Category: blog

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

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

What is a mastermind group?

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

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

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

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

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

Why choose a mastermind group? 

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

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

Diverse opinions

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

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

Immediate brainstorming

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

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

Relevant information

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

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

Motivational

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

Time-efficient

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

Customized 

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

Practice mentorship

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

Networking and cross-promotion

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

Work with the best mastermind group for boutique firms

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

There are five types of competitors for all boutique firms. They are as follows:

1. Do nothing

2. Internal resources

3. Boutiques

4. Market leaders

5. Other

Understanding the difference between these business obstacles, and how to overcome them, is key to success as a boutique firm. Here, we’ll go over how to tackle these kinds of business problems in your day-to-day, depending on the type.

The “do nothing” decision 

Approximately 40 percent of the time you will be competing with “do nothing.” This competitor can be described as the project that went away. The client did not hire you or one of your competitors. They just decided not to go forward with the initiative. The reason this happens about 40 percent of the time is that you are not pursuing the urgent. The client has other priorities and business plans.

The way to defeat “do nothing” business challenges is to calculate the cost of inaction. You need to prove to the client that your project deserves their full attention. It is the priority. As they say, “Money talks and BS walks.” Put a hard dollar on their inaction, and you will defeat this competitor.

Clients that rely on internal resources

Approximately 30 percent of the time you will be competing with internal resources. These clients think that they can do what you can do. And they think that they can do it better than you and for “free.” The reason this happens about 30 percent of the time is that there is no compelling event. The client is not concerned with how long the project takes. There is no deadline breathing down their necks.

The way to defeat internal resource-based business challenges is to establish a deadline. Explain to the client that completing the project inside of this deadline is very difficult. It is too risky for them to try to do so on their own. Share with the client the true workload. Make it obvious that they need help.

Boutique firm competition

Approximately 20 percent of the time you will be competing with other boutiques. Highly specialized prescale firms are very attractive to potential clients. The reason this happens about 20 percent of the time is that some clients have budget constraints. They turn to boutique firms because, in general, boutiques are less costly. The way to deal with this kind of business obstacle is to guarantee the work. Boutiques have limited resources, and this makes them risk averse. The idea of a guarantee frightens them, as they may not get paid. By guaranteeing your work, you separate yourself from the boutique competitors.

Market leader competition

Approximately 5 percent of the time you will be competing with the market leaders. These are

the 4,100 firms that have had their business grow to more than 250 employees. The reason this happens only about 5 percent of the time is that most boutiques are not in these deals. By guaranteeing your work, you separate yourself from the boutique competitors.

Clients who can afford the market leaders tend not to ask smaller firms to bid. However, when they do, these deals represent the year makers. Therefore, boutiques must be excellent at beating the market leaders. Although it is only 5 percent of the pipeline, these are the big deals. Just one or two wins per year can mean a lot.

Small businesses vs. market leaders

The way to defeat the market leaders is by implementing a five-step approach. Step one is to establish your credibility. Prove to the client that you are worthy of consideration. Step two is to

deliver a top-quality proposal. This will signal to the client that you deliver exceptional work and have a plan to overcome business obstacles. Step three is to demonstrate to the client that you can complete the work much faster. The advantage of a boutique is speed. Big firms can be very slow-moving. Step four is to offer the same quality of work for 25 percent less cost. Market leaders are expensive. They can be defeated with competitive pricing.

Don’t discount too much, for it may mistakenly signal that you are “cheap.” Step five is to offer an enjoyable experience. Market leaders enter a client like a tornado and are very disruptive. The advantage of working with a boutique is that they are easier to deal with.

The “other”

Approximately 5 percent of the time you will be competing with the “other.” This is to say that you are competing with alternative ways of solving the client’s problem. The two most common “others” are executive search and software providers. Clients often think that the fast way to solve a problem is to fire someone. This is quickly followed by hiring a replacement. In other cases, clients think that they can license a piece of software and the problem goes away.

The way to defeat “other” is to perform a postmortem. The postmortem highlights that the last time they took this approach, it did not work. For instance, the hiring error rate is high, especially

so at the executive level. And many software applications have low user adoption rates. Once the client is reminded of these previous attempts, they typically eliminate them.

Are you ready to compete? 

In order to determine if you’re ready to compete, here are some questions to ask yourself.

1. Can you calculate a client’s cost of inaction?

2. Can you find a compelling event that puts a deadline on the client’s project?

3. Are you confident enough to guarantee your work?

4. Can you establish your credibility in the eyes of your client?

5. Can you signal quality to the client by delivering a best-in-class proposal?

6. Can you deliver much faster than the market leaders in your niche?

7. Can you earn healthy margins and still be 25 percent less than the market leaders?

8. Are you more enjoyable to work with than the market leaders?

9. Do you understand the alternative solutions to the problem you address?

10. Will a postmortem reveal to the client that these alternatives have a poor track record?

If you answered no to eight or more of these questions, you are not ready to tackle the business challenge of competition. The task is to prepare for competition by converting the nos to yeses.

If you answered yes to eight or more of these questions, you are ready to win. The task is to get in as many deals as possible. Your win rate will be very high.

Summary

A start-up boutique must win a high percentage of the time. They are not in enough deals to allow for many deals to be lost. No one wins every deal. But that should be the goal. By establishing a competitive playbook, you can make sure to beat the other guys consistently.

Get the best experience when growing your business 

Dealing with the competition is a part of the business challenges that every company faces. However, just because business obstacles are commonplace, doesn’t make them any less daunting to face. Relying on firsthand experience and advice is always the way to go. 
For more insights into how to upscale your consulting business, listen to the Collective 54 podcast today or join our mastermind group.

You are probably receiving some inbound interest in your boutique. Managing this interest correctly is very important. You get only one chance to make a first impression. There are large sums of investment capital available today. This dry powder needs to be deployed. As a result, investors have built marketing teams. These teams spend all day, every day, reaching out to owners like you. Do not overreact to calls coming in from those interested in purchasing your firm. These firms are kissing a lot of frogs. It’s up to you to manage and generate sustained information in your business. 

Importance of investment bankers when selling a business

How should you manage interest in your firm? Be careful not to reveal too much information too early in the process. The idea is to create some competitive tension among possible bidders once you’re ready to sell. The best way to do that is to hire an investment banker.

For those who are unfamiliar with the term investment banker, let me explain. An investment banker works for an investment banking firm. For example, John Doe works for Goldman Sachs, J.P. Morgan, Morgan Stanley, and others. John gets hired to advise companies looking to sell, or buy, companies. In your case, John would help you determine what your firm is worth. 

He and his team would prepare the marketing materials. He would reach out to a group of

potential buyers. And for those interested, he would manage what is known as a process. This involves items such as arranging management meetings, reference calls, and so on. Ultimately, the investment banker is charged with getting you the best deal. They are your representation when selling your business.

Boutiques and investment bankers

Boutiques undergoing the process of selling without a banker are making a mistake. The amount you save on commissions pales in comparison to the amount the banker makes you. For example, banker’s fees can range from 1 percent to as high as 10 percent of the sales price. If you sell for $100 million, this is real money. However, it is not uncommon for a banker to raise the purchase price by 30 to 50 percent. What is better for you: paying 0 percent commission on a $50 million sale or paying a 3 percent commission on a $100 million sale? 

The first-time seller benefits from a banker in more ways than price. Boutique owners selling a business for the first time are inexperienced. They make costly mistakes that prevent a sale from closing. Selling for the right price is one thing. Closing the sale is another. Many deals have fallen apart late in the process due to an inexperienced seller. An investment banker will make sure that you do not shoot yourself in the foot. Deciding on which banker to hire is a difficult decision. 

Tips For Selling Your Company 

Here are some things to be aware of when selling a company. Look for a banker with relevant transaction experience to represent your boutique. For instance, an IT services firm should choose a banker who has sold many IT services firms. Look for comparable transactions over the last four to five years. Do not settle for industry-specific experience. Be sure that the experience is niche specific. Also, size is critical. Investment bankers doing billion-dollar deals are not for you. They are unlikely to take on your project. And if they do, you will be dealing with the junior varsity team.

Look at the dealing background

 Look for broken deals. Ask the banker how many of their assignments do not close and why. Speak directly to the owners of these companies. Hear from them why they were unsuccessful in their attempt to sell their businesses. Seek to understand the process to develop a comprehensive buyer list. Selling boutiques is harder than selling companies with major brand power. The list of possible buyers is very long. No one banker can possibly know all the potential buyers. You need to understand how their process will surface a deep buyer pool.

Source different buyers 

It is important, for instance, that the banker sources both strategic buyers and private equity buyers. Dig into the valuation range they give you. It is necessary to know how they reached these figures. Of course, it comes down to the team. Meet the actual people who will

be working on your deal. As you can see, much goes into the banker selection process. However, the most important lesson is to hire one. This is not the time to do it yourself.

Another mistake made in managing interest is scaring buyers away. Boutique owners often do not have realistic price expectations. A buyer calls, the owner is flattered, and they blurt out a very high number. The buyer politely gets off the phone quickly. They feel that there is no way to get a deal done. The price is way too high and the owner seems nuts. They move on to the next name on the call sheet. Your boutique is your baby. You believe that it is unique and is worth a lot. 

However, you do not determine the price when selling a business. The market does. Your boutique is worth what someone is willing to pay for it. Nothing more and nothing less. It may make sense to suggest an initial price. This is, however, later in the process. And, please, if you do, be sure it that is market based and realistic.

Structure for success

Buyers care a lot about deal structures. In some cases as much as price. Be careful not to scare buyers away with an unrealistic structure. It is important to understand how deals like yours are structured. For instance, selling to private equity often requires rolling over some equity. If you are unwilling to do this, many private equity firms will walk away. Or, if selling to a market leader, they will likely require an earn-out. If you are unwilling to accommodate an earn-out, your buyer pool will shrink. The market will dictate the terms. Understand the common structures and try to align with these practices.

This will prevent you from running off possible buyers. Also, understand that prices and structures change a lot. Boutique owners often overreact to opening bids. They get emotional during the process. Opening bids are not insults. They are just data inputs. The price you get should increase as you go through the process. As competitors compete for your boutique, prices go up. 

Unfortunately, some boutique owners get outmaneuvered by savvy buyers. At times, acquirers will throw out a big number, pending due diligence. The owner’s ego becomes inflated, and they let the fox inside the hen house. The potential buyer proceeds to lower their number based on diligence findings. To the owner, it feels like a bait and switch. And, in this instance, it is. Just remember, the sales process is a nine- to twelve-month roller-coaster ride. Stay in your seat with your seat belt on.

Attorneys and accountants 

Sometimes deals take too long and cost too much. This happens when the owner does not understand roles. A banker is not a lawyer. The banker will find you a buyer and get you a deal. The attorney(s) then need to negotiate the terms. This is an additional cost and takes some time. And, like choosing a banker, selecting the right attorney matters. Do not go cheap here. You get what you pay for. The last thing you want is a lawsuit two years postsale trying to claw back proceeds. Hire the best attorney you can find and let them do their job. And then there are the accountants. 

Deal Structures

Deal structures can impact the tax bill a lot. You will want to keep as much of the proceeds as possible. How the transaction is booked can make a big difference. For example, did you know that a dollar amount will be assigned to your non-compete? This dollar amount will be recognized as ordinary income and not capital gains. You will pay ordinary income taxes on that in April. I did not know this at the time of my sale. But my tax lawyer and accountant did. And they negotiated down this tax liability, which saved me a lot of money. Again, you get what you pay for. Hire the best advisers you can.

As you can see, there is a lot to consider when managing interest.

Are you prepared to do so?

1. Are investors inquiring about buying your firm?

2. Are you making a good first impression by not divulging too much information too early?

3. Have you created the appropriate amount of competitive tension among the buyers?

4. Do you know who the right investment banker is for you?

5. Have you hired them?

6. Do you have a realistic, market-based price in your mind?

7. Have you waited the appropriate amount of time before suggesting a price?

8. Do you understand the typical deal structures for boutiques like yours?

9. Are you prepared to engage and let prices drift up over time?

10. Have you hired the best attorneys and accountants to complete the transaction?

If you answered yes to eight or more of these questions, you are prepared to manage interest well. You are likely to make a great first impression.

If you answered no to eight or more of these questions, you are not prepared to manage interest well. You are likely to run off potential buyers during the process.

Summary 

You get only one chance to make a first impression. There is a lot of available investment capital. The phone is going to ring. The email in-box is going to get pinged. The social media invitations will be coming in. Be extra careful to avoid the common mistakes made by first-time boutique sellers.

Get the best experience when selling your business 

Selling your company is going to take experience. It’s also going to take experience to get your boutique to the point where it’s ready to sell. You’ll want the best information out there on business valuation, and to take you through the process of selling. 

For more insights into how to upscale your consulting business, listen to the Collective 54 podcast today or join our mastermind group.

As  your boutique graduates from start-up to scale, business development needs to change. The primary difference is that at scale, firms have an established client roster. This means that they can generate revenue from existing clients. Start-ups spend their business development efforts exclusively on acquiring new clients. Scale firms split their time between acquiring new clients and developing existing clients. This ignites growth. Why? It is a lot easier to sell to existing clients.

How your scalable plan changes post-start-up

The cost to acquire new clients is expensive. It takes a long time. Start-up companies need to get in front of the new client. This requires a dedicated marketing push and time for word of mouth to spread. Articles must be published, speeches made, podcasts produced, books written and social media posts made. This wide net approach will catch a lot of fish that need to be sorted and qualified.

On top of this, RFPs require responses. Competitive bake-offs require decks to be created. Opportunities must be managed with care. Relationships need to be nurtured. Lots of miles get logged and many hotel beds get filled. References need to be contacted. I am exhausted just writing about it. All these activities take a consistent level of effort. This requires staff, time, and budget. It is very expensive. 

Once you start scaling your business, this starts to change. True, a steady stream of new clients is necessary for a healthy scale boutique. However, these boutiques also count on repeat business from their existing customers. This revenue reduces the urgency of seeking out new customers. And it costs much less to generate; thus, it spikes profits. This blog will focus on generating revenue from existing clients. This is the scale activity. 

How to make a business development plan work

To start creating a scalable plan, you need a budget. Scaling a business for growth requires a business development budget which should include both dollars and hours.

Here, dollars refers to the discretionary funds you will use to invest in your existing clients. Your hours are the non-billable time that your staff will invest in those existing clients. When scaling their business, many boutiques incorrectly assume that business from existing clients just happens. This is not true. These clients will require investment in time and money. 

Case study: Energy efficiency inspection business

Let’s take a look at a hypothetical example to demonstrate scaling a business for growth. We’ll use the energy efficiency inspection industry as an example. A business in this industry provides energy audits for companies looking for a way to reduce their utility bills. The technicians from this energy efficiency business have been cross-trained in the firm’s business development process. 

While delivering the work, they are listening for new opportunities. The technicians’ expense reports are heavily monitored. However, the goal is not to reduce expenses but to increase them. 

The technicians need to make the client feel important. They should show up to every meeting with Starbucks for everyone. The technicians should act like team members, not salespeople. The clients trust the technicians because they are not salespeople. These technicians often point out needs that the client was unaware of. These leads fill the funnel. In some cases, they convert to billings instantly. The cost to acquire this type of business is very little. 

Share of wallet

Boutiques are often horrified the first time they do a share of wallet exercise. This reveals how much of a client’s total spend is spent with you. Boutiques assume that they are getting 100 percent of a client’s business. They are not. Clients have new needs all the time. They give business to other firms without you even knowing about it. Why? They are unaware of your full capabilities. Unless something is seriously wrong with the relationship, this should be yours. Capturing this low-hanging fruit is a simple way to scale. 

Building a scalable plan

Capturing this low-hanging fruit requires that you first ask yourself some questions. Which of your clients could give you additional business? How could you invest to capture this business? Which activities are you most likely to succeed at? 

The solution to this problem is easily implemented. Start by doing a share of wallet exercise. This should include current and previous clients. This will produce a list of accounts you should invest in. Focus first on your current client roster. You have a team deployed there right now.  Redesign your business development process to focus on identifying new opportunities. 

Train your team on the new business development process and get them to find new opportunities with your existing clients. Afterward, continue your scalable plan by examining your previous clients. Nurture these relationships. Invest non-billable time in activities that these clients would value. Develop a business development process that is specific to those clients. Train a team in that business development process and task them with reactivating these dormant clients. 

Boutiques should generate approximately 80% of their revenue from existing clients and 20% from new clients. If your numbers differ significantly, rethink your business development efforts. 

How do I know when I’m ready to scale my business? 

There’s no hard line that marks when you transition from a start-up to a scaled business. You don’t magically wake up one morning with enough clients that you can slow down your rate of client acquisition. The most important thing you can do is communicate constantly with current clients. You need to understand their business nearly as well as they do. You need to have a deep understanding of the role that your business plays in theirs. 

Still uncertain? Then try taking this quick self-quiz below. If you answer “yes” to eight or more of these questions, then it might be time to consider yourself a scaling business and start focusing more on client development.

1. Are you generating a lot of business from existing clients? 

2. Have you reduced your need for new clients substantially? 

3. Do you understand your share of wallet for your current clients? 

4. Are your current clients up to date on your full capabilities? 

5. Are you investing non-billable hours directly into your existing clients? 

6. Have you redesigned your business development process to prioritize existing clients? 

7. Have you trained your employees on the new business development process? 

8. Are your “delivery teams” given goals and measured on finding new opportunities? 

9. Are the employees who are best at business development your cultural heroes? 

10. Do you make sure that your current clients know how important they are to you? 

Get the best scalable plan for your consulting business 

Scaling your business will take hard work and patience. You need to make sure your business development process is flexible enough to grow over time, and that you have the right team members to support and help you thrive, no matter what challenges you take on. 
For more insights into how to upscale your consulting business, listen to the Collective 54 podcast today or join our mastermind group.

What is a Mastermind Community? 

Mastermind communities bring together professionals from a variety of backgrounds to learn from one another and share expertise and experiences. These communities are typically peer-to-peer-based groups, where every participant not only plays the role of a mentor, but that of a mentee as well. The overall goal of a mastermind community is to simply help one another. Whether you’re looking for advice or want to share your knowledge, mastermind communities benefit everyone. While there are numerous benefits to a mastermind community, five main benefits stand out: 

1. Receiving Immediate Feedback

Have you ever made a business decision that didn’t pan out the way you expected? Maybe you made the decision hoping it would go well, only to realize that you chose wrong? Well, that’s completely normal. As a business owner, you’re expected to have all the answers, but that’s an unrealistic expectation. The notion that one person should be proficient across every avenue of business is far-fetched at best. A team of people, on the other hand, that’s not far-fetched at all. 

One of the greatest benefits of a mastermind community is immediate feedback and insight. Unless you’re attempting something revolutionary, chances are, someone else has already done something similar. Whether it be product pricing or infrastructure management, others have already set the precedent. They can teach you what went wrong with that attempt, and what went right. Learn from their mistakes and successes, and you’re bound to succeed.

2. Taking a Holistic Approach

Joining a mastermind community allows you to take a holistic approach to everything you do. By collaborating with other minds, you’re bringing in different knowledge, experience and skill sets. For example, accountants are great with numbers. They know everything there is to know about accounting, from financial management to personal investments. However, what happens if they need to solve something that’s not within the realm of their expertise? Perhaps an accounting firm owner has a few employees that aren’t contributing enough and needs advice on how to manage their team. Well, chances are, there’s an owner in your mastermind community that’s willing to share insights with you on team management. Mastermind communities are full of different professional experiences, which in turn allows for a greater variety of perspectives and insights to be shared. 

3. Rising Above the Competition

Mastermind communities provide a huge advantage that will allow you to rise above your competition and lead the charge in your industry. While your competition struggles with difficult decisions, you’ll be supported by your community. A hundred minds will be with you, supporting you through every challenge along the way. 

4. Growing as a Person

Many people initially think that mastermind communities are simply for brainstorming. After joining one however, they start to see that that’s not entirely true. It’s definitely great for brainstorming, but it’s also great for your own personal development. Working with other people from other backgrounds is an excellent way to develop new skills. Whether it be new ways to learn, new ways to collaborate, or new ways to teach. The possibilities are endless. 

5. Support and Celebration

Above all else, mastermind communities are a place in which you can go to receive professional support. Your peers want you to succeed and will celebrate when you do. Mastermind communities are more than just a place to share advice and experience, they’re a place to build and nurture professional relationships of all kinds. 

Final Thoughts

At the end of the day, the benefits of a mastermind community are hard to deny. The simple truth is, 100 minds are better than one. Here at Collective 54, we created the first mastermind community for founders and owners of boutique professional services firms. Our members help one another to make more, work less and get to sell their firms bigger and faster. If you own or lead a pro serv firm, these are your people, ready to welcome you to the tribe. Check it out.  You won’t regret it. 

Joining a Mastermind Group: Is it Worth Your Time?

People reach out to me after reading The BOUTIQUE: How to Start, Scale and Sell a Professional Services Firm. They hear about Collective 54, a mastermind community specifically for professional services firm owners, and ask me to help them understand if it’s for them. Here’s what I tell them: “Yes, 1000 percent.” 

Running a professional services firm is not easy. In fact, it is too much work for one person. Whether it be deciding on pricing for your services or setting up tech enabling service, decision-making can be very challenging. The pressure to have all the answers can sometimes feel insurmountable, but you don’t need to be making these decisions alone. Countless business founders and owners face the same problem, so why not work together? 

Mastermind communities are peer-to-peer-based groups that allow business professionals from a vast array of disciplines to meet and brainstorm together. These groups are incredibly holistic, for each individual taking part brings their knowledge, experience, and skillset. These communities are predominantly mentorship based, where each person takes on the role of both mentor and mentee. Mastermind communities allow for knowledge and experience to be shared and act as a place where one’s strength is used to develop another’s weakness. 

The reason why mastermind communities work is actually quite simple. A hundred minds are far better than one. Chances are, someone else has had the same problem, or at least one that’s very similar to yours. Looking into how they solved it is an easy way to discover a path that may also work for you. Not to mention, there may be a professional in your mastermind community that doesn’t see your issue as a problem at all. Perhaps the area of weakness you’re working in is an area of strength for them.

The Collective 54 mastermind group allows you to gain a competitive edge by learning from true peers in professional services, sharing expertise and benefitting from our specific programming for founders and owners of boutiques. We offer a modern, time-efficient way to put the power of 100s of brilliant minds to help you. So, is joining a mastermind group like ours worth your time? 

Absolutely. A mastermind group is your greatest weapon if you want to rise above the noise and stay ahead of your competition. 

The Benefits of a Mastermind Community

1. Receiving Instant Feedback Regularly

When running a business independently, it’s easy to make decisions and wait for results. Suppose it turns out how you intended, great. However, wouldn’t it have helped to know that in the first place if it didn’t go your way? After all, hindsight is always perfect. As part of a mastermind community, you’ll receive instant feedback, almost perfectly replicating that hindsight vision we all wish we had. Perhaps one of your peers has already tried the method you’re considering and, as such, gives you insight into how it will play out. Maybe it worked, but with a few modifications. Instant feedback is an asset that only a mastermind community can provide. 

2. Strengthening Your Weaknesses

Mastermind communities are more than just places for advice. They’re a place where you can learn from other professionals and turn your weaknesses into strengths. For example, if you’re struggling with the financial aspect of your business, reach out to the financially savvy members of your mastermind community. Listening to their advice and suggestions is the first step to strengthening your skills. Over time, you’ll find that you’re also becoming financially savvy and, as such, have turned your weakness into a strength. 

3. Motivating and Celebrating One Another

When you join a mastermind community, you’re joining a community that’s solely there to support and lean on one another. When you succeed, your community will be there to celebrate with you, and when your peers succeed, you’ll be there to cheer them on. Being in an atmosphere that’s always positive and moving forward is an excellent motivator for success. You’ll start to find that your community wants you to succeed just as badly as you want to see yourself succeed. Mastermind communities are places in which relationships are built and sustained. 

Benefits of Joining Collective 54’s Mastermind Community

Collective 54 was created specifically for professional services firms. Our group consists of true peers- founders and owners of boutique pro serv firms. Our mission is to help these founders and owners  to grow, scale and sell their firms bigger and faster.

The collective wisdom of our mastermind community combined with expertise sharing and our specific pro serv expert programming truly sets our community apart. Other benefits you can expect from joining Collective 54’s mastermind group include: 

• Live Expert Instruction: Receive expert advice from other boutique leaders. I teach a live, weekly topic and lead a Q&A session for all mastermind group members as part of our community.
• Small-Group Learning: We facilitate roundtable sessions so that you and other members can solve problems and design strategies through live, interactive learning and collaboration. 
• 1:1 Member Connections: Collective 54 mastermind community members are encouraged to connect to leverage an individual’s subject matter expertise or experience. 
• On-Demand Self Study: Members of our mastermind group can engage with Collective 54’s intellectual property and resources on-demand. Leverage diagnostic tools, templates, and the  Collective 54 podcast series to create your boutique action plan. 
• Digital First Community: Purposely built for the time-pressed leader, our mastermind community offers in-person and online activities. Engage with Collective 54’s expertise in the medium that suits you best. 

Collective 54: The Peer Mentoring Community Your Professional Services Firm Needs

Solving challenges in your professional services firm is done better and faster with hundreds of minds rather than one. First, find a mastermind community that will fit your needs. Take advantage of peer mentoring and networking opportunities to learn from experts in various subject matter areas. Innovate through collaboration to grow, scale, and sell your firm. 
At Collective 54, we offer three customized membership plans based on your business’ lifecycle stage. Our dedicated focus and support for your goals are what sets our community apart. Contact us today to learn more about how your business can benefit from joining Collective 54.

Selling a Business? Chase Your Happy Exit

The reason for selling your boutique is very personal. And it should be. You poured your life into building the firm. Leaving it and handing it to someone else takes much thought. Some owners sell for the money. Others say they are bored or exhausted. Others say that the work became a job. It was not fun anymore. 

Some professional services firm owners are afraid that tomorrow might not be as profitable as today. At times, partners start fighting, and one needs to be bought out. Maybe it is time to retire. Or perhaps you are getting divorced, and the assets are being divided. A health scare causes some to consider selling a business. The list is long.

When selling a business, you should aim for a happy exit. I have met owners who have had happy exits and owners who have had unhappy exits. What is the difference? Those who had happy exits knew why they were selling. Those with unhappy exits made one of the biggest selling mistakes: they did not have a reason.

Happy Versus Unhappy Business Exits: Real Case Example

If you are wondering how to sell a business, your first step is understanding your why. I am fortunate to be one of those professional services firm owners who had a happy exit. I knew why I was selling. Allow me to share my personal journey with you. 

I started my firm to answer a question: “How good am I?” I thought starting a firm from scratch was the purest way to find out. I started with no customers, no product, and no employees. I put all my money into the new firm and rolled the dice. If I blew it all, I was prepared to start over. If I was successful, I could look in the mirror and know what I was made of.

As time went on, I matured. I developed a personal mission statement. I outlined a vision of my future that I wanted to pursue. I determined how I wanted to behave. I codified this into eight core values, and I lived by them.  

I became a skilled decision-maker. I made good choices, which created new opportunities. I met many different types of people. I learned which tribe I wanted to belong to. I discovered how best to spend my time. I knew what my limitations were. 

This led me to goal setting. I settled on a single goal: self-actualization. The concept of full personal potential lit a fire in my belly. I began to evaluate my boutique against this goal. Was being the owner and CEO of this firm helping me self-actualize? The answer was no. 

The firm was providing things to me that were no longer important. My basic needs for food, shelter, and the like were secured for a lifetime. Safety for myself and my family was stable and certain. I had an identity outside of work. My need to belong was being fulfilled elsewhere. And most importantly, I had answered my burning question. 

The firm was thriving. I had become wealthy and had received plenty of recognition. I was validated internally and externally. I had reached the point of diminishing returns. There was nothing left for me inside the boutique. 

After reading a book called Halftime: Moving from Success to Significance by Bob Buford, I realized where my journey needed to go. The next stage in my entrepreneurial journey was not owning a boutique but selling it. I then had my reason for selling a business.  

Top Ten Questions to Ask Yourself Before Selling a Business

When selling a business, you need to have a clear reason. And this reason needs to be personal and well-thought-out. If you are looking for a happy exit when developing your business exit strategy, these are the questions you need to ask yourself:

1. Do you have a clear vision of your future?
2. Will selling your business help you to get there?
3. Do you know the reason why you do what you do?
4. Would selling a business bring you closer to your purpose?
5. Do you have a set of core values that define how you behave?
6. Would selling your professional services firm allow you to behave the way you want?
7. Do you know the type of community or tribe you want to be part of?
8. Would selling your firm allow you to spend more time with this community?
9. Will you be using the proceeds of the sale on more than just material possessions?
10. Are you prepared to start your next chapter and sell your business? 

How you answer these questions will determine whether or not you are ready to sell a business. For example, if you answered yes to eight or more questions, you know your reason to sell. If you answered no to eight or more, do not sell your business. You are not ready to exit yet. 

Happy Exits Are Possible Once You Know Your Why

Every entrepreneur exits. We all die. You cannot run your boutique from the grave. Most of us sell our firms before we die. There are good exits. Some owners are happy after they sell. There are bad exits. Some owners are unhappy after they sell. 

So what will set you apart from those owners who have unhappy exits? A great business exit strategy starts with a genuine, passionate reason to sell. If you have this, then selling a business is the next logical step for your career. 

Join us today to learn more about how the Collective 54 mastermind community can help you sell your firm faster. Our community offers valuable and irreplaceable collective knowledge from peers and mentors in the professional services industry. 

How to Scale An Accounting Firm to Sell: Know the Growth Facts

Boutiques are attractive to potential acquirers when they are growing. And your growth rate is determined based on growth in revenue and profits. Also, growth is relative. It is relative to the other boutiques in your space and the growth rates of an existing practice inside of a market leader. You are attractive if your accounting firm is growing more and faster relative to the alternatives.

Most professional services firms are private. Therefore, data on growth rates are hard to come by. Accounting firms often think they are growing and scaling nicely, only to learn later that this isn’t the case. And finding this out during due diligence is embarrassing.

If you are devising a scalable plan for your accounting firm so that you can sell your business, remember that growth is relative. Scaling a business takes time. A year or two of great results does not mean you have a sellable boutique.

Case Study: When a Scalable Plan Leads to an Unsellable Firm

I was recently involved in an auction of an IT services company. This company had a strategic relationship with the software provider Tableau. They helped clients use their data to make better decisions through data visualization. The investment bank running the auction touted the boutique as a high-growth firm. 

When I met with the management team, they were proud of their accomplishments. I was presented with slide after slide of steep revenue and profit growth. And this growth was accelerating. I had looked at a few firms in this space and had an unfair information advantage. This boutique grew revenue at 22 percent per year and had done so for about three years. The problem was that their boutique competitors were growing their top lines at twice that rate. 

You see, the data visualization space was hot. A rising tide was raising all ships. When I dropped out of the bidding process, they were insulted. I explained my rationale and provided my evidence. They claimed that my comparisons were not apples to apples, that the firms I compared them to were not “pure plays.” 

This firm was not able to find an acquirer. It appears that I was not the only one with a command of the facts. And the story gets worse. The data visualization space cooled off. Tableau, the golden goose, stopped laying eggs. As their growth rate and scaling slowed, so did the growth rate of its service partners. 

What is the moral of the story? Know your facts. Growth is relative. When creating a scalable plan for your accounting firm, you have to look at your business from all sides. Don’t take your revenue or profit growth at face value. Compare it against competing professional services firms and determine where you truly stand in the market. 

Seven Growth Benchmarks to Consider When Scaling a Business 

Here are a few growth benchmarks for you to consider if you are wondering how to scale an accounting firm to sell at a later date. These are specific to NAICS 54—the professional services industry. And they are specific to the segment—that is, boutiques with between 5 and 250 employees in the United States. 

Proceed with caution. These numbers can change a lot based on the submarkets. For example, law firms are different from marketing agencies and so on. 

• A five-to ten-year track record of consistent growth; 
• Greater than 30 percent top-line revenue growth; 
• More than 75 percent gross margins; 
• Forty percent EBITDA margins; 
• More than twelve months of forward visibility; 
• One year of payroll in cash on the balance sheet; 
• No debt. 

A boutique under five years old will have a tough time selling. One without five to ten years of solid growth in revenue and profits is unsellable. Unfortunately, many boutiques have remarkable top-line growth but no profit growth. This is a deal killer for most. These firms have not decoupled revenue growth from head-count growth. Until they do, they should not try to sell an accounting firm.

When they do, gross margins and EBITDA margins will jump. That is the time to sell. This is when they have a proven, scalable plan and business model. Lastly, forward visibility must be at least a year out. Investors are not going to take your word for it. Performance relative to your scalable plan will be a much-scrutinized item.

Wondering If Your Scalable Plan is Working? Ask Yourself These Questions

When scaling and growing an accounting firm, you need to make sure your scalable plan will hit the growth benchmarks required to sell the firm. Ask yourself these questions to determine if your scalable plan is working for your business: 

1. Are you growing revenue at a faster pace than competing accounting firms? Have you been doing this for years?
2. Are you growing your profits faster than your competitors? Have you been doing this for several years?
3. Are you growing your revenue faster than the practice inside the large market leaders? 
4. Are you growing your profits faster than the practice inside the large market leaders?
5. Are you increasing your cash balance to cover payroll for twelve months?
6. Do you have at least twelve months of forward visibility? 

If you answered no to more than half of these questions, your scalable plan and growth story needs more work. 

Developing a Successful Scalable Plan: Remember Growth is Relative

Growth matters when scaling a business to sell it later. A lot. And relative growth matters even more. A decade of market-beating growth will command an excellent price and excellent terms. 

And profit growth is as important as revenue growth. This indicates that you have cracked the code. You are one of the few who broke the link between revenue and head-count growth. Be sure to run a tight ship. Be prepared to demonstrate reliable forward visibility and plenty of working capital as part of a scalable plan.

For more insights on how to scale an accounting firm, join our mastermind community today. Collective 54 is the first mastermind community for founders and owners of professional services firms. Members enjoy multiple benefits, including peer-to-peer networking, live expert instruction, and small group learning. 

Networking is an Entrepreneur’s Best Asset

When working with boutique owners, I’m often asked, “What’s the best way to help my business grow and become successful?” The answer is business networking. To be an entrepreneur and lead your professional services firm to success, you need to network. 

Many founders and owners of professional services firms fail to recognize the importance of networking in entrepreneurship. It is possibly your best asset in driving your firm. Why? Business networking allows you to connect with and learn from others that share common challenges, experiences, and goals. Not only will you create relationships, but you’ll get the opportunity to learn from the successes and failures of others. 

Still unsure about why networking in entrepreneurship is worth it? Let’s look at what benefits it provides. 

How Business Networking Can Benefit You During Your Firm’s Lifecycle

Business networking must be part of each stage of the business lifecycle journey. You are wrong if you think you’ll only need to network during the growth stage. Boutique owners often fall into the mindset of “going it alone.” Yet, running a firm requires advice and support from many others throughout the journey. 

Here’s how networking benefits entrepreneurs during each stage:

Growth Stage

The United States Bureau of Labor Statistics claims that approximately 20% of small businesses fail in their first year. Yes, many factors can lead to this happening, including cash flow problems and insufficient product or service demand. Yet, a failure to network can be included in this list. 

If you want your professional services firm to see its second birthday, business networking can help you do that. By joining a mastermind group or attending industry events, you can better grow your business. 

Here’s how: 

1. Gain Access to a Growing Network

Successful entrepreneurs start networking close to home. Capitalize on your existing contacts, whether they’re friends, family, or the guy you met on vacation last year. This is how you open doors and expand your professional network when growing your business. Being an entrepreneur means accessing a complex system of connections that provide access to human, social, and financial capital. 

2. Bring Your Concept From Idea to Reality

Business networking also helps you bring your idea from concept to reality. When you have access to an extensive network of connections in the same industry or a similar one, there is a wealth of knowledge at your fingertips. You can harness the intelligence and experience of others who are in or have gone through the trenches like you. This allows you to transform your ideas into tangible business options and implement them faster.

3. Helps You Find the Right Team

It is a myth that great firms are started by a single brilliant person. To grow your professional services firm, you need the right team of people working alongside you. Networking and building professional connections will help you find these individuals. 

When speaking with boutique owners, I remind them that it takes a team to realize a dream. You need to pick your business partners as carefully as you choose your spouse. 

Scaling Stage

Scaling a business requires time, effort, and plenty of advice. This is when you will need to put systems and procedures in place to continue on the path of profitable development. During this time, you will define your core values and develop your firm’s client experience. Essentially, it is your firm’s make-or-break period. 

Leveraging a mastermind community when scaling a firm is extremely important. Learning from peers and mentors helps you find the right people and strategies to scale your firm even further. This is a time for continuous education and accessing collective knowledge. Scaling a business should never be a solitary task. The more support you receive through networking, the more successful you will be. 

Selling Stage

Networking continues to be beneficial even for entrepreneurs looking to sell their boutique firm. Creating a business exit strategy needs to be done with consideration and thought. Speaking to your professional network can open up opportunities for new exit strategy perspectives. Perhaps a connection will even introduce you to a potential buyer for your firm. 

Why You Should Join a Small Business Networking Group

Joining a small business networking group or a mastermind community like Collective 54 will help you grow, scale, and sell your firm bigger and faster than ever. We offer peer-to-peer mentoring, small group learning, and our C54 Business Exchange to encourage member’s firms to hire one another. Many of our members succeed by tapping into  business networking opportunities within our community. 

The importance of networking in entrepreneurship is clear — it empowers you with the tools, knowledge and relationships you need to drive your firm toward success. Boutique founders and owners who join mastermind communities are given the guidance they need to earn more, work less, and sell faster. 
For more insights on how to capitalize on networking to grow your business, join our mastermind community or purchase The BOUTIQUE: How to Start, Scale, and Sell a Professional Services Firm.

Selling a business is a high-risk, high-reward initiative. I want to spend some time on the common mistakes made when selling. I hope that by reading this, you can avoid these land mines. Every situation is different. Yet, these are the most common mistakes I see owners of professional services firms making.

Avoid These 7 Costly Mistakes When Selling a Business

When selling a business, you must do it on your own terms. You started a professional services firm that you built from the ground up. Trying to sell a boutique that is not worth buying or rushing into a fast sell without knowing the buyer can lead to failed business exit strategies. That’s why you need to avoid these costly mistakes.

1. Being Uncertain About Reasons Behind Sale

First, boutique owners are unclear about what they want from the sale. If you are unsure of who you are, you will be unhappy with the sale. If you do not know where your business is headed, you will be unhappy with the sale. No amount of money will change this. After the sale is complete, there is no going back. Be sure that you know what you are doing before you start down the path of selling a business.

2. Selling an Unsellable Business

Second, sometimes boutique owners try to sell an unsellable business. Most boutiques are unsellable. It is not enough to have a successful boutique. Your professional services firm needs to be attractive to a buyer. This requires you to look at your business as an investor would. 

An investor starts by listing all the reasons not to do a deal. The boutique owner starts with a list of all the reasons to do a deal. This gap often cannot be closed. Before trying to sell, be sure that you have something worth buying.

3. Looking For a Fast Sell

Third, it takes years to sell a business. Yet some owners try to sell their boutique in a matter of months. This tends to result in many failed attempts, or worse, a lot of forced sales. The process of selling a business takes about nine months. However, the process of preparing to sell takes two to three years.

A good business exit is a sale that happens on your terms. It takes time to stack every card in your favor. And, as they say, you have only one chance to make a first impression. It’s best to be ready.

4. Underinvesting in Succession Planning

Fourth, boutique owners underinvest in succession planning. This results in seller’s regret. After you sell, you will want to see your boutique do well without you. You will have many employees you care about who are still employed by the boutique. If you hand over your business to a stranger, they may destroy it. 

A large bank balance will not compensate you enough for this tragedy. Spend years grooming your successor. Make sure that your successor builds on what you have already created.

5. Pursuing a Business Exit Strategy Alone

Fifth, entrepreneurs think that they can sell their business on their own. Doing so can result in tactical execution errors that can cost the owner millions. Boutique owners are usually entrepreneur founders. They are very different from hired-gun CEOs. 

Founders have a high risk-tolerance level and supreme confidence in their abilities. They often approach the selling of their business as another problem that has to be solved. They assume that they can figure it out without expert advice. This is a mistake. 

Exit strategies are not an area to go cheap. Hire the best advisers that money can buy. Let these advisers guide you through the process.

6. Taking Feedback After the Sale Personally 

Sixth, boutique owners get attacked after the sale, and they take it personally. Those whom you are leaving behind will be jealous. They will feel cheated and underappreciated. They begin to tell a story that is not based on fact. Rather, it is a story they need to tell to make themselves look and feel good. Do not take it personally. 

This is just business. You created the wealth, and you are the one to realize it. Those who helped you do this have benefited and will continue to benefit in the long run. Remember to sleep peacefully at night. The only thing that matters is what you see in the mirror. 

7. Not Knowing Who is Buying the Business

Seventh, be sure to understand who the business is being sold to. And what their motives are. This is particularly important if you are on an earn-out or are rolling some equity. This prevents unwanted surprises from cropping up. Once you sell it, the buyers own the assets. They are entitled to do whatever they want with it. If you disagree with their plans, do not sell it to them.

Top 10 Business Exit Strategy Questions to Ask When Selling a Business

There are other mistakes to avoid. Every situation is different. However, these are the most common mistakes that boutique owners make. If you are considering selling a business, ask yourself these questions to make sure you are avoiding these exit strategy mistakes:

1. Do you know what you want from selling your business?
2. Do you know what you will do after your business is sold?
3. Is your business attractive to a buyer?
4. Do you have a sellable boutique?
5. Do you have a handpicked successor?
6. Is the successor ready to take over?
7. Do you have an all-star team of advisers to help you?
8. Are you prepared for the postsale criticism headed your way?
9. Do you understand to whom you are selling your boutique to?
10. Do you know their motives for buying?

How to Sell a Business: With Purpose and Patience

You are building a business you could run forever. You are also building a business you could sell tomorrow. If you decide to sell, you want to do so on your terms. Give yourself plenty of time to avoid these common mistakes when selling a business.

For more insights on how to develop a business exit strategy, join our mastermind community. Collective 54 is the first mastermind group for owners of professional services boutiques. Contact us today to learn more about how our community helps businesses like yours.