As your boutique graduates from start-up to scale, business development needs to change. The primary difference is that at scale, firms have an established client roster. This means that they can generate revenue from existing clients. Start-ups spend their business development efforts exclusively on acquiring new clients. Scale firms split their time between acquiring new clients and developing existing clients. This ignites growth. Why? It is a lot easier to sell to existing clients.
How your scalable plan changes post-start-up
The cost to acquire new clients is expensive. It takes a long time. Start-up companies need to get in front of the new client. This requires a dedicated marketing push and time for word of mouth to spread. Articles must be published, speeches made, podcasts produced, books written and social media posts made. This wide net approach will catch a lot of fish that need to be sorted and qualified.
On top of this, RFPs require responses. Competitive bake-offs require decks to be created. Opportunities must be managed with care. Relationships need to be nurtured. Lots of miles get logged and many hotel beds get filled. References need to be contacted. I am exhausted just writing about it. All these activities take a consistent level of effort. This requires staff, time, and budget. It is very expensive.
Once you start scaling your business, this starts to change. True, a steady stream of new clients is necessary for a healthy scale boutique. However, these boutiques also count on repeat business from their existing customers. This revenue reduces the urgency of seeking out new customers. And it costs much less to generate; thus, it spikes profits. This blog will focus on generating revenue from existing clients. This is the scale activity.
How to make a business development plan work
To start creating a scalable plan, you need a budget. Scaling a business for growth requires a business development budget which should include both dollars and hours.
Here, dollars refers to the discretionary funds you will use to invest in your existing clients. Your hours are the non-billable time that your staff will invest in those existing clients. When scaling their business, many boutiques incorrectly assume that business from existing clients just happens. This is not true. These clients will require investment in time and money.
Case study: Energy efficiency inspection business
Let’s take a look at a hypothetical example to demonstrate scaling a business for growth. We’ll use the energy efficiency inspection industry as an example. A business in this industry provides energy audits for companies looking for a way to reduce their utility bills. The technicians from this energy efficiency business have been cross-trained in the firm’s business development process.
While delivering the work, they are listening for new opportunities. The technicians’ expense reports are heavily monitored. However, the goal is not to reduce expenses but to increase them.
The technicians need to make the client feel important. They should show up to every meeting with Starbucks for everyone. The technicians should act like team members, not salespeople. The clients trust the technicians because they are not salespeople. These technicians often point out needs that the client was unaware of. These leads fill the funnel. In some cases, they convert to billings instantly. The cost to acquire this type of business is very little.
Share of wallet
Boutiques are often horrified the first time they do a share of wallet exercise. This reveals how much of a client’s total spend is spent with you. Boutiques assume that they are getting 100 percent of a client’s business. They are not. Clients have new needs all the time. They give business to other firms without you even knowing about it. Why? They are unaware of your full capabilities. Unless something is seriously wrong with the relationship, this should be yours. Capturing this low-hanging fruit is a simple way to scale.
Building a scalable plan
Capturing this low-hanging fruit requires that you first ask yourself some questions. Which of your clients could give you additional business? How could you invest to capture this business? Which activities are you most likely to succeed at?
The solution to this problem is easily implemented. Start by doing a share of wallet exercise. This should include current and previous clients. This will produce a list of accounts you should invest in. Focus first on your current client roster. You have a team deployed there right now. Redesign your business development process to focus on identifying new opportunities.
Train your team on the new business development process and get them to find new opportunities with your existing clients. Afterward, continue your scalable plan by examining your previous clients. Nurture these relationships. Invest non-billable time in activities that these clients would value. Develop a business development process that is specific to those clients. Train a team in that business development process and task them with reactivating these dormant clients.
Boutiques should generate approximately 80% of their revenue from existing clients and 20% from new clients. If your numbers differ significantly, rethink your business development efforts.
How do I know when I’m ready to scale my business?
There’s no hard line that marks when you transition from a start-up to a scaled business. You don’t magically wake up one morning with enough clients that you can slow down your rate of client acquisition. The most important thing you can do is communicate constantly with current clients. You need to understand their business nearly as well as they do. You need to have a deep understanding of the role that your business plays in theirs.
Still uncertain? Then try taking this quick self-quiz below. If you answer “yes” to eight or more of these questions, then it might be time to consider yourself a scaling business and start focusing more on client development.
1. Are you generating a lot of business from existing clients?
2. Have you reduced your need for new clients substantially?
3. Do you understand your share of wallet for your current clients?
4. Are your current clients up to date on your full capabilities?
5. Are you investing non-billable hours directly into your existing clients?
6. Have you redesigned your business development process to prioritize existing clients?
7. Have you trained your employees on the new business development process?
8. Are your “delivery teams” given goals and measured on finding new opportunities?
9. Are the employees who are best at business development your cultural heroes?
10. Do you make sure that your current clients know how important they are to you?
Get the best scalable plan for your consulting business
Scaling your business will take hard work and patience. You need to make sure your business development process is flexible enough to grow over time, and that you have the right team members to support and help you thrive, no matter what challenges you take on.
For more insights into how to upscale your consulting business, listen to the Collective 54 podcast today or join our mastermind group.