Episode 149 – Why Professional Service Firms Should Never Become SaaS Companies – Member Case by Nathan Kievman

Many professional service firms foolishly think the path to scalability is to become a software company. However, founders of service firms make more money than founders of software firms, generate more wealth for themselves at exit, and succeed much more often. In this session, we will help you avoid making the devastating mistake of trying to become a software company.


Greg Alexander [00:00:10] Hi, everyone. This is Greg Alexander, the host of the Pro Serve podcast. Brought to you by collective 54, the first community dedicated to the unique needs of thriving boutique professional services firms. On this episode, we have a very interesting topic. Today we’re going to talk about the problem of having too much cash. Most of us have the other problem, which is not having enough cash. But today we’ve got an interesting story to tell you. And I’m joined by a very well-liked, long tenured, well-respected member, Nate Caveman. Nate, it’s good to see you. Please introduce yourself to the audience. 

Nathan Kievman [00:00:58] Thanks, Greg. Great to be here, guys. My name is Nathan Kievman. Nate Kievman is what my friends call me. So please call me Nate. I’m the CEO of a company called the Link Strategies Group, and we are a 12 year firm that has been in the marketing and consulting space and helping organizations grow. Helping them schedule meetings and connect with their executives. They’re at their most ideal market. And in doing so, we’ve been obviously able to grow our own company and it’s been a fun journey over the past 12 years, sending over 86 million emails, setting up 100 over 100,000 meetings for our executives over the years, working with big firms like BlackRock and Nasdaq for the world that a single person browser company. So we’re great. We’re grateful to be here and thanks for inviting me. Okay. All right. 

Greg Alexander [00:01:48] Fantastic. So, Nate, I asked you to come on the show after you and I had a very interesting conversation and I would like you to tell the story of the problem that you had by having too much cash. 

Nathan Kievman [00:02:03] For sure. So I never expected this whole story and experience to happen in my whole life. But after the fact, Greg and I had some fun, fun, fun, fun conversations and some lessons to learn from it. But now you all get a benefit from my band. So basically towards the end of 2022, our firm was looking for ways to raise capital because, you know, in short, we had gone down a path as a as a services firm to build a technology and to do the technology piece require more capital. We had quite a few developers and so forth, and I’ll walk through with the learnings from that as well as part of this journey. But we had effectively between two sources with the SBA and a private lender, were able to finance $1.8 million that into our $3.4 million business. Right? And so the prior year we had 3.4 million in revenue as an organization and we raised those 1.8. And the purpose of the raise was to stand up the technology and to stand up a sales organization within our firm and really get that functioning and going. And so I moved over to the sales side of the house, focused mostly on that. Our CEO had handed the reins over to do a lot on the allocation of resources and so forth side of the House and working with our CFO to manage that. And I really, you know, quite honestly thought much of it, and I didn’t pay a whole lot of attention to the distribution of cash and the changes and team members and the increase in team and the increase in salaries and pay and so forth. And all of a sudden six months into it, the money was gone and we really didn’t have a whole lot to show for it. And I was like, Whoa, what just happened? And that’s like the start of the story. Greg, do you want to jump in here, too? I’m going to continue through on with what that what what happened from there? Well. 

Greg Alexander [00:04:01] So the spend 1.8 million bucks in six months is I mean, that’s crazy. So where did the money where did it go? 

Nathan Kievman [00:04:11] Well, yeah. You know, so. Where. When the big money came in, all of a sudden we went from two executives to five. That’s a big part of it. Our executive payroll became the next year. It was equal to the next year’s total revenue. The IPO taken off the ball of serving our clients. Our client retention went down by almost 50%. Our cost went up by 100%. And my next year was a total reverse of the year prior. Right. And it went in executive salaries. We went from a team of 30 to 50 now, and we were outsourced. So it wasn’t super expensive. Like you might think that’s a lot, but we were able to leverage that. But if the people that manage half that number of clients were so firm, right? Imagine 25 or 35 at any given time. I think we were up to 40 at that point, but still we didn’t need 50 people to manage that. Right. And so those are where most of the extra developers, couple extra executives, all of a sudden that money is flying out the door. Yep. 

Greg Alexander [00:05:18] Okay. So that that helps explain it. So tell me kind of what was the short term implications and then what did you do to course. Correct. 

Nathan Kievman [00:05:32] So as the CFO came over and had a private conversation with me, this was all that money was spent between about March and September. So in September, I had a conversation, a really very candid you’re going to the doors are going to shut here, buddy. Let’s make some changes. And and because he didn’t he wasn’t a CFO at the time. He’s now my CFO, but he was like a director of finance. And he was kind of being directed by the single point of direction of all the capital. Right. So we what the biggest mistake I made is I didn’t have. Two roles vetting out the decisions for where money. What? I had one person that was able to do it who was maybe not experienced enough to do so. I wasn’t paying attention close enough. I was focused on selling deals and trying to get new things in the door. I’d sell new deals and they’d be leaving shortly thereafter. And so we had this like week happening in the business and I was like, Wait, what? So so we had a retention that we had to fix, and that was really a culture issue. That’s a different story. We can talk about another time, but you know, there is one singular, very toxic person in my company that I had to get rid of. So the learning that we had to go through, Greg, was that we didn’t have good a good process for managing the money. We didn’t put good controls in place, although we did build a budget for it and we did have that plan. It was it was undercut from the sales side because everybody’s focus needed to move over to retention. So then sales were down, then retention was down to the double. It was like a double whammy. It’s just like, this is like a yeah, what do you call that? One of the drain holes in the large sorority was getting sucked down into the vortex. Yeah. So, yeah, it was, it was a vortex. Exactly. And so we had a big team made up, our team made up in, in October and said, All right, we need to, we need to cut the fat. Everything’s got to change. So that forward six months, we cut $2 million of cost out of the business. We eliminated most executive roles, move most roles into functional delivery roles with a couple management roles of oversaw, but not senior executives. We had two senior executives, I’m sorry, one myself as a primary senior executive. And then and we kept two as part time fractional and the rest were non managers and doers. And so we cut to $1,000,000 between that. We also canned the technology build. It was just a drain on profits. We focused back on our core services model, which saved us about 1.1 million a year between the developer cost and then all the technology that we were spending money on with NWC and other other, you know, non people costs. And then we got really lean. So we went from the here’s the math, we went from a $3.4 million profit and $1.7 million cost in 2122 we flipped it 3.4 million in cost and 1.8 million in profit and revenue. And then this. And then in 23 we’re going to end up and around. Right now, we’ll do about 3.2 to 3.4 million and 1.4 million across some of you. Yeah. So he just totally flipped it around. So but it was hard and it was a lot a lot of people transitioning. Yeah. So. 

Greg Alexander [00:09:09] Well, listen, I appreciate you being vulnerable enough to share the story because, you know, there’s people going to be listening to this and they’re going to avoid this painful mistake because of your willingness to share. I want to highlight two things. First, if I had a nickel for every time I’ve heard the story of a service company trying to become a tech company and screwing themselves up in the process, I’d be a multi-billionaire. So I want to be very clear to members that are listening to this. If you’re a services firm, do not try to become a technology firm. Everything is going to cost twice as much as you think, and it’s going to take twice as long as you think. And it’s not who you are. Your services firm. So don’t do it. And there’s a lot of misconceptions out there. You know, people say, well, if I become a SAS company, you know, the valuation of my firm is going to go through the roof and I’m going to make a ton of money. That’s actually not true. If you look at exits of founders of services firms, they end up making more wealth than founders of technology companies. And why is that? It’s because of capital intensive intensity. Services firms don’t really require any capital, so you don’t have to take on debt as a needs case. You don’t have to dilute yourself by selling equity to people. You can bootstrap and fund the firm yourself. So upon exit, you own 100% of the firm. If you’re trying to become a tech company upon exit, you’ve got to pay the back. You got to pay the equity person and therefore your net proceeds from the sale is much less. In fact, I wrote a blog article on this. You might take a look at that. I think it’s titled Why Services Firms Should Not Try to Become SaaS Companies. But that’s a huge mistake that I want everyone to avoid. The second thing is, is that, you know, high powered senior executives that cost a lot of money and services is also not a good idea. I mean, you want everybody to be billable, either in total or partially. So their expense and running the firm, the on the business stuff is covered by revenue that’s coming in from clients. So two huge lessons there, you know, from Nate. So, Nate, let me ask you a little bit about the debt. So you raised it from the SBA and you raised it from private lenders. It’s all gone. I’m assuming you haven’t paid off the debt yet. You’re still on the hook for it. Is that true? 

Nathan Kievman [00:11:16] Yeah. Yeah. So now. But now I have to go pay that off. You know, that’s the airline’s super, super generous of the 30 year term on 3% and not paying it back yet. But that’s awesome. 24 right around the corner. So I want to add to my path of of in the business, like my my bachelor path and and and it’s just that particular. That’s just I mean, like, I’m really if something happens, I’m going to have to take care of it. So now I remember the text message and cost me $2 million at a minimum, probably like about 2.5 over a three year period of my profit. That’s out of my profit. Yeah, it would have otherwise been profit. And now the debt that I used to pay for those people, I’ve got to pay back on top of that. So I mean, that’s a really heavy cost. And Greg, stay with me. Like, this is the direction we went this way because Greg and I had a very candid conversation. He just wrote the article that week when we had this conversation on the tech. But at the end, and it was a hard decision because it’s like you’ve grown a baby for three years, you kind of want to see it through. But the end of that path was death. So I said, okay, let’s stop this now. And, you know, lesson learned. Hopefully you all can hear this because I really resonated with Greg’s story. And now we’re a super profitable company if we’re a very healthy company. But I decided to be stupid and follow these these shiny objects which, you know, can be part of our founders problem occasionally. So, you know, lesson learned. And yeah, I’ll be paying off, you know, $1.8 million of debt over the next while that’s a little less now but over the next many years. Yeah. 

Greg Alexander [00:12:56] So you know, the one good thing about your story, Nate, the mistake that you did make is you didn’t sell any equity. That would have been a real kick in the teeth because equity you can’t get rid of. I mean, you can pay off the debt. You know, it sucks that you have to do that, but you can pay it off and get back to zero and then grow again from there. If you had take on an equity partner, now you got somebody owns 20, 30, 40, God forbid, 50% of your firm and you can’t get rid of them. So thank goodness that that you didn’t do that. And that’s another lesson. So, Nate, lastly, you know, if you were to kind of summarize, maybe, you know, for those listening, any other words of wisdom or advice that you would share with people that we haven’t discussed today regarding this issue? 

Nathan Kievman [00:13:39] Read the boutique and follow the instructions. I mean, if if I had read it and had some of the insights prior, that would have saved me millions of dollars. Yeah, right. And and and it did it still, even though I only did it halfway through, it still did save me. Possibly my company, actually. Yeah. You know, I would say definitely take the word of wisdom. Greg’s been a great resource for me and an advisor and from an experiential level, but also the community. I mean, I’m very involved in the community. I talk with members, I learn from members all the time, the the board board program we have. We have great value contribution to each other and insight. Um, but I would actually say my biggest takeaway of all of this is. Before you start giving away executive seats or partner seats in your firm. And then there’s the equity part of that, because I did have Greg, I did give and I brought it all back. I was able to retrieve all my equity back, but I almost lost 34% of my company while in the process of all of that. And and I would say that to. To have controls in place. So for me, the biggest thing was if I had a proper reporting mechanism that I could see weekly of what the money was going towards. I could have stopped it, but I didn’t. And I trusted really poor people more than I should have trusted them. And they abused money that they had never seen before. Right. So it wasn’t their money. It was easy to go increase everybody’s pay by five or ten grand. And then, I mean, we had a board session with with the CFO for board. And in that session, but the context of executive pay norms came up and I was like, what is what is normal for everybody? Well, I got quoted from two different people in my company that I trusted that this was normal pay for people. And when we heard the numbers on the board were like, no way down here. They’re quoting me like billion dollar corporate normal pay structures and our normal pay structure as a start up boutique. I’m like, I’m like, Oh my God, I’m paying way too much for all these different roles. And when it just it just didn’t the math didn’t work, right? So I would just say, make sure your controls are in place. Trust, but verify, especially with executive teams, have double points of control that check against each other, especially when it comes down to the money part of things. And those are my big takeaways. And don’t do that. Like you’re going to detect them on a separate entity. Go raise money for that person. Just leave your services business as its own cash cow. Awesome. I hope that’s helpful, Greg. 

Greg Alexander [00:16:25] Yeah, Super helpful, man. All right. I got three calls. Action. One for members, one for candidates for membership, and one for tire kickers. So, members, look for the meeting invite. We’re going to have a private one hour Q&A session with Nate. I’m sure all of you got a thousand questions because you either have made this mistake, which I have myself in the past. That’s why I can speak so authoritatively on this. Or you might be getting ready to do some of these things and speaking and it will be really important. So eyes open for that. Candidates for membership. If you want to become a member, go to Collective 54 Adcom Fill out an application. The membership review committee will look at it and get back to you. And if you’re not ready for either one of those two things and just want to learn more. Go to Amazon, buy the book called The Boutique How to Start Scale and sell a professional services firm written by yours Truly. But Nate, on behalf of the community, every time you make a deposit into the collective body of knowledge, it’s dead on. So thanks a bunch, man. I really appreciate it. 

Nathan Kievman [00:17:24] For sure, Greg. Appreciate you. Community is great. And for anybody considering joining Giant, it’s worth its weight in gold. 

Greg Alexander [00:17:31] Thanks for saying that. 

Nathan Kievman [00:17:31] That’s all I can say. 

Greg Alexander [00:17:32] Okay. Take care, buddy.

Episode 148 – Prompt Engineering: A New Skill That Professional Service Firms Need to Learn – Member Case by Stephen Straus and Numa Dhamani

Generative AI is transforming the professional services industry, lifting productivity levels to heights thought unobtainable. Interacting with large language models has become a required core competency. This is best done via prompt engineering. Attend this session and learn this new skill from a machine learning engineer.


Greg Alexander [00:00:15] Hi, everyone. This is Greg Alexander, the host of the Pro Serv podcast, brought to you by Collective 54, the first community dedicated to the boutique professional services industry. On this episode, we’re going to talk about prompt engineering, prompt and engineering. Hopefully, you’re aware of what that term is now since we’re all living in the air era, but if you’re not aware of what that is, we’re going to talk about that and how to leverage it in today’s economy. And we have a great guest who is going to walk us through the basics and then she’ll participate in our member Q&A later on. Her name is Numa Dhamani. Did I say your last name correctly? 

Numa Dhamani [00:00:59] Yes. 

Greg Alexander [00:01:00] Very good. And she is with Kung Fu AI and is a member of Steven Strauss’s team who is a member of Collective 54. So, Numa, would you please introduce yourself and your firm to the audience? 

Numa Dhamani [00:01:16] Yeah. So, hi, I’m Nima, and thank you so much for having me today. I’m a principal machine learning engineer for a boutique consulting firm that focuses on artificial intelligence. And my personal expertise is the natural language and the largely large language model space. 

Greg Alexander [00:01:34] Okay. And Numa, I was researching your background before the call, and it’s really it’s rather impressive. Would you mind sharing a little with the audience what your background is? 

Numa Dhamani [00:01:47] Yeah. So I have primarily kind of worked in the information worker space. So I’ve done a lot of work around disinformation and misinformation. And then also, like privacy and security. 

Greg Alexander [00:02:01] Okay, very good. All right. Well, let’s start with the basics. So what is prompt engineering? 

Numa Dhamani [00:02:07] So prompt engineering is really just the practice of structuring and refining prompts to get specific responses from a generative A.I. system. So here your system would be something like chat, chip or Bard. And the prompts are really just a way to interact with these systems where you can help guide the model towards achieving certain types of desired outputs. Okay, So. An effective pump engineering would kind of involve formulating prompts that would clearly communicate what your desired task is. And this can include like detailed instructions or providing context or what you want your output to look like. So you can make sure that we are getting out of the model is kind of aligned with the intention. 

Greg Alexander [00:02:55] Okay. Very good. And why is it important to develop the skill of prompt engineering? 

Numa Dhamani [00:03:04] Yeah. So it’s if you understand how to do product engineering, it can really help empower you to take advantage of the capabilities of these models for various applications. So you’re going to be able to communicate really complex tasks and requirements to these models, which can help ensure that the generated content and responses really align closely with what your intended purpose for that task was. So just helps you leverage the capabilities of these systems. 

Greg Alexander [00:03:33] So is it is it true or false that when I use Chad GPT as an example and the response that comes back is inaccurate, it’s not the model’s fault. It was that I wasn’t clear in my request. Is that true or false? 

Numa Dhamani [00:03:51] And so a lot of bit of both. Which which I know is in the best answer. But the model isn’t really designed to be accurate, is designed to be really helpful. You can, however, use strategies to help get more accurate answers so you can give it some factual information. You can do certain things on the back end, or you can hook it up to like sort of databases or something to really get factual information. But you can also ask it to go critique itself sometimes. So if it kind of provides a quote to you and you’re like, I’m not actually sure someone said this, you can be like, Well, can you actually verify that for me? Or can you go double check that response? So it’s a little bit of both where you can craft a prompt to get more accurate responses. So one of the there’s several techniques you can use something with scores of cuts of consistency where you can go ask it the same question like three or four times and see like if it actually gives you like the right answer three or four times, I kind of pick the majority. And and part of it is just the nature of these models, and it’s because they’re probabilistic in nature and aren’t designed to be factual. 

Greg Alexander [00:05:07] When you say probabilistic in nature as it relates to an elm. Explain how that works. 

Numa Dhamani [00:05:14] Yeah, so a language model is really designed to represent natural language and it’s probabilistic. So it basically generates probabilities for a series of words based on the data trained on the models that we see these days are trained on the entire Internet. They’re trained on crazy amounts of data, like billions and trillions of documents. And the way they work is they actually just predict what the next word would be. Hmm. So they kind of assign. So let’s say the sentence is I am a machine learning and we’re trying to predict the word engineer. It might have probabilities assigned for several words that could fit there. It could happen. Engineer, technologist, practitioner, researcher, and the one that would have the highest probability, which would be the words probably kind of seen the most used in that context. That’s what they will assign. 

Greg Alexander [00:06:12] Interesting. You know, I’ll give the listeners an example here on how what I learned from Numa recently has helped me. So there’s a feature in Egypt for called Code Interpreter, and this allows you to load a document. So I loaded a 224 page franchise franchise disclosure document and I asked the. The tool. I said, please summarize this document. And I got back a response and then I said, okay, you are a financial analyst. Please summarize a document. And the summary was so different. You know, it was all around financial matters. And then I said, You are a management consultant specializing in competitive strategy. Summarize the document in a whole different set of things came up. So in that little example, and I just bring the example up to help the listeners who might be new to this. Enriched my experience tremendously, and it made the tool, you know, support the initiative that I was working on that much that much better. So providing context as as Numa likes to say is is very, very helpful. Okay. Who should be using prompt engineering? Is it everybody or is a certain job functions? What are your thoughts on that? 

Numa Dhamani [00:07:30] And it’s really anyone who wants to interact with the journey of the AI system. So like any time you’re interacting with it, you are actually writing your engineering a prompt, right? So business leaders can see that, developers can use that content, creators can use it, researcher or students. It’s really anyone who wants to leverage capabilities of the generative system. 

Greg Alexander [00:07:51] Okay. And is there a particular time, like when should somebody use this as an early in a project? Late in the project. Across the entire spectrum. What are your thoughts on that? 

Numa Dhamani [00:08:01] C I think you can kind of incorporate it into your workflow. Either you can in early, later, kind of throughout. It really depends on what task you want. So you can you can use it for brainstorming purposes. That’s actually a really great tool to kind of go back and forth with to kind of brainstorm, I don’t know, like a blog post or something. So let’s say we’re we’re talking about a blog post. You can use it to kind of brainstorm a blog post. You can ask it to maybe write certain sections of it and you could ask it to refine it for you. You could ask it to, you know, correct certain like word usage kind of throughout as you want. You could ask it for like a title towards the end. You could give it the whole thing and be like, okay, well, now give me a title. What do you think the suitable title would be? So I think there’s ways to kind of be incorporated throughout your workflow. It really just depends on what works best for you. Like if that’s something that is like, useful for you, right? 

Greg Alexander [00:08:56] Interesting. So I guess the advice there would be to to try to use it in the workflow at the task level, you know, beginning, middle and end, kind of see how it works for you. That’s really great advice. Where is it used? I am a novice at this and I spend most of my time on my smartphone and therefore I don’t use it as often. But when I’m on my PC, I use it more often. So is that common? Is that uncommon? Like where? Where is it most often used? 

Numa Dhamani [00:09:25] I think people do kind of maybe most use it on the PC just because it there aren’t like really great apps right now on, you know, like your iOS app. I guess you could pull it up, but it looks great, but you can really just use it for any sort of specific task. I’ve seen it a lot for generating content and kind of a lot of the writing or customer service tasks which actually work really well if you are using it on IPC. A lot of developers that were coding, myself included, sometimes it can be really great to get like just ask it for like the example of a minimal function of doing something like this or like helping it for using with like if you’re using something like copilot, which kind of passes on the back end. And for those who do not get a copilot is basically is a generative system that helps generate concrete. It’s just what it would be, but kind of of tuned for code. Okay. So what it does is what can be useful is like while you’re typing, it will give you sort of like comments or, you know, like variable names and things which can be very easily kind of incorporated while you’re using it. I think we might come to a point where people will be using it on their phones. It might be integrated with like text messaging and kind of functions like that, like I know inflection they are. So there you can text with it. Mm hmm. Which is their version of catch up. And I think we will kind of start seeing a little bit more of that where it’s you can very easily pull it up and talk to it. But in its infancy right now, a lot of it is, I think, Web browser based. 

Greg Alexander [00:11:11] Got it. So for those that are listening that haven’t developed a skill of prompt engineering and after listening to you have been inspired to do so, what advice would you give them? 

Numa Dhamani [00:11:23] The best way is just by practicing. You can start with really simple tasks and problems and then gradually move on to more complex ones, which maybe require logic or reasoning or brainstorming or critiquing. And it’s just don’t be afraid to try different problems. Fine with it. Like it’s actually really fun to do. 

Greg Alexander [00:11:44] Yeah, I’m surprisingly enjoying myself after I was in Austin spending time with you. 

Numa Dhamani [00:11:49] When. 

Greg Alexander [00:11:50] I went back and said, All right, you know that it’s okay to to make mistakes and try it. And I found it to be. I had your PowerPoint deck up in front of me and with all the instructions on how to do it, which we’ll go over with the members in a later session. And I was using it like that, and I was really pleased with how intuitive it was. 

Numa Dhamani [00:12:10] Yeah, I’m so glad. 

Greg Alexander [00:12:12] So, Noomi, you have a book coming out soon. Can you tell us the title of the book? What’s What’s it about? And by the time this airs, it probably will be available. So where, where can people find it? 

Numa Dhamani [00:12:23] Yeah. So the work is called Introduction to Generative A.I., and it’ll be published by Manning Publications, and it talks about how you can use large language models up to their potential. And so things like this, but at the same time also tries to build an awareness of the risks and limitations that come with using generative AI technologies. So it kind of outlines the broader economic, social, ethical and legal considerations that you need to think about when you’re using generative A.I.. And it will be out this fall. Right now, you can preorder just on man income, but closer to the release date, it will be on Amazon, Target, Barnes and Noble and some other resellers. 

Greg Alexander [00:13:08] Well, congratulations on it. I I’ll be buying a copy and will read it. And thank you for contributing to the body of knowledge by going through the hard work of writing a book. I’ve done that myself. I know how difficult that is. I have to ask, did you use A.I. to write the book? 

Numa Dhamani [00:13:26] I did not. There are so there are some examples from JP and Bard and Claude in the book, but that is that is kind of the extent of it. 

Greg Alexander [00:13:40] Okay, good, good. So it’s original. All right. Fantastic. 

Numa Dhamani [00:13:43] Yeah. Yeah. Original piece. 

Greg Alexander [00:13:45] Great. Well, Numa, on behalf of the membership, I really want to thank you for supporting Steven and helping us understand prompt engineering. Really looking forward to the member session. And congratulations again on your book. And thanks for being here. 

Numa Dhamani [00:14:01] Thank you. Thank you for having me. This is fun. 

Greg Alexander [00:14:03] All right. So a few calls to action for the audience. So if you’re a member, please attend the Q&A session that we’ll have with Numa. Look out for that invitation. If you’re a candidate for membership, go to Collective 54 ICOM and apply and the membership committee will consider your application and get back to you. And if you’re not ready for either of those things, you just want to learn more. I would direct you to my book. It’s called The Boutique How to Start Scale and sell a professional services firm, which you can find on Amazon. So with that, thanks again, Numa and thanks for the audience for listening and we’ll talk to you soon.

Episode 147 – How to Recover from the Unexpected Departure of a Key Employee – Member Case by Phillip Acosta

Small service firms are overly dependent on a few key employees. The departure of one can cause much pain for the Founder and impede the progress of the firm, especially if it was unexpected. Attend this session and prevent this trouble from stinging you.


Greg Alexander [00:00:10] Hi, everyone. This is Greg Alexander, the host of the Pro Serve podcast, brought to you by Collective 54, the first community dedicated to the boutique professional services industry. On today’s episode, we’re going to talk about key person risk. Key person risk is when a small firm is overdependence on a person or a small group of people. And that increases risk in our firm because if someone leaves, it tends to create a large gap inside of a small firm, and then we find ourselves in panic mode to try to improve that. And we have a member with us today. His name is Phil Acosta. And Phil recently experienced this and significant successfully navigated his way through it. So I thought he could share with you what he shared with me because as much to be learned in his story. So, Phil, it’s good to see you. Would you introduce yourself, please? 

Philip Acosta [00:01:08] Hey, thanks for having me. My name is Phillip Acosta. I am the principal here at GuROO LLC. We’re an enterprise I.T. company, primarily based in the DC area, but providing support all across the lower 48. We also have a virtualization platform that’s a SAS offering called Ibos. So that’s kind of what we do. And I’ve been running this company for about a decade. 

Greg Alexander [00:01:32] Got it. So Philip, why don’t we start off with telling the audience what happened? 

Philip Acosta [00:01:38] Okay. So basically I have had the same structure of how we’ve been run the company corporately probably for about the last 5 to 6 years, and that is myself. And then I had a number two as an operations manager, and then we had some people beneath that, but it was mainly me to him at the top. That person told me that they were going to be retiring at the end of 2024. So I kind of had a plan for that, but they moved it up to the end of this year. So 20, 23 calendar year. And I found that out a couple of months ago, three March, April. And so from that period, I started thinking, okay, what are we going to do here? Are we going to just replace the person that’s in that spot, which I think would be impossible because of the institutional knowledge and stuff like that that’s been associated with that. So, you know, you could get pretty close, but probably not a perfect fit to replace that, or at least it would be challenging. Or I looked at it as like, okay, we are in the forties going into fifties at that point. Now we’re over 50. You know, maybe this is an opportunity to restructure the company for the next stage of what we’re going to do here, because even if that individual had stayed, we probably couldn’t around the company the same way for very much longer. I chose the latter, and now I’m in the process of implementing that change. You know, the new person as a board and the person that was here prior, they’re still here overlapping currently. But you know, like as Greg was saying, we’re we’re making that transition. And so far it’s it’s going okay. 

Greg Alexander [00:03:15] So that’s it’s a great story. Thanks for sharing that with me. And I think it’s very real. I mean, I think, you know, this has happened to several of our members and, you know, what are you going to say to somebody when they want to retire? I mean, they they’ve done a great job for you. I’m sure you’ve got a great relationship and you want them to have a happy retirement. So it’s a it’s a tricky situation because on the other side, you got you got a business to run. And this creates creates a gap. Tell me short term, so you get deliver this news. You know, now you’ve been able to digest it, remove emotion, think logically, make a sound business decision, which we’ll get to in a moment. It sounds like that’s working out. But in the moment when that happened, you know, was there any fallout? Was there you know, did the business take a hit? Was there a lot of stress placed on you? Kind of bring us back to that moment. 

Philip Acosta [00:04:05] Um, yeah. I don’t think the business necessarily took a hit. There was a lot of stress placed on me. 

Greg Alexander [00:04:12] Yeah. 

Philip Acosta [00:04:13] You know, it goes. You know, the timing is just, um, you know, not to get into my personal life, but I have a bunch of small kids that I just, you know, I just had recently disasters in our family, so you got to know the personal side of it. But, you know, I try to have some structure in how I do things. And I had a plan to start this process at the end of 2023 and basically to give myself the whole calendar year of 2024, to make this a smooth thing to, you know, you know, go out, interview, look for people, figure out the right, do the integration and it kind of crunch that entire timeline. So I was a little upset initially. And I think one of the things that I’ve tried to do is not take one moment, which I kind of looked at, is like you told me you would do one thing and now you’re kind of going back on your word. I tried to do that. Take one moment and allow it to define what is a 19 year working relationship with this person, which is mostly been really good. And so to me, I wouldn’t want to take that moment and allow that to, you know, you know, take away from all the good things that have happened over the years. So I’m not going to lie. I’m an imperfect person. It took me time to process and get to that point to be able to look at it that way. But, you know, that is the way that I’ve helped myself get through it. And then, you know, it’s like, okay, now we got to refocus and figure out how we’re going to do this. Yeah. 

Greg Alexander [00:05:42] Well, it’s very mature of you, and I appreciate you being honest and vulnerable. I mean, I’ve had this happen to me before in the past, and I reacted very emotionally initially. And then, you know, once I said, okay, it is what it is, I got to deal with it. You know, I brought some clarity to the situation. And listen, we got to acknowledge that we are people and, you know, emotions are going to be part of it because the implications of this, as you just mentioned, not just professionally but personally, you know, can be traumatic. You know, you’ve got a plan and all of a sudden the plan goes up in smoke and that can be very, very disturbing. So you talked about your two options and the criteria upon which you made the choice, which, if I repeat back, was you didn’t think that you could replace this person as is because of all the institutional knowledge. And that would be really tough to replicate. And then you were peeking into the future and you’re saying we’re a 50 people now in a few years will be at 500 people, like what do I need going forward? Which is a very good set of decision criteria. Sometimes there’s a third choice that people consider. And I want to ask you if you did consider this and why you ruled it out, and that is you could promote somebody from within. And that sometimes works because that tribal knowledge issue, that institutional knowledge is less felt if it’s an internal promotion. So did you consider that and why did you decide against it? 

Philip Acosta [00:07:01] Yeah, I did consider it. I think the problem is that and it’s a it’s a fault of something we’ve done here. We didn’t build anybody to take that role and we should have done that. And I won’t make that mistake again because like you said, it makes it easier to have an internal hire. But when I look at the things that I needed, there was nobody that had been dealt to take over in that capacity. Yeah. Without creating a hole in some other area and then basically just playing, you know, whack a mole of replacing people. So to me, that’s the reason that we didn’t go that route. Yeah. 

Greg Alexander [00:07:39] So, so the lesson for members is the talent supply chain concept, right. Which says you should be developing, you know, everybody along the chain, if you will. So if one person leads, another person steps in. But that Whac-A-Mole concept we are creating holes throughout the org chart isn’t an issue because, you know, everybody gets pulled up accordingly. Now, listen, I understand how hard that is. I know we’re all super busy and it sounds great in theory and it makes a ton of sense. Meanwhile, you’re working 50 hours a week, running around trying to serve clients like it’s hard to compartmentalize these things. But if you’re learning anything from Phillips story is it’s really important to have that talent supply chain in place so that if something like this was to happen again or happened to you for the first time, it’s not that big of a deal. It doesn’t mean that you’re going to promote from within, but it means you have the option, it’s a viable option. And then you can compare the internal promotion to the external recruit and make a good choice. So I just wanted to point that out. So let’s move to the the external recruitment. So this is a big job that you’re you’re filling. This person is going to play a huge role in your success going forward. So how did you find this person and how did you decide on who to hire? 

Philip Acosta [00:08:50] So I really turned to people that I knew in the industry that were either mentors or, you know, I know had had this experience in prior, you know, interactions because honestly, it was brand new territory for me. You know, I’ve made a bazillion hires in this company, but I’ve never hired someone to kind of run the company. And so trying to figure out the right choice for that was challenging. So I reached out to people that, like I said, that I trusted. I asked them if they knew people in the market. That’s another thing is it’s kind of a word of mouth thing, not saying you can’t go higher. A CEO often bandied, but it’s certainly not as common as like going and hiring a network engineer. So, you know, you kind of want to ask what they’ve done in the industry and be able to vet some of that stuff. So, you know, with the person that I ultimately landed on, you know, it came from a source that I trusted that I felt like it just didn’t work out. I could hold accountable. And it also, you know, I vetted a lot of their there are folks that they gave me and asked them about background, you know, not really to ask them, was this person good for the job? Because anybody you put down for a reference, I got selected for the job or probably shouldn’t put them down for reference, but I just tried to pull out of them, you know, what they had done and line it up against what I thought we needed and wanted it to be clear on a theme. One of the big things I wanted to hear is what their growth story where had taken a division and grown it and how they scaled that, what they did and what they left in place and how they got there. 

Greg Alexander [00:10:24] What was the pitch to the candidate? Because it sounds like these are big shoes to fill and how did you convince them to take the job? 

Philip Acosta [00:10:34] Oh, well, I mean, he actually really liked the company, so, I mean, it was helpful that, you know, when I presented what the company did, he thought it was attractive. He thought it was ripe to go for. But, you know, I did One of the big things that I told them is that, you know, you know, I’ve ran this company even though I had a number opportunity before. It’s kind of been like my way on everything for a very, very long time. I’ve kind of been the driving force for this company. I said, But I’m not looking for someone to come in and report to me. I said, I’m looking for someone to be a partner and grow with me. And I am willing to step back and embrace your ideas and not be saying, Well, that’s not how we do this here. So I think part of what made the job attractive was how open I was to new things. And, you know, that’s I mean, I’ve talked with Greg about it and that’s proving hard so far and practice to do. But but I mean, I’m working at it. I’m trying not to, you know, get in the way too much. 

Greg Alexander [00:11:32] Well, good for you for being aware of that. That’s an issue. You know, entrepreneurs and I’m one of them. We all struggle with that, right? It’s the control issues. And in order to get a company to a certain level, you have to have talented people and empower them to be successful. And it’s really hard to let go. So and it’s not like you flick a switch and it happens overnight. Just it’ll happen over time. And then once this new person and underline the word new, that’s the issue. Once they demonstrate their ability, your your trust in them will go up and up and up, not the you don’t trust them now. I’m sure you do, but it’ll be an earned trust and you’ll sleep better at night knowing about your delegation decisions. All right. My last question would be, so you have somebody leaving in the next six months and you have somebody who just started within the last two. How have you structured their relationships so that the transition goes as smooth as possible? 

Philip Acosta [00:12:24] And so one of the things I did immediately is I wanted them to marry up and spend a lot of time together. In fact, as we’re doing this podcast, they’re in the conference room right now. We’re working on some stuff together. So I told them basically in week one, I said I just kind of wanted them to spend time together because I had talked a lot with the candidate before he ever came here. So he kind of knew what I wanted. And I also had the benefit of I’m probably going to be here for quite a long time and I want to make sure that we get as much done in figuring out a transition prior to them. You know, with us having our person that’s in place moving on. So they’ve you know, I’ve encouraged them to go out, have lunches together. They seem to genuinely be getting along and doing well. I think another bonding point is talking about me, not necessarily in a bad way, but, you know, things like, hey, does this, you know, kind of the challenges of working with me or the good things and, you know, different stylistic things that I like to see. I think they’ve kind of bonded over that. But I’ve tried to make sure that they spend a lot of time together. And I said, I had this person that’s taking the job now that’s been in place. I had these two talking throughout the interview process, so they already knew a bunch about each other before the job, so were accepted. 

Greg Alexander [00:13:44] You know, and it’s fortunate that it was a retirement situation which gave you some runway. It gave you an opportunity to have the retiring person participate in the interview process. But imagine a scenario, listeners, where that’s not the case. You show up for work one day and your key person walks in and gives you two weeks notice now. So it’s a it’s a very different situation in that. And that that just puts you puts an emphasis on bond. This key person risk issue and making sure that you’re building that talent supply chain. So, Phillip, we’re out of time here, but I appreciate you sharing your story with us. It’s incredibly relevant and I appreciate you being in the community. Every time I speak to you, I learn something. So. So thanks for being here today.

Philip Acosta [00:14:29] Oh, thank you so much for having me. She has. Have a good day. 

Greg Alexander [00:14:33] All right. Couple of calls to action for listeners. If you’re a member and you’re listening, look out for the meeting invite. So Phil will do his Q&A session with us. If you’re want to be a member and you’re not yet, go to collective 54 dot com and fill out an application or get in contact with you. And then if you’re not ready for either of those two things, you just want to learn more. Go to Amazon. You can find my book. It’s called The Boutique How to Start School and Sell the Professional Services Firm. Okay. Thanks, everybody. Take care.

Episode 146 – Brand Building in a Professional Service Firm – Member Case by Chad Prinkey

Your brand matters. In the professional service industry, Founders need a brand for the firm, the service offering, themselves, and their talent. This session will explain how brands are built inside small service firms, and how they help boutiques punch above their weight class.


Greg Alexander [00:00:10] Hi, everyone. This is Greg Alexander, the host of the Pro Serv Podcast brought to you by Collective 54, the first community dedicated to the boutique professional services industry. On today’s episode, we’re going to talk about brand building inside of a boutique professional services firm, and I’m joined today by someone who’s done quite a nice job with this. He’s a Collective 54 member. His name is Chad Prinkey. Chad, would you please introduce yourself and your firm to the audience? 

Chad Prinkey [00:00:45] Sure. Thanks for having me, Greg. It’s a pleasure to be here. I am the founder of a consulting firm that focuses only on the construction industry. It’s called Well Built Construction Consulting, and we’ve been around now for coming up on three years. 

Greg Alexander [00:01:07] Congratulations! All right. So the reason why I wanted to have you on the show is we had spoken. You told me about a lot of things that you were doing to build the brand of your young firm. So I’ve got some questions here that I’d like to kind of run you through. The first one would be, you know, step one in building a brand is identifying your target audience. So tell us a little bit about how you did that. 

Chad Prinkey [00:01:31] Yeah, so what I know about our target audience, and I should be clear that I was, I’ve had this experience from doing what I do at a different firm, different meeting, different day, Greg. We could talk about what happened there, but at a, at a different firm that I, that I chose to leave a couple of, you know, I guess three years ago for. So I’ve had exposure to this market for the better part of 15 years. The market that I serve. So what I’ve learned about that market is that there are three different categories of potential customer. They’re on the small end, there are customers, potential customers for us that have under 50 employees, and these are contractors, general contractors or subcontractors, that have under 50 employees who when they hire us, it’s make or break. This is a big spend and it’s a lot of stress and pressure on the business. And they are really stretching to make ends meet when they bring us in. On the on the top end, there are companies with a thousand or more employees, and these are our organizations that really don’t need us for our full suite of services because they handle so much of what we really do, which, you know, in-house. They own this capacity internally. So our sweet spot really lies in between 50 and 1000 employee contractors, general contractors, and subcontractors, who can make the most use of our service, which is a fractional chief strategy officer offering, where we’re helping them to go to market. We’re helping them to address all the items in their business from really from A to Z, from in every silo, you know, in a strategic planning context, improving the business across every aspect of it. So if they are under 50 employees, we can have a massive impact, but it’s such a scary spend that it’s a dangerous it’s a dangerous spot for us to be in, a dangerous spot for them to be. Okay over the 51 employee mark, they really start to get and feel comfortable with what we’re going to deliver. And it’s not a small investment, but it’s not scary to them. So that’s our target audience. 

Greg Alexander [00:04:17] Okay, very good. So now that we understand the target audience and how you selected and that was very well articulated and that’s part of the brand-building process, you know, there’s different seduction tactics to reach the audience, and I know that that you’ve done a few a book, you do some speaking, you’re involved in some associations. So could you kind of explain to the audience what you’re doing to seduce that target audience? 

Chad Prinkey [00:04:39] I believe in authority marketing. I believe in the idea of positioning yourself as the go-to group for what you do. And one of the things, your listeners may be asking themselves, you know, geez, you know, here’s this consulting firm that’s focused on this really, really narrow aspect of the market. It’s over 40,000 companies that fit that description in the United States. And, you know, so for me, that’s more than I could ever hope to service. And what I found in my personal experience is that when you are trying to appeal to do broad an audience, they have a very difficult time finding you. Mm hmm. So when you’re talking about here’s how to be the best in selling, you blend in with a massive group of people who are selling that same message. But when you narrow that down to say, here’s how you can bring in three new general contractor clients this year that fit your target perfectly. There’s a very narrow group of people who that is focused, too. And they all care. They’re all they’re all really interested in that. So anyway, to answer your question, maybe a little bit more directly. Content–content creation Adding free value. From my perspective, I’ve never felt bad giving away great ideas. 

Greg Alexander [00:06:22] And I understand you’ve got a book. Is that correct? 

Chad Prinkey [00:06:25] A book is coming out, so the book is complete. We’re going through the publishing process, and we should be releasing probably by the time this drops in back. Something along those lines, though, like November. December. 

Greg Alexander [00:06:36] Okay, great. And then you’re doing some speaking. 

Chad Prinkey [00:06:39] I do a lot of speaking, Yeah. I averaged two speaking engagements a month between live events and virtual events. And that you mentioned associations, Greg, that ties in is that what I found is that inside the industry that I serve, there are associations that are desperate to provide valuable content to their members, and I’m there to help to fill that need. And it provides a fantastic, you know, receptive audience for me as well. There are just dozens and dozens of associations. Yeah. In the construction industry. So I’m partnered with many of those. 

Greg Alexander [00:07:21] You know, it’s a perfect tactic for you since you believe in authority marketing. The associations have built the audience. They need the content, and you come in with the authority. I mean, it’s just it’s hand in glove there. Makes a ton of sense. You know, let’s talk about positioning, because positioning is part of brand building. And sometimes small firms like our community, yours, young firms, they have a hard time making room for their brand. And the way that they do that in the in the mind of the prospect. That’s what I mean by making room. Freeing up mindshare that you can occupate, they have to reposition the bad guys, the competition. All right. So I know you have a long history in this industry and you’re new yourself with your firm. So how have you repositioned the bad guys and made yourself sound different? 

Chad Prinkey [00:08:11] Number one by a long shot is emphasizing the fact that this is all we do. There are folks who have construction industry practices, practice areas with one person who’s heading that up, who’s, you know, doing their best to try to appeal to that market. But if you dig deeper, you might actually find them marketing to software as well and financial services as well. And that’s our number one positioning strategy is the only people we’re talking to are you, and you are the hero. And don’t you deserve somebody who understands that? 

Greg Alexander [00:08:49] I love that. 

Chad Prinkey [00:08:51] We understand the villains that you face and we’re helping to slay those dragons with you every day. Yep. The other thing that we do is we stand for positive change in the building industry. So we are actively involved with all measure of diversity initiatives, of attempts to drive more progressive delivery methods, which that shock of shoptalk now. But the other two attempts to drive meaningful technological change and business process change. And we’re joining we are joining in voice with some of our competitors as we do that, and we actually will talk about, I think another one of our positioning statements, actually, now, the thing about it, Greg, is that we’re we’re the good guys in this industry. And if our competition is trying to make the industry a better place, well, then they’re our friends, too. Yeah. And and they don’t talk about us that way, which I think also sticks out. 

Greg Alexander [00:10:04] Yeah, for sure. I mean, it’s often overlooked, but if you’re advocating for the industry that your prospects and clients are in, then you’re on the right side of the argument, right? And you’re going to get some positive rub-off because you’re advocating for the industry. And the general positioning idea there is that if it’s good for the industry, it’s good for me. You know, we’re all going to win here. And sometimes industry participants don’t don’t do that. You know, they might even, I don’t know, say negative things about the industry. All they do is talk about everything that’s wrong about the industry. And then they talk poorly about the competitors in the industry. To rise above that and occupy a spot as kind of a brand ambassador on behalf of the client is a wonderful spot to be in, and it sounds like that’s just the spot that you occupied, which is pretty amazing given the fact he’s only been doing this for three years. 

Chad Prinkey [00:10:54] Yeah, again, I well, I have found is that it’s relationships. It all comes down to credibility. Yeah. And fortunately enough, I have, you know, many years of credibility that I’m able to, you know, build on from having developed a comprehensive relationship set over a long time. So thankful I’m able to pull on that. It’s kind of like I’m cheating. I’m not really, I’m not really brand new. Yeah, that makes. 

Greg Alexander [00:11:20] So let’s talk about credibility. Buying professional services is difficult because it’s an intangible. It’s not like you can take it out for a test drive or try it on in a dressing room. You know, ultimately, you’re asking a client to take a leap of faith when they hire you and you have to establish trust. So what stands in for as a proxy for a product sample or a product demo, because we don’t have that in services, is credibility. And you’re asking them to trust you based on your proof points. How, what are you doing around credibility to, you know, get those clients to make that leap of faith and trust you even though they haven’t been able to taste your wares, so to speak? 

Chad Prinkey [00:12:10] I haven’t been able to get the full benefit of the book, but I believe that’s going to be a game changer in that area when it comes to reaching well outside my current market area. What I can speak to in my current market area, which is really easy, is that we deliver phenomenal results for companies everybody wants to be like. Hmm, And that’s the easiest game in the world. McKinsey, I think, has always held this position that I can’t imagine holding, but I have the utmost respect for what they’ve done. But McKinsey holds this position that they never talk about who their clients are. But I think anybody who knows that. McKinsey, right, they don’t need to talk about it because other people do. And so that makes it big, you know, so here’s here’s my point, is that what I am able to do is I’m able to use lightning rod names that I’ve been fortunate enough to not only be affiliated with, but to have raving fans inside who will say, listen, and I literally have a testimonial to this effect is, you listen, if you want to build a better construction company and you’re not our competition, I highly recommend that you do this. You’d be crazy not to, and that that in in the market in which you serve, just I think most industries are like this. Construction I know for sure is very much like this. They all know each other. Yeah. And it’s on a regional and local level in particular. And so inside our home base market, which is DC. Inside our home base market, we are closely affiliated with names people want to be, and what is really nice is when we’re meeting our target audience, our target audience is often saying like, we would really like to work with you guys, but I’m not sure I can afford it. If you work with X or Y or Z, we’re nowhere near those guys. And then I’m able to come back and say they weren’t really there always either. Yeah. So the good news is we’re we’re priced perfectly to fit you guys and let’s talk about that. 

Greg Alexander [00:14:35] Yeah, I mean, what a perfect spot to be from a brand perspective. My last question is a little bit more tactical, and that’s around naming, you know, naming the firm, naming the service, naming the methodology, naming the book, etc.. So tell us a little bit about the name of your firm, how it was chosen, was that part of the brand strategy, etc.? 

Chad Prinkey [00:14:58] There is it was absolutely part of the brand strategy. And there’s there’s there’s an inspiration that I had for this. In a construction firm based out of Kansas City that is not a client. I would love to at some point, but they’re in that not they’re too big to take advantage of our core service. But we could do a lot of business with this company named JE Dunn is the name of the business and they’re an awesome, well-respected general contractor that does work nationwide and they have done a beautiful job. I noted they did this beautiful job with weaving, Dunn, D-U-NN, in their world, but “Dunn” into all of their, yeah, it’s like everything they have is branded “Dunn,” so it’s like this Dunn right or this, you know, Dunn It’s great. And and and I always loved it. I always thought that it’s an example I’ve used multiple times when working with my clients, like, I’m going to pull up a website. I want you to think about how we can do this with your brand, and how we can how we can really create consistency across all of your brand with with how we name things. So when I selected Well Built, it was to be able to say We do. We create Well Built construction companies, Well Built project teams, well-built estimating apartments, Well Built project teams I’m sorry, project management departments, well built, business development. Well, you know, all these different things that we can do. It all attaches to our idea of everything we do is Well Built and what were what we’ve done, what we’re doing. I shouldn’t say what we’ve done right. It’s it’s always a process. But I, I see signs that have me excited that when we talk to our clients, they will say we are a Well Built company. Yeah. And they’re proud of that. They’re proud of being able to say we’re a well-built company, which means we’re following the principles that our consultant teaches us. Yeah. 

Greg Alexander [00:17:00] Absolutely brilliant. I mean, it’s the ways you can use that are so broad, yet so targeted for your industry that you’re serving. It’s it’s just and we’ll talk about this when we have a Q&A, but that’s what’s called this brand architecture, which a name is part of. And it allows for an umbrella approach that Chad is using very, very well. So. Well, Chad, it’s so great to have you in the membership. Today’s session was really interesting. The private Q&A session I’m going to have with the members is going to be even more interesting because members will be able to ask you questions directly. But on behalf of the membership, just thanks for being part of our group. Thanks for contributing today. We very appreciate it. Thank you. 

Chad Prinkey [00:17:45] Thank you. Thanks for all you do and for what you and your team are putting out there. I very much needed what Collective 54 brought to the table when I first joined and the value continues to build, so thank you. 

Greg Alexander [00:17:59] Thank you. All right. So three calls to action for listeners. So if you’re a member, look out for the invitation that’s coming so that you can attend Chad’s Q&A session. I’m sure you got a million questions for him. If you’re not a member, but you want to be, go to Collective54.com, fill out an application. The application review committee will take a look at it and get back in contact with you, and if you’re not ready for either of those two things and just want to educate yourself further, go to Amazon and check out my book, The Boutique How to Start Scale and sell a Professional Services Firm. But until next time, I wish you the best of luck is to try to grow, scale and exit your firm.

Episode 145 –How Life Gets in the Way of Scaling a Professional Service Firm and What to Do About It – Member Case by Matt Jenkins and Nick Moretta

The personal lives of the Founders evolve as a firm advances. And the professional lives of the Founders morph as a firm matures. How can partners stay in harmony with themselves, and with each other, along the entrepreneurial journey? This session shares how partners work well together and use a tool called The Commitment Letter.


Greg Alexander [00:00:10] Hi, everyone. This is Greg Alexander, the host of the Pro Serv Podcast, brought to you by Collective 54, the first community dedicated to the boutique professional services industry. And on today’s episode, we’re going to talk about how one’s personal life and professional life change as a firm goes through its natural evolution and how critical it is for partners co-founders to. Change with the times, so to speak, and how to keep those things in harmony. And if they’re not in harmony. Bad things can happen. And if they are in harmony, wonderful things can happen. And we have a couple of collective 54 members with us today, Matt Jenkins and Nick Marella, and they are someone who’s taught me quite a bit about this subject and I thought it was worth them sharing what they’ve shared with me, with all of you. So with that, guys, it’s good to see you. Welcome to the show. Why don’t I let you introduce yourselves and maybe, Nick, I’ll start with you and then Matt, we can hear from you. 

Nick Moretta [00:01:22] Hi, I’m Nick Moretta. I’m a founding partner here at Other and I oversee a couple divisions of the business and they’re my very proud  Collective 54 member and father of two. Yeah. 

Greg Alexander [00:01:33] Thanks. 

Matt Jenkins [00:01:35] And my name is Matt Jenkins, one of the other founding partners here at Other. I oversee sort of the operations, service delivery and the business oversee a little bit of client services as well. And I am a father of one right now. We’ve got three partners in the business, so two of the three of us are here today. 

Greg Alexander [00:01:53] Okay, very good. And for the benefit of the audience, tell me what other is. 

Nick Moretta [00:02:00] Yeah, sure. I’ll take that one. So we’re a 40 person performance marketing firm. We have clients in Canada and the US, and really what we do is we help our clients derive the most value from their paid media investments using our proprietary methodology and channels like paid search and paid social. That’s really what we do as an organization. 

Greg Alexander [00:02:16] Okay, very good. Perfect. All right. So let me start with the first question, which is how have your personal lives changed, you know, since the founding of the firm until now? And, you know, maybe I’ll air traffic control this. Nic, why don’t we start with you? Because you just told me. Just add your second kids. So lots of change in your life right now. So this is a timely question. 

Nick Moretta [00:02:39] Yeah, definitely. Definitely. Yeah, I think I think so. Like, you know, when we started the business, we were super young, right? We were, I think around 25 years old. And, you know, life has changed a lot. When we started the business, there were super long hours, you know, we were coming home at 11 p.m. or midnight. We were starting at 8 a.m. in the morning. You know, very exciting time in the business to sort of build and get off the ground. But we didn’t have a lot of commitments. We didn’t have mortgages at the time. We didn’t have children. And I think over the past few years we’ve really seen that shift a little bit. You know, all three of the partners at our firm have young kids. I have two kids. Matt has one, Catherine has one. So we’re just getting used to that change and making sure that we stay disciplined with creating or integrating both our personal lives that are in our professional lives. 

Greg Alexander [00:03:28] So, Matt, in terms of the professional life, we just heard from Nick how the personal life had changed over time from, you know, being young and full of energy and being willing to burn the midnight oil to a time of adulthood and having obligations which we all eventually mature to. How has the the professional life, Matt, changed since the founding of the firm? 

Matt Jenkins [00:03:53] It’s not dissimilar to the personal side. If you think about your team in the context of being like your business family. And we don’t necessarily refer to our our team as a family, there’s a very different dynamic that happens with your your team than with your family at home. But know, in the beginning I think we spent a lot of time, Kat and myself, doing the work we spent. We would go on, we would we would find a client and we would bring them on board and come on board. We were the same people sitting there that needed to do the work and actually service what what we’d sold in. And so we spent a significant amount of time doing that. In the early days, and then he sort of move on and realize the need to bring on your first team member and and bring them all in and you can offload some some work, but then you need to mentor them and you need to take care of them, need to look after them, to train them and to create exposure and upward mobility for them. And then he starts to extrapolate that among the larger group of people, and that becomes you get some time back because you’re not doing the work yourself so much anymore, but you’re managing and mentoring these people and there’s time associated with that. But it frees up some time to be able to grow the business as well and for myself to start to build some business infrastructure. And so today we’re about 40 people and we’re across two offices. We have one in downtown Toronto, we have another one in Ottawa. We work on a principally hybrid model and we have a couple of different layers of management. And so things change remarkably. We’re not really the ones doing too much of the the actual client work anymore, really spending the majority of our time growing the business, continuing to augment the the operating infrastructure and processes and spending a lot of time mentoring and helping our people to grow. So it’s a very different vibe today than it was it sort of responsibility today than it was then. Yeah. 

Greg Alexander [00:05:52] That’s a great illustrative example for sure. And sometimes people struggle when that happens because they actually enjoy doing the work. And then, you know, I once learned in my life, you know, you go into business for yourself and you think you’re working for yourself, but one day you wake up and you realize you’re not. You’re working for your clients. Then one day you wake up and you’re not just working for your clients, you’re working for your employees for the reasons that you all just mentioned. And then eventually you wake up one day after you exit and you realize you’re not working for your clients, your employees, you’re working for your investors. So it changes kind of as you go through time. But, you know, you have to go through it to learn it. There were a few things that that you all shared with me that I wanted to pick on as examples, because I think our members would be particularly interested in this. So you went from a period of time where you were focused on salaries to now where you’re focused on distributions, and that is a big mental model shift. So tell us a little bit about that. When did that happen and kind of what caused that and how are you dealing with it? 

Matt Jenkins [00:06:56] Sure. I think there’s also an important stage actually prior to that, which is the pre salary stage, which is at the early days where we didn’t make any money. So it took some time. It took some time. At the beginning we only had $150 each into this business at the beginning, which was not enough for any sort of payment. And we took some risk and we started to build it organically. And at the beginning, yes, it’s it’s salary from a taxation perspective, It’s salary, but it’s it’s significantly based on what we are bringing in on the top line and what we’re able to take home and obviously a function of our cost base. And so in some respects it’s in some respects it’s performance based. And then as we’ve grown over time, we have to keep our salary structure commensurate with the work that we might be paying somebody else to do a similar job inside of the organization. So if I’m acting as a lead of operations, how much would a lead of operations cost in the marketplace and structure the compensation around something similar? But at the same time, we’re still owning the company and our responsibility is to the overall financial performance of the company. And so there starts to become an element that is outside of that, that’s performance based distribution. And so that’s the sort of middle stage is that when there’s a balance of those two things. And now as we think more about ourselves as the founders of the organization and the owners and are less in the work, it’s it’s becoming more on the performance compensation side and less of the day to day compensation of somebody who might be, you know, might be available in the market to occupy that same kind of role. So from sort of nothing to the small salaries and the salaries and distributions. And then we’re sort of off in the future looking at probably a larger portion of distributions and less salary. There’s also the elements of taxation that’s important along the way, which is having a good partner to help you navigate that and making sure that you’re you’re earning efficiently is also really important. 

Greg Alexander [00:09:12] You know, And someday if you do exit your firm, it’s going to make it a lot easier for somebody to buy your firm because they’re going to understand what the true cost of operating the businesses, which is your salary, reflective of what the going rate would be for somebody to perform that job. And then they can separate that from the distributions of the excess profits that you’re distributing to yourself right now, which is how an owner would get paid. So you’re balancing the two hats of owner operator extremely well. So that’s a lesson for all of our members is that, you know, those those things are separate. You know how you’re compensated as an operator, what should be market based and how you compensated as an owner? What should be distribution based, based on excess profit? Okay. Let me go to the next one, which was the shift from focusing on utilization, you know, as a measurement of yourselves to focusing on profits, you know, as a measurement for yourself. It’s kind of related to what we just talked about. But the way you run your firm and like the KPIs you look at, Accenture might be slightly different. So maybe I’ll direct this one to you, but how did that evolve inside of your firm? 

Nick Moretta [00:10:23] You know what, Greg? I think actually Matt could provide a probably better, more concise answer for this one. 

Matt Jenkins [00:10:29] Sure. Yeah. To be completely transparent in looking at utilization in the organization is not something that we’ve always done. It’s not something we were taught to do in previous lives. We haven’t run professional services business before and so we were coming into this and we were really focusing our our time and effort in the earlier stages of the business around some of our traditional business metrics. What does top line look like? What is profitability look like, and are those things growing? And we didn’t look a whole lot at the science behind what makes the inside of the engine actually work. And in the last several years, we’ve spent a lot more time on that. I think there’s also a lot more time on that, and we’ve re-engineered the organizational KPIs around that. They’re certainly still top line and profitability at a board level. But when we look inside and think about how to manage resources, it’s much more focused on target billable gaps and utilization rate and and things like that. But I think there’s also a mental shift, which is at the beginning, kind of like Nick was saying, we’re spending until midnight. We’re not going and tracking that time and time tracking system and making sure that the profitability get there. It’s a it’s a do whatever you need to do, whatever cost to make this client happy so that you can continue to build and grow that relationship. And that worked really well for us in the beginning. It’s obviously not sustainable strategy over a long period of time. But I just want to speak to there’s there’s kind of the size part of it, but then there’s also the mental shift that we’ve had to go through to say, okay, how can you manage this really effectively? And I think one of the things that we actually look at that’s a big topic in our category is that traditionally in advertising and marketing agencies, the notion is that people are overworked, that they come in very early and they stay until very late and they work too much. And I look at that as if there’s something broken in your business model, if people are doing that. And so if we see somebody in the office at 630, 7:00, I look at that as actually poor management and not somebody who is going above and beyond because our economic model should work and our operating model should work such that people can be in the office for the hours that we’ve allotted to that. So, yes, it’s shifted in a couple of different places. That’s a. 

Greg Alexander [00:12:51] Great synopsis. All right. So we’ve talked a lot about how the business has changed and the professional lives have changed. Let’s come back to the personal for a moment. You all have this wonderful tool that you called the commitment letter. And I thought it was it literally blew me away. I’ve never seen anything like it before. I love the symbolism of it, the wet signature. And it’s so relevant to our community because like you, that’s there’s three partners. Most processor firms are partnerships. Partnerships need to work. They’re kind of like marriages. There’s got to be compromises. People need to understand where everyone’s coming from. So why don’t you tell me about the commitment letter, how it originated, how you’re using it today, and maybe at the end of that explanation, give some advice to our listeners as to how they might copycat you on this. 

Nick Moretta [00:13:43] Sure. Yeah, I can definitely elaborate on that. So, you know, earlier I would say earlier this year, late last year, you know, we were approaching, I guess, you know, we’re approaching nine years now. We’re at eight and a half years old, our firm. And, you know, we’re feeling tired. You know, we had all young kids. We’re feeling a little bit beat up. And we know that in order to preserve your, we have to stay resilient. And part of the idea behind it was how can we have a commitment letter where we make commitments to each other? Because I think a lot of us and a lot of the members here, maybe they make commitments to themselves, maybe they’re around physical health or mental health, and maybe they’re commitments around business or family. And sometimes it’s difficult to live up to the commitments that you make to yourself. But when you make a commitment to your business partner, you make a commitment to a family member. I always find that, you know, brings a little bit more skin in the game and you want to make sure you live up to your commitments. So the idea was, we’re in a sit down. We’re going to make, you know, a series of commitments around different areas of life. So how do we we want to commit to becoming better executives? Part of that was actually setting up for collective 54 so that we could learn we can educate ourselves on how to become executives. We want to be more accountable to each other. We want to make sure we show up prepared to meetings. We want to make sure we, you know, allude a certain preparation to the rest of the organization. Personal and mental health, you know, physical health and mental health. These are important things. Commitments to exercise, commitments to seeing coaches. So we wanted to make sure that we just had a shared set of principles and commitments that we put down on paper. And then symbolic, like you mentioned, you know, how can we sign this document off? It’s not like a legally binding document. You have your shareholder’s agreement, but it’s more around saying this. And we sat down and we committed to these things. So we’re going to make sure we remain a. And, you know, if I needed to to give any advice on how someone could get started, you know, perhaps we could share the template with you, Greg, and you could put it into the portal. But I really think you have to sit down with your business partners and find out what are the things that are, you know, you’re struggling with both personally and professionally and how can you how can you commit to resolving some of those things? So are we operating at peak performance as a partnership group? If we’re not. Why not? Is a personal is a professional. List those things down and then put those series of commitments together and just put a signature against it and say, we’re going to commit to this for a year, which is what we did. 

Greg Alexander [00:16:12] It’s a fantastic story. I’m so glad that you guys have brought this to us. I would very much appreciate the template, if you wouldn’t mind. Couple of quick follow up questions on it. Are the three founders all approximately at the same stage in life in terms of age and things like that? 

Nick Moretta [00:16:30] Yes. Yes. We’re all three of us are at very similar stages. 

Greg Alexander [00:16:33] You know, that’s often overlooked. But it’s it’s mission critical because imagine a commitment letter, you know, if you have one partner in their sixties, one in their forties and one in their twenties, I mean, you just you just life is different. So it’s hard to make, you know, mutually reinforced commitments to each other. So something to think about there for the members. As you were going through the commitment letter, was there a negotiation? You know, were you horse trading in any way or was it not Was that not the spirit of the document? 

Nick Moretta [00:17:03] I think, you know, negotiation is more of a hostile word, right? I think it was more around making sure that they were realistic commitments for everybody. So, hey, listen, we’re going to commit to these things if we do. You realistically think you’re going to be able to live up to this commitment. So one of them is we need to exercise at a minimum 1 to 2 times per week. Do we think that this is realistic? You know, yes, this is realistic. If we came over at four or five times per week, maybe not. So it was really around are these realistic commitments that we can make to each other less around negotiating over the specific thing? 

Matt Jenkins [00:17:40] And I will add there that one thing that did have some meaningful discussion around it was actually making it time bound because when we originally put it together, it was put together with no end date on it. It was just, here’s the commitment from now until forever. And I think in some ways that when we were trying, it took time. It seemed a little bit daunting. It’s like we’re going to commit to this now and then. And then what? And so what we decided we were going to do is we’re going to put a time frame of a year on it. And it also helped us to narrow in and say, okay, what is truly important if we want to get where we want to be in one year, what is truly important between the three of us and let’s narrow in some of the language around that. And then we signed it off for one year. And so when we get back to the end of this year, we’ll revisit it and say, you know what was helpful? What wasn’t helpful? What do we think is a priority for next year? And we’ll we’ll do a fresh one or well, at least do a version of this year in a modified way. So the time bound piece I think has been helpful for us, and that was probably the thing that we discussed the most throughout the process. Yeah. 

Greg Alexander [00:18:46] The thing that I love about it the most is that to Nick’s earlier comment, you know, I mean, I am a habitual offender of commitments to myself. I oftentimes blow them off and because, you know, I’m not letting anybody else down other than myself. So therefore I tolerate it when I make commitments to my team. I mean, I have a tremendous sense of obligation and I don’t want to be that guy, you know, that guy that let down everybody else. There’s just something about our human psychology that that that’s part of who we are. And if you’re structured in a partnership and you really have partners, then it’s intensified because, I mean, the last thing you want to do is let your partners down. So I think it’s such an effective tool. Well, listen, we’re at our time window here. We try to keep the podcast short. We’re going to go into this much greater depth when we have our private member Q&A session with you all. But on behalf of the membership, it’s just wonderful having you guys in the community. This contribution to the body of knowledge is particularly fantastic amongst many others that you’ve made over time. So thank you for being here. 

Nick Moretta [00:19:47] Thank you. Thank you very much. Appreciate you having us on. 

Greg Alexander [00:19:50] All right. I’m going to give the audience just three quick calls to action. So members look for the invitation to attend the Q&A session with Matt and Nick. If you’re not a member, you want to become one. Go to Collective 54 dot com and fill out an application. We’ll get in contact with you. And if you’re someone who just wants to learn a little bit more directly to our book, you can find it on Amazon. It’s called The Boutique How to Start Scale and sell your professional services firm. Okay, guys, we’ll talk to you soon. Take care.

Episode 144 – Revenue Mix: Balancing Staff Augmentation, Advisory, and Managed Services to Drive Margins – Member Case by Ryan Buell

Boutique service firms often confuse staff augmentation work with advisory work and with managed services work. These are three different types of services that are marketed, sold, and delivered differently. Each has its own margin profile. Balancing the mix of these three correctly can be the difference between running a firm with good margins or a firm with poor margins. Attend this session and get clear on how to manage the revenue mix.


Greg Alexander [00:00:10] Hi, everyone. This is Greg Alexander, the host of the Pro Serv Podcast, brought to you by Collective 54, the first community dedicated to the boutique professional services industry. On today’s episode, we’re going to talk about finding the right revenue mix, the balance of revenue to hit your profit targets. And there’s different types of revenue that happen in services firms. And sometimes we don’t think about the mix. And that’s what we’re going to discuss today. And we’ve got a collective 54 member with us. His name is Ryan Buell, and Ryan has several types of revenue in his firm and we’re going to ask him to talk about those and discuss how he handles the balance of them to try to hit his targets. So, Ryan, it’s good to see you. Thanks for being here. Please introduce yourself to the audience. 

Ryan Buell [00:01:08] Yeah. Thanks, Greg. I appreciate you having me. My name’s Ryan Buell and I’m the founder and CEO of Save US Solutions. We’ve been around for about nine years and obviously professional services firm, we kind of have three main services that we offer consulting, recruiting and managed services, and we specialize in finance and accounting, tech and h.r. And we’re located here in sunny san diego. 

Greg Alexander [00:01:37] Okay, so, very good. So i’m going to ask you to kind of give me three definitions and then we’ll kick that around a bit and then we’ll have the conversation around mix. So give me your definition of staff augmentation work. 

Ryan Buell [00:01:51] Yeah, sure. So, you know, staff augmentation, at least for us, it really means that we’re providing specialized resources to support project execution or interim needs. You know, our consultants may own certain aspects of the project or provide some strategic guidance, but ultimately, we do not own the outcome. We’re typically operating under the guidance of the client and helping them with the execution of the project. So they’re especially with our enterprise level clients relying on us to provide specialized resources to really come in and complement their team to help get the work done. 

Greg Alexander [00:02:31] So maybe give me a sample use case just to let me sink my teeth into it a bit. 

Ryan Buell [00:02:37] Yeah, sure. So we have, you know, as an example, we have some clients currently transitioning to the new S4 Hana SFP product, and it’s an extremely large undertaking and these are large multibillion dollar global public companies and they’ll come to us to bring in project manager or Scrum Masters to to really help complement their existing team. And they’ll leverage obviously all the background and experience of our team to help because the resources we’re providing have a lot of experience in that technical space. But ultimately they have somebody there as part of the PMO that really is owning the strategy, and then they’ll also have an external third party implementation partner. Really, our role there is, is to be kind of the interim interim communication between the implementation partner and the client to help make sure that requirements are defined, that the outcomes are consistent with the expectations that have been set with the implementation partner. We’ll help with testing and change control and some other areas, but all of it’s really under the guidance of the project champion there within the PMO. 

Greg Alexander [00:03:54] Okay, perfect example that that brings great clarity to that. Okay, let’s move to the the second type of work that you do, which is advisory work. So please explain that and then maybe give us an example of that. 

Ryan Buell [00:04:07] Yeah. So the advisory work that we do is and this is probably more just a function of San Diego, but typically those are going to be with more small to mid-market clients. You know, the difference there is really we have full ownership of the project and outcomes. So typically, you know, the work’s very specialized. There’s going to be a proposal upfront with a clearly defined scope of responsibilities, estimated costs, and then, you know, the costs may have, you know, various deliverables or performance milestones associated with it. So although a lot of times we’ll still bill time and materials for advisory work, not always, but but typically we will there’s there’s usually a lot more work upfront to set expectations with the client so they know what they’re getting. 

Greg Alexander [00:04:57] Okay. And an example of that would be. 

Ryan Buell [00:05:01] So a lot of the companies here in San Diego are small to midsize tech and life sciences companies, just as an example. So as part of their IPO prep, they might come to analysts to implement technical accounting standards. Okay. They may come to us to help with some sort of a system implementation or change control. We’ve had companies come to us to help stand up an integration management office for a company that was looking to become very acquisitive as part of their growth strategy. So, you know, there’s there’s different examples. But for us, it’s it’s typically all going to be under that that finance, accounting or maybe tech. 

Greg Alexander [00:05:45] So yeah so the IPO prep great example that that helps us understand the difference between advisory work and staff legwork. Okay. So let’s go to number three, which is the MSSP or managed service provider space. So what’s your definition of that? 

Ryan Buell [00:06:00] So the MSSP is where a company typically a small to midsize business is going to completely outsource all or certain aspects of their business functions to us. So for us, again, those those functions on the on the managed services side are finance and accounting in h.R. And so we typically have full ownership of the function with the ability to implement our best practices, systems, tech stacks and other strategies that we believe are going to really help the customer be in the best position for for growth. You know, billing for that can be fixed fee or we’ll sometimes do essentially a consolidation of timing materials, but there’s always a very clear scope of responsibilities. And for us, a monthly cost kind of do not exceed amount without approval arrangement with the client. 

Greg Alexander [00:06:51] Okay. And an example of that might be what? 

Ryan Buell [00:06:55] So, you know, a good example would be, you know, we have a collective 54 member as a client. We’ll work with a lot of VC backed companies. Usually what they’re coming to us, maybe they have a bookkeeper or CFO who’s maybe not quite what they’re looking for. We will provide a team, a dedicated team, a department, so to speak, to that client. And each client receives a CFO control or accounting manager, an accountant in the works, then fractionally allocated based on scope and workload to the appropriate level to provide a kind of a more cost effective solution. So really, it’s you know, it’s any company, usually less than 100 million is going to come to us to outsource either all or part of that function. 

Greg Alexander [00:07:44] Perfect. And I think the key word there is outsourcing. That helps us to distinguish between the other two. Okay. So so with that, that’s a great distinction. And I know this sounds basic, and for you, maybe it is, but for some of our members, these terms tend to get blurred. And we really don’t know the differences between the two. And it’s important to understand the differences between the three. Excuse me. So right when you think about it from your perspective, the founder and CEO, you know, do you have an optimal mix you’re shooting for and if so, why? And how do you manage to that? 

Ryan Buell [00:08:18] Yeah. Yeah. I mean, we’re actually working on that right now. I mean, we have found that because we also provide recruiting services as well. And so, you know what? We have found that if if we can get to right around a 90% or more of the recurring revenue and maybe 10% on on some of the recruiting side, that’s that’s been relatively optimal. The obviously, from an enterprise value perspective, the managed services piece is going to be going to be the highest just due to the nature of the client outsourcing the work to us and the stickiness of the work. And it’s usually a much longer term duration, but. You know, I would say right now about 90 about 90%. Consulting and consulting advisory and staff augmentation compared to the recruiting side is the mix that we’re shooting for. 

Greg Alexander [00:09:20] Okay. And I understand why, because you want recurring revenue as opposed to kind of one off projects. That makes a lot of sense. Are there any other considerations? Like in my experience, the advisory work tends to have the highest margin. MSP work would come in second and then the staff augmentation work would come in third. That’s a generalization, but there’s a margin profile of the services come into play, or is it just focused on as little project work as possible and as much recurring revenue as possible? 

Ryan Buell [00:09:55] I mean, the margins definitely come into play. I think on the staff augmentation side of the House, we will sometimes get more pricing pressure, which can lower margin. So although the volumes there, the margins may suffer, especially if things in the economy shift like, you know, things have softened a bit recently, although we’ve stayed relatively busy on the advisory side, it’s a lot more specialized. And so if the needs are truly there, although budgets always a piece of the fact, you know, a piece of it, you know, usually they’re they’re looking for the right partner that truly specializes in that area and can deliver value. Mm hmm. The managed services piece, the margins are definitely there. I think the challenge there is it’s a full bench model. And so with us being in high growth mode, it’s always the balance of, you know, how how much do we want to get ahead of the demand for service to have a strong bench available as we bring on clients? Because we, you know, we never want to you know, we never want to have quality suffer. And we’ve heard feedback from clients in the market that some of our competitors had tried to grow too fast. So they struggle with continuity and quality. And so, you know, we’re trying to find the right balance of aggressive growth with quality and not sacrificing the culture. 

Greg Alexander [00:11:17] You know, and you brought to my attention and I had forgotten about this, but you have a fourth service as well called recruiting. So how does that compare on these dimensions? 

Ryan Buell [00:11:26] Yeah, I mean, the recruiting piece, it’s it’s a nice piece of the puzzle because, you know, at the end of the day, it’s pure gross margin. So from a business perspective, it’s great for the business. The downside is it doesn’t really add much to enterprise value. Yeah, because there’s nothing about it that’s recurring. So, you know, it’s nice for us to be able to offer it because clients need it and ask for it. And there’s a lot of synergies from a recruiting perspective when we’re out in the market bringing in more consultants or internal employees to our practice, we obviously come across individuals looking for full time opportunities. So it’s easy for us to be able to provide that service, but we have to be careful that we don’t emphasize it too much. And so, you know, we’ve done that through how we structure comp plans and we’ve implemented a very specific sales strategy, you know, which has helped. So I guess the short answer is we want it to be part of the business, but we have to be careful about the mix of of revenue and how how we strategize how we’re going to achieve the right mix to optimize profitability and enterprise value. Yeah. 

Greg Alexander [00:12:38] Okay. Very good. All right. My last question would be, you know, for service lines, for different staffing requirements, for different margin profiles. It sounds complex to manage. Is that true or not true? 

Ryan Buell [00:12:54] Yeah. I mean, you know, there’s good and bad everything. And I think, you know, the good is that we never lose clients. We work with them through every stage of growth and they essentially graduate from one service to the next. The challenge can be. I think sometimes market confusion on maybe what we do or to be able to answer that question in a simple answer. I know there’s a lot of companies out there that have a lot more complexity than we do, but that but that’s a bit of a of a challenge. The delivery models, the nice thing is, is we’re able to leverage our internal recruiting team to feed the other lines of business, which is another another kind of competitive advantage. So anytime we’re hiring on the managed services team, the same recruiters that are working for these large multi, you know, helping support these large multibillion dollar public companies that have the highest standards you can imagine are the same people that are filling our positions. So we’re able to scale with quality. But but yeah, it creates challenges. There’s different business needs, different systems. So we essentially run run two different businesses. We have a managed services business and then the consulting, recruiting and advisory side of the business as two separate business entities. We have separate budgets by service and different leaders for each service just to ensure that someone’s accountable for the growth and strategy because, you know, they are they are different with different challenges. 

Greg Alexander [00:14:23] And is that distinction between Mr. MSP and the rest of it because of the full bench model? 

Ryan Buell [00:14:32] Well we have is what distinction that the. 

Greg Alexander [00:14:35] So between the MSRP business that’s one line of business and then you grouping the other businesses together. As I understand what you just said and I’m wondering why you’re running those as two separate businesses. 

Ryan Buell [00:14:47] Well, the the MSP we originally set up as a different business because we wanted to bring in leadership to really be incentivized to grow and scale the managed service side of the business. So I have a different cap table, different systems, different budget. Um, and, and it’s really a, it’s a different delivery model and in a lot of ways. 

Greg Alexander [00:15:08] Okay, Very good. All right. Well, listen, you know, this was good old fashioned one on one education distinguishing these things. And as Brian and I just demonstrated even amongst us and we know each other, you know, clarification was required. Put yourself in the shoes of a client, you know, who might not know the difference between these things. And then you submit a price and they react to it because maybe they don’t know. So having clarity around these different types of services and when clients should leverage one versus the other, when it’s appropriate to use one versus the other, how the other cost benefit analysis might be thought about as a really important thing for all of us to keep in mind. 

Ryan Buell [00:15:52] Yeah. Yeah, for sure. Revenue mixes is definitely something that we’re focused on right now. And you know, with the market shifting and us trying to continue to work on our ongoing growth strategy, it’s it’s something that is top priority. 

Greg Alexander [00:16:05] All right, listeners, I’m going to give you three calls. Action. So if you’re a member, watch for the meeting invitation. Well, you’ll get invited to Ryan’s Q&A and you can ask questions directly for him. If you’re not a member and you want to become one, go to collect 254 dotcom and fill out an application. We’ll review that and get back in contact with you. And if you just want to learn more directed to Amazon in our book, it’s called The Boutique How to Start Scale and Sell a Professional Services Firm. But Ryan, thanks a bunch for coming on the show today and making a deposit into the collective body of knowledge. I enjoyed listening to you and we’ll talk to you again. 

Ryan Buell [00:16:41] All right. Thanks, Greg.

Episode 143 – The Basics of Doing Business with the Government – Member Case by Frank Tsamoutales

Uncle Sam is the world’s biggest client. Yet, many boutique service firms do not do business with the government. This session is for firms who do not do business with the government but wonder if they should. We will cover the basics such as why elections matter, understanding legislation, and partnering.


Greg Alexander [00:00:10] Hi, everyone. This is Greg Alexander, the host of the Pro Serve podcast. Brought to you by Collective 54, the first community dedicated to the boutique professional services industry, and on today’s episode, we’re going to talk about doing business with the government, and the reason why I picked this subject is most of our members are focused exclusively on the private sector, and there is an opportunity potentially to grow their firms by learning how to do business with the government. And on this episode, we’ve got a role model and expert in this area. His name is Frank. Frank, I always mispronounce your last name. Would you pronounce it for me, please? 

Frank Tsamoutales [00:00:58] Tsamoutales. 

Greg Alexander [00:00:58] Tsamoutales. I don’t know why I can’t get that, but I’ll commit that to memory. So. Would you please introduce yourself and your firm to the group? 

Frank Tsamoutales [00:01:08] Sure, Greg. Thank you very much. Before I introduce myself, I just want to say I’ve always been a huge fan and believer in mastermind groups and collaborating with people that bring different frames of reference to the conversation. And I just want to congratulate you on the team on collective efforts. In the short time we’ve been involved, we have picked up many gems that are already having greater moments for our firm’s growth and value. And I want to thank you and everybody, a collective, collective 50 for including all my fellow members who have been very open and candid and provided a lot of those gems along with yours. So thank you for this opportunity as well as in terms of an introduction, we we are a government relations business development firm. We’re unique in a couple of ways. And I know that sounds probably a little maybe not so authentic of a statement to make, but but I’ll explain why we feel that way about it. But we really focus on solving problems that keep leaders up at night, whether it’s a founder, a CEO, CFO, or even government officials or community leaders. And we’re pretty open minded about the range of those kind of problems. But what we’ve learned time and time again throughout our 40 years of doing this, the intersection of business and government can have a tremendous positive and negative impact on a business. So we try and avoid those pits involves for our partners and clients and at the same time are available to them when in fact they do get blindsided that there’s an issue they just can’t quite tackle, whether they’re regulated or whether they are selling goods and services to the government or exploring opportunities in that regard as you as you opened up this podcast. 

Greg Alexander [00:03:14] Perfect. Well, again, thank you for being here. You’re going to be a wonderful guest today in preparation for our time together. I spoke to some members and I asked them, you know, what they would want to hear about. So I’ve got a few questions and I’m going to jump into those. And these are going to be in the category of kind of the basics, the starting point for our members, as is. Many of them don’t even know, you know, how do you even get started? The first question that I had from a member was, you know, what does a advocacy group or a lobbying firm actually do? And is it wise for somebody in our community, which is, you know, the founder of a small services firm, is it wise for them to, you know, approach one of those firms and and ask to partner with them? 

Frank Tsamoutales [00:04:03] I think that’s a good question. And I’m going to I’m going to just say not so fast. So let me just maybe frame up kind of the the environment a little bit, but the little time that we have, I’ll do my best to be suspect and then and then answer, but hopefully it’ll help answer the question as well. First and foremost, elections matter. Underline Circle asked her to highlight that. And so what a small professional services company or mid-sized professional service company has to be careful of is not to investigate purely opportunities that may be born from a new administration, something that is unique maybe in the world that we live in today. There are very opposing views of how to serve the taxpayer and communities. And so for a small company, and as risky as it is, as it may be, you’re much better off in taking a look at what your current ideal client profile is, what your core competencies are, and then doing in this, you know, without engaging a firm at this point, really just investigating on one’s own. These founders, as we know, are very, very bright, very resourceful and and look for opportunities that are more insulated from the election cycle. And I think I think the founder and the founders team are probably capable with technology today, too, you know, because they’re keenly aware of what they do, what problem they solve, what value they bring, and then look for maybe some at this point is hunches and instinct, maybe educated kind of guesses before they walk into a lobbying firm. And why do I say that most lobbying firms, not all, are generalists, not specialists. They’re obviously exceptions. And they’re the type, generally the type of personalities where they’re extremely hard working, they’re very bright, they’re relational capital is extraordinarily useful to a founder, but if you don’t point them or help point them in at least a specific direction, what you what the founder may discover 6 to 8 months down the road, and after investing a significant amount of money or a modest amount of money, depending on on the scope that they engage with, is that they’ve met a lot of important people. They’ve met, they’ve walked the proverbial the halls of a county complex or a state legislature or state agency or even a federal agency, only to find out they’ve met a lot of people with big, important titles. But when they look at their PNL, there’s really nothing to show for it. And so you’ve got to really help point that government relations expert in the right direction, and it will also help the founder. Find a firm that aligns. Best with at least what their what their thesis might be. As I said, most of the firms are generalist, but they often have, like our subject matter experts across a wide range of of areas. And it’s good to to come to a firm with at least a little bit of some understanding of where the low lying fruit is. 

Greg Alexander [00:07:48] Excellent advice that’s going to save all of us lots of money and frustration. Okay. My next question was. Understanding legislation. So, you know, our members are reading and watching TV and they see, you know, big bills get passed like the Infrastructure Act and all that. And they’re trying to figure out how to understand it and capitalize on it. So what advice would you give a member when they’re trying to understand a piece of legislation and find an opportunity? 

Frank Tsamoutales [00:08:22] A couple of things. Was it? Mark Twain said to things you don’t want to ever watch being made sausage and laws. It’s rough and tumble environment and their legislation is generally a, you know, a manifestation of a lot of influence. Advocacy groups and special interests all have something at stake. And so by the time a piece of legislation passes, generally it has what we like to refer to a lot of stakeholders fingerprints on it. So in terms of doing, you know, how can I how can I as a founder exploit? And I mean that in a moral and ethical way, a piece of legislation to to build my business. What you don’t see at that point, once the legislation is passed, is all the folks that have had impact have written the language. Every line, every word is coming from somewhere, whether it’s a staffer in a cubbyhole with a light bulb hanging over their head you’ll never meet, or one of the usual suspects, whether it be an industry player or a government relations firm, and certainly the legislators and their staff as well. So it’s it’s better to get out front. It’s. Particularly for a founder just delving into this. Quite a risky proposition to react to a large piece of legislation that that on the surface appears to be a great opportunity for them, only for them to find out that, you know, it’s it’s what we call in the south home cooking. Hmm. Having said that. As a founder, a good approach can often be to partner with one of those usual suspects. And I and what I’ve learned from collective 54 and interacting with some of the founders is that they do business for large and medium sized. Firms that have quite robust business pipeline with the government, whether it be state, local or federal. And so approaching them is a good idea to see if they could bolt on to those opportunities so they don’t have to try and sort out all all the details and just provide it, you know, as part of a solution. Now, one of the risks in that is that typically not always the and this is a broad generalization, but it’s something that needs to be sorted out. Is when you’re interfacing with a private sector that will say a client, a founders and was one of their. They’re typically going to be talking to somebody that’s in the commercial side of the business. And one of the things that we focus a lot on, it’s actually become a product that we’ve developed. And I don’t know, but I would imagine other firms do this, too. McKinsey certainly done it, and several other firms that have done some interesting research on this is those commercial practices are not necessarily tied off or reliant or what we say integrated with the public sector side of that firm. So you may have some issues going from, you know, whoever the typical contact is. That you deal with on a day to day basis and transitioning into, you know, partnering with them on a on a government on a government project. But I think knowing that up front informs the founder what questions to ask and if if that firm is not integrated, if that if the prospective partner is not doesn’t have government relations integrated into the private sector sales, then you’re going to have to navigate that. But that’s another way to maybe faster, more efficiently, more effectively get into the market, particularly because you’re leveraging, you know, relationships that are at this point for the founder based on trust and experience a track record and they may be more likely to the client may be more likely to bring you in on some opportunities. 

Greg Alexander [00:12:56] So partnering, that’s a great recommendation. And you know, you mentioned the word relationships, which leads me to my last question here, which is members are wondering, you know, should they get involved with elected officials? Should they try to build relationships with, you know, the people that represent them? Any advice in that area? 

Frank Tsamoutales [00:13:19] Yeah, absolutely. I mean, you know, I said earlier, elections matter and relationships matter. We all know that business, right, is no different and maybe even more so in in politics and in government is, you know, get involved, get engaged, be prepared if you do for the elected officials when they enter campaign season to reach out and ask for your help, whether it be volunteering or providing financial assistance and that sort of thing, which is another reason why I wouldn’t want I wouldn’t recommend a founder start there just because it could get very expensive and work more, maybe risk more risk associated with saying no to too many of them, only to come back later and ask for some help. So there’s a lot of information to. I gather, before doing something like this. So I would want to know, you know, who historically has been behind that candidate or that elected official, because there could be some unintended consequences. You may find out that they have a long standing relationship with a firm that might be a competitor and they might be less inclined to help. So there’s you know, there’s a lot of due diligence upfront. The other you know, the other piece of that that’s related to that is there’s ways to. Ascertain what competitors are spending, both in donations to elected officials as well as what lobbying firms they’ve hired and how much they’re paying them. So you can get a good analysis of the landscape and make sure that, you know, you’re not talking to somebody, that at the end of the day might be a competitor or a friend of a competitor. 

Greg Alexander [00:15:18] So this is fantastic. I mean, today’s short session was just to talk about some broad ideas, and we were very successful in doing that. You know, I’m left with the feeling, as I’m sure our listeners are, there’s so much more to that. So when we have Frank on as our weekly role model and we do our private Q&A session with him, our members will be able to ask frank questions directly regarding this because as you can see, this is multi-layered. But Frank, on behalf of the membership, this is unique. You started off by saying you are unique. I believe that you are. You certainly are to us. You know, many of our members have expressed interest in expanding their firm into the government and they don’t really know how. And just a few things you share with us today have been very helpful. So thank you for being on the show and contributing to the collective. 

Frank Tsamoutales [00:16:06] Well, thank you, Greg. I know with the economy taking, we just had the Fed meeting out here in Jackson Hole. You know, there’s some potential black swan events on the lake that are on the horizon. Whether they’ll come to passed or not, who knows? But government is the largest purchaser of goods and services in the country and they’re not going to stop. And this could be a great opportunity for your members to shore up their PNL and even grow their business at a time in an uncertain time. 

Greg Alexander [00:16:37] Yeah. Okay. All right. So for those listening, I’m going to give you three calls to action. First, if you’re a member, attend the Q&A with Frank. Look out for the invite. If you’re a candidate for membership, you want to become a member. Go to collect 54 e-commerce site on application, and the app committee will get in contact with you. And then if you just want to learn more directed to my book, The Boutique How to Start Scale and sell a professional services firm, which you can find on Amazon. But with that, I wish everybody good luck and we’ll talk to you soon.

Episode 142 – Why Recruiting for Sales Positions in Small Service Firms is Different and How to Adapt – Member Case by Carter Hopkins

Recruiting for sales positions in a small service firm is not the same as recruiting for sales positions in large service firm, or in a product company. This session will help you avoid making costly hiring mistakes as you build out your sales team.


Greg Alexander [00:00:10] Hi, everyone. This is Greg Alexander, the host of the Pro Serv Podcast, brought to you by Collective 54, the first community dedicated to the boutique professional services industry. On today’s episode, we’re going to discuss recruiting salespeople into a small services firm, which is a very precise recruiting process. And we have a wonderful role model with us today. His name is Carter Hopkins, and he’s a member of Collective 54, and he runs a firm that this is what they do. They recruit for sales, and he’s successfully done this for several of our members. So he’s got a lot to offer on this topic. So, Carter, it’s good to see you. Please introduce yourself to the audience. 

Carter Hopkins [00:00:59] Yes, they’re great. Thank you so much for having me. Honestly honored that you asked me to be on the podcast. So, yeah, I’m the founder of Pursuit and we are a sales and marketing recruiting firm that specializes in helping our partners scale out their sales and marketing function with top talent. 

Greg Alexander [00:01:16] Fantastic. So let’s jump into it. So my first question is how is recruiting for sales positions inside services firms different than recruiting for a similar role in a product company? 

Carter Hopkins [00:01:31] Absolutely. I think a. You know, for me, recruiting for sales in general is so different than any other type of recruiting out there. And that’s really the reason I started our company eight years ago, is because I there are a million recruiting firms out there. There’s not a lot of sales recruiting firms. And I believe sales recruiting done well is very, very different than recruiting an engineer or recruiting somebody in I.T. or something like that. And the reason why is it’s it’s it’s not as much about the resume. It’s a lot of it is about the intangibles. It’s about the person. And there’s no certification on a resume that’s going to sell anything. And so, you know, our approach to sales recruiting and don’t get me wrong, a lot of times we are looking for specific things on a resume as well. We’re looking for those intangibles that you may not necessarily be able to to see on the resume. And I think that makes it a little bit different, as well as recruiting for a professional services firm and sales within a professional services firm. Just the motion is a lot different than it is when you’re selling a product, you’re selling a product. A lot of times it’s the same sales pitch over and over and it doesn’t really have to be a solutions based sell. And when you’re recruiting somebody to a professional to sell within a professional services firm, it’s not tangible. Your the sell itself looks so different than it does when it is one product and you’re selling it the exact same way every time. Yeah. 

Greg Alexander [00:03:12] I agree. That’s a that’s a really good point to bring out. You know, sell services. You’re selling the intangible as a product, as a tangible. That’s a very different emotion. So that that’s a good ad. All right. Let me let me ask the next question, which is, you know, our our membership, because you’re a member and, you know, this is is focused on boutiques, which is code for smaller firms. So let’s talk about the size dimension. So when you’re recruiting sales positions for a small company as opposed to a large company, how is that different? 

Carter Hopkins [00:03:44] Yeah. Working at a big company. Opposed to working at a small company is so different. And you know, the thing that I would encourage members that are listening to this is when you recruit, you need to sell for what you are. And be very upfront and honest what you are with these candidates. And if the candidate is the right candidate for your small firm, that will excite them. If the candidate is the wrong candidate and you’re in, you are going through the good and the bad about working for a small firm, it will scare them away. And so for us, you know, for me, I started the company eight years ago and we’ve built it out. And, you know, I have when people come in to interview with me, I have to tell them, hey, it’s it it’s not a huge firm. We may not have all of the benefits for a lot of these sales reps that are coming from from big firms. What I see is they have a ton of resources. They have a marketing department, they have all of these different resources that they have access to. And then you throw them into a small environment and they’re not used to that. Like they’re like, Hey, where’s where is the client marketing collateral? It’s like, Well, I don’t know. You may have to create that kind of small firm. And so, you know, I think for me personally, I love small business, obviously. And if you sell it correctly, because to me, there’s a lot of advantages of a small firm. Candidates want to know that they can move up quickly. And I believe that you can in a small firm, they want to know that there’s not as much team in to work through. In a small company like that. There is a big company. They want to know that they have access to the founder. There’s a lot of selling points that you you can talk to candidates about that are true. But I would also say almost sell against your opportunity. Hey, here’s what it’s not in the interview process and what it will do. We’ve lost candidates that I liked and I thought could have been good, but they didn’t want that. And I would rather know that in the interview process than figure that out four months down the road and have them leave. 

Greg Alexander [00:05:43] Yeah, I like that. So against it, that makes it’s kind of reverse psychology. And I agree with you. I can’t tell you how many times I’ve seen our membership and even outside of our membership, people get enamored, you know, with the person with 20 years of industry experience, you know, try to bring him in to this small firm. And it’s a trainwreck because they can’t scale down to a small firm. They’re used to being surrounded by all these resources and small firm. It’s it’s largely, you know, building the plane as you’re flying the plane. And you need scrappy people that can make it happen. And sometimes these big company people, they have a really hard time scaling down like that. So that’s a mistake. We’d like all of our members to avoid making speak. 

Carter Hopkins [00:06:25] And I think real quick on that, Greg, another selling point that I believe in small business for is if you’re in sales, you want to try to you want to try to create value within your company as an individual. And I believe it’s easier to create value for a sales rep in a small company than in a big company. And the reason why is because when you work for a big company and you walk in there and the name on your shirt sells itself, yeah, it’s really hard. You’re very replaceable. Yeah, very replaceable because the company’s buy, the buyer is buying from the company and not from you. When you work for a small company and you walk in there. And when we were a, you know, a six person company that preceded you, and our sales rep walks into the room and says, Hey, we’re pursued. They don’t know who pursuit is. So they’re buying from David. They’re buying from a person opposed to buying from a company. And so for me, that’s one of the reasons I always we work with a lot of small companies, and that’s one of our selling points to candidates about going to a small company. You may miss out on some benefits and some of those things, but you’re able to create so much more value for the company, which in turn creates value for yourself. 

Greg Alexander [00:07:33] Yeah, good point. So let’s get to one of the biggest mistakes that members are making right now, and that is they’re over hiring in the sales leadership role and they’re hiring for it too early. Yeah, you and I have spoken about this previously. I’d love for you to share with our members why you think this mistake is happening and maybe what to do about it. 

Carter Hopkins [00:07:59] Yeah, I think so. Here’s kind of what I see. And we have the opportunity to work with some professional services firms, and a lot of times it’s on their first sales hire and you know, they’ve been they’ve been the CEO and they’ve been selling more or less and they may not even wait to sell. Yeah, they may like the delivery side of things and they may be specialized in that, but they find themselves selling and then they listen to Greg and they listen to collective 54. They go, Hey, I need to scale out my sales team. And and they reach out to me. And a lot of times they want us. They want a sales leader. They think that they want a sales leader. That can be a player coach at first that can come in and is going to be an individual contributor. And then go into sales leadership. Right. And what I find is, you know, they want somebody that’s been leading people. Mm hmm. Because they want them to own that sales function. But the hard part about that is somebody that’s been leading people. It’s very hard for them to go back and to go back to selling all day, every day. Right. And they end up frustrated and it ends up not working out well, in theory, in my opinion, from what I’ve seen. And so, you know, I always in most I won’t say always in most scenarios, I believe in hiring somebody that’s going to be a straight sales rep. That’s a little bit probably junior that has no problem reaching out 30, 40 times a day. The person that’s been leading other people to make 40 calls a day is really hard to get them to go back to making 40 calls a day. And what I’ve seen. Yeah. And so, you know, I always cash is king. Right. And like people, how you get cash is you get people that are selling it. I believe your first couple of hires. Most of the time it’s important as long as you can put them in the right atmosphere. It’s important to to find somebody that’s okay with getting out. It’s selling all day. Would you agree with that? 

Greg Alexander [00:10:00] I agree 100%. I mean, listen, individual contributors in sales, it’s a grind. And it is when you get to a mid point in your career or maybe even later on in your career, going back to the grind is just culturally a very difficult thing to do. And for our community, if you think about it, you know, most of them are, you know, early in the development of their sales function in general. So hiring an individual contributor to start with and using that person to kind of be the guinea pig or the test lab, if you will, to figure out what works for you. And then once you understand that maybe that person has the ability to grow into the sales leadership job, if not, at least you know what’s needed now, because you had that junior person in there grinding all the time. So, so really good advice. Speaking of which, I wanted to get to the next question, which is. 

Carter Hopkins [00:10:46] Yeah. 

Greg Alexander [00:10:47] Our members. The stereotype of our members, if I could place it on them is this. They’re absolutely brilliant domain experts in what it is that they do. And that’s the reason why they’ve been able to build their firms, is because of their, you know, intellectual horsepower and their expertise. But they didn’t come up through sales most often. Therefore, they really don’t know what good looks like. And they have out of whack expectations. So they hire somebody and they think sales are just going to miraculously come in and they don’t understand that there needs to be a whole system in place. So can you tell us a little little bit about what expectations should be like and how to avoid this mistake? 

Carter Hopkins [00:11:32] Yeah, I would always I would even caution a lot of times what I see is people want to go hire the person that’s been doing it for 15, 20 or 20 years that says they have a Rolodex of contacts and they just move over the business and all of a sudden they’re making all this money. And where I talked to founders that have made a lot of mistakes is they’ve hired people that say that. And then they get in there and they don’t they don’t do anything. Sales is not easy. It’s not that’s why their sales reps make as much money as they make, is because it’s hard and it is a grind and there are no shortcuts to it. And, you know, I I’m going to quote as a friend, this is sales consultant Gregg Stanley. So I’m not going to take credit for it. But how he talks about it is it’s like a houseplant. You go you go buy a houseplant. And if you don’t put that houseplant in the right environment, it’s going to die. And, you know, and then what ends up happening is the plant dies and you don’t know if it was the environment or if it was a bad plant. And a lot of times you think it’s a bad plant, but really it’s a bad. It’s a bad it was a great plant, but you put it in a bad environment and it died. And so that really hit home with me because I watched that happen time after time again, where you have to create a sales environment and you have to have somebody within your organization to set up that right environment. When I say environment, accountability, KPI is a sales atmosphere where they don’t they they don’t feel like they’re flying solo when the day’s tough and they made 40 calls and they haven’t talked to one person all day long. Like you have to put them in an atmosphere to where they can thrive. And it may be like, Well, Greg, how do I do that if that’s not my background? Fortunately, I love sales. You know, when I started the company, that’s my passion and my background. But for a lot of founders, that’s not their domain or expertise. And I would just say like. I believe in. If it’s not going to be you owning that function, hire a sales consultant that helps you set up that environment correctly from the get go before you go hire that salesperson to put him in that environment overall. And then also don’t think once you hire that salesperson as the CEO or as the founder, you’re just going to be hands off and all of a sudden money’s going to start showing up. You’re going to have to be involved in training, in teaching and coaching the whole way through. 

Greg Alexander [00:14:01] Yeah, I love the house houseplant analogy. You know, when I was in the sales consulting space, I used to tell my clients, Listen, you don’t put a football helmet on Tiger Woods. Yeah, but if you hand him a golf club, you’re going to win Majors, right? So it’s matching the talent to the environment and making sure that you’re putting the talent in a position to win. And it’s very often not understood. And I think your advice of maybe renting a sales consultant that can build your sales environment first. Yeah. Then recruiting in the talent is the way to go. 

Carter Hopkins [00:14:35] Well, and I’ll say the last thing I’ll say to that, Greg, is be patient. Like if you have to play the long term game, far too often I see people playing. A short term game is like, you know, they’ll call, will fill a position, they’ll call me like, hey, never sold anything. It’s like, how long it been? It’s been a month and it’s like, man, it it you have to play the long term game with some of these you know, these people in your organization as well because it’s going to take time to figure it out, especially if you’ve never had anybody doing it before and you don’t have a playbook. Yeah. 

Greg Alexander [00:15:05] All right. Well, listen, we need to wrap this up, but I’ve got a few calls to action here for the listeners. So. So if you’re a member, keep your eyes open for the meeting. Invite. That’ll be coming to you shortly for the private Q&A session that we’ll have with Carter. You’ll be able to ask him direct questions, will go into much greater depth and more able to do in a short podcast. If you’re not a member and you want to become one, go to collect 54 Ecom and submit an application and we’ll get in contact with you. And then if you’re just someone who wants a little, little bit more, I would drive you towards our book. It’s called The Boutique How to Start Scale. And so a professional services firm written by yours truly, Greg Alexander, you can find it on Amazon. But Carter, on behalf of the membership, I appreciate you being here, making a deposit into the collective body of knowledge and I look forward to our upcoming member session. 

Carter Hopkins [00:15:59] Thank you, Greg. 

Greg Alexander [00:16:00] Okay, take care.

Episode 141 – The Secret to Big Sales: How an Executive Sponsor Program and Executive Language Wins Clients – Member Case by Carajane Moore

What role should the Founder of a boutique professional service firm play in the process of acquiring new clients? That of an Executive Sponsor. And how can a Founder perform in this role with excellence? By using executive language. Attend this session and learn about executive sponsor programs and executive language. 


Greg Alexander [00:00:15] Hi, everyone. This is Greg Alexander, the host of the Pro Serve podcast. Brought to you by collective 54, the first community dedicated to the boutique professional services industry. On today’s episode, we’re going to talk about executive sponsor programs, what they are. Why you should care. Why you should deploy them. Who should own it, how to do it, etc., etc.. And I’m joined today by a member of Collective 54. Her name is Cara Jane Moore, and she’s an expert in this area and she’s got a lot to offer on this topic. So, Karajan, it’s great to see you. Please introduce yourself and your firm to the audience. 

Carajane Moore [00:00:52] Well, thanks, Greg. It’s great to be here. I’m CaraJane Moore, president Hunt Big Sales, co-owner and Hunt Big Sales is a boutique professional services firm, and we work with the small and mid-sized businesses to help them grow very rapidly by landing large accounts. 

Greg Alexander [00:01:07] Okay, Very good. All right. Well, let me let me start at the top. So what is an executive sponsor program? 

Carajane Moore [00:01:14] Well, actually, an executive sponsor program is more of an approach to how you go about sales. What we’re trying to do is we’re trying to increase that reality in your pipeline. We’re trying to add some assurances in your forecasting and to increase the close rates of of sales. And so an executive sponsorship is about an approach that’s going to allow us to do those things. So an executive sponsor then is somebody that is at the highest level of the organization you’re going after to secure new services. Right? And so they’re at the highest level that have the business problem that you solve. And that’s really important because oftentimes we end up trying to sell us sell benefits and services instead of solving business problems. And really all biotech firms do is solve business problems. And so they’re at the highest level who have the problem that you solve and then also have urgency to solve it. So what we’re talking about is an approach that allows us to secure those types of people so that they can help us through the sales process to close. 

Greg Alexander [00:02:23] Okay. So why do you think this approach and I like that word is the right approach for our community, which is made up of founder led boutique process firms? 

Carajane Moore [00:02:38] Sure. So as a smaller firm, as a founder led, oftentimes founders are involved in the sales. So one, it’s easier for them to get to the owners of the prospect companies they’re going after because sales, when you’re solving business problems happens at a higher level in the organizations you’re hunting than the managerial levels that maybe sales reps are only able to get to. So first and foremost, we have to get to that higher level and an executive is the easiest way to do that. But you can’t teach your salespeople how to do that as well. So one, that’s true. Two, we’re trying to solve business problems. And so you need the executive sponsor inside that organization because if it’s a larger opportunity, they’re going to be the ones that are going to be making the decision to buy. But even if it’s not a big opportunity, it’s a regular sales opportunity. If you’ve got the person who has the problem, the chances are you’re going to get more information and better information than your competitors on landing that piece of business, because you’re going to understand the nuances of the problem versus working with procurement who has no problem. And we oftentimes get lost in the idea of procurement h.r. Training some of these departments who actually don’t have problems. They’re hired to execute someone else’s problems. 

Greg Alexander [00:03:57] Very good. So if you think about a boutique and the lifecycle stages of grow, scale and exit, in your opinion, is there a good time to start this, a bad time to start this? Like where in a lifecycle should a small services firm think about an executive sponsor approach? 

Carajane Moore [00:04:19] Actually, I think that executive sponsor should start the minute you start if you’re selling, which there’s no way we could be in business if we aren’t selling right. If you’re selling the best way to get efficiency and effectiveness and clarity in your sales approach is only speak to the people that have the problems you solve, not their proxies. Mm hmm. 

Greg Alexander [00:04:41] So some of our founders, actually quite a few, are some of the smartest people I’ve ever met. And when you talk to them about their domain, I mean, you literally go back on your heels and you say, oh, my goodness, this person really is an expert. It’s one of the reasons why I love the professional services industry. However, they’re not great salespeople, not because they can’t be. It’s just they were never trained. They don’t want to be you know, they really love kind of the content of their job. So how do you get them? To be the executive sponsor and sell, Empower. Sell the power. 

Carajane Moore [00:05:19] Yeah. So power to power selling is really important. And although they’re the executive for their own organization, we’re trying to secure the executive at their prospects organization, right? Yep. And because they’re a subject matter expert and they are an owner, right. Or he as a founder, they have some gravitas that allows them to get in that door to begin with, which is why most professional services firms grow based on their network of the founders. Right. And we’ve talked about that and seen the founders bottleneck. And then at that particular point in time, as you’re having conversations, all you’re doing is adding clarity to the rules of the process that both you and your prospect are going to go through to determine if you’re the right solution. So we’re not doing anything unethical or behind the doors. This is all clean up, but we’re just making it clear. So even though they don’t have sales backgrounds or they don’t even want to sell, it’s about having an easy conversation. It’s just as simple as me saying, Hey, Greg, we’ve been talking and it sounds like what we’re talking about, I can solve the problem that you’ve got. And in your end, you want us to continue to look at that. But you and I both know there’s some nuances and we’re going to need to get our teams together. So I have to bring my team together. You have to bring your team together. They have to spend some time kind of working through the details. And I just want to make sure before we get started that you’re willing to be a part of that process, that you’re willing to stay engaged, that you’re willing to give me access to your team and data as necessary to go through the sales process. You’re willing to make it a priority. You’re willing to add clarity when maybe some of the people in your team have conflicting ideas or the urgency overcomes the importance and we get into a logjam and getting data and access. Would you be willing to do that for us so that we can work through this process to determine if we can solve this problem the way you need it in the timeframe you’re asking? It’s a that’s all it takes. 

Greg Alexander [00:07:21] Yeah. I mean, that was such a beautiful summary of it. STEM to stern. I marvel at your ability to take the complex and make it simple. Let’s, let’s consider a use case here. So let’s say I’m the founder of a 50 person consulting firm and I’m trying to scale my firm, which means I’m trying to solve for the founder bottleneck and replicate myself and others and be a great delegator and build a team. So because of that, I have a business development function of some kind of sales function, and they’re out there trying to win new clients. Where how is the labor separated? Like who does what and when does the founder parachuted? 

Carajane Moore [00:08:07] Sure, absolutely. So generally, if you’re on the earlier aid of that lifecycle, right, as a founder, you’re going to be more involved at the beginning of the sales process and then again at the end when you’re closing, as you’re scaling to your point, you should be able to turn over some of those, what we would call traditional prospecting activities to somebody in the business development department who is able to then sell the services. And as a founder, depending on the size of the transaction, whether you should be involved or not really is played at that point. So if you’ve already got somebody in business development and we’re trying to get to the highest person within that organization, you should be able to turn that over because they have to be a seasoned salesperson. If they’re trying to get to an owner. If we’re selling power to power, owner to owner, then they have to have enough. Business acumen and be able to do executive language speak to get in. And there’s three secrets to landing large deals you get sent to whom you sound like. So if you don’t sound like the executive, you’re going to get deferred down to a manager or director. You stay with whom you impress, which means you have to be able to continue conversation and an engagement at that executive level, and you close and grow with those who believe, which means you also have to be convincing. And so that’s part of where maybe a founder comes back in because they’ve got the resources they’re committing to. Yeah. So you should be able to transfer that to a salesperson, but they have to have that executive language, that executive presence and that business acumen to be able to be at that level, to have those conversations. 

Greg Alexander [00:09:47] So let’s talk about the executive language. And I know that your firm has an executive language program and how critical it is. And I think it’s so relevant to our community because our founders, they speak in jargon. They speak in like their domain expertise. And if you’re going to be power to power selling to an executive, the person inside to they don’t even understand all the three letter acronyms. So So how can one of our members get themselves trained on executive speak? 

Carajane Moore [00:10:24] Yeah, absolutely. Well, like you said, we’ve we’re launching a new program, Big Sale Secrets, and it’s really about mastering that executive language to close more deals. And that’s that language is more it’s less about the details. And this is one of the things that I think is really important. Executives buy to solve a problem of the future. They’re buying a better future. So they don’t need to know the details of how what we’re doing to solve that problem is going to happen. That’s what their team is for, to evaluate. So executive language is talking about the bigger concept, the bigger idea. We’re talking about money, not price. Right. We’re talking about leading through influence, persuasion and executive through some of the data. And especially if we’re talking about our founders speaking jargon, we’re going to back it up. We’re going to lead them through data and the analysis of that data to implications. And as executives themselves, they’d rather make a decision off of an option. So you have to be able to place the options that don’t include you as a part of the decision making framework for your executive buyer, then provide the recommendation for that choice. And so by putting in some of these conversational arcs and tools, how do you use napkin math so that we’re not into the precision, but we’re giving the big picture idea bullet points, bite sized, but a full arc of concept for executives to make a decision now. So our video program does exactly that. And then we’ve added C suite fluency because it’s a new language, right? So we have to become fluent in it. And what we’re learning is in today’s world, we want to consume information so rapidly, but we don’t take the time to practice and perfected. And so when you’re learning a new language, you have to practice that language. I don’t know about you. I try to do Spanish on a Rosetta Stone, and I could read it and I could I could understand it when they said it, but when I tried to say it back to them. Error. Yeah, error because I couldn’t get the role of the hours and all. I mean, it was, it was really fun and my daughter’s just fluent and I can’t write. Well, that’s the same thing when we’re talking about salespeople or founders trying to learn how to speak at an executive language, which is not their day to day language because they work with their own peers. And if your founders are those very, very smart people, but they’re the subject matter experts in their business, they’re going to be jargon based. Yeah. So we have to elevate them into business based conversation. 

Greg Alexander [00:12:59] Yeah. You know, I’ll share a story with the membership. I made this mistake that Cara Jane is talking about. When we first hit the market with collective 54, we would talk about helping a services firm grow, scale and exit. And I thought everybody understood what that meant. And I had several people say, What are you talking about? And finally someone said, So Greg, what you’re really talking about is going to help me make more money. You can help me work smarter, not harder, and you can help me get to an exit bigger and faster. And I almost kiss the person. I’m like, Yeah, that’s exactly what I’m talking about. So we have since taken that language, which is their language, not my language. I was using industry jargon and it wasn’t, it wasn’t landing. So using their language is what really happened. And that’s what this executive language program is about. All right. One more question for you. So let’s say I’m a member and I’m listening to this and I’ve now been inspired, you know, to go implement an executive sponsor approach. What obstacles should I anticipate? 

Carajane Moore [00:13:55] Well. So first and foremost, the first obstacle and I know this seems really obvious, but everybody misses it if you’re going to go ask for an executive sponsorship. Oftentimes people are afraid and it’s our side that’s afraid. So we kind of say it. We don’t really lay it out or. And so the biggest obstacle that we find is we work with companies to get them to do that is their own teams fear to actually go have that conversation. What I will tell you is when you’re actually speaking to executive, they are absolutely thrilled that when you have a problem, you’ve got a process, you’ve got a plan, and you know exactly how to execute it. And they know where they’re supposed to step in. They are grateful for the conversation. They’re not resentful. And so first we have to get over the fear. That’s the first piece. The other piece is if the answer is no, that tells you a whole lot of information. One, if they say, no, I don’t want to be your executive sponsor, it might be because they’re not the right person. Right? Might be because they’re just kicking tires and they’re not interested. Right? Answer Stop wasting our time. Right. So there’s nothing to be afraid of. This is just an easy conversation. Right? So those are some of the key obstacles. The last thing is, it depends on who you’re selling to. If you are in big situations in which you can’t speak to anybody, you can’t ask for an executive sponsor at that particular time, even though you might be able to gather more information. Right. If you’re speaking to municipalities, we have to be careful about the language we use. We don’t say executive sponsor because that sounds like we’re for you to win versus others. And that’s not what we’re asking for. We’re asking for to guide us through the sales process like they would anybody else. Right? So government, military contracting, some of those types of things, the language has to be tweaked just a little bit. And we’re not asking them to sign an agreement and we’re not even asking them to favor us. We just have to be careful. That’s an obstacle in some of those organizations that you have to be aware of. 

Greg Alexander [00:15:58] All right. Very good. Well, listen, we’re out of our time here, but this was really intriguing. And I’m so looking forward to the private Q&A session we’re going to have with the members where members can ask you questions directly. And I’m sure there’s going to be a ton of them. But, Caroline, you’ve been a wonderful addition to our community. You’re always a giving member. You’re actively participating. So on behalf of the entire membership, I just wanted to thank you for all that you do for us. 

Carajane Moore [00:16:22] Oh, well, thank you. I love being a part of C 54, and I keep referring everybody I can because I think it’s a great organization and a great structure for professional service firms like mine and yours. So yeah. 

Greg Alexander [00:16:35] Okay, so audience members, three calls to action. So if you’re a member, keep an eye out for the invitation that’s going to come for Carajane’s Q&A session. If you’re a candidate for membership, go to collective 54 dot com and submit an application and we’ll get in contact with you. And if you’re not ready for that, just want to learn more. Go to Amazon and find my book. It’s called The Boutique How to Start Scale and Sell a Professional services firm. And we talk about lots of topics that hopefully resonate with you. But thanks for listening. And until next time, I wish you the best of luck as you try to grow, scale and exit your firm.

Episode 140 – Lead Generation Inside the Small Service Firm: How It Is Different and What to Do About It – Member Case by Christian Banach

Small service firms need to generate leads but are constrained by limited resources. Budget and talent are in short supply. Therefore, what works in a small service firm is different than what works in a large service firm, or in a product company. Attend this session and learn what works, and what does not work, for small service firms.


Greg Alexander [00:00:10] Hi, everyone. This is Greg Alexander, the host of the Pro Serv Podcast, brought to you by Collective 54, the first community dedicated to the boutique professional services industry. On today’s episode, we’re going to talk about lead generation inside of a small services firm or an agency. And the reason why I want to have this conversation is because sometimes this term lead generation gets thrown around carelessly, and a lot of times the best practices that are available to people don’t apply to services companies only product companies, and they don’t really apply to small firms that are constrained by resources. You know, they sound great on paper. Then you go to implement them. You realize you need $1,000,000 budget, a team of ten, so it doesn’t work. So we’re going to dissect what is working for agencies. And we’ve got a great member with us today. His name is Christian Banach. This is what Christian does for a living and he’s got a lot to say about this topic. So. Christian, it’s good to see you. Thanks for being here. Please introduce yourself and your firm. 

Christian Banach [00:01:23] Thanks for having me, Greg. So, yeah, my name is Christian, but I am the founder of Christian Banach LLC. We are a business development and growth consulting firm. We work with primarily advertising and marketing agencies, but we work also with SAS companies, along with other professional services firm. And our job really is to help them get in the door with the types of companies that they want to do business with, and that’s oftentimes mid-market or enterprise level businesses. 

Greg Alexander [00:01:52] Okay. So very good. So I’m going to ask you a very simple question to start with, but it’s so important to get this definition correct. What is lead generation? 

Christian Banach [00:02:03] Yeah. Greg, that’s a great, great question that we do hear a lot of that thrown around in different ways to us. Lead generation is really the proactive engagement of prospects to generate a predictable pipeline of opportunities to a certain segment of a target audience. That’s what that means to us. 

Greg Alexander [00:02:22] Okay. So proactive, as important as what that means, is outbound outreach as opposed to just like receiving a referral or word of mouth or something like that. 

Christian Banach [00:02:33] Exactly. Yeah. So an inbound lead would be somebody who finds you through, say, a CEO or through word of mouth or through referrals. But when we’re talking about lead generation, it is more of a. A proactive approach in which you’re being really intentional about the types of companies and the types of people within those companies that you want to connect with. 

Greg Alexander [00:02:55] Okay, perfect. Okay. So with that as our foundation. Tell me how lead generation is different for agencies as opposed to product companies. 

Christian Banach [00:03:06] Yeah. So product companies, obviously there is a product, right? There is something tangible that somebody can hold that can feel, that can smell, it can touch. However, when you’re a professional services firm, you’re in most cases selling expertise. There is nothing to hold, nothing to touch, per se. So here you really have to demonstrate your expertise through case studies, through testimonials, through research, through various different ways where you can make a prospect, believe that whatever problem they’re looking to solve, that you have something that could help them solve for it. So it’s a little bit more challenging and much more complex than, you know, throwing a picture or an image up on a website somebody can click to buy. These are oftentimes also very much a consultative type agreements, right? So it’s very customized as well. So it’s much more complex than, say, a product. 

Greg Alexander [00:04:03] Yeah. Okay. Very good. All right. And how is lead generation different for small firms than it is for large firms? 

Christian Banach [00:04:11] Yeah, well, the biggest thing that I see here, the large firms obviously have much more brand recognition. So if you were to do some sort of lead generation or outbound call call or email and you work at IBM, the prospect is going to immediately know who you are and what you stand for versus if you’re a small professional services firm and you reach out, they have no idea who you are. So that barrier is much greater for a professional services firm that’s on the small side to break through, because I’m sure we’re all on the receiving end of emails and cold calls from various vendors. So we’ve been in our prospect shoes so we know what it’s like. And so how do you stand out? I’m sure with the work you do is great, but how do you stand out from all the other competitors that are out there? Yep. 

Greg Alexander [00:04:56] Okay, so by the time this airs, it’s going to be autumn of 2023. We’re recording here the last day of August. So in that time period. So tell me, tell me what’s working currently and why. And then as a second part of your question, tell me what’s not working currently and why? Or if you want to do those in reverse order, that’s fine too. 

Christian Banach [00:05:17] Sure. Yeah. Let me talk about what what isn’t working? You know, maybe first, I think a lot of people, when they think about lead generation, they really defer back to what, you know, kind of old school methods where you might get a list and you just sort of call it dialing for dollars, or you get an email list and you blast out an email to hundreds or thousands of prospects that used to work years ago. It doesn’t anymore. You really have to be much more strategic and thoughtful and who you reach out to, what you say to them. You have to be very personalized in your outreach to them. You can’t come across as like a robot or check your email. People will see right through it. So that has definitely changed. So there’s a lot more effort that is involved. And what’s also causing problems is technology itself. You know, is these inboxes are flooded now. There’s spam filters, there’s robo calls that are you know, your phones are blocking robo calls now. So the technology is blocking it. So it’s a lot more challenging to get through these days. On the other hand, there are certainly plenty of firms that we work with and others that are out there that are excelling. And what are they doing while they’re trying to doing the opposite of what I just said? They are taking the time to personalize their outreach communications to these different companies. They’re taking more of a quality over quantity based approach. What we’re also seeing is more creativity in what you’re reaching out with. And what I mean by that is sort of the old school way might be to contact the company and say, Hey, we’d love to get 15 minutes on your calendar or do a demo of our product and tell you how great we are and where our office is and about our company dog. And nobody has time for those things, right? They you really need to give we call give to get right you need to give value before you can expect value back. And what you want back from them is their time, right? Their time is worth something. So we’re seeing some of them are higher performing firms in the space. What they’re doing is they’re coming up with something. So maybe they have done some original research and they’re going to reach out to prospects and say, Hey, we’ve done some research into your industry. We’d love to share these insights with you on a call or I’ve seen others that are taking the approach of they might be organizing a virtual panel. And by that I mean as they pick a topic that’s really a hot topic, let’s say maybe A.I. and they’re reaching out to different senior managers, senior decision makers at their target companies and saying, Hey, we’d like to we’re organizing this panel. We’re getting eight thought leaders together to talk about this hot topic. And they’re using that as sort of a Trojan horse way to start building a relationship and contacting these people and then using that again to start building relationships. So the companies that are really. Doing well with this are thinking more long term. They’re thinking more about building relationships than they’re thinking about short term and transactional type regeneration. 

Greg Alexander [00:08:14] You know, one thing I would add to you, add to your list is community participation. So something I’ve experienced with Collective 54. There’s some of our members that are in collective that whose businesses have exploded as a result of that because they’re participating in the community. They’re not selling anything, but they’re in the community and people are getting exposed to them with their expertise and they’re proactively reaching out and saying, Hey, I noticed that you do X, Y, Z, I happen to have that problem. Can we chat? And it’s been fantastic to see the amount of business that’s been generated in the community. So and our community is only one. So the the lesson for the people that are listening is there’s all kinds of communities out there. And if you become a active participant in them and you adhere to the code of conduct, there’s there’s lots of benefits that can come from that. So just another idea. Okay. Next question. So who in a firm or an agency, a small firm should own lead generation? 

Christian Banach [00:09:10] Yeah, I think about this a little bit, depending on the size. Yes, small agencies. But if you’re under, say, ten people, you know, it can be challenging, right? Because you’re the founder, you’re wearing a lot of different hats. You probably don’t have the budget to go out there and hire somebody full time to do this. So in that case, I think you really need to get smart about how you’re prospecting, right? You’re not going to be able to do as large or volume of prospecting as maybe a larger firm would be able to do. But there are still some really tactical type things that you could do looking at things like your website, visitor ID, people that are visiting your website, people are engage with you on social media. If you have an email newsletter, who’s engaging a newsletter? So being really smart about who you reach out to and strategic and I think the owner can take that on, you know, in a smaller type of firm. That said, you know, if you want to up level and go beyond that, you know, I think at that point then usually this is on this is maybe firms of ten or more. You might then have somebody that’s a head of marketing or a head of sales or something along those lines. And at that point, they could potentially, you know, own this process as well. The challenge there is I see a lot of these firms is when you hire, say, a VP of sales, they may not want to do the prospecting. They may think that that’s maybe lower level type work for them and they want to be in the pitch in the close and get the deal sign. So sometimes it’s hard to motivate those folks to to do that type of work. But but I will say, you know, if you’re a small firm, you need to push your your team to do that. And and you might want to look beyond just those people to how do you involve maybe others within your team, you know, to be involved in this as well? You know, there are certainly you can go out and hire more of a junior business development representative. That’s certainly something to explore. Or, you know, you may want to explore outsourcing, you know, essentially what we do. But with a firm like ours, you know, you’re able to get the technology, you get the tools, you get the people, you kind of get everything, you know, all in one, which is, you know, generally for smaller firms, you know, they can’t afford all of those different elements. But by outsourcing, that is certainly a possibility for growth as well. 

Greg Alexander [00:11:26] You know, a collective even for one of our features is the process of benchmark, and that’s where we collect operational and financial metrics from our members. We’re always looking at kind of the firms that are doing really well in comparison to the average. What are they doing differently? And not to just give you a blatant plug here, but I can tell you that as it relates to lead gen, the firms that are doing better than average typically outsource it. And the reason why they outsource it is because it’s not core to who they are and what they do. And the idea of hiring these people and training them and retaining them, installing all the instrumentation and all the tech is, there’s a lot and it’s a very specialized skill. So, you know, spending money and having an expert do that for you, it would be my recommendation that to those that are listening, are you talked about obstacles to success. So let’s go there next. So I’m a I’m a small agency or a consulting firm of some kind. Maybe I’m 25 people or something along those lines. And you’re right, I realize I need to do lead gen because I want that predictable pipeline. That’s the thing that’s eluding me. What are the obstacles to success? 

Christian Banach [00:12:31] So a couple of things. So if you’re a size of 25 people, if you’ve grown primarily through more word of mouth and referrals, but we oftentimes see is that you sometimes still don’t have your value propositions and your ideal company profile really nailed down yet at times. Right. And you’ve kind of taken what have come in through the door, which is fine, which as you should. But when you’re going outbound, you really need to be very specific and you have to have a niche that you’re going after just to come out and say, Hey, we do marketing and we’d love to work with you. Is it enough? You’ve got to really zero in on specific problems that you can solve for clients. So a lot of the companies that we work with initially, that’s what we’re doing with them. To start off, we don’t just start off sending out emails or making cold calls for them. It’s really getting clear on their go to market from an outbound perspective because that is a different lens to think about it. So to me that is probably the number one challenge, is then also changing the mindset and wanting them to specialize in something. Because if you don’t, you’re not going to see success with outbound. 

Greg Alexander [00:13:39] Okay, very good. So the flip side of that question is, let’s say that I do this and it works. What’s the payoff? 

Christian Banach [00:13:47] The payoff is really scalable and predictable growth. Well, we work with our clients on and anyone that really implements a program like this is you will eventually start to know the metrics. The metrics meaning how many outreaches do I need to do to land a meeting on average? And then of those meetings I get what percentage do I convert to an opportunity? Which one of those what percentage of those opportunities converted to do business wins? When you start to know those numbers, you have that predictability. So if you’re looking to grow double in revenue, in revenue next year, you will know I need to do this many outreaches to get to that point and to get to that those number of wins that I’m going to need. If you get very busy and you can’t take on more clients, you could pull that back. So, you know, we’re it’s not uncommon to see clients of ours, you know, giving a ten X, you rely on their investment. But it does take time. You know, outbound sales cycles are longer than inbound sales cycles. That is another mindset shift that people have to take. So if your sales cycle is six months on an inbound lead, it’s going to be longer for outbound. So you still have to give it enough time in order to start to learn those metrics and then be able to dial it up or ballot down as needed. 

Greg Alexander [00:15:00] You know, one thing I would add to that is what we’re seeing is a decline in referral generation. And the reason for that is because the world has gone to remote work. Word of mouth and referral generation is impacted greatly by geographic density and face to face interaction. You know, so back in the day you’d go to a networking event and, you know, you’d meet ten, 15 people and there was all kinds of introductions and referrals happen kind of naturally. That’s the way humans spread. B2B brands, it’s face to face. I share something with you. Oh, that’s interesting. Tell me more kind of thing. Well, we’re not doing that anymore. We’re not doing that nearly enough. So the referral rate has gone down, and that’s been the bread and butter for most of the professional services firms. So if if you are experiencing a decline in referrals, I hope you’re not. But if you are two things, try to reengage in in-person networking as much as possible. This fewer opportunities, but you can do that. And then add, you know, outbound lead generation to your mix as part of your marketing strategy because something’s got to replace those lost referrals. And what we talked to Christian about today as one possible replacement for that decline in referrals. All right, Chris, and we’re out of our time here today, but it’s great to have you in the community. Your expertise is very relevant because you focus on lead gen for small agencies, which is what we’re comprised of. So it was wonderful to hear what you had to say today. I very much look forward to our Q&A session, which we’ll have in a few weeks. So on behalf of the members, thanks for being here. 

Christian Banach [00:16:38] Thank you, Greg. It’s been a pleasure. 

Greg Alexander [00:16:40] All right. We got three calls to action. So if you’re a member, look for the meeting. Invite when you’ll get a chance to attend question session sessions and you can ask your questions directly. Even if you’re not a member and you want to become one, go to collective 54 dot com and apply and the membership committee will consider your application and get in contact with you. And if you just want to learn more, go to Amazon and find my book. It’s titled The Boutique How to Start Scale and Sell a Professional services Firm. When we talk about subjects like this and many more, okay, until next time, I wish you the best of luck as you try to grow, scale and exit your front.