking data, you’ll find podcasts like this one, you’ll find a great blog. We even have a best selling book called How to Start Scale and Sell a professional services firm. So you can find all all of that there at Collective 54 dot com. But until then, thanks for listening and I look forward to our next episode.

Episode 106 – How A Founder Optimized Scarce Sales Resources by Narrowing A Generic Market from 4,000 Prospects to A Focused Market of 39 – Member Case by Jay Mitchell

It is harder to sell a service than it is to sell a product. But the more you know about your client, the easier it is to market and sell your service. The better you understand them, the better you can serve them. On this episode, Jay Mitchell, President & Founder of Mereo LLC, shares how his team built their Ideal Client Profile and the results of this highly targeted approach.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Pro Serve podcast with Collective 54, podcasts 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 entirely and exclusively to the boutique pro serve segment. And for those that want to grow, scale and maybe someday sell their firms. My name is Greg Alexander and I’m the lucky guy to lead this group. I’m the founder of Collective 54 and I’ll be your host today. And on today’s episode, we’re going to talk about creating the ideal client profile. Now, before you roll your eyes in the back of the head and hit delete and say, I already got one of those, I’m going to challenge you because everybody says they have one, but the ones they have aren’t very good. They’re not kept up to date. And your ideal client profile changes all the time. So this is something that you have to keep top of mind. So it’s a good refresher. And then back to the basics fundamental episode. And we’re really lucky today. We’ve got a role model, role model, a member, Jay Mitchell. And Jay is does this better than most. And he’s going to drop his wisdom on us on how to pull this off and how to keep this thing current and use it and your pursuit of growing, scaling and selling your firm. So, Jay, it’s great to see you. Thanks for being here. And please introduce yourself to the audience. 

Jay Mitchell [00:01:34] Thanks, Greg. Good to see you as well. I appreciate the introduction. As you said, I am a member of Collective 54 and had the opportunity to do that for the last two years. It’ll be two years actually later this month. So it’s been a fun ride and I’ve learned a lot from you and some of the other members. I started my firm Mario back in 2007, having led sales and marketing teams for mostly technology, but some service companies for about 15 years prior to that and just had an opportunity to jump in here and and help a bunch of other companies through a consultative approach as opposed to doing it as an employee approach. And so then a really fun ride and and I learned a lot along the way. It’s been fun. 

Greg Alexander [00:02:16] And Jay, what’s a typical type of client that you serve and what’s the service you provide that client? 

Jay Mitchell [00:02:23] So for companies that are wrestling with different aspects or that go to market, they’re not getting the win rates they want to get. They’re not seeing the the deal velocity that they want to get. The average deal size is not large enough. We come in and provide a suite of revenue performance services and those will end up being things like ideal client profiles and who do you go after and what’s the value proposition and the value messaging that you would use that also lots of times incorporate sales methodologies and sales process. You know, the different aspects of go to market are at the heart of that. A lot of that Greg ends up being what’s a lot at the intersection of the sales product and marketing triangle there. And so you’ll see things like product marketing or sales enablement might be program leaders for our engagements. 

Greg Alexander [00:03:11] Okay, fantastic. So the ideal client profile, so our audience as you know, because, because you’re a member, they’re founders, co-founders, senior leaders of boutique crossover firms, which means they don’t sell a product, they sell a service. And it means that they really have to get tight on who their ideal client is, because as a boutique, we can fall victim to saying, Well, everybody could be a client. You know, if you think about the way that you just described your services, I mean, who doesn’t want to improve their win rates? But if you try to go after everybody, you’re not going to be very successful. And getting super tight on who you want to serve is really important. Yet for some reason, our members pencil whip this from time to time and for the life of me, I can understand. I absolutely could not. I can’t get why people would do this, so let’s start there. Why do you think the ideal client profile is not treated with the respect that it needs to be inside of a small service firm? 

Jay Mitchell [00:04:13] I think, frankly, whether it’s a large organization or a small services firm, either one, it’s not treated with the respect due. Yeah, as a part of that and I say that because a large organization needs focus too. They’ve got a lot of resources they’re deploying and you can have too many actions go on. A small firm, like most of us in the collective are. Greg If we have precious resources that we’ve got at our disposal and as the owners and operators of those firms, we’ve got to be very discreet in how we’re applying those resources. And frankly, the cornerstone of how you deploy those resources is based on the ideal client profile. With that as a services firm, it’s to me, as I mentioned, a lot of what we do is at that intersection of sales, marketing and product, it drives those three aspects of an operational business, whether that’s a product firm or a services firm for service organizations. It’s, you know, what are the. What’s the staffing that you’re going to do? What’s the what’s the territory coverage model that you’re going to have, whether that’s sales or the the services team for the product team, it’s driving the product portfolio around that. So it has a it’s an integral part is the cornerstone really of what folks should be doing. Why people don’t do that is beyond me that it’s a repeat it’s a repeat offender over and over. 

Greg Alexander [00:05:39] Yeah, it is. You know, so in some cases, people think they have it done and they what they basically have is a demographic profile. And that’s a start for sure. But it’s not that’s not in and of itself enough. The ideal client profile also includes the psychographic. So you get into things like wants, needs, desires, goals, objectives. You know, these are the things that you can’t see. You have to feel and you and you encounter them. When you begin your your your sales efforts, it’s easy to see things like in a database like industry, company size, job title, etc. and those things are important, but they, they’re only the starting point. So Jay, when you when you work with your clients to deliver this for them, what is the process that you go through and how long does it take? And is it is it difficult? Is it easy? You know, kind of share with us if somebody does want to go do this, what are they getting into? 

Jay Mitchell [00:06:37] Greg, let me let me preface answering how we do it by what is kind of the output. Because you mentioned the the demographic and the psychographic elements of that ideal client profile. And when we’re looking at that, we’re looking at both both factors. They’re right. The demographic end up being things, as you know, that you can pull from a database industry size. It can be number of locations, it could be number of employees. Things like that can be very good factors when you’re doing that. But if you look, you’re very familiar with the table of contents of this book called The Boutique. I think you’re at that table. The second chapter is ideal client profile. It’s the cornerstone, but there’s a chapter before it called The Problem and the Psychographic Pieces are about how does the problem come to life with. Right? And when you take those demographic aspects and you say, let’s apply that to the big vision, the bigger problem that we’re solving there that ultimately starts to turn into what are the use cases at an organizational level, at a persona role base level, it turns into what are the business, financial and personal pains that those particular members of the buying committee or are encountering as a part of that. That’s how you get people off status quo. When that’s the case is you got to go activate, you know, you got to turn it, like you said, from a vitamin into a painkiller. I won’t do that unless you get down to the pain associated with that and that psychographic program profile. That’s the triggers. That’s the attributes. When you look at that, to your question of how we do it, it’s a lot of interviews. It’s not just interviewing the internal team. What are they having? Wins and losses is a part of that. So you end up interviewing the existing customers or those that we wanted to be customers of the other clients. You’ll also we’ll do some of the analysis, some of the market segmentation aspects of that as well. But you combine that with the voice of the customer. One of my favorite things we do, you talk about win loss analysis. A lot will go to the voice of the customer, not just with wins and losses, but not. We have a network within Merrill of about 300 executive decision makers. So these are sea BP director level buyers. And you know, in the finance function, in the i.t function or in a manufacturing function or supply chain function or something like that, and we’ll go talk to them. And we haven’t gotten introduced to those people by our by our customer, by our client. We’ve gotten introduced to those through our network or through people we know. And you can start to really see what why would they even look at doing something? What’s the trigger point or the catalyst for why they would explore and what would they look like for their buying journey? So go turn to the voice of the customer through win loss. Go turn to a through the internal team, look at the analytics and then go look at just general good ole focus group market data. Yeah, and part of that as well. And those are the aspects that we’ll use to build that. The next step then is then go build the pain matrix associated with all those, right? And so that problem turns into the pains once you filter it through the profile. 

Greg Alexander [00:09:47] You know, you mentioned getting people off the status quo and this is such an important point to bring up, and it’s a good way to illustrate how somebody would use an ideal client profile. By my estimate, that’s just Greg’s opinion. About 50% of the times when a services firm loses a deal, they’re not losing to another service provider. They’re losing to do nothing. Meaning the project, in a way. Yeah, because status quo one. And to get somebody off a status quo, you have to convince them to change. And humans don’t like to change is just it’s perceived to be too much work and a pain in the butt and blah blah blah. So if you don’t really understand the status quo and how the status quo is unsatisfactory and you can’t get to a pain matrix that you talked about, then you’re really not going to grow. Scale and exert you for some days is not going to be enough work and the ideal client profile is what gets you to that understanding so that when you’re having a conversation with a prospect which it’s hard to get meetings with prospects of when you have one, it better be a good meeting. And the way you make it a good meeting is you prepare properly. And one of the ways you prepare properly is a review of an accurate, current, ideal client profile so that what comes out of your mouth makes sense to them. So it takes me to a question, Jane, which is how often do you recommend people update this? 

Jay Mitchell [00:11:11] But. Once a quarter to twice a year. 

Greg Alexander [00:11:15] Yep. 

Jay Mitchell [00:11:16] And that’s it. I use that as a variable there because there’s a rhythm, there’s a cadence that you’ve got to get into, and once a quarter, you’re fine tuning it. You know, once a year you’re doing a macro level on that. But if you can’t do it in between that half a year, somewhere in that range, that once a quarter to one, once every two quarters is minimal as a part of that. 

Greg Alexander [00:11:38] Yeah, I think that I think that’s good for us. And I think maybe, maybe the younger companies that are in the growth stage, they’re still trying to figure it out. Maybe they do it more frequently because they haven’t really figured out yet who they’re serving in the scale stage. Maybe you do it less frequently and maybe it’s based on a certain thing. Like maybe maybe you’re going into a new market or maybe you’re launching a new service and therefore you drive the need for that. I can tell you that when you get to the exit stage, intelligence, people can ask you for it. And they’re going to they’re going to say, how big is your market? 

Jay Mitchell [00:12:10] Exactly. And they’re going to you’re going to have to not just give the attributes of it, but you’re going to have to give the sizing around that of the part of that and the sizing. Lots of times go back goes back to the demographics, the demographic aspect of it. The thing that that doesn’t change as often, right? That that that’s why I say you may do the, the hard coding, the hard work on the demographic aspect of the profile, maybe once a year on that, maybe every half year. But I guarantee you the attributes of the psychographic are changing a lot more frequently than that. I mean, we’re still in 2023. I mean, the market none of us saw COVID well, but psychographic changed in a moment there with that. Right. And we had our best six month period we ever had. And even since then, the second half of 2020, just because people had extra money to spend with that. Right. They didn’t have travel sales, travel budgets to use. And they and those sales leaders were saying, I’m not letting this go to waste. Let’s put it to use through consulting services. So there was unmet there was pent up demand there that we were able to tap into. That’s a that’s a one time event. Hopefully it’s a one off event. Yeah, that’s right. But that’s a psychographic piece you’re tapping into for a period of time there. Yeah. 

Greg Alexander [00:13:25] I’ll share store a story with the audience to kind of bring this to life a little bit. So the reason why the number 54 is in the name collected 54 is that’s the industry code for professional services. And an industry code is one of the elements of the demographic profile, but there’s approximately 1.5 million firms in that code. There’s no way that we could go after 1.5 million. And even within each firm, these firms are often partnerships with his co-founders. So maybe there’s two or three people that would be interested in our services. So let’s say that the addressable market is 4 to 5 million people. I mean, it’s impossible to go after that. So we just went through because here it is at the time of this recording, it’s November of 2022 and we’re planning for 2023 and we’re trying to figure out where are we going to deploy our limited resources as a small firm, a small boutique ourselves. And we went we’ve had 17 exits in Collective 54 in about three years. When I say that, when I say we, I mean 17 members have exited and we’ve had a ringside seat. Of those 17, nine of them, nine are in customers custom software development. And until we went to refresh our ideal client profile, we didn’t know that like it was right under our nose. But we did know that. And we said, What’s going on here? Why? Why is the customer software development segment within the 54 segment doing so well? Well, as they say, software is leading the world and it’s huge demand for it. So these people are scaling and they’re running into scale problems. So they’re they’re a natural fit for what it is that we do. So guess what? We’re now being much more deliberate and intentional and having conversations with software development shops because of that knowledge. That’s an example for the audience members of how powerful this tool would be. And Joe, you went through this one time event with COVID, and COVID changed the sales strategy for pretty much every company in the world. I mean, we used to drive around in our cars and go meet people face to face. Now we sell over Zoom. 

Jay Mitchell [00:15:30] So, yeah, you don’t get sales guys don’t need a gas card anymore. 

Greg Alexander [00:15:33] Exactly. I’d hate to be the guy selling the gas card. So how how did your client profile change as a result of COVID? And was it a one time thing or are there some things are going to persist? 

Jay Mitchell [00:15:48] The demographic aspects didn’t change that much as a result of COVID. It was the psychographic and it was just looking at some different trigger points related to that. If you break down Greg, our our primary ideal client profile, it looks a little something like this. We will we will focus on large enterprise companies, primarily technology oriented companies. So enterprise software, SAS related, those are going to be most of the time north of $1,000,000,000 because there’s not that many enterprise software. There’s not that many companies between 100, 100 million and a billion, anyway, kind of thing. And so the large enterprise companies where we’re going in solving a divisional problem, then you’ve got those under 100 and then you have those under 25 million. So we break that technology, only band down into those three buckets of 25 and below million, below 25 to 100, and then basically over a billion because the 100 million to 1000000000, there’s just not that many in there. Then you take those and we’ll apply private equity, particularly to take that 25, 200 million. And we’re looking for private equity backed portfolio companies is another key trigger point. Again, psychographic trigger that we’ve seen is a recent funding round by private equity. We were actually doing some 2023 planning and I’ll give you the numbers because I don’t know that don’t have a memorize yet. We were literally just looking to crunching this little bit this week. So in that 25 to 100 million revenue band for technology enterprise software type companies, there’s 3923 total companies in Zoom info that fit the bill on that. That’s not a massive number, right? But that’s plenty big. 

Greg Alexander [00:17:28] I was going to say, yeah. 

Jay Mitchell [00:17:29] Go after it. Right. Okay. You take the private equity that have done a funding round and there’s 399 of those who have done a funding round on that. Okay. So now we’re getting to like where we can go focus as a part of that. You take the that the text, the US of the US piece of that. Let me actually go back. There’s 39 and 23. There’s 720. I’m sorry that they’ve done private equity. Okay. I’ve done that. Okay. Within Texas, you and I live in Texas, there’s 38 that have done a recent funding round. They just do it. So that’s 1% of that. Now, do we want to capture more than 1%? Yeah, but you take that. My point is you take the universe and you start to segment that down and then it starts to direct your marketing campaigns. 

Greg Alexander [00:18:17] And the priority. 

Jay Mitchell [00:18:19] Yeah, account based marketing is a is a huge focus now. Right. A B2B. How are we going to apply all these marketing automation systems? It’s not that doing broadcast marketing, it’s very account based, targeted marketing. Like you got to get down to the 38 in Texas to do account is marketing right not even the 3923 it’s who are the 38 in Texas because I got one rep in Texas calling on those 39 accounts. Yeah. Part of that. 

Greg Alexander [00:18:44] Right. And the tools can target like that now. Right. So again, it makes the I took my profile that much easier. You know, if you’re going to if you’re going to do some marketing automation systems, you can target by those 38, which is really good. Well, listen, we could talk about this forever. We try to keep these podcast episodes short. The extended conversation is the Friday Q&A with the members. And I’m really looking forward to to you hosting that for us in the upcoming weeks. I know it’s going to be well-attended. A lot of members going to have a lot of questions. So thanks for being on the show today and sharing what you know about this, using your own firm as an example. Plus, your clients clearly have some domain expertize here, so thanks for sharing with the group. 

Jay Mitchell [00:19:26] Yeah, glad to be part of it. Thanks for the invitation, Greg. 

Greg Alexander [00:19:29] Thank you. Great. All right. So if you’re not a member and you think you might want to be want to be in a community, meet great people like Jay, go to Collective 54 dot com and you can apply for membership. And if you’re not ready to be a member yet and you want to educate yourself and listen to more content like this, you can subscribe to Collective 54 Insights and you’ll get a weekly podcast and blog. You’ll get access to some charts that are based on our benchmarking data that are really interesting. And you can get a copy of our book, The Boutique How to Start Scale and Sell a Professional Services Firm. So check that out. And that’s the end of the show. And I thank you for listening and I look forward to the next episode.

Episode 82 – How a Technology Service Provider Transitioned from a Founder Driven Sales Model to a Sales Team – Member Case with Lenka Lechmanova

Boutiques become market leaders by building a commercial sales engine that is capable of scaling. On this episode, we invited Lenka Lechmanova, CEO at V2 Strategic Advisors. She shares how her firm has cultivated a homegrown talent strategy, established sales processes and metrics to benchmark performance, and moved away from partner selling. 

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. On this episode, we’re going to discuss a sales and marketing process. The reason why we’re going to talk about this is because on the path of a boutique, from the growth stage to the scale stage to the exit stage, it’s important that a firm moves away from a partner led sales model or a CEO led sales model, and they build a repeatable sales engine of some kind. And that typically involves development of talent, process design metrics, tracking things of that nature. And it can be a stumbling block for some because our founders and CEOs are naturally gifted in this area usually, and they tend to be the chief rainmaker for a period of time, or in some cases, founders and CEOs are more operationally focused, and sales and marketing is a new skill for them, and they have to learn how to do this. And it’s a real challenge, you know, to develop this capability. And it’s essential to scale. It’s particularly essential to exit. And the reason for that is because anybody who might want to buy a firm wants to know that there’s some system in place that is going to be able to predictably and on a regular basis, bring in new clients and expand existing clients. So that’s what I’m going to talk to talk about today. And we have a role model who’s going to be our expert, if you will, and her name is Lenka Lechmanova, that I pronounce that last name correctly. 

Lenka Lechmanova [00:02:15] Yes, you did. 

Greg Alexander [00:02:16] Okay. Very good. And she’s in the middle of this. I’ve spoken to her about this before, and I’m pleased that she’s here and willing to share her experiences so far on this topic. So. So, Lenka, thanks for being here. And would you introduce yourself to the audience, please? 

Lenka Lechmanova [00:02:33] Sure. I’m Greg. Thank you for having me. My name is, as you said, Lenka Lechmanova. I’m the CEO of V2 strategic advisors. We are a technology and management consulting firm focused on Salesforce.com digital transformation projects. And our business was originally founded by by a founder that specifically focused on sales and marketing processes versus AI and operationally founded and oriented CEO that has is not selling or delivering services. Yeah. 

Greg Alexander [00:03:14] So Exhibit A to what I was talking about at the at the beginning and we have many, many members in the collective in a similar situation. So your your topic in your talk today is going to resonate. So I guess let me start there. So for somebody who is a CEO and doesn’t come from the sales and marketing background, but knows that this is a critical thing for your firm, what’s the first thing you did to get familiar with it, to get started on this journey? 

Lenka Lechmanova [00:03:43] You know, truly, it is not what I did, but what the founders did to transfer that knowledge into the organization. And really how it started is they’re recognizing that this is a journey that he needs to take and transition from him running sales and marketing completely to growing the team. I will say in our organization we have tested various models and the one that has proven to be the most effective is really transferring that knowledge to someone within the organization that may not necessarily have the traditional sales background, but really understands what we do and how to sell the value of the organization. 

Greg Alexander [00:04:38] So that’s interesting and that’s encouraging because some would say that somebody who doesn’t come from a sales background is never going to be able to sell. I disagree with that. I think it’s a learned skill and it sounds like you’ve had some success with this in teaching those that don’t come from a sales background but really understand who you are, what you do, your clients, your solutions. They’re having success. 

Lenka Lechmanova [00:05:02] Yeah. I think, you know, it’s recognizing what your business sells. I think you as a business, you have to understand what is unique about what you’re selling in professional services, especially in the niche market. Like we are, we although there’s many Salesforce services providers, we have focused on specific niche market and becomes a lot of enabling a lot of education for our clients. So really that consultative approach, it was key to our sales model there and therefore that transition from founder led sales organization was critical that we bring someone who understands we’ve been there delivering the services to our clients and understands the journey so that value based selling can be created. 

Greg Alexander [00:06:00] You know, in the niche that you’re in, an understanding that niche. So for the audience, maybe, maybe go one level deeper there. What is your specific niche? 

Lenka Lechmanova [00:06:09] Our niche is we focus on a lot on media and entertainment clients or clients in this particular industry. We focus on other we expanded our repertoire, but particularly at the time and were transitioning from our founders based model. We predominantly serviced media and entertainment organization and helping that they are middle office management, standing up and creating digital transformation. And in that particular industry, understanding how ad sales management and digital sales management works is critical. It is not something that you can just you know, it is not just enough to understand the technology background and the sales force. You have to have a specific industry knowledge and understand how those type of clients operate. 

Greg Alexander [00:07:04] Okay. Well, that would explain it. It sounds like that vertical industry, knowledge, media and entertainment and how this advertisement is sold was the mission critical skill that your prospects and customers were looking for. So therefore, it makes a lot of sense for somebody who really understand your solutions in great depth to be in the sales capacity, because that’s what the prospects are looking for. Just for context, did you attempt to hire or develop traditional salespeople who didn’t have that industry experience? And it was through that experiment that you learned that that’s what’s required or that it happened more organically, that you promoted some people from the delivery team into sales and they just thrived. 

Lenka Lechmanova [00:07:52] Yes. And I will continue to expand actually on your question, because I think it’s a combination. I think the the yes, we promoted within the organization someone who worked very closely with the founder. And there are actually two aspects to it. One was sales engineering and one was actually that consultative selling. So really understanding the technical nuances and then understanding the value base. But then we also hire from outside for traditional account executive into traditional account executive roles because it was really important that we create a wealth of relationships. Our selling model is also not just purely account based outreach, but it’s also channel. So we do a lot of combination of account based sale as well as channel based sales channel for those who don’t have that model. So we have to collaborate very heavily with the account executives that sell actual sales for software and for in order to be effective, you really need to do both. You need to do prospecting activities as well as growing your relationship in a channel. And therefore, we our approach was to do a combination of few different things. So really having technical experts who can support sales cycles and those were grown within the organization as well as thought leadership. And then we hired traditional sellers from professional services, but none of them were Salesforce experts. We have tried to hire from software companies in the different stages, but those skillsets didn’t necessarily translate well. And. 

Greg Alexander [00:09:52] You know, and a lot of members have that same experience, right? So the lesson for all of us to take care is really understanding the job, the account executive. Job, the sales engineering job, in Lincoln’s case, at the detail level to know what the skills are required. Just because somebody was a successful account executive with X, Y, Z software company doesn’t mean they’re going to be successful with you. I mean, you’re using value based selling consultant to be selling. There’s a channel involved. You know, that’s a very specific job description. And I’m not surprised that the kind of nontraditional person that went into this role is having success. A delivery person in particular, what I would call a delivery person, a technical expert in your language. The question on that, sometimes when you go to technical experts and you ask them to get involved in business development, sales and marketing, they don’t want to. So how did you present the opportunity and encouraged them to to move in that direction? 

Lenka Lechmanova [00:10:58] Well, I think it was kind of a natural transition. You know, we had a couple of team members that been with the organization for a while. And, you know, as every organization, you want to grow your talent and provide opportunities. And some of these opportunities were created by inviting them to sales cycles, helping them scoping, figuring out how we deliver, you know, what are the nuances, what questions do we need to ask in order to successfully deploy our our services? And the final aspect is also that understanding really what makes us unique in a marketplace and documenting it. I think our founder had a specific methodology that he used, and before we transitioned to the sales team to try to sales team, he worked with them for about 6 to 9 months side by side and documenting some of the processes or methodologies, creating a sales structure, taking, downloading what’s in his head that he didn’t necessarily have to put down because it was a little bit more smaller team that was selling or through principal consultants or subject matter experts that were involved. But taking that knowledge and translating into a system, into operating procedures and into best practices. 

Greg Alexander [00:12:34] You know, it’s such a great point, and I’m really glad to hear that you finally took the time to do that. 6 to 9 months of documenting, you know, what was in what was in his head so other people could understand it and do what what he did. For those listening that are in the found role, that want to move to this sales model where other people in the firm can sell as well as you can sell, that’s a that’s a critical best practice to pay attention to. Like if I come to you for a moment so you are a self-described operationally focused CEO. I’m not putting words in your mouth. And we’ve talked about that. And one thing that I’ve always gained from you is that you believe in metrics. And I’m assuming that you have a set of metrics that you’re paying attention to that helps you, you know, learn what’s going on in the sales department. Would you mind sharing some of those metrics with us? 

Lenka Lechmanova [00:13:27] Sure. Absolutely. So even before I transitioned to my current role, I worked very closely with the sales organization on driving behaviors of account executives and the activities that we want to foster. So, you know, for the founders that are looking to establish metrics or stand up to a traditional commercial team, sales team is identifying what activities they would need to what activities they struggle with at a top of the funnel or the middle of the funnel as at the bottom of the funnel. And, you know, drive the metrics around around those weak points in our particular and things, it was a little bit more top of the funnel with we had once we engaged in a client we tend to build trust in relationship of a prospect and we had quite a strong closing closing rate, especially, you know, the founder. But our challenge has always been a little bit more top of the funnel. So the lead generation and therefore when we stood up commercial team, our focus was, you know, it was how do we generate those, those leads? So we focused on measuring prospecting activities, what artists, individual sellers doing in terms of the outreach. To on in terms of their account as well as in their channel relationship. And our big goal was to grow those channel relationships. So we were measuring the expansion, how many new relationships they were forming and how many meetings or calls they were. They were managing over a period of one week, 30 days, and in some instances, what has been happening over the last 90 days. Right. Because certain activities, especially when you have a territory, you have to look at the size of the territory and define what’s realistic, that there is a touch point. So, you know, looking at your territory and saying this is, you know, you have to reach out to all your 50 or 100 accounts every week. That’s probably not realistic. But what are you doing over a period of 90 days? So dissecting that then from prospecting activities, from phone calls or emails, marketing materials, you know, we are trying to generate meetings. Meetings are what form forms that trust provides opportunity. So the second layer was, you know, you do those prospecting activities so you can get meetings. Once you have those meetings, you know, what are their target move channel direct. Either way, they got a result into opportunities and those opportunities ultimately result into converted sales. So it’s a little bit of funnel building through those prospecting. 

Greg Alexander [00:16:30] And four stages activities, meetings, opportunities and then closed transactions. So that’s excellent. I appreciate you. Walk me through that. Well, listen, I could talk to you about this forever, but we’re at our our time window here. But on behalf of the members, I mean, your your story you use case is very interesting. You know, an organization that is transitioned from founder led sales to a commercial sales engine and you gave a lots, lots of stuff to think about. So I appreciate you being on the show today. 

Lenka Lechmanova [00:16:59] Thank you for having me. 

Greg Alexander [00:17:00] Okay, great. And for those that want to learn more about this topic and others like it, I suggest you pick up a copy of our book. It’s called The Boutique How to Start Skill and Sell a Professional Services Firm. And if you’re interested in meeting leaders of other process firms like Lanco, consider joining our mastermind community. And you can find it at collective54.com. Thanks again. Take care. 
Lenka Lechmanova [00:17:25] Thank you.

Don Goldstein [00:19:06] Thank you.