Tag: growth

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How a Founder is Scaling Her Marketing Agency by Getting Prospects to Come to Her

Ali Schwanke
Ali Schwanke

Episode 77 – How a Founder is Scaling Her Marketing Agency by Getting Prospects to Come to Her – Member Case with Ali Schwanke

Invest in your marketing and let your customers come to you. In this podcast episode, we interviewed Ali Schwanke, CEO & Founder of Simple Strat, to share how this professional services firm elevated its inbound marketing strategy and improved win rates.

TRANSCRIPT

Greg Alexander [00:00:16] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community to help you grow, scale, and exit your firm bigger and faster. 

My name is Greg Alexander, and I’m the founder of Collective 54, and I’ll be your host today. Today we’re going to talk about defining a market. And let me set this up by suggesting why this is important. You know, many like to say, and I agree with this phrase, the riches are in the niches. And as founders of boutiques, our members have to pick the right market. It’s got to thread the needle a little bit. 

It’s got to be big enough to matter but small enough where you can dominate. So we’ve got a great role model with us today, someone who’s got some experience with this, and she’s willing to share her learnings with us. Her name is Ali Schwanke. And Ali, I would love it if you would give a proper introduction to the audience. 

Member Case Study: Ali Schwanke, Simple Strat

Ali Schwanke [00:01:19] Absolutely. Well, thanks, Greg, for being here. Yeah, as Greg said, I am Ali Schwanke, and I’m the founder of a business called Simple Strat. And we are a HubSpot consulting agency that started about six years ago. And we have worked with folks all over the nation in helping them get more out of their HubSpot instance, which is a marketing technology and software platform.

 And also increasing the effectiveness of their content on that platform once they get their bearings under them. So we’ve been doing that for the last six years, but myself, I’ve been in marketing for almost two decades now. 

Greg Alexander [00:01:51] Okay. And Ali, what’s a typical client look like for you? 

Ali Schwanke [00:01:56] Sure. So our clients that have the most success with us are between about five and 200 employees. And they have a strong propensity to grow efficiencies with their business. And they are primarily B2B because they have the need to track information inside of a technology platform and then eventually get the most out of the reporting and analytics that come with that function. 

Greg Alexander [00:02:18] Okay. Very good. So the reason why I wanted to speak to you this morning is I understand that you and your team have been redefining your target market a bit and yet that answer you just gave me was very crisp. You should be proud of that answer. That tells me that you really have given this some thought. 

You mentioned an employee count range, etc. So why don’t we start with what first made you think about maybe redefining your target client and redefining the market that you’re going to compete in? 

Scaling a Business: You Need to Define Your Target Client and Market

Ali Schwanke [00:02:48] Sure. Well, a lot of professional services firms and agencies are not excluded from this. They’re kind of like that  story of the E-Myth, where they have someone who’s really good at a craft, and they just start an agency or start a company. And you go from being able to do the work to thinking about building a company around the work. And once you do that as an agency, you realize that you are competing with everybody and their mother and their son who went to college for social media. 

And the word marketing is so vague, and I think it is for a lot of folks. So when we started saying initially, when Simple Strat started, we were going to focus primarily on helping folks with marketing strategy because there weren’t as many strategy firms out there. What I failed to realize at the time was that strategy is something that is not defined just by marketing. You’re now competing with firms that do business strategy and all these other things. 

So as the firm developed, we found a specific line of success in helping folks navigate HubSpot. And what we realized is, if we can get really, really good at that platform and know it better than any of our competitors and focus only on that platform, we have a competitive advantage of simply focus. And that focus allowed us to then narrow that target market to teams that really appreciate our expertise and have the value and a budget defined for engaging someone like us. 

Greg Alexander [00:04:11] Okay. So the path to getting to it towards this new focus of HubSpot, it sounds like, but I don’t want to put words in your mouth that you were looking at where you were having success and then said to yourself, maybe that’s where we should focus. Is that how it happened? 

Ali Schwanke [00:04:28] It did. I’ll say it happened in a little bit of a backward way. We said initially we became a HubSpot partner. There are lots and lots and lots of those out there. We did that about five years ago, and at the time, I think me and my inexperienced mind was thinking we become a partner. That’s our niche. And we go. 

Well, what happened is we did a lot of things to try and promote that partnership. And I’ll tell you, Greg, nobody cared. Nobody cared. So very similar to the story that you published in Chapter eight of the market when we started publishing content around our competitive advantage and demonstrating that expertise online, that’s when things changed for us and the focus became real. So it’s very interesting. I would do it all over again the same way. 

Greg Alexander [00:05:14] Yeah. So let’s talk about that a little bit, because it’s easy to fire up a spreadsheet and say, “Okay, so there’s 5000 companies to go after. And these are the vertical industries and the geographies and the job titles and the sizes that we want to focus on.” But sometimes, we often forget we have to figure out how we’re going to reach them. 

You know, there’s the TAM (total addressable market), and then there’s the percentage of that TAM that you can reach in boutiques like yours, like the one that I had, like our members. It’s not as if we have a 10,000-person salesforce that can go out and reach all these folks. 

So you started producing content and that content started getting out there. That was your reach. Instead of salespeople, you were using content as to extend your reach. And then that content was attracting people to you. That’s how it was working. Okay. Right. And that must be some great content because there’s a lot of content out there about inbound marketing in HubSpot, etc.. So how did you develop content that kind of penetrated the noise? 

How Simple Strat Brought Prospects to Their Firm Through Great Content

Ali Schwanke [00:06:26] Yeah, I think what we found is there was a lot of companies that are writing similar things. And to be frank, when you become a partner with HubSpot, they do their due diligence in helping you sort of build your business plan and your approach. But I’ll say that I’ve been in this long enough to see that at first they were encouraging you to be called an inbound agency, and then they were encouraging you to position yourself as a growth agency and now position yourself as a robot. 

Well, if you think about this, they’re telling all of their partners similar advice. And so great, we’re now in this sea of competing with each other in these same terms. And we did a little bit of analysis of the market of looking at this sort of unserved population. And that was there are a lot of things you can do in HubSpot, but the number of instances that I have seen where the first thing I say when I open up the portal is what’s going on in here. They don’t want to admit to their agency that they don’t know what they’re doing. 

And so we found if they can find content that’s very basic things like, here’s how to set up your lifecycle stages or, here’s how to have here’s how to do a portal audit. There was no content online for that because that is content you have to see. And we already had an advantage of being able to produce video tutorials. So we just leaned into that and that lesson was people, if they see your expertize online first, they trust you before you even make a sale. 

Greg Alexander [00:07:56] It’s so true. I mean, you just referenced one of the chapters in my book, and a book is a version of content marketing, and people read it. And if it resonates with them, they reach out to us and hopefully become a member. I mean, that’s how it works now. 

You mentioned video. I want to go there just a little bit because a lot of our members, I think, aren’t using video as well as they could. And these days, you know, people are consuming content on their phone. Video tends to lend itself really well to that, particularly short clips. So tell me a little bit about what you’re doing in the video bucket. 

Ali Schwanke [00:08:30] Yeah. So I’ll tell you what we did wrong first. I was a firm believer of video back when I started in 2016. I said, we need video. I hired a videographer. I had planned on selling video services to folks as well. And I’ll tell you, Greg, I think I made a whole $5,000 off of this video person. 

Mostly what they did is produce video for us. And in doing that, what I learned was two things. One, there’s two types of video. One is video that is thought out on how to do something. And then there’s video that’s entertaining and kind of what I would call rabbit hole video. You find yourself watching clips after clips, after clips. 

And so for us to go lean into that video piece was we learned that the video content that was out there, people were talking about themself a lot. They weren’t actually thinking about the viewer first. And so we said if we just create short to the point videos that were well-produced and highly searchable, I think we can win. 

So we put a small bet out. We put a certain amount of very, very low production value videos first and saw those succeed. And then we invested in a full channel and it was about six months until we saw that really kind of transact for us. But once we started getting traffic, then we started talking about how to convert the traffic.

 We didn’t  have this like grandiose thing all at once. We grew as we learned. And I think that’s one piece that makes a lot of folks nervous about video is they want to see results after two videos or three videos. And it’s a cumulative effect that we now dominate the YouTube channel for the search of HubSpot. 

Greg Alexander [00:10:00] Interesting. So a boutique like yours is the dominant player on YouTube. 

Ali Schwanke [00:10:06] If you type HubSpot into YouTube, my face will be on at least four or five of the ten results. 

Greg Alexander [00:10:12] No kidding. Wow. That’s quite an accomplishment. 

Ali Schwanke [00:10:15] At the moment. Like, let’s hope that that continues, right? 

Greg Alexander [00:10:18] Yeah. That’s a little bit of an arms race for sure. Yes. Okay. So you mentioned the next stage was learning how to convert once you started getting the traffic. And that’s a big component about defining your target market, which is what our subject is today. 

You know, sometimes we realize that we have to reach this large market and we’re going to do it through content marketing in all of its forms. And you throw the content out there and all of a sudden you start getting lots of inbound interest. But you’re catching the wrong fish. You can’t win. So how did you learn more about your target market based on what was coming to you in response to this content that you were creating? 

Scaling a Consulting Business: How Simple Strat Learned More About Its Target Market

Ali Schwanke [00:11:01] Yeah, I’m a big believer in constantly observing your audience in the way that they talk. So what a lot of teams I would  think miss when they’re looking at their total addressable market. So for instance, if I said I believe my total addressable market needs rev ops because that’s the buzzword right now. I will tell you in having conversations with sales and marketing leaders, rarely do I ever hear the word rev ops. 

And even right now, if I run a keyword search report on that, the volume is low. And that’s because it’s a word we use to describe it in the marketing industry. But the actual thing folks are looking for is, can I have a function that’s accountable for sales and marketing in my organization? So when we’re looking at the way that your total addressable market talks about their products and their needs and their pains, that’s the content to create. And then you have to sort through and say which one of those is closest to a sale? 

So in our case, if they’re having issues with their sales reporting, that’s a problem they’re looking at solving immediately. If they just want to figure out how to optimize their blogs better, that’s longer to revenue for them. And so they might not be willing to pay as much. So we focused on the content that you see immediate gain and then we’re continue like we have a next thing that we’re rolling out that helps address some of that stuff higher on the. 

Greg Alexander [00:12:23] So some of our listeners right now members are going to say, this is fascinating. I’ve never met anybody who can dominate the YouTube channel like Ali has. And it’s hard to do. And what I’m taking from our conversation is how incredibly focused you are on the client and how you’re outward in and everything you think about. 

That example of rev ops is a great one. I mean, that’s industry lingo, but the clients don’t use it. So it’s not valuable. It’s valuable to the other HubSpot partners, but it’s not valuable to the client. I have some members who say, “I don’t have time for this. You know, I’m super busy. I’m a young growing firm. And who’s got time to do this?” I’m sure your to do list is just as long as theirs. So why do you make time for it? 

Ali Schwanke [00:13:11] So I didn’t have a business that existed when we all saw each other a lot in person. Like, I definitely have been to conferences and I’ve networked and I’ve had a lot of success in that early in my career. But we now live in an environment where you don’t go to one master trade show a year and build all of your leads. We now live in a world where that’s happening every single day, and to say you don’t have time for that is like saying 25 years ago that I don’t have time to go to the largest trade show in my industry. 

And if you don’t have a mindset of value, you will not make time for it. But I will say if you do not create content based on what your audience finds valuable, and you talk a lot about this in the book and we talk about a lot about it in the Collective. If you do not create content based on what your audience is interested in and just what you want to say, it will not convert for you and you will have a failed experiment. 

Greg Alexander [00:14:04] And for those that say I don’t see a client spending thousands and thousands of dollars with me, that came through a social media channel like YouTube. What would your response be to that? 

Ali Schwanke [00:14:19] Sure. Some of this comes down to education of marketing and what it is and how it’s defined. I will say the majority of founders that I have worked with in the professional services industry, their initial perspective of marketing and marketing spend is what I would call direct response. Yeah, I have a coupon. I turn in coupon. I see that coupon led to sale B2B sales. And especially when you’re involving a human in their expertize, there is a high degree of trust. There is a lot. 

It’s actually not marketing at all. What you’re doing is psychologically driven and we are complex beings and we make decisions with our level of logic, which sometimes is zero and it’s all feeling. So if you make them feel that they’re learning things from you and trusting you, you can sell them sometimes whatever you want. That’s not a good practice, but once you gain that trust, then you are simply depositing additional coins in that bank that keeps that trust for a long time. 

Yeah, and that’s again, it’s a mindset. I will say conversion wise though, you do have to have a content offer that brings them value and actually shows a small piece of what you can actually do. It has to be tied to the overall value. And if it’s not, then it’s just a fancy download. 

Bringing Clients To Your Door When Scaling a Business: Knowing Them is Key

Greg Alexander [00:15:34] This has been a great conversation. And just to summarize, you know, Ali started and she had a really large definition of a market strategy which can mean a lot of things to a lot of people. And it was outside of her niche and then she narrowed that down by becoming a HubSpot partner. And then even within the HubSpot ecosystem, if you will, she got even tighter by focusing on a specific type of company to go after. 

And then really what I learned today, which was really fascinating, is the code that she’s cracked, if you will. She’s figured out how to reach this tightly defined market in a cost-effective way with a high conversion rate. And she’s doing that through content marketing, in particular on YouTube. And if you type in HubSpot into YouTube, I mean, she’s going to be the dominant provider there, which is quite a thing for sure. 

So, Ali, we’re at our time commitment here, but the way the Collective works is that we all contribute to the collective body of knowledge. You know, every time a member contributes, the other members benefit. And that’s the give and take nature of this. So on behalf of the membership, I want to thank you, because that was a big contribution. I learned a lot today. 

Ali Schwanke [00:16:42] Yeah, thank you. I have learned a lot from the Collective and I know other members have as well. So thank you for what you’re doing. 

Greg Alexander [00:16:48] And members I’m sure many of you are anxious to speak to Ali because if she’s doing this for her firm, she can probably do it for your firm. So feel free to reach out to her via the member portal and have a follow-up conversation with her. 

Okay. And for those that are interested in this topic and others like it, you can pick up a copy of our book, The Boutique: How to Start, Scale, and Sell Professional Services Firm. And for those that are listening to this and are not members and are interested in meeting fascinating people like Ali consider joining our mastermind community which you can find at Collective54.com. Thanks again, Ali. Take care. Ali Schwanke [00:17:24] Thank you.

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How a Consulting Firm Leverages Specialists to Increase Scale

Cynthia Klint
Cynthia Klint

Episode 75 – How a Consulting Firm Leverages Specialists to Increase Scale – Member Case with Cynthia Klint

The engagements you sell determine your market position and the team needed to deliver your service. In this episode, Cynthia Klint, CEO at BRC, shares how she leverages specialists to deliver client engagements and increase sales. 

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community to help you grow, scale, and exit your firm bigger and faster. 

My name is Greg Alexander. I’m the founder, and I’ll be your host today. And on this episode, we’re going to discuss engagement type and how that drives the type of firm you become. And we have a member with us today. Her name is Cynthia Klint. Cynthia and I are going to have a discussion regarding this subject. Cynthia, it’s good to see you. Thanks for being here. 

Cynthia Klint [00:00:52] Sure. Happy to be here. Thanks for inviting me. 

Greg Alexander [00:00:54] And would you provide a proper introduction of yourself and your firm to the audience, please? 

Scaling a Business: Member Case with Biodynamic Research

Cynthia Klint [00:01:00] Sure. As you said, my name is Cynthia Klint. The company that I work for goes by BRC, but the long name is Biodynamic Research. We’ve been in business for about 36 years. I’ve been with the company for 23 of those years. And what we do is we help people understand how injuries happen. And we do that by answering two questions, primarily in a litigation setting. The first question is, did an injury occur, and if so, how? 

Greg Alexander [00:01:29] Wow. That’s a fascinating field. I can imagine the litigation services around that for sure. I hope no one’s ever asking me that question. I hope I never say yes that an injury occurred. 

Cynthia Klint [00:01:41] When people say they haven’t heard of us, I always tell them that they should be glad. It means they’ve probably never been in an accident that required litigation. 

Greg Alexander [00:01:50] Alright. So for context, who is the typical client? 

Cynthia Klint [00:01:57] Primarily, our clients are attorneys. Okay. Although we do work directly from time to time for individuals or insurance companies. 

What Are the Types of Engagements When Scaling a Consulting Firm?

Greg Alexander [00:02:05] Okay. Got it. Okay. So let me set up today’s conversation. Generally speaking, and I admit I am oversimplifying here, but in the time that we have, that’ll work. There’s kind of two types of engagement. 

There’s what I call elephant hunting, and that is a really big engagement. And, you know, they could they could last months, if not years, and cost hundreds of thousands, if not millions of dollars. And firms that have those types of engagements tend to have, relatively speaking, a smaller number of clients. But each client spends a lot of money, and that’s one style of firm. 

In contrast, theother type of firm, which I call rabbit hunters, are firms that do small, quick, inexpensive engagements. But, they do them in volume. And they tend to have lots and lots and lots of clients, but each client only spends a little. 

And the important thing here is to understand what type of engagements you’re selling and, therefore, what type of company you’re becoming. Because in the end, we become who we serve. And I would suggest that scaling a business is easier when you pick one or the other, and it becomes more difficult when you try to do both. 

I’m not saying one is better than the other. I’m just advocating for picking one over the other. So, Cynthia, given my oversimplification, if I was to force you to put yourself in one of those two categories, which category you in? 

Cynthia Klint [00:03:41] It’s a really tough question to answer. And like several members has said that the yes/no is a tough question. I’m you know, I thought about this a lot. I went back and reread the chapter. And if I had to be forced to pick, I would say we’re more like the rabbit. Okay. The both of our cases tend to be quicker turn, lower revenue. But quite frankly, we’re a combination of the two. 

Greg Alexander [00:04:12] You are. Okay. And and that’s okay. I mean, you’ve been in business for 36 years. Obviously, it’s working. Right. So if you have both styles in the firm. Is it true or false that it is  difficult to manage and difficult to scale? 

Cynthia Klint [00:04:35] It is true. I think it certainly complicates the way that you manage the different clients and the way that you manage the logistics in supporting those different clients. 

Greg Alexander [00:04:49] Yeah, and that’s the real challenge, right, because… 

Cynthia Klint [00:04:51] Absolutely. 

Greg Alexander [00:04:52] You have to staff these projects, right? And and it’s a different staffing model, usually in the rabbit space, if you will. A single person might have many, many, many clients. So therefore, he or she is only spending so much time with each client. It’s just mathematics. 

On the other side of it, you know, if you’re in the elephant business, you might have one or two clients and you’re spending a ton of time with those one or two clients. So when you say logistically, it’s difficult to manage, is that what you’re referring to? Are there other logistical items? 

What Difficulties Can You Face With These Engagement Types?

Cynthia Klint [00:05:27] So in litigation, you’re probably familiar that, you know, litigation can drag out for a really long time. And most cases, I would say the desire is to move toward some sort of settlement. And that’s why I say that the bulk of what we do is is really the smaller cases or the quick return cases. 

Logistically, what’s difficult is really maintaining the ability to manage the longer term cases because like you said, we have some cases that literally have been our books on our books for 20 years. But most of them are shorter. 

And one of the things that’s happened in litigation is there’s a push toward a quicker turnaround. And that’s something that we’re really working toward being able to manage because you have to staff or have processes that support. The same client can bring you a rabbit case and an elephant case. 

Greg Alexander [00:06:30] Oh, really? 

Cynthia Klint [00:06:31] And so the thing is, you want to be able to say yes, regardless of the turnaround time. When they come to us, it’s because they need our help. They need us to help clarify what’s happening. Yeah. And so we want to be able to do that objectively, accurately, but we sometimes need to be able to do that quickly. 

So, from a logistics standpoint, it’s about the processes, the staffing, and calendar management. We’re driven by court deadlines. So our deadlines are very much on the outside. And so we have to be in lockstep with our client to make sure that we can meet the deadlines that they’re really subject to. Does that answer your question?

Greg Alexander [00:07:17] In fact, I have several follow up questions, if I may. So now I know why you have both because you have one client that can bring you two scenarios. And I mean, what are you going to do? Tell that client no. Of course not. Right. 

So you have to be responsive to that client’s individual needs. So my follow-up question would be: Does the client understand that what he or she is asking for is two different things? And is he accommodating, or do you have to educate? 

Cynthia Klint [00:07:47] So again, I hate to sound like a lawyer, but yes and no, because they do understand. But oftentimes our clients are under the gun as well. And so they may understand, but it doesn’t change the fact that they need us to help them in that situation. 

And so they often are very accommodating. They work with us. They do their best to create timelines that make it possible for us to do a thorough job, which is something we always want to do and always strive to do. So, they do understand. They do work with us, but sometimes they have no control over that deadline. 

And so, you know, we are here to provide the best answers that we can, not necessarily the answers that they want, but the best answers that we can with the time and the information that we’re provided. Right. 

Greg Alexander [00:08:41] You know, for the listeners, this is a very unusual case. And I’m so glad that we’re on the call today because it’s a rich learning experience. Normally, in normal situations, it’s much easier because there’s a certain type of client, maybe a Fortune 500 company, and they’re only going to do the big projects. And then there’s another type of client, the small business, and they can do small projects. 

And in Cynthia’s case, it’s one client with two different needs. And what makes it even more complicated is that the timeline is dictated by the court’s deadline. It’s not dictated by the project team, and it’s not dictated by the client. It’s dictated by an independent third party. 

And boy, I would imagine that makes it rather stressful. Like, does the working backward from that timeline and that deadline being outside of your control, how do you scope work? 

Scaling a Consulting Firm: How Does Biodyancmic Research Scope Work?

Cynthia Klint [00:09:31] Well, being in business this long, we’ve gotten pretty good at it. So, you know, there’s several components that go into our work product. So ultimately, the work product is the objective opinion of the expert. You know, we employ physicians with engineering degrees as well as accident reconstructionists who are engineers. And so, again, their goal is to understand what happened not only in the accident or in the incident, but what happened to the person. 

And so we’re getting different kinds of materials, legal documents, medical documents. You know, sometimes if there’s a product involved, we may be getting product information. And so what we’ve done is, is really the model that Collective 54 promotes, which is leveraging. 

We have specialists in each of those areas, and so we have nurses who will go through and organize the medical records to make it more efficient for the experts. We have paralegals, so that do the same thing with legal documents and so forth. So scoping, it really is about understanding the volume of the materials and then being able to apply our experience, knowledge, and determine for the client what our timeline looks like. 

And it can be variable because if you have something that, for example, if you have a case with a long medical history, you can have thousands and thousands of pages of medical records that have to be dealt with. And so, our goal is to take our experience and really apply it to that and give the client an understanding of what the timeline can be and what the cost may be as it relates to that. 

How This Consulting Firm Matches Revenue with Expenses

Greg Alexander [00:11:09] Now, with this group of specialists; paralegals, the nurses, the engineers, it’s a fascinating story. I had no idea this existed. It’s really intriguing. Well, maybe I have another question. I was going to ask, How do you match revenue with expenses? 

Because the way it normally works in pro serve is you get a project and it’s worth X amount of dollars. You staff it and that’s your cost and the deltas, your profit. Do you know what the revenue is or are you waiting for the settlement? How does it work? 

Cynthia Klint [00:11:44] So that’s a great question, Greg. We are not on a contingency basis because we are objective. So we’re hired to look at something very objectively. And it is irrespective of the outcome. So we don’t really have a dog in the fight, so to speak. 

Our job is to come in and really give insight and clarity and educate the client as to what happened so that they can make a decision on how to proceed with their case. And sometimes the answer is not what a client may want to hear. And it’s still our job to share that information because that’s helpful information as they make decisions. 

Greg Alexander [00:12:19] Right. 

Cynthia Klint [00:12:20] So the way that the revenue is, we build time and materials  and so we will bill on a monthly basis. 

Greg Alexander [00:12:29] And with these specialists  I mentioned, the nurses and engineers. What was the third one I mentioned?. Paralegals. Excuse me. Are they, you know, I think in senior, mid-level and junior staff and I think about associated cost and rates for that, is it that simple or is it more complicated in your scenario? 

Cynthia Klint [00:12:50] So it actually has several more layers than what you’ve described. So we have our physicians with engineering degrees and that’s really \the most client facing role. So that is the expert that the client is hiring. And so they are the person who is providing consultation and giving an opinion and that kind of thing. 

In that role, they’re acting as what we call biomechanics. So what happened to the person? We also have the engineers and those we have various levels of. Let me back up. The physicians, we have various levels based on experience. One of the big components in an expert’s career is obtaining experience in a testifying situation. 

So giving an opinion is one component, but testifying is another component. And the more senior you become, the more testifying history you build, the more in demand you are. Because you’ve proven that not only can you come up with an objective opinion, but you can communicate that to a jury, a judge or a client. And so the more senior you are, you have a higher billing rate. 

And then we have that same model in our engineering group. Same thing. So the engineers are looking at the vehicle dynamics. So not so much the application of the forces to the body, but more how does the vehicle move? How do the forces apply to the body? And so we have different levels there. 

The staff, the support staff, the paralegals, the nurses, other groups that we have that support. We have a technical librarian and we have a test facility. We have a group that we call the Technical Resource Group. So all of these work in support of these two groups, the physician, and the engineer. And they’re all at a fixed rate by department. 

Greg Alexander [00:14:42] Okay. And that’s how you drive your leverage model. Is through those tiers? 

Cynthia Klint [00:14:49] Yes, absolutely. And the goal is always to get the client the opinion in a way that is least costly to them. Yeah. Because you have a physician at their billing, right. Organizing all the materials. But that doesn’t seem like a very good use of their time or cost. 

Scaling a Business: Engagement Type Determines the Type of Firm You Are

Greg Alexander [00:15:07] Right. Very good. Yeah. Okay. Well, very good. Well, let’s conclude here. So today we were talking about how the type of engagement you market and deliver determines the type of firm you are. And we had a very real case here because it’s not as black and white as we would want it to be. And Cynthia’s thought about this a lot. 

And what I find fascinating about her case as even though it’s a blend, they have figured out a leverage model and they’ve done it through two things: specializing their labor force and working backwards from the client’s need so that they get the client what they need with the right level of investment and money and time. 

This is a really interesting case and I’m not surprised your firm has been around as long as you have. That’s a really specialized service. So, Cynthia, thank you for being on the show. It was, it was wonderful to have you here. 

Cynthia Klint [00:16:01] Thanks. Thanks for having me. 

Greg Alexander [00:16:03] Okay. And for those that are interested in this topic, the engagement type and those like it can pick up a copy of the book, The Boutique: How to Start Scale and Sell A Professional Services Firm. You can also find it on Amazon. I’m proud to say we just hit number one in our little niche category. 

And then for those that are interested in meeting leaders of professional services firms like Cynthia, consider joining our mastermind community, it’s collective54.com. Thank you. And Cynthia, have a good rest of your day. Okay. 

Cynthia Klint [00:16:33] Thanks so much. Greg Alexander [00:16:34] All right. Bye bye.

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Episode 68 – How to Disrupt a Large Market with an Innovative Service – Member Case with Scott Conard

The service offering is how firms deliver value to their client. Designing it correctly is mission-critical. On this episode, we discuss how to re-think service design by interviewing Scott Conard, Founder of Converging Health. 

TRANSCRIPT

Greg Alexander [00:00:14] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that don’t know us, Collective 54 is the first mastermind community to help you grow, scale and exit from bigger and faster. My name is Greg Alexander. I’m the founder, and today I’ll be your host. And on this episode, I have the pleasure to talk to Dr. Scott Conard. And today we’re going to talk about how to apply innovation to your service offering. And Dr. Scott’s got a great story around that. So welcome. Thanks for being on the show. And would you please provide an introduction about yourself in your firm to the audience? 

Scott Conard [00:00:55] Yeah, thank you, Greg. My name’s Scott Conard, a firm is converging health, we’ve been in business for the last seven years and we do it consulting for broker consultants and directly to corporations to help them decrease the cost and increase the value. 

Greg Alexander [00:01:17] So, Scott, one of the things that the reason why I want to talk to you about this particular subject is that you’re going after a big problem, which I’m not going to do it justice, but the cost of health care for lack of a more precise term. And you’ve been able to combine three interesting things, in my opinion, and I’d like you to explain this because there’s a point in all this and that is obviously human capital expertize technology and data to bring an innovative solution to market. So would you would you explain to everybody about what your solution is and what it does? 

Scott Conard [00:01:53] Absolutely. So, Greg, probably the best way that they can those listening can relate to it is every year when you get your health benefit bill and they say, Oh, it’s going to be five, 10, 15 this year could be 15 to 25 percent more than it was last year, which honestly for manufacturing and service companies could destroy their bottom line. And in fact, it has destroyed some companies. Bottom line. There’s this primordial scream. We’ve got to do this different. We’ve got to do it better. And I remember experiencing that back in the 90s when they would bring you my bill of the year. So what’s happened is that the health care industry has become 20 percent of the GDP. It’s gotten incredibly complicated. Only 30 percent of the money that’s paid into health care is actually paid for care. The other 70 percent is middlemen in some way, shape or form or fraud, waste and abuse. And so to get access to this and to understand what’s actually happening to your money, you’ve got to have technology, you’ve got to have the ability to analyze and look at how your money is being spent, which requires data analysis. So being a doctor, having grown up in this environment, seeing all these perversions of what should be, you know, an employer paying money to get the employees in their family members excellent care. I developed an IP platform that takes the claims, pharmacy and eligibility and zeroes in on what companies are paying. And in elucidates, where they’re being taken advantage of and what they can do to decrease their costs. So it’s it’s a minimal human capital, but you have to have human capital to go do the evaluation, but then technology and data to reveal what’s going on. 

Greg Alexander [00:03:35] It’s fascinating. And I mean, when I hear those statistics on, you know, 15 to 20 percent price increases in a small percentage of it actually go into care. I mean, I literally want to get sick when I hear those things. But you’re right. I mean, I’m experiencing that myself, and it’s incredibly frustrating. So to me, this is an opportunity to disrupt a legacy industry and do something better, faster and cheaper than what is being done today. And I believe that you’re a disruptor, and that’s why I wanted to have you on the show. And very often people don’t put the word innovation or disruption into the service bucket. You know, they want to talk about, you know, Elon Musk and Jeff Bezos or somebody like that. But here you are innovating in a very real way, in a very disruptive way. What how did you get to this point? Because some of our members, they want to do this, but they don’t even know where to start. They think it’s so daunting that they they kind of give up on it. So what led you to this point? 

Scott Conard [00:04:34] Well, Greg, the thing is, to be honest, I mean, I’m a family doctor, I’m practicing medicine, I’m watching the industrial medical industrial complex put barrier after barrier and barrier in front of me is a doctor trying to care for people, and I’m seeing the price go up higher and higher and higher for the people paying for it. It doesn’t make any sense. So for me, I started to dove into being a businessman and entrepreneur. I’m like, Well, wait a minute, this is crazy. There’s got to be a way to dissect this and understand it. And so my career was practicing medicine, becoming frustrated, building a group, trying to get leverage. That group got as big as 500 doctors at one time and still getting an appointment with, you know, Blue Cross, Aetna, Sydney UnitedHealthcare was difficult. We were doing $500 million of the business and they wouldn’t talk to me. But when that sold and I became the chief medical officer of a mid-size broker firm all of a sudden I could get their attention and they’d come talk to me. And and so I realize now I was buying a couple of billion dollars worth of health care for the corporation. So I, you know, started off as a doctor who figured out what to do. Then I was a leader of the physician group and figured out how traumatic the the system was on doctors, both personally and trying to manage them, and then realized that the broker consultant world has tremendous leverage if they will use it properly. And corporations through the broker consultant can do it. But unfortunately, the sophistication of health care has left behind the, I don’t say, intellectual building. There’s a lot of very smart people and brokerage consulting firms, but their model is very relational. You know, let’s go play golf, let’s go to the club. Gosh, I love you, man. You’re my best friend. They’re going to have social IQs that are off the wall, emotional IQs that are really strong, but the analytics, scientific exploration they’ve had in their past, let’s just say there’s not that high. So the broker consultant world has gotten left behind, and so they’ve turned to these really strange perversions to increase their bottom line. And that’s where we’re at today. So you’ve got these big brokerage houses. I give you an example, Greg, we just heard about last week is another example of the hundreds I’ve already known about. So these big consulting firms will say, Hey, if you want a transparency company or if you want a second opinion company, here are the three we recommend. And little do both companies realize, but they make those three companies pay them a quarter of a million dollars to be on that list. Wow. And then when the bid comes through for those services, guess what? They’re raised to cover the broker consultants, you know, firms, you know, writer kicker, if you will, and the broker consultant firm that is supposed to be representing the company and protecting the company is actually getting these other flows of income that have nothing to do with defending the company. 

Greg Alexander [00:07:45] I mean, it sounds like an incredible conflict of interest. Is that is it even legal? 

Scott Conard [00:07:51] That’s the rule. Now, it’s not the exception, whether it’s insurance companies, you know, again, we could go through 50 examples for how insurance companies are doing very similar things to to find revenue inside the flow. And the amazing thing is they won’t give people their data to look at it frequently, so they won’t even let you see what’s going on. The broker consultants, some of them are pure consultants where they actually take a fee and they will not take these, you know, the the broker part of. It’s where you get a lot of these perverse incentives, not the consultant side. So you can be very sure that you need to be careful about that. And then you know, you’ve got all the other middlemen, all these vendors point solutions. Literally billions of dollars of quote unquote innovation health care, which actually at the end of the day ends up being additional fees to corporations. And that’s why the non medical part of this has gotten so large. Hmm. 

Greg Alexander [00:08:52] OK, so your innovative solution, particularly in the data side, does what exactly? 

Scott Conard [00:09:01] Very simply, we look at the contracts for a corporation with these different than, you know, the PBM. The insurance company and other contracts that are there and understand the flow of money, follow the money, you’ll figure it out. So we understand the flow of money. That’s my that’s the people I work with. They’re the the people who are more the. It will be divided into eight principles on each side. So they have the each side that is the contractual and the fixed cost side of it. I do the clinical evaluation to see are the people receiving good care? Do they have access to excellent providers? Are they using those providers? And are the incentives in the system set up so that they encourage people to engage in their health and to get taken care of? Or what we see more often than not now is if you actually lean into trying to take care of yourself, you end up getting hit with the big bills repetitively. And so people withdraw from care and then they have things go a long time before they get intervened on. And then it’s very severe and very expensive. So I’m the clinician that’s looking at everything. We have the contractual fixed cost side that looks at everything, and we put that together and come back to the company and say, Here’s what’s working. Here’s what’s not working. Here’s what you can do about it. And. I would say that 90 percent of the time, maybe 95 percent of the time, there’s 10 percent of what a company’s paying that can be fixed within the next enrollment period or the next cycle. You can get rid of 10 percent of costs with the clinical side of it. That takes a little longer within two years, two and a half years. You’re talking about another 10 percent of costs that can be removed, so you can think about the fact the average company is spending 10000 to 12000 dollars right now for their health benefits. And we are able to save 2000 of the 10000 over the next two years. It’s a tremendous value per employee. Yeah, that’s per employee. 

Greg Alexander [00:11:08] Yeah. I mean, that adds up in a hurry. That’s a big number. OK, so 

Scott Conard [00:11:12] straight to the bottom line. So. 

Greg Alexander [00:11:14] Yeah, exactly. OK, so obviously incredibly innovative thing combination again of expertize data tech to go after this big, big, big problem in trying to disrupt it when taking something that innovative to market and calling on the end customer in this case, the big corporation. Are they? Is there a big kind of evangelism or education that needs to be done or do they get it right away? 

Scott Conard [00:11:42] No, well, the thing is, if you were to this is this is the catch 22. If you were to meet with the CEO and CFO and you were to share what’s happening, how to figure it out, it’d be a relatively quick meeting. What happens, though, is they delegate everything to H.R. and H.R.. Folks appreciate them. But they are not part of the C-suite. They do not get rewarded for innovation. They do not get rewarded for taking any chances. And so you get a lot of literally the first question I usually get is what is everybody else doing? How many clients do you have and who are they? Because they’re more concerned about job preservation than they are actually doing what’s right for the corporation? So you have to literally the CFO wants to save money just as hard as they can. The H.R. wants to be no disruption, and the CEO wants to be very popular and make as much money as possible. But what happens to me frequently I will be with the CEO or CFO. They’re like, We got to do this. They delegated me to the H.R. and you can never get it over the finish line, like no matter how hard the CEO or CFO told them to do it. It’s not the business they’re in. But most companies don’t realize they’re running a health care business inside their business. 

Greg Alexander [00:13:00] Yeah, it certainly sounds manageable. 

Scott Conard [00:13:03] Yeah. 

Greg Alexander [00:13:04] OK, now you’ve had some success. I know it’s whenever you’re bringing an innovation like this to market, there’s lots of obstacles to overcome in walls to run through. But share with the audience a little bit about, you know, the early adopters or the innovators that you’ve been able to sell to. And and where does a firm stand right now? 

Scott Conard [00:13:22] Okay. So we have about 40 companies that we’re working with. We’re working with a number of broker consulting firms. So the converging health is providing the clinical and IT support for a number of consulting firms, one in particular. And so we, you know, our growth, we’ve been 30 to 40 percent growth over the last two years covered really, as you can imagine, took some wind out of our sails. We thought we’d be 40, 50 percent growth two years ago and go up from there. What we find is once we start working with somebody, we have incredibly high retention and they gel and there were other people. So it’s very much growing dramatically as we get in and get things going. So right now, we’ve got about 40 companies. We are the thing that’s fascinating to me, Greg, is we started off thinking, I’m going to serve self-insured companies in the mid-market where I get a YPO type leader who’s able to make decisions and we’re not delegated and we can make things happen. And that’s the segment that I’ve been focused on. Believe it or not, I just got hired by a huge health care system in New York City, and because they said, what you’re doing is going to help us with our Medicare and Medicaid risk contracts. And so now I have a contract for one hundred and seventy seven thousand lives that the same I.T. analytics is serving. They have a captive of smaller companies that has hired us, that we’re doing that we’re doing their I.T. analytics. And so what’s happening is that, believe it or not, the amount of pain, even at ten to twelve thousand dollars per employee that corporations are serving, they’re not willing to spend the energy to get it done frequently, even 40 of them. But that that’s a we would like to be 400 or 4000 and in other segments are coming to us and saying what you’re doing matters and it makes a big difference. So the federal government right now is forcing hospital systems to take financial risks for Medicare and Medicaid, and they’re like, Holy cow, we’ve got to figure out how to have people be healthy and spend less money and your system does that. And so it’s an interesting life for me right now because those with whom I thought I would be serving, I think what’s going to happen is this year when they get told, Hey, it’s going to be 15 percent, 25 percent more next year for health insurance, they’ll they’ll, you know, there’ll be a premier, you’ll scream and maybe another 40 or 50 will come on board and at some point in the next three years, this is just so unsustainable that the marketplace is going to there’s going to be ready to act and not just hear about it, get excited about it delegated and then come back a year later and say, Yeah, we should have done that. Yep. 

Greg Alexander [00:16:00] So, audience member, there’s there’s a lesson here that I want to underline through. Scott’s a fantastic example when you truly are innovative and he has and you’re going after really large problem, which he is, you got to hang in there because sometimes the original assumptions proved to be incorrect and there’s new things that happen that represent wonderful opportunities, as we just heard with the federal government. So the lesson here is to remind ourselves on the adoption curve and the great Jeffrey Moore once wrote about the adoption curve. And I’ll briefly summarize it here think of a bell curve, and whenever an innovation hits the market in the first place, it goes is the innovators meaning. And customers who like to be first. And they are willing to take a risk and experiment. Then it moves past innovators to the early adopter community, and these are people who also like to be early but not necessarily on the bleeding edge, but they see such a tremendous win that they’re willing to take a chance. Then once you get solidified in that group, you make it to the mainstream market and then that’s when all the great things happen. And that early majority and that mainstream market is when things really kick into gear. So if you want to be an innovator, as Scott is, you’ve got to make it through those cycles. And the way you do that is you just listen, you push as hard as you can into the market and you let a thousand flowers bloom because you never know where it’s going to take you. And that’s what it means to be an innovator. And so there are audience members who are trying to innovate their firms and disrupt other firms, larger firms and go after big giant problems, which as a percentage of our group, you got to hang in there as you go through those stages. And hopefully you’re hearing from Dr. Scott today an inspiring story. I mean, he got to 40 companies, right? That’s a lot. You know, sometimes early firms get to one or two or three or four, and they don’t get past that very substantial. And now he’s got this new Wonderful Market segment to go after. Given the recent success story of New York. So, Scott, thanks for sharing your story. Today was inspirational. Every time I talk to you, I find myself rooting for you, and I hope that you keep pushing and you and you make it happen. And I hope those that are listening to this are inspired with by what what you’re trying to do. 

Scott Conard [00:18:16] Well, Greg, thanks so much. Know anybody listening to this. We do a free 30 day assessment where we take your contracts. We take your reports from Blue Cross United Cigna from last year. We do a bunch of work and then we come back and educate you. And it may not be the first year that you get that that you engage with. There’ll be a moment where you go, Thank God, I talk to them and I know and understand what’s going on, because that made us an additional $2 million on the bottom line, particularly when you sell and you get a multiple of five to 12. There’s no reason to be decreasing your EBITDA because you’re paying too much for health care. 

Greg Alexander [00:18:52] So somebody that wants to take you up on that offer, how do they how do they get it? 

Scott Conard [00:18:58] [email protected], just say, Hey, I want an assessment done and we’ll reach out to you. We’ll get it done. I have a team around me that that does the basic work and that I lean in and have the final meeting with you that we’ll show you and educate you at what’s going on. 

Greg Alexander [00:19:13] OK, awesome. OK, so for those that are interested in this subject and others like it growing and scaling a firm, check out the book The Boutique How to Start, Scale and Sell a professional services firm. You can find it on Amazon. And for those that want to meet really interesting people like Scott, consider joining our mastermind community. You can find it at Collective 54.com. Scott, thanks again and enjoy the rest of the conference, and hopefully I’ll see you soon. 

Scott Conard [00:19:42] Yeah, Greg, it’s been great being a part of Collective 54, it’s added so much to our corporation. I’d really encourage everybody hearing this to think about it and join. 
Greg Alexander [00:19:50] Hey, thanks for saying that. I appreciate it. Be good.

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Episode 65 – The Go-To-Market: How to Market and Sell Like a Pro – Member Case with Dan Bernoske

Founders of boutique professional services firms can increase their rate of growth by professionalizing their marketing and sales approach. On this episode, we will discuss how by interviewing Dan Bernoske of Cortado Group.



TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that don’t know us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. I’m Greg Alexander, the founder of the place. And today I’m going to be your host. And joining me is a long time friend and member, Dan Bernoske. And today we’re going to talk about sales and marketing and go to market for your professional services firm. So, Dan, good to see you. 

 

Dan Bernoske [00:00:49] Good to see you, too. Good morning. 

 

Greg Alexander [00:00:51] If you would not mind, could you introduce yourself and your firm to the group? 

Dan Bernoske [00:00:57] Sure. Yeah, I am. Dan Bernoske, the founder of the Cortado Group and we are a boutique consultancy serving companies that are owned by private equity firms. 

Greg Alexander [00:01:09] OK, very good. So, Dan, today we’re going to talk about sales and marketing specific to boutique professional services firms, in other words, how you take your services to market. And given that this is what you do for your clients. I would imagine you’re an expert and doing it for yourself. So I’m going to ask you a few questions, and they’re meant to just kind of stimulate thought and get the conversation going. So the first thing I want to talk to you about is that you have a close rate of 65 percent, which is incredible. And that number says and means a lot of things, and I’m not sure our membership is tracking close rate as diligently as they should and when they do track it and they have the number how to interpret the number. So first, tell the audience how you got to 65 percent and then interpret that number for us. 

 

Dan Bernoske [00:02:04] Well, I mean, the first thing is targeting the right, the right companies. It’s starting out with the ideal customer profile or client profile keeps us super super laser focused on calling on the right accounts. That’s probably the biggest contributor. And then, Greg, you know, buyer personas. OK, so there’s one thing to get into the right company, but a whole other thing to be talking the right person, the decision maker. So those two things combined contributed to that. 

Greg Alexander [00:02:37] Yup. And what I love about that is that, you know, people like yourself that are running these high growth boutique professional services firms. We’re resource constrained. There’s only so many hours and day, so only so many people on the teams, only so many, so much money in the bank account. So if we’re wasting our resources by not being as targeted as Dan is or are is, I guess is the way you would say that, then you know, you’re closer. It’s going to be 20, 30 percent. And sometimes people think that’s good. It’s not good because what that means, let’s say closer rates 30 percent. That means you’re losing seven out of 10 times. So think about all the effort associated in those pursuits and you’re losing seven out of 10 times. It’s just eliminate that and you’re going to recapture all those resources. Now, I advocate Dan, that the close rate should be 50 percent, and I would I would suggest that 65 is too high, which sounds almost counterintuitive. Like why? I mean, maybe closer. It should be 100 percent. But when I hit 65 percent, I think maybe you’re not in enough deals or, you know, charging enough for your services. So what do you think about the 65 percent number and how do you interpret that? 

 

Dan Bernoske [00:03:47] This is so glad you brought it up, and that is a huge debate for us around one of the points of pricing. So are we pricing ourselves? We’re trying to weigh the balance of not pricing ourselves out of our target market. I mean, I’m going toward the small and mid-market company. So weighing that balance, so I suspect maybe we’re price people too low and then we may be, you know, the other thing driving is maybe our ICP is a little too tight. So to your point that if we’re not getting into enough deals, are we constricting ourselves from other opportunities if we’re just not seeing. 

 

Greg Alexander [00:04:25] Yeah, and you’re right, and that’s how you interpret that number, so there is such a thing as a close rate being too good because again, that might be restricting your market opportunity. So the most important thing is what we’re learning from this is to really be super crystal clear on two things that Dan is teaching us today. Number one, who the ideal client profile is. And I know right now everybody’s rolling their eyes in the back of the head because they say, I hear this from Greg all the time. Yet many of us still don’t have that done correctly, and that’s a dynamic document, not a static document. It changes over time as your firm evolves. And then secondly, once you pick the clients who want to go after, who’s the individual or group of people in those accounts that you want to sell to? And Dan, in your case, you’re selling sales and marketing effectiveness improvement. So are you selling to the CMO or the head of sales or who are you selling to? 

 

Dan Bernoske [00:05:18] Yeah. If we were up in the enterprise, that’s exactly where we would be great. But we sell to companies. So our ICP the ideal client profile 10 to 500 million in size earned by private equity. So we’re selling to we’re selling to the private equity operating partners and the CEO level like that’s that’s really our sweet spot. 

 

Greg Alexander [00:05:40] OK, so let’s apply this concept of buyer personas to to those two particular individuals and operating partner in a shop and a CEO of a portico. So first, there might be some folks listening that don’t know what a buyer persona is. So give us a quick definition of that. 

 

Dan Bernoske [00:05:56] Well, think of it as a fictitious representation of your buyer. And what does that mean? That means I’m going to know how are they motivated to do their job right? What are the obstacles standing in their way of doing their job? How are our success measured? There’s a whole bunch of things that go into that, but you need to get this psychographic profile of your buyer. So you really understand how they think and how they act. Yeah. 

 

Greg Alexander [00:06:20] OK, perfect. All right. So let’s start with the first one. The CEO of the Port Co. So maybe give us two or three things that you know about that buyer persona as an illustration or an example of what what should be on a buyer persona? 

 

Dan Bernoske [00:06:37] Well, first of all, they have their piggybacks, so we know that they’re going to want to exit in three to five years. So that maximum exit valuation, huge objective. 

 

Greg Alexander [00:06:48] OK, so let’s stop there, because that’s a great one. So you know that this CEO is the CEO of a portico owned by PE, which means are selling in three to five years. So his motivation is to get to that successful exit, correct? Oh, absolutely. Okay. So then when are positioning your services just to connect the dots here for the audience? You’re connecting it to that priority, that goal. 

 

Dan Bernoske [00:07:13] Absolutely. You know, it’s going to resonate with it’s going to mean something. 

 

Greg Alexander [00:07:17] So so how do you do that? 

 

Dan Bernoske [00:07:20] Well, we do that like how we actually execute has on multiple levels, but let’s just take the the proposal. Yeah. Is that what you mean? Yes, exactly. Yes. Yeah. I mean, if you think about how we frame up our solution, it has to really satisfy that, that objective for him. So all of our solutions have to point in that direction. So for example, yeah, we’re going to help improve the revenue on your company. But what we’d like to do is show a case study that demonstrates the fact that in three to five years, the lift that we’re going to provide today is actually going to lead to a two or three x multiple on their on their exit, for example. So always, always tying everything back to that, that objective there. 

 

Greg Alexander [00:08:06] That’s a great example. I mean, that’s a that’s a built in cost justification for your project. You know, you’re putting you put a proposal on the table and then instead of just leaving it in isolation, you connected to this objective. And you say, if we’re successful with this project, here’s what it means to you in dollars and cents expressed as a multiple and even though correct? 

 

Dan Bernoske [00:08:26] Yeah, absolutely. Yeah, absolutely. You know, kind of get to go on a rabbit hole here. But it highlights the fact that when we think about go to market, I think there’s a long overlooked tool and that is the proposal is actually your most important piece of marketing and sales material. I’ve got a website, fabulous research reports, but the rubber meets the road on this proposal. So all the more reason why it has to speak to that percent of that objective? 

 

Greg Alexander [00:08:57] Yeah, yeah. And sometimes these proposals are kind of template sized or they don’t put the firm’s best foot forward at times, which I agree with you. The proposal is often overlooked, and that’s a good piece of advice for the members is to take a fresh look at their proposal and make sure it’s connecting to the motivations expressed in your buyer persona and within your ideal client profile. OK, let’s go to the next big thing as it relates to go to market strategy for a boutique professional services firm, there’s three things we talked about. One which is to close rate. We had an interesting conversation around your remarkable 65 percent. The next is average deal size. So if I’m winning five out of 10 deals and they’re worth 50 grand, that’s a lot different than winning five to 10 deals. And they’re at five and a grand. So how are you optimizing for deal size? 

 

Dan Bernoske [00:09:51] Oh, man, that that is a that’s a tough one, because what what I’m what I’m finding is, well, it boils down to willingness to pay. 

 

Greg Alexander [00:10:02] What does that mean? 

 

Dan Bernoske [00:10:04] Well, what what is the perceived value of your solution to the buyer and what are they willing to pay? Yeah. So you know what, what, how much of their money is going to come out of their pocket into mine? Yeah. So that’s I think you’ve got some great sale pricing experts in the collective that could probably speak to that one. Yeah. 

 

Greg Alexander [00:10:27] So what what Dan’s referring to, there is a way to optimize for deal sizes is that you put a proposal on the table. You’re going after mission critical, urgent problem. And if the problem is not solved, there’s a real cost. Or if the problem is solved, there’s a real reward. And quantifying those in hard dollars creates a perceived value. Let’s just say, I don’t know, it’s $5 million as an example. So then the conversation is what percentage of that gain that you deliver to the client is a client willing to share with you 10 percent, 20 percent and then you back into your price there. And that’s how you optimize for a deal size. And then you’re in the management consulting industry. That’s your sector and you specialize in sales and marketing. So I’m assuming that your model is one where you want to have, relatively speaking, a small number of clients, but you want each one of those clients to spend a lot. Is that correct? 

 

Dan Bernoske [00:11:21] Absolutely. Over them, over served clients. 

 

Greg Alexander [00:11:25] So therefore, you’re staying away from clients who. You know, might need an act of God to spend 25 grand. 

 

Dan Bernoske [00:11:35] Absolutely. Yeah. Yeah. But you know, what’s interesting, though, in terms of deal size is that we’ve also found that this size client, they do buy and bite size chunks. So there’s another lever I really pay attention to, and that is what’s the customer lifetime value that you are given the size of 500 out of the 10 to five hundred million dollars. They’re not going to buy that $1 million deal. But they will buy maybe the equivalent of that over time. Right. And that’s when you really have to think about is what how is it that they buy? It’s huge. 

 

Greg Alexander [00:12:14] So that’s interesting. So lifetime value is a great concept. I’m glad you introduced it. You can get to the same dollar amount and that example a million bucks, but instead of one deal, maybe it’s for $250000 deals. So that raises another interesting question regarding go to market. And that is expansion revenue from existing clients vs. new revenue from new logos. So do you have a a different sales approach when trying to grow an existing client than you do opening up a new one? 

 

Dan Bernoske [00:12:44] We we do the reason why is because you’re embedded with the client. So the behavior is a lot different in your interactions with them. They’re you’re kind of uncovering needs as you’re as you’re going along. And so therefore the the reception on their side is much more open minded so that that approach is very different than going in on a new logo. 

 

Greg Alexander [00:13:06] Sometimes I hear sorry, sometimes I hear from clients. However, if their consulting company is always looking for the next deal while they’re working on the current project, it can be a turnoff. How do you how do you handle that? 

 

Dan Bernoske [00:13:20] Yeah, that is a that’s a big balance. But we’re not selling. It’s always framed up around making sure that they’ve got a problem that needs to be solved. I just very, very much in problem focused, always, always not solutions focused. I can actually, Greg, you know, I come out of a product background, which I’ve applied to my approach for building our solutions. And there’s a great saying in that space that says, don’t be in love with the solution, be in love with the problem. So the more that I enforce that with my people. So seek out that problem. It actually doesn’t feel like selling. It really feels like trying to help out the buyer persona as much as possible. That that’s a really small point, but it does make a difference. 

 

Greg Alexander [00:14:07] Yeah, that does make a big difference. It’s a big point, actually, not a small point. I’m glad you mentioned it. Just one more question regarding expansion sales from existing accounts. Let’s say I’m a delivery person on your team. I’m not held accountable to growing revenue and I get deployed on a project and I going to get done in 90 days and I’m on a project plan and I get to issue X amount of deliverables. And then, are you also asking me to be a salesperson or am I just focused on that project? Like, who’s doing the expansion selling? 

 

Dan Bernoske [00:14:45] So right now, it’s the partners who are we’re small enough where each partner can have a set of of clients that they’re overseeing. So we’re really trying to push that over to them. The job of that of the consultant is to find the evidence and bring it back to us. I see. And just enlighten us because, you know, the other important is what you brought up a great point. I want them focused on delivering good work because good work actually is. The other big piece that sells you more is if you just do a good job that’s that gets you there. But also the partner will have the overall strategic viewpoint of how that that evidence actually fits into the bigger story. So that’s the approach that we always 

 

Greg Alexander [00:15:27] I think that’s a great division of labor. So the delivery team does have an eye towards growing revenue, but they’re not held accountable to the sell. They kick over the evidence to the partner and then the partners get enough skill and probably enough savvy to to re approach the client and say, Hey, my team has uncovered this additional problem. I want to talk to you about it, that type of thing. 

 

Dan Bernoske [00:15:52] Absolutely. 

 

Greg Alexander [00:15:53] Yeah. And that’s working well for you. 

 

Dan Bernoske [00:15:55] It works real well. Yeah. And also think about the delivery. They’re good at delivery. That’s going to be they’re very good at selling. Yeah. So get everybody focused on their skill set. 

 

Greg Alexander [00:16:07] Okay. So then the third kind of leg of the stool as it relates to go to market excellence in selling professional services is the length of the sales cycle and that rounds out the other two, which is the average deal size and the clothes rate. One thing that kills boutique owners is the sales cycles are just too long. Back to my earlier comments around pursuit cost, you know, and if it takes forever to sell a deal, I mean, it’s just a constant, right? Now you’ve got two markets, you’ve got a channel, the PE space, and I’m assuming that takes a little bit longer. And then you’ve got your portfolio company, the portfolio company of the firm, which I’m assuming takes a little bit longer. But is that true? Are those two different lengths of sale cycle? 

 

Dan Bernoske [00:16:51] Yeah, 100 percent. Very different. 

 

Greg Alexander [00:16:54] How long is the PE sales cycle? 

 

Dan Bernoske [00:16:58] Is nine to 12 months. 

 

Greg Alexander [00:17:00] Wow. And you’re willing to hang in there that long. How come? 

 

Dan Bernoske [00:17:04] Yeah, it is. Because once you’re in, I mean, basically, it’s a hunting license and you do a good job in the first portfolio company, earn their trust and then you become a part of their toolkit. I see. So that that Greg, I mean, saves a lot of a lot of selling time alone. So it’s worth getting in. 

 

Greg Alexander [00:17:22] So you get it. You spent a year to get into a shop, but they might own 20 companies, so that’s worth it. 

 

Dan Bernoske [00:17:28] Yeah. 

 

Greg Alexander [00:17:29] Okay. Very cool. And then the portfolio company, what’s the sale cycle there? 

 

Dan Bernoske [00:17:33] Well, quite a bit shorter, around 30 to 45 days. Got it for those. 

 

Greg Alexander [00:17:38] Yep, interesting. So listeners, what that’s known as is a sell through model as opposed to a sell to model. And you might learn from Dan and say to yourself, Do I have any partners that I can sell through that if I establish a relationship with, they could grant me access to a much broader prospect base. And it’s a very interesting approach and probably a topic for another day. All right, my man. Listen, we’re out of time here, but that was a great session. I appreciate you dropping your wisdom with us. If you don’t mind, explain to the audience how to get a hold of you if they have some follow up questions. 

 

Dan Bernoske [00:18:19] Sure, cortadogroup.com, cortadogroup.com online or yeah, just fill out a form. Reach out to me and we’ll go from there. 

 

Greg Alexander [00:18:32] All right, awesome. All right. And for those listeners that might want to learn more about this topic and others, you can check out a book. It just became an Amazon number one bestseller in our category. Yeah, I’m really happy about that. It’s called the boutique how to start, scale and sell the professional services firm, and again, you can find it on Amazon and other retailers. And if you liked this, then you want to meet other great people like Dan, consider joining our mastermind community. You can find that at Collective54.com. Dan, thanks a bunch. Take care. 

 

Dan Bernoske [00:19:04] Thank you, Greg. I appreciate it. 

Posted on

Episode 64 – The Revenue: A Practical Guide to Monetize Professional Services – Member Case with Jamie Shanks

Boutiques often think there is only one way to charge with limited revenue sources. On this episode, we interview Jamie Shanks, CEO at Sales for Life to discuss the 9 common ways to make money in the professional services industry.

TRANSCRIPT

Sean Magennis [00:00:15] Welcome to the Boutique with Collective 54, a podcast for
founders and leaders of boutique professional services firms. Our goal with this show is to
help you grow, scale and exit your firm bigger and faster. I’m Sean Magennis Collective 54
Advisory Board member and your host. On this episode, I will make the case that
boutiques constrain their growth by thinking too narrowly about monetization. They often
think there is only one way to charge and only a couple of revenue sources available to
them, when in fact, there are nine common ways and probably more to make money in the
professional services industry. I’ll try to prove this theory by interviewing Jamie Shanks,
CEO at Sales for Life. Sales for Life enables sales organizations and teams to produce
sales generated pipeline at scale. To accomplish this, they have evolved into a tech
enabled service with a product called the Scale Pipeline System. This system helps
customers grow their sales pipeline by 25 percent within 90 days, and you can find Jamie
and his team on sales for life, all one word, dot com. Jamie, great to see you. Welcome.

Jamie Shanks [00:01:44] Sean, thanks for having me.

Sean Magennis [00:01:45] Oh, it’s such a pleasure, and I’ve been so looking forward to
chatting with you. I love your energy and I love what you’re doing. So let’s start with an
overview. Can you briefly share with the audience an example of how you’ve developed a
new revenue stream?

Jamie Shanks [00:02:00] Yeah, actually, we not only generated a new revenue stream,
but spun it out as a secondary company called pipeline signals. Essentially, we had or
have a training business for the last eight years that has various sources of revenue
streams. What was happening upon finalizing certification with our customers? We needed
a reinforcement mechanism when we created a managed service that actually mined
signal intelligence on behalf of sellers and created that revenue stream as a spin out from
sales for life.

Sean Magennis [00:02:34] I love that, you know, it sounds easy, and I’m sure you know it
wasn’t as easy as you make it sound, but having that knowledge that you needed a
reinforcement turning that into a managed service, what a great example. So, Jamie, what
I’d like to do is get your thoughts on some of the best practices that we recommend in this
area. We’ve identified nine of the most used sources of revenue in professional services.
I’ll walk you through each one and then get your brief thoughts on each as we’ve got quite
a bit to get through. So the first one is hourly. Billings charging clients an hourly rate has
the benefit of being easy to implement. However, it limits how much revenue you can
generate. There’s a fixed number of hours. There’s an upper limit of how much you can
charge for each hour. What are your thoughts on this concept?

Jamie Shanks [00:03:25] And all the context I provide, I’m going to talk from a training
perspective in a managed service. Great. I completely avoid the hourly billing because I
only have whatever is six hundred or two thousand hours in a year, and I’m trying to create
leverage per those hours and trading time and materials. My my personal opinion I
avoided at all costs.

Sean Magennis [00:03:51] That’s Jamie in your context. Excellent. Number two is a
retainer. This is when a client pays you upfront to secure your services when needed. This
has the benefit of getting paid in advance and of a predictable cash flow. However, there
are only so many retainers a boutique can handle at one time. What is your opinion about
this concept?

Jamie Shanks [00:04:14] We had that separated. We actually had a retainer program
where we have what’s called a daily coaching hotline, and it granted our customers
unlimited access to coming into think of like Professor Class Time at university. Yes. The
challenge is then what? Again, it became a utilization rate exercise of constantly trying to
figure out what is the percentage chance the people will drop into that call? Will we
spreading ourselves too thin? We then had to break out if some people get individualized
call times versus a public enrollment of allowing multiple people on the same call. So we
eventually migrated that revenue stream into more of a fixed fee bid and utilized
subscription, so we no longer touch the retainer model.

Sean Magennis [00:05:07] OK, excellent because the next question is fixed bid. So this is
using a flat amount regardless of the amount of hours worked. It is profitable work for
boutiques if they can scope projects correctly. So if a firm struggles with estimating the
level of effort, it can be a money loser. So what do you think about this? How have you
dealt with that?

Jamie Shanks [00:05:28] This is essentially our go to market. Over time, we’ve discovered
our gross margins. Our gross margins are north of 80 percent. And so by understanding
that and also developing a service that is scalable, tech enabled services you described
upfront, it allows for predictable delivery. Our delivery really doesn’t change customer the
customer outside of a few hours here, a few hours there over the course of a year. Yes. So
all of our customers for sales for life in particular are on annualized subscription contracts
that are fixed fee bid. And it is up to us to live within the means of the people and process
that we’re deploying against that.

Sean Magennis [00:06:14] Brilliant. And staying disciplined and not going out of scope,
right?

Jamie Shanks [00:06:19] Correct. Fantastic and going to school. I think the important
piece here is not customizing. I mean, this is a lesson learned. Don’t play the game of let’s
throw everything into the deliverables and outcomes section of your statement of work.
Yes, design something that is a repeatable service. The one offs, you will get clobbered
because there will be scope creep that happens every time.

Sean Magennis [00:06:47] Absolutely. So well said, the fourth one is performance based
contracts. So this is where goals are established. And if the firm is successful, they get
paid. And if they fail to deliver, they don’t. Get paid, it does allow a boutique to capture
upside as they’re usually uncapped. The risk, of course, is if you don’t produce, you lose
your shirt. So what are your thoughts on performance based contracts?

Jamie Shanks [00:07:13] This is actually something we want to experiment in the future
with a company that we have an idea of launching, but its sales for life, we have not had
the retained earnings or there the risk profile willingness to take on those type of
customers now. I’ll give some caveat the customers and sales for life are global enterprise
global mid-market. They may not be as apt to to running a model like that because for
them, they’re pulling money out of our backs. It’s predictable. It’s being sold to a director or a VP of a business unit or a line. So we haven’t done it. I have interviewed and met many
CEOs that are experimenting or are doing it successfully. And it actually has been the
growth driver for their business. I unfortunately, have not tried it out of fear.

Sean Magennis [00:08:05] No, and that’s important to recognize, and it’s important to
have the means to carry that risk from a cash flow or from a cash reserve standpoint. The
fifth one is member dues, and it’s a business we know well and it’s a business you’re
getting to know well. So this is when a client pays the boutique, if they see a value in being
in a group or community with other clients, the annual dues grant access to people of a
similar nature and similar jobs dealing with similar issues. It’s profitable for boutiques as it
scales nicely. Small amounts of staff can manage large numbers of clients. The risk,
however, is you have. If you have unhappy clients, the word is going to spread quickly. So
what are your thoughts on member dues?

Jamie Shanks [00:08:49] This is essentially a form of what sales training companies do.
Yes, they originate typically in project based one time revenue. But our business after
eight years, it is a form of a member do. Essentially, it’s an annualized subscription. It
began where there was quarterly deposits up front. Then we became comfortable and
asking for annualized membership dues. That’s essentially what it is and then now with
three and five year contracts. But essentially, what they are getting is a series of
deliverables throughout the year, and it’s this is what I like about it. It’s value based
outcomes. So all that you’re basically saying to people is over the course of X, let’s call
that one year. Yes, I’m going to move you from ground ground floor to Mars. And on that
journey, don’t come to me every month about where we are on our way to the space
shuttle and then on the way to the Moon and the way onto the Mars. Let’s focus on what
we’re trying to accomplish over a year and keep paying your bills. So we are a form of a
member service and it’s the best way, especially again if you understand your gross
margins.

Sean Magennis [00:10:03] I love that example. Well, well, well said. The six is licensing
revenue. It’s a it’s an area I know well. I was in a licensing revenue business for 14 years.
This is where a licensing fee is paid by a client to a boutique for the use of intellectual
property. Many boutiques have methodologies and tools that client want unlimited access
to. They pay a license fee or a royalty for this right. And the risk to a boutique with this is
an inability to productize their service offering. So if every project is a snowflake, it doesn’t
work. So what are your thoughts on this concept?

Jamie Shanks [00:10:41] Yes. And so that’s what makes up our annualized subscription,
and I’ll talk about what we’d like to do in the future with a channel model. But essentially, if
you were to reverse engineer, our average sales price annualized sits between 80 and
100000 U.S. dollars per customer. If you were to break that down, a percentage of that
from an accounting perspective is counted as an annualized license that is then deployed
in one twelfth across a year when you use accrual accounting. Yeah. And then there’s a
service that’s also applied to that as well. And what we try to do is make the annualized
license worth 70 to 80 percent of the total fee. And then the services work on top of the
licenses has more enterprise value than the services themselves. The services again have
been productized. The onboarding process is the same for every customer, right? The
moment of the learning, it’s the same for every customer. The quarterly business reviews
with the customer the same. So in essence, they’re all like that from all. The customer
sees one licensing price. Some will ask for that breakdown because they need to account
for what percentage is a license. Now where we want to bring this in the future is being
able to develop a channel ecosystem in that channel ecosystem. Our customer then does

not become the end user. The customer of ours becomes the channel partner. They pay a
licensing fee and then they resell it to their cash, the end user, and it will come to one of
your other models. It’s a form of a royalty.

Sean Magennis [00:12:22] It’s right now that makes a lot of sense, and I think you’ve
keyed in on something I think our listeners need to know. That’s really important when
you’re looking at licensing revenue, the documentation, the playbooks making it very, very
standard that you can replicate is really critical for the success of this model.

Jamie Shanks [00:12:39] Yes. Yeah. And if you if you look at like a training business, we
would straddle the line between a shot. It has the it should have the margins of a software
company. Mm-Hmm. But the human element of services, I wish it had sat on for multiples.
That’s what it has. It’s very akin to it where you create the intellectual property and the IP.
One time you put it in a learning management system and you sell it a thousand times.
Yes, to a thousand companies. Yeah.

Sean Magennis [00:13:13] Oh, very nice. The seventh one is subscription, and these are
all sort of, you know, aligned in some way. So subscription is paid to boutique by a client to
gain access to an asset. For example, many boutiques have proprietary benchmark data
and clients who want access to this data pay a subscription. The risk is managing the
asset, keeping the quality of the data well. So, you know, if the data ages, it becomes
worthless. Clients, you know, disappear. What are your thoughts on the subscription
model for revenue generation?

Jamie Shanks [00:13:49] It’s basically all of our revenue, and we it took us a while to have
the strength and the tenacity to ask for the annualized subscription fee paid in advance of
the calendar year that it’s going to be deployed. Yes, and we try unless it’s the Microsofts
of the world that is always the case. Collect the money upfront. Yeah. And from from that
moment, I work within that, that gross margins itself. And we really worked hard to ensure
that DSO were based sales outstanding, if possible, under 30 days that we’re not experts
at it. But that means that you are taking a year and of revenue and deploying it in the same
month of an operating expense of one particular month. It’s an incredible way to accelerate
the growth of your business if you can sell 12 of those over the course of a year.
Absolutely.

Sean Magennis [00:14:53] Yeah, it’s brilliant. Well, well structured and a great example.
Number eight is events in this current environment. This may not be a particularly good
revenue generator, but this is where clients buy a ticket or tickets to be granted admission
to an event or a seminar or a three day that boutiques put on can be very profitable. And
typically, you can get sponsors to cover the cost of the event and the ticket sales then or
all profit. The risk, of course, is that if no one buys tickets and no one shows up, then it’s a
bust. What are your thoughts on the event concept?

Jamie Shanks [00:15:32] I have a couple examples on the event, so as part of my
business, a quarter million dollars of revenue for five years up until COVID, with speaking
engagements and workshops. So this also comes to your first question. Yes, which was
around hourly. When I began speaking on stage, I made many mistakes and that was
thinking that the hour that I was on the stage should be charged for that particular hour,
only to come to realize that when your car leaves the driveway to get to the airport, live in
Dubai for two days and then come home, you need to equate for this. And then you also
need to wait for the value creation, not the hour spent, because you also spend a lot of
time building the presentation and so forth. So my speaking fees went from five hundred to

a thousand dollars incorrect thinking of like the hour of that deployment to on average
between 20 and 40 thousand dollars really under what I was going to go. COVID changed
that when COVID happened, the world tried to revert all of US speakers to ensure that our
Zoom calls were a cost per hour and that how much the calls were cost per hour. So what
happened is those who that was 10 percent of our revenue and reduce the size of sales
for life. Right. If you look at that, those that had speaking and workshops as like 80 percent
of the revenue just crippled crush because the customer was saying, Well, I’ll pay you five
hundred dollars to do the same thing virtually, I don’t know. Again, you tried to drive it back
to the value creation piece. Now you could obviously discount saying, Well, I’m not going
to spend two days in Dubai market out of pocket. So, you know, speaking of fees on virtual
have typically landed four in my world for three to five three to five to maybe ten thousand
dollars. Mm hmm. Maybe that kind of helps answer the first part, which is how do events
change and you get away from that hourly? Yes. Also then ran our own conference. We
put together a conference six years ago. Assess a quarter million dollars to put this thing
all together, and one of the things that I’ve learned is that the gate fees or the to calling
these events ticket fees three or five hundred dollars is not the way to make money, nor is
even the sponsors the best practice from my understanding, my limited experience. My
wife’s in that industry has been that the people that you bring in the future equated
revenue of those people measured over the next one to three years should be your return
on investment thinking and the gate fee and the ticket fee and the sponsorship fee. Will
hopefully bring you to a brief break even. Yes. And your cost of customer acquisition
hopefully became zero unless you equate the time and energy it took to build the
conference itself.

Sean Magennis [00:18:49] So and thats brilliant. I love that thinking, and that means that
your strategy for events has to be extraordinarily well conceived, very well thought
through. Because if you’re reliant, then on those individuals, either as prospects or as a
land and expand if you have them as existing clients, is this an opportunity to up sell or
cross-sell? There needs to be a very specific engagement strategy from what I’m hearing
from you to unlock the value long term from the investment in events.

Jamie Shanks [00:19:20] Correct. And I think the events world is now permanently
disrupted. Yes. And if you were trying to put on a $100000 event, let’s use a round
numbers to try to recoup in $100000 in gate ticket fees and sponsors might be a tall ask.
Now you have to deploy a sales team to even get those. That level of people in the door?
Correct? Think about it. Think about it from the perspective that if we can at least break
even, what would five of those hundred people who became customers? What would that
mean to our business? Yeah. What is the lifetime value of five new accounts?

Sean Magennis [00:20:02] Absolutely.

Jamie Shanks [00:20:03] That’s probably the best way to look at it.

Sean Magennis [00:20:05] I love it. That is so clear, and thank you for being so candid in
Airplane because a lot of people are thinking, Do I go back to events? Is it going to be a
hybrid model and how can we truly extract an hour away from it? The final one is royalties,
so this is when a boutique does not monetize the client, but instead they monetize other
boutiques. It’s often used by boutiques of training products like you and your bag. They
allow other firms to use their training material. They collect a royalty every time they do.
The risk with this is that somebody steals your IP, you know, and and dresses it up and
creates their own. So a boutique who chooses this strategy really needs to understand
paywalls, royalty agreements and IP protection. What are your thoughts on this?

Jamie Shanks [00:20:52] Well, if you look at my industry, those that have scaled and I’ve
had this conversation with Greg many times, and he’s made it very clear. If you look at the
few great global sales training companies, they have one thing in common they have built
a channel ecosystem. Sandler in my industry decided to do it through a franchising model.
Most do it through a ten ninety nine contractor channel model. But it is this the singular
commonality to scale and intellectual property is that in my industry, typically the OEM, the
designer of the –

Sean Magennis [00:21:29] which is you,

Jamie Shanks [00:21:30] which is me, would take on average 30 to 40 percent of the
deal. And the boutique that actually sells, wins and then delivers the service is somewhere
in the 60 to 70 percent range, and that’s a common model. We experimented with it and I
learned the lesson of trying to become pregnant. We got halfway there, had a few hits and
misses. It will be a focus of ours over the next five to 10 years. And it is the obvious path to
scale that we will focus on.

Sean Magennis [00:22:08] Great. Thank you for that, Jamie. So there you have it. Nine
ways to monetize professional services, some amazing insights and really practical, real
time examples from Jamie. So going to market with a single revenue source, in our view,
is a mistake. The important lesson here is to have multiple revenue sources. Therefore,
the question our listeners should be asking themselves is what is the right mix for you? If
you have one, try to get two, if you have to try to get three and so on. The opportunity is
often right under the nose of an owner. You just need to know where to look. OK. This
takes us to the end of the episode. Let’s try to help listeners apply this. We end each show
with a tool. There’s going to be a simple 10 question checklist and a yes no answer to it.
We keep it very simple. So, Jamie, I’m going to ask you these questions and just simply
say yes or no, and I’ll run through them quickly.

Sean Magennis [00:23:15] The first one is, will the client pay you more than $500 an
hour?

Jamie Shanks [00:23:22] Yes.

Sean Magennis [00:23:23] Will a client pay you in advance to secure your services on
demand?
Jamie Shanks [00:23:28] Yes.

Sean Magennis [00:23:29] Number three, can you scope your projects with precision?

Jamie Shanks [00:23:34] Yes.

Sean Magennis [00:23:35] Number four, can you prove direct attribution of results in your
project?

Jamie Shanks [00:23:41] Yes, I mean, sales were quite easy, actually.

Sean Magennis [00:23:44] Number five, will your clients pay you for the privilege of
speaking to your other clients?

Jamie Shanks [00:23:50] Never tried.

Sean Magennis [00:23:52] Number six, will your clients pay you for the right to use your
intellectual property?

Jamie Shanks [00:23:58] Yes.

Sean Magennis [00:23:59] Number seven, do you have proprietary data that clients would
like to subscribe to?

Jamie Shanks [00:24:04] Yes.

Sean Magennis [00:24:05] Number eight, do you put on events and our clients willing to
buy tickets to attend?
Jamie Shanks [00:24:11] Had in the past.
Sean Magennis [00:24:13] Number nine are other boutiques willing to pay you a royalty to
distribute your intellectual property?

Jamie Shanks [00:24:19] Hopefully in my future.

Sean Magennis [00:24:21] And number ten, does your business model include at least
three sources of revenue?

Jamie Shanks [00:24:27] Yes.

Sean Magennis [00:24:28] Jamie. Fantastic. So in summary, there are many different
sources of revenue available to boutiques. Develop a clever monetization strategy. Think
about a mix of revenue, not just one source. Jamie, a huge thank you for your expertize
today, and I look forward to seeing you again. And for our listeners, if you enjoyed the
show and want to learn more. Pick up a copy of the book The Boutique How to Start,
Scale and Sell the professional services firm written by Collective 54 founder Greg
Alexander.

And for more expert support, check out Collective 54 the first mastermind
community for founders and leaders of boutique professional services firms.

Collective 54will help you grow, scale and exit your firm bigger and faster.

Go to Collective54.com to learn more.

Thank you for listening.

Posted on

Episode 59 – Competitors: The 5 Competitors Boutiques Must Defeat to Grow – Member Case with Mark Riggs

There are 5 competitors’ boutique professional services firms must defeat to grow.  
Mark Riggs, CEO & Lead Strategist for Pemberton shares insights to win.

TRANSCRIPT

Sean Magennis [00:00:16] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. Our goal with this show is to help you grow, scale and exit your firm bigger and faster. I’m Sean Magennis, Collective 54 Advisory Board Member, and your host. On this episode, I will make the case that there are five competitors boutiques must defeat to grow. I’ll try to prove this theory by interviewing Mark Riggs, CEO and lead strategist for Pemberton. Pemberton helps liberate marketing, PR and communications agencies, as well as consultants across a variety of industries from the dreaded RFP. Turning over clients and chasing RFP doesn’t have to be that way. There is a better, smarter, more sustainable and satisfying way Mike counsels clients and growing their business by focusing on the clients they already have, rather than continually wooing new ones. Check out his podcast Agency Insurgents. Mark, great to see you. Welcome. 

Mark Riggs [00:01:29] Thank you, Sean. Thanks for having me. 

Sean Magennis [00:01:31] It’s a real pleasure. Mark, let’s start with an overview. Can you briefly share with the audience an example of how you’ve experienced and overcome competition? 

Mark Riggs [00:01:43] Yeah, I mean, you know, it’s so funny when I read the Chapter Chapter three in the book, you know, we talk about the cost of inaction. You know, for us, when we first started this company, that was a real challenge and that we, you know, it was it was a nice to have, you know, but we had to we had to find that pain pill, right? So for us, we came up with the cost of inaction calculator. Very good with now with agencies and say, Hey, listen, this is the actual amount of money that you’re either leaving on the table, especially the small and mid-sized agency Sean, that we work with. Yes, you know, those agency owners have a horizon in their mind, right, that they have a time horizon and they have a number in mind so we can ask just a few questions. And we’ve developed this calculator and say, Hey, listen, this is how many, you know, new clients over the course of your five year horizon, you would have to win per per year per month. And it just becomes an overwhelming number. And once you’ve illustrated form that way, their eyes really bulge. You’re like, you know, I didn’t realize, you know, we can’t get there along with new business, and we say, Well, hey, how? How do we get there? And it’s in as revenue expansion. 

Sean Magennis [00:02:56] Fantastic. 

Mark Riggs [00:02:57] So that’s the way we wrote it out. 

Sean Magennis [00:02:59] That’s obviously become a major competitive differentiator for you, Mark. 

Mark Riggs [00:03:04] Yeah, it has I mean, we’d like to think we’re a category one child, but, you know, I’m sure that we haven’t been able to pinpoint just yet. Yes. Other companies who do what we do, I don’t think they do it the way we do it. But you know, whether it’s the number of new clients, you would have to win about a thousand. All right. You’d have to win every opportunity that you find. You’d have to find the opportunities have no attrition. Yes. Over the course of time. But then when you calculate attrition, they really they realize like, you know, gosh, I’m not going to get better with net new business alone. And it has become an advantage for us. And since we’ve been able to develop this calculator, I can ask a potential client for questions and illustrate to them, you know, we can come up with what we call the prime number here based on the percentage. This is how much faster we can get you to your horizon goal with revenue expansion and taking that approach and really making it a priority as opposed to happenstance. And when we do that, it’s it’s definitely increased our win rate for sure. 

Sean Magennis [00:04:10] Outstanding. That’s a brilliant example, mark. Thank you. So I’d like to get your thoughts and some of the best practices we recommend in this area. We’ve identified five competitors in order of importance based on the frequency they show up in sales campaigns that we’re aware of. The first is do nothing. So this is a project that went away because of a competing client priority. The second is internal resources. So this is an internal client staff who think they can do what you do better than you do it and for free in inverted commas. The third is boutiques. So these are firms like yours in size and specialty, the fourth are market leaders. So these are the mega firms that have the offerings in your niche. And then there’s other. So this is the other ways clients can solve the problem. Often there’s more than one way to skin the cat, obviously. So I’ll walk you through them one by one and get your thoughts on each. So the first one do nothing. So this is, you know, 40 per cent of deals, whether you know it or not. And the way to beat do nothing is to calculate the cost of inaction. And you said this earlier, this dollar figure will prove to the client that your project deserves their full attention. It’s a priority. So what do you think of this concept? 

Mark Riggs [00:05:33] Its spot on in the especially in our industry when it comes to public relations advertising agencies, right? We’re all busy all the time. There’s never a good time to start any sort of focused initiative. And so early on, what we found is, you know, this sounds great, guys, and this would be awesome to have. But you know, right, right now is not the time where we’re really busy with new business. We’re really busy with onboarding clients, et cetera. So we had to find, you know, that pain pill and the pain pills pointing out to them, I know you have business goals. You know, we’re in business too, especially in the agency business. We typically have this subservient attitude towards our clients, right, that we work for them when we’re in business too. We’re here to make money. And so we try to point that out to them. And that cost of inaction calculator allows us to do that. But we had to come up with that because it really poured people’s attention. And yeah, so. So doing nothing will get you nothing right? And so we try to point that out. 

Sean Magennis [00:06:36] Thank you. So the next one is internal resources. So as a reminder, it’s internal client staff, and I realize it’s weird to think about the client as a competitor, but they are about 30 per cent of the time. And the way to defeat them is to establish a deadline that the project needs to be completed by. So what’s your opinion of this? 

Mark Riggs [00:07:00] Well, you are giving them that, you know, defining the horizon, right? You know, when do you want to walk out of here? When do you want to sell? When do you want to pass this on to your children, whatever that may be? That’s one way. Yes. The other way is, you know, every agency we speak to, Sean says, Oh, we already do that. You know, we grow our business, right? But when you take a hard look at it, a lot of that happens through happenstance. You know, in our joke is that we’re a society of liberal arts vendors. You know, unless you’re the CFO or the CEO, you really don’t know how to rub two numbers together. And because you’re really good at churning butter, they eventually plate. you’re in charge of all the butter turners, so you get the VP level in the agency world. And all of a sudden you’ve got all these business you are responsible for. No one’s taught us that. Mm hmm. So our whole concept is let’s teach people the business of the agency before they’re in a position of responsibility. Right? And so if we can take that action, it becomes a very purposeful thing. And then, you know, most agencies have those handful of what we would call hunters. You know, typically we have hunters and farmers in our business. Yes. And you know, I encourage CEOs and COOs or get their senior staff as an investment portfolio. You know, you have assets and you have liabilities. Yup. The assets are the ones who are generating revenue. Hmm. The liabilities are those SDP EVPs, who have gotten to a position because they were really good at something. But are they generating revenue for your business? And we all know when you look at your investment portfolio, if there is a liability, those are things that are easy to cut. So as opposed to having five assets in the portfolio, let’s create a portfolio of 10 15 assets, right? Let’s teach people to grow business. And so we like to think we bridge the gap between hunters and farmers. 

Sean Magennis [00:08:51] I love that, Mike. I love that concept. You know, we have a concept, you know, where every member of your team should be an asset on your balance sheet, particularly when you’re thinking of selling your business one day. So what I took away from that is defining the horizon and look at every member of your staff as an important portfolio asset. I love that. So the third one is boutiques. So these are firms like yours in size and specialty. And our recommendation is offering your client a money back guarantee for any reason. No questions asked. Have you seen that? What do you think of that? 

Mark Riggs [00:09:28] We don’t do that. It’s a tough one right there. Yeah, we like to. We haven’t gotten there yet, but we are confident guaranteeing results. You know, when we first started this business, the tip of the spear was organic growth. Let’s grow the revenue. Yes, right? And as a byproduct of that, what we saw was personnel growth, human growth, executive growth rate. So as we’ve grown, we’ve kind of twisted that approach a little bit to let’s focus on the growth of the person in the in the team. And if we can focus on their growth as an executive, as a hunter, right, the new business will come. Now there are opportunities to come along and say, Hey, did you hear something? This is the this is an opportunity. Yes. But you know, we we feel like if we can do that right, what helps us differentiate ourselves from different boutiques that might do something similar to us is we don’t do train the trainer we don’t do. And after a full day training, as you and I probably both step in those trainings and you learn something great. Yeah. And then 48 hours later that it hits the fan and muscle memory takes over. Mm hmm. So our differentiator is we will only work with agencies who are willing to invest three to six months, at least in working with these executive, these teams, to change the muscle memory that makes them. Yeah, because we’ve been taught and account management to bend over backwards. Right? You know, do whatever it takes to keep them happy. So we got to change some of that muscle memory. 

Sean Magennis [00:11:04] That makes total sense. The fourth one is market leaders. So these are the mega firms. They have offerings in your niche. You’ll run into mega firms only we we see about five per cent of the time. However, these are sizable deals and they can make or break a year. So what do you think of this? 

Mark Riggs [00:11:25] Honestly Sean, in terms of what we do, we haven’t run into that a lot. I think where we run into that is the mega holding companies, right? The IPG is the the omni columns. They have some of these resources built in. Yes. And so it’s it’s the idea of convincing them that we can help mitigate attrition because to them, their businesses are going to grow. They’re moving so fast from a new business perspective. But if they’re having to replace 30 or 40 percent of their business every year, you know, I can help get you. Pemberton can help get you to a spot of, you know what? Maybe it’s going to be five percent attrition because we’ve grown the existing accounts. So you’re not starting out so far back every year, year over year. So there are agencies or companies out there who who touch organic growth, that type of thing. Mm-Hmm. But we really haven’t run into that Bain or McKinsey, and I’m sure they may do some of this right. Their focus is on the marketing communications industry. And so it’s kind of wide open for us. It’s just a matter of getting in front of the right people and pointing out their pain and saying We’ve got a pain pill. 

Sean Magennis [00:12:35] And knowing distinctly your market, which I’m hearing clearly from you. So the final one is other. So this is the other ways clients can solve the problem. So clients often think they can solve a problem by firing somebody recruiting new talent, and we recommend beating other by doing a postmortem. So highlighting to the client and you’ve shared some of this the last time they took this approach, it didn’t work. So what else in this area can you share with the audience? 

Mark Riggs [00:13:06] Well, it’s very easy to look year over year, quarter over quarter of the impact of a client, especially if you’ve had a client for more than 24 months, right? I’ve had a client for more than 24 months, and I can I can identify the trends, the ebbs and flows. And were we able to fill in some of those gaps? Some level it out, right? Yes. Well, the other thing we were able to do from a postmortem standpoint is in the very beginning of our engagements, we do a senior leader. Scorecard. Mm-Hmm. So we have five criteria that these senior leaders have scored on, and we also do a proactive mis appraisal. Well, like that. So in our in our business, oftentimes we’re very reactive to the to the client. We have up the order taker type role and really that’s our fault and we let that happen. So for us from a postmortem, it’s either I can look distinctly at the revenue it has. The revenue changed as a number of opportunities with that client changed. Mm-Hmm. And I can score your people based on the senior leadership scorecard and the prior fitness appraisal and say, you know, here’s where they were deficient or we’re not confident, right? And we can go back and look, say after working with them for six months. Has that changed? And so it’s revenue, but it’s also the human growth because for us, it’s about sustained growth. Mm-Hmm. When they start working with Pemberton, we walk away from them. We want to be able to Sure progress and leave them in a good place. But what we have found is right. So when we started this, we said, Hey, three to six months of wear out, right? You know, but as I’m growing a company that I would like to sell next Sunday, yes, you know, how do I get recurring business? And so someone pointed out to me that, you know, hey, listen, after six months, an agency’s problems are not completely solved. They constantly have problems and challenges. So what we have done is we have morphed into other avenues that really the organic growth, the human growth is our Trojan horse. Yes, we can get in there. We can make an impact. We’re pleasant to work with. We develop deep relationships over the course of working with somebody, you know. Yes, we try to show them exactly what we’re preaching, which is deepening relationship with clients. And what that allows us to do is get into other challenges. 

Sean Magennis [00:15:22] Outstanding, Mark. Really, that’s you know, these additional insights to what we’re seeing is as recommendations are exceptional. So, Mark, thank you. This takes us to the end of the episode. Let’s let’s try to help listeners apply this. So we end each show with a tool. We do so because this allows the listener to apply the lessons to his or her firm. And our preferred tool is a checklist, a style of checklist as a yes, no questionnaire. We aim to keep it simple by asking only 10 questions in this instance. If you answered yes to eight or more of these questions, you’re on your way to defeating your competitors. If you answered no too many times, lack of a strategy to defeat your competitors is likely getting in the way of closing more business. So Mark has graciously agreed to be our peer example today, and I’ll ask Mark the yes no question so we can learn from his example. Let’s begin. 

Sean Magennis [00:16:23] Number one. Can you calculate a client’s cost of inaction? 

Mark Riggs [00:16:29] Yes. 

Sean Magennis [00:16:30] Number two, can you find a compelling event that puts a deadline or horizon on the client’s project? 

Mark Riggs [00:16:39] Yes. 

Sean Magennis [00:16:40] Number three. Are you confident enough to guarantee your work? 

Mark Riggs [00:16:46] Yes. 

Sean Magennis [00:16:47] Number four, can you establish credibility in the eyes of the client? 

Mark Riggs [00:16:54] Yes, and I will expound on that one just Sean. You know, it’s we don’t hire any consultant who hasn’t been the agency business for more than 20 years. It’s hard to walk into any agency without some sort of gravitas, yes. And say, Let me show you how I’ve done it in the past, I’ve taken accounts and grow them into multimillion dollar accounts. So the answer is yes. But there’s there’s some specifics there. 

Sean Magennis [00:17:19] Excellent. Excellent. Number five, can you signal quality to the client by delivering a best in class proposal? 

Mark Riggs [00:17:29] Yes. 

Sean Magennis [00:17:30] Number six, can you deliver much faster than the market leaders in your niche? 

Mark Riggs [00:17:36] No. But let me expand there again. You know, like I pointed out, this is about sustained growth. Yes. This is about changing muscle memory. So while someone else may come in and immediately point out an opportunity and they’re upselling, our approach is solved dont sell. On solving problems, should take care of itself. So for us, it’s not about speed. It’s about sustainability. 

Sean Magennis [00:17:59] Excellent. And every situation is different. Every client engagement is nuanced. The services are different. So thank you. I get that. Number seven, can you earn healthy margins and still be 25 percent less than the market leaders? 

Mark Riggs [00:18:16] We believe so, yes. 

Sean Magennis [00:18:19] Are you more enjoyable to work with than the market leaders? 

Mark Riggs [00:18:24] Yes, we are in fact pointing that out every time we start working with a new client, the we’re going to have a lot of fun. We’re going to do a lot of laughing. We get to know them very well. And again, we like it. You know, you have to have empathy for your client. They have lives, they have things going on, too, so but but but yes, we have a lot of fun. 

Sean Magennis [00:18:43] Fantastic. Number nine, do you understand the alternative solutions to the problem you’re addressing? 

Mark Riggs [00:18:51] Yes, assets versus liabilities, happenstance. Attrition. Absolutely. 

Sean Magennis [00:18:58] And number 10, will a postmortem revealed to the client that these alternatives have a poor track record? 

Mark Riggs [00:19:05] Yes. 

Sean Magennis [00:19:07] Mark, fantastic. In summary, a boutique must win a high percentage of the time they are not in enough deals to allow for many deals to be lost. No one wins every deal, but that should be the goal by establishing a competitive playbook. You can make sure you can beat the competition. Huge thanks again, Mark, for sharing your expertize today. If you enjoyed the show and want to learn more, pick up a copy of the book The Boutique How to Start, Scale and Sell the Professional Services Firm. Written by Collective 54 founder Greg Alexander.

And for more expert support. Check out Collective 54, the first mastermind community for founders and leaders of boutique professional services firms. Collective 54 will help you grow, scale and exit your firm bigger and faster.

Go to Collective54.com to learn more.

Thank you for listening.

Posted on

Episode 58 – Growth Rate: The Ultimate BS Detector – Member Case with Darren Isaacs and Paul Emery

Your growth rate is important than the size of your firm. It is more important than your client roster, and it is more important than your service offerings. On this episode, we interview Darren Isaacs, Co-Founder and CEO, and Paul Emery, Co-Founder at Makosi.  

Transcript

Sean Magennis [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. Our goal with this show is to help you grow, scale and exit your firm bigger and faster. I’m Sean Magennis Collective 54 Advisory Board member and your host. On this episode, I will make the case that your rate of growth is your most important number. It’s more important than the size of your firm. It is more important than your client roster, and it’s more important than your service offerings. Potential acquirers want to see strong growth in both top line revenue and bottom line profits. I’ll try to prove this theory by interviewing Darren Isaacs, co-founder and CEO, and Paul Emery, co-founder at Makosi. Makosi helps audit firms drive growth, improve profitability and pursue important strategic goals by delivering an on demand audit workforce backed by their technology and their proven process. You can find them at Makosi M-A-K-O-S-I dot com. So Darren and Paul, great to see you both and welcome. 

Darren Isaacs [00:01:33] Sean, appreciate it. 

Paul Emery [00:01:35] Thank you. 

Sean Magennis [00:01:36] So let’s start with an overview, Darren, I’m going to call on you. So can you briefly share with the audience an example of why the rate of growth is such an important number? 

Darren Isaacs [00:01:47] Sure, I think you know, the saying used to be that if you’re not growing you, you’re dying? And so it’s really important to understand what market dynamics might actually be driving growth and also to ensure that your growth exceeds that of your competitors because of a long enough period of time. If you’re growing slower than your competitors. You are really slowly having your  lunch eaten, so you know they pay attention to how your competitors are faring in that equivalent market. Yup. And it’s also important to consider not only your rates of growth against your competitors, but also what that growth means for cash flow, infrastructure compliance and other things that go along with that growth. 

Sean Magennis [00:02:30] Fantastic. And we’re going to dove into those questions, but that’s a really good distinction. So making sure that your growth exceeds the growth of your competitors. So I’d like to get your both of your thoughts on some of the best ways to demonstrate growth in the context of a potential investor. The five specific things I’ll walk you through and get your thoughts on each. I’ll ask one of you to tackle an item and then I’ll rotate to the other. So the first one is the first thing to understand is what does good growth look like from the perspective of the investor? Darren, what are your thoughts on this concept? 

Darren Isaacs [00:03:09] I think an investor really wants to see a long track record of consistent and sustainable growth of revenue, but they’ll also pay very careful attention to how gross margins have fared over those years as well. There are also various inflection points along that path of growth that come into play again, particularly with respect to two to non-revenue generating infrastructure and people, so revenues and net margins should be growing together. Yes, and they should also be clear, defined as of the scalable expenses you know, as as as growth is, is ensuing. 

Sean Magennis [00:03:50] Excellent. Thank you. So the second one is we advocate a five to 10 year track record of consistent revenue and profit growth. And you’ve alluded to some of that. Paul, what’s your opinion on this concept of sustainability? 

Paul Emery [00:04:05] Yeah, I think from the perspective of Makosi, we’ve gone through like hyper growth over the last three years and and it’s something that we’re like very, very conscious about in terms of because we’ve gone through four digit growth numbers over the last 12 months, which is a lovely tagline. I think when you speak to investors, and it gets a lot of grins, a lot of big eyes, kind of rubbing of the hands into it. That’s great. But you know, from when you get to the stage of due diligence and you’re looking back, you’re like, all hang on a minute. Is this sustainable? Yes. So I think for us, we understand that, and I think that that’s kind of like our transition or an inflection point where we remain right now is that we’ve been focused on grabbing as much market share as possible over the last three years. And now we need to kind of transition from revenue growth to just really focusing on that profitability piece. So we have a consistent record over time. Yes. And especially for firms that are in hyper growth, I think you need to be hyper vigilant around that service offering. And at what point is it going to start slowing down? And do you have other strategies in play in order to kind of continue growth into the future over a five, 10, 15 or 20 year period? So you know what? That’s exactly where we’re at right now. It’s like, Okay, it’s great. We’ve had an awesome ride over the next three years, but is this just transition now to really say, OK, this part of the business is growing really fast, but how are we setting up three or four others under that umbrella to continue that growth into the future and make it sustainable? And I think for the founders, you like that rocket ship, you like that uncertainty. You like that chaos that comes along with all of it. But to transition the company from the grow to scale stage, yes, it needs that next level of professionalization. And that’s something that we’ve been working very, very hard on. And so transitioning from five to a track record of consistent revenue growth, I think it’s something that we’re looking at is like, OK, maybe we don’t have the skills internally to have that set building up management team really kind of doing some self-reflection on things of that. So it’s. It seems very simple, right, to say, OK, we need to get five to 10 years worth of consistent growth, but it always comes a little bit trippy because you are having to do a lot of internal reflection to speak. Speaking of profound is what our unique ability to do that sort of stuff. 

Sean Magennis [00:06:43] Fine tuning, building your team, you know, tweaking all the elements that an investor is going to look at. Yeah, you’ve hit the nail on the head there. So when our firm Capital 54, is considering making an investment or we’re doing advisory, we look at the following and I acknowledge these are incredibly high bars. And you know, not all. It’s not an apples to apples, but we look at a 20 to 30 percent top line growth, a 70-80 percent gross margin and a 30 to 40 percent net margin. Darren, what are your thoughts on these benchmarks and be open, you know, I mean, this is real talk that we’re having now. 

Darren Isaacs [00:07:23] So, I mean, pretty, pretty extreme numbers there, and I guess I agree with your thesis on top line growth and in fact, that that might even be a bit conservative in this COVID world. Yes. You know, I also agree on the net margin front, but maybe where I differ is on the gross margin front. So the first and I really generalize, I think that margins at those levels are potentially unsustainable in this new gig world. Mm-Hmm. You know, with access to global to, you know, to skills on a global scale. And then secondly, I’d be more interested in firms who are strategically positioned to grow those, those gross margins. So over time, this. Yeah, exactly. And know, unfortunately, I have this curse of being an accountant. So, you know,  those opportunities aren’t always, you know, visible in the actual numbers. Right. It’s really important to kind of dig into the strategy of that business and understand what the opportunities of the growing gross margins think. Things like automation to tech enable your service delivery. And so, you know, how are investors looking at strategy and seeing how this firm is going to grow out, you know? Rev Yes, grow gross margins even  faster. And it’s really a kind of a multiple from a strategy point of view. 

Sean Magennis [00:08:50] I like that and you know, my view is these are targets. You know, these are nice to have. It may not be real. And your example of the impact of the new gig economy businesses is very accurate. I think the important thing and Paul said it earlier, is to have some comparisons. Look at what your competitors are doing because that will give you a leading indicator, at least a benchmark. So thank you. That’s really great. The fourth one we recommend, including profit growth in our list of due diligence requirements. Many young firms don’t focus on profit growth. They spend their time focusing on and obsessing over top line revenue, and they haven’t decoupled their revenue growth from their headcount headcount growth. Paul, any thoughts or opinions on that? 

Paul Emery [00:09:43] Yeah, I mean, this question strikes very close to home. 

Sean Magennis [00:09:47] It’s your business. 

Paul Emery [00:09:48] In that gross stage where we were very, just focused on revenue. And so we built on what we call our advisory board, but it’s essentially we monetize a kind of ex-partners Rolodexes. And it was and it was great to kind of grab market share in a very rapid way. But as we kind of transition from revenue focused to profit focus with our growth, it’s that transition and making sure you have having those kind of big conversations and your kind of bolstering the organization to kind of address those issues because if you cut it, don’t get ahead of that and you kind of keep operating in that grow operation, that kind of growth mindset. It can kind of really, really hurt you because we’ve been going through such a rate of growth that, like a lot of our support functions, like our finance functions, operations functions have really struggled to keep up with the sales in the business development of the business. And so we’ve lacked a lot of transparency into those numbers to be able to say actually what we’re looking at and then, you know, you do catch your breath for five minutes and you look at those numbers not, oh, well, we should probably adjust this. And so I would very much advocate that you, you know, be proactive on that, making sure that you do have a solid finance function set up. So you’ve got visibility into the numbers, especially if you’re kind of an operator in the business now and you’re transitioning to the true owner. Yes, you need that top down view. It’s really, really important that you’re able to kind of dig into those numbers and have that clarity to make sure that the business is going to be profitable in the long term. 

Sean Magennis [00:11:37] Fantastic well-said. And then the fifth one, and we’ve touched on this a little bit of best practices to actively go out into the market. Seek accurate apples to apples comparatives. How do you do this, Darren? What’s your opinion on this? 

Darren Isaacs [00:11:52] I think it’s yeah, I mean,  it’s a good practice. You know, I think it’s mostly practical if you’re in a fairly vanilla category, you know those metrics might be quite easily attainable. Mm hmm. I think it’s been harder for us because we’ve created an entirely new category. COVID has also blown the doors off in so many ways. So to you looking in the COVID world, this is so fresh, which is really, really challenging. And so, you know, things, things just move so much quicker now. Mm hmm. So our view at the moment is quite simple. You know, just keep our eyes on the road and keep our competitors in our peripheral vision, you know? Yes. You know, and so just to kind of be aware of them, but don’t don’t be too focused on them. I think what’s more interesting for us is actually how our  clients are benchmarked against their peers. Mm hmm. And so if we’re able to benchmark how our clients are doing against each other, then it just enables us to add so much more, more value to them. So, you know, really enabling us to drive much more meaningful outcomes for them and thereby commanding higher margins and an overall satisfaction from their client. 

Sean Magennis [00:13:13] I really like that. That’s nuanced and it’s smart. Thank you. That’s great. So, you know, there’s so many variables on making sure you put your best foot forward in terms of, you know, the value of affirm, the value of the work that you’re doing. And I loved your comment. Darren, you’re an accountant, probably a recovering accountant, right? And facts always win out. So this takes us to the end of this episode, and as is customary, we end each show with a tool. We do so because this allows a listener to apply the lessons to his or her firm. Our preferred tool is a checklist, and our style of checklist is a yes no questionnaire. Our listeners ask yourself these 10 questions, and if you answer yes to eight or more of these, you have an excellent growth story that will attract investors. Darren and Paul have graciously agreed to be our peer examples today. I’ll ask Darren five of the Yes No Questions and Paul five, so we can learn from this example. So Darren, you’re first up. 

Sean Magennis [00:14:19] Question number one, are you growing revenue faster than your boutique competitors? 

Darren Isaacs [00:14:25] Yes. 

Sean Magennis [00:14:27] Number two, have you been doing so for a few years? 

Darren Isaacs [00:14:31] Yes. 

Sean Magennis [00:14:32] Number three, are you growing your profits faster than your boutique competitors? 

Darren Isaacs [00:14:38] Oh, yes. 

Sean Magennis [00:14:40] Number four, have you been doing so for a few years?

Darren Isaacs [00:14:44] Yes. 

Sean Magennis [00:14:45] And number five, are you growing your revenue faster than the practice inside the large market leaders if you have a comparative practice? 

Darren Isaacs [00:14:54] So this is a tricky question. We are the market leaders. So yes. 

Sean Magennis [00:14:58] Fantastic. Paul, I’m going to switch to you. Number six, have you been doing so for a few years? In the context, well, you’re a first mover, so that’s a trick question, will give you a pass on that one. 

Sean Magennis [00:15:10] Number seven, while you’re growing your profits faster than the practice inside the lodge market leaders or do you think, given that you’re a market leader, that you’re growing your profits faster? 

Paul Emery [00:15:23] Yes. 

Sean Magennis [00:15:24] And you’ve been doing so for a few years. 

Paul Emery [00:15:26] Yes, we’ve been doing so for a few years. 

Sean Magennis [00:15:27] Yeah. And then number nine. Are you growing your cash balance to cover payroll for 12 months? 

Paul Emery [00:15:35] Hopefully. 

Sean Magennis [00:15:37] This is why we’re working on the business is key, right? But to me, you’re smiling. 

Paul Emery [00:15:44] I think so. 

Sean Magennis [00:15:45] It’s good. And then finally, number ten, do you have at least 12 months of forward visibility? 

Paul Emery [00:15:52] I would say somewhat. 

Sean Magennis [00:15:53] Okay. 

Sean Magennis [00:15:55] That’s that’s great. Listen, these are important things for you and our listeners to to think through and then to go back and answer for yourselves. Do you have them? And if you don’t have them or if you think you have them to double check. So growth matters a lot and relative growth matters even more. So a year or two of great results doesn’t mean that you’ve got a sellable boutique. A decade of market beating growth will command an outstanding price and excellent terms, and profit growth is as important as revenue growth. This indicates that you’ve cracked the code. You are one of the few who broke the link between revenue and headcount growth. Be sure to run a tight ship. And we’ve heard that from Darren and Paul. Be prepared to demonstrate reliable forward visibility and plenty of working capital. So Darren and Paul, a huge thank you to both of you today. I’m so excited for you and your business. It’s got to be thrilling to be a first mover, market leader.

And if our listeners have enjoyed the show and want to learn more, pick up a copy of the book The Boutique How to Start, Scale and Sell the Professional Services Firm. Written by Collective 54 founder Greg Alexander. 

And for more expert support, check out Collective 54, the first mastermind community for founders and leaders of boutique professional services firms. Collective 54 will help you grow, scale and exit your firm bigger and faster.

Go to Collective54.com to learn more. 

Thank you for listening. 

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Episode 54: The Client: 2 Sales Tools to Win Bigger, Faster, and More Often – Member Case with Nate Kievman

There are two sales tools that allow boutique founders to win bigger, faster, and more often. On this episode, we discuss these tools with C54 member Nate Kievman, CEO of Linked Strategies.

Transcript

Sean Magennis [00:00:16] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. Our goal with this show is to help you grow, scale and exit your firm bigger and faster. I’m Sean Magennis, Collective 54 Advisory Board Member, and your host. On this episode, I will make the case that there are two sales tools that allow boutique founders to win bigger, faster and more often. I’ll try to prove this theory by interviewing Nate Keivman, CEO of Linked Strategies. Nate, I’m known and getting to know for a while. He’s a highly sought after digital strategist. He brings a no nonsense business approach to digital and social strategies, and his company Linked Strategies is a consulting firm that specializes in delivering clients a steady stream of highly targeted and pre-qualified meetings with top executives, CEOs, VP’s thought leaders and other key decision makers who are typically made extremely hard to reach. He can be found at linkedstrategies.com, Nate, great to see you and welcome. 

Nate Keivman [00:01:33] Thank you, Sean. Thanks for having me today. 

Sean Magennis [00:01:35] It’s such a pleasure. So let’s start with an overview. Can you briefly share with the audience an example of a sales tool you developed to win bigger, faster and more often? 

Nate Keivman [00:01:49] Yeah, absolutely, Sean, I think it’s an interesting perspective to think about the tool itself that helps you win deals. And I think there’s actually two and I call it an impact analysis, and this is something that is a self-created tool for any organization, especially in the management consulting space who we serve. I think about 90 percent of our clients are in that space. So what they’re looking for is a way to articulate value more clearly and then get their client to agree to that value. And what’s interesting about that is if you do it really powerfully, it very quickly ups your price model and in and it builds your pricing based on the value you’re bringing versus the market competition. So, for example, we just wrapped up our biggest deal ever at a four and a half million dollar contract. Our average deal prior to this was one hundred and fifty thousand dollars a year. And what we’re looking at doing and the reason that we did this as we said, OK, what’s the market value that we’re bringing? And then can we scale that? And so what we did is we created two things and I said two, right? So one is the impact analysis. The other is the sales process of a thing called we call co-creation. And if you can build a sales process that builds a co-creation model into it, then that, coupled with an impact analysis, is almost impossible not to land very significant deals. 

Sean Magennis [00:03:15] I love that. So an impact analysis and a sales process, you’re co-creation model. Outstanding. So, Nate, I’d like to get your thoughts on two tools that we also recommend in this area. I’ll walk you through each one and get your thoughts on each of the two tools are the demographic profile and the psychographic profile. So let’s start with the demographic profile. This is a description of a particular type of client based on unique identifiers such as gender, age, industry, job title, geography. And it focuses on quantifiable attributes and is objective. What are your thoughts on this concept? 

Nate Keivman [00:03:59] I think it’s a baseline for being able to access any given market, right? You have to understand who they are. We call it your total digital universe. Like how do we know our market right? And in the day and age that we live in, we have such accessibility that we’ve never seen before in our in our world to where there’s no excuse for you as an organization not to have your total digital universe at your fingertips. And what I mean by that is the ability to communicate with them, by email, by phone, by social and having that database something that’s always in your hand and always live. 

Sean Magennis [00:04:35] Well, that’s right on. So the next one is a psychographic profile. This is a description of a type of client based on also on unique identifiers such as once needs, goals, challenges, priorities. It’s the qualitative attributes and it’s more subjective. What do you think about that, Nate? 

Nate Keivman [00:04:56] Well, I mean, it’s the holy grail of data, right? So if if if I could figure that one out permanently, we’d be doing a lot more of those bigger deals, right? So the we end up figuring the psychographic out through a thing called the five psychological triggers. And this is a way that executives actually interact, not just think it’s interesting. So we’re most marketing and most sales fall into the habit of if I say my client is this and I talk about my big background and pedigree, that’s enough, right? But it’s not for an executive what an executive actually makes decisions on and when. The reason they’re executives, by the way, is they make great decisions fast. That’s kind of part of the the role too great. So, so, psychologically and globally. This is applicable. So in Abu Dhabi, to London, to New York, to Australia and Sydney, it’s the same for executives, which is there are limited on time. They’re good at making decisions and they make decisions on three core areas outside of trust and credibility. So trust and credibility is the baseline, but time, money and risk are the three critical components that get them to say yes, that’s what’s been able to get us from like just a single call. The email that’s extremely long, by the way, and that’s a different conversation point. Yes, that’s what we’ve been able to land a conversation for one of our clients with with Elon Musk and then one with Tim Cook, right from an email. And it’s something that opens the door that you never knew possible because of the way you articulate your value as it pertains to them and how they see time, money and risk. 

Sean Magennis [00:06:39] You know, that’s that’s absolutely fascinating. And I love what you’ve just shared. One of the one of the things that differentiates you is what you said at the end of your remarks, which is this long email. And because so many marketers go out with trying to get something catchy, some pain points to two word line, you know, two sentence line. Give us a quick insight into this long email concept because I think our listeners need to hear this. 

Nate Keivman [00:07:08] As it’s really important, everybody so executives are great at making decisions, but they also don’t have a lot of time. So a long emails, actually respectful of time, not disrespectful of time, and people don’t understand that because what you need to be able to do is give them enough. And remember, there’s four what if you if you look at the various personality tests out there, there’s four kind of primary personas, maybe six, depending on which one you’re using. Yes. And and CEOs tend to fall on one of two classes and then a little bit of one of the third and. And so what we do is we write to each of those different persona types in order of their attention span. And so when you write that way, you have to understand that there’s a thing called the power statement that you have to build to get their attention. And that’s all short. That’s true, yes, but they’re not going to make a decision to give up their most valuable asset, which is their time, unless they can get a little more information right there without clicking on something and having to go dig for it. So that’s why we’ve been able to modify this over 10 years of and tens of millions of emails and and figure out the Hey, this stuff, this is this is the way to get executives. It doesn’t mean that’s the way to get sales professionals, by the way is going to be better for them, right? But if you want executives? Yeah, you go. There’s a model for it. 

Sean Magennis [00:08:26] Outstanding that that that was a great definition. So we’ve also found that selling services is much harder than selling a product. So when a prospect buys a product, they put their trust in the product itself. When a prospect buys a service, they put their trust in the people delivering the service. So therefore, and you’ve said this establishing trust is essential. What do you think of this? 

Nate Keivman [00:08:50] I think that the reason that the sales process is one of the critical tools to success that we talked about earlier. I I teach a methodology where rapport building and this is from some really great colleagues of mine that have fed into this and are happy to give them as resources. But you know, we’ve done a combination of learnings over tens of thousands of sales calls, hundreds of thousands of sales calls now with our clients to the market that we’ve been serving them right. And we can see out of all that, all that data. Who’s winning at higher percentages versus others? And what do they do differently over others? Well, the ones that are really, really good at closing on a brand new conversation for the first time from a new relationship. They’re really, really good at building rapport, and the process for that is a consultative sales. So consultants and the reason I love serving the consulting industry is by default, you’re naturally a consultant. You have all the tools within you to be very good at this process. However, by default, what most people do is they get into their pitch and they sell themselves. And yeah, they just throw up on them. And right, and that’s honestly your consulting because you’re super smart in your category. But the bottom line is, is you’re doing something that’s the same for everybody. Rapport is not built by talking about the city you live in and connecting on something really generic on a sports team. It’s built by understanding their challenges, understanding where they’re trying to go and watch the gap between them. And can you or can’t you solve that? That’s how Raptors built. And that’s what we do as consultants anyway. We just don’t always recognize it. So what we tend to do is we want to get into really hurry up and tell them about us. But they don’t care. They want to know is what we do able to solve their problem first. And that’s what we need to focus on. 

Sean Magennis [00:10:42] That is a powerful distinction. And listeners, please remember that. So sales tools like those we just discussed, they’ve been around forever. If they truly can help win bigger deals faster and more often, you would think they’d be used more often. So when when I look at firms and I think you’re the same, they’re either not present or if they are, they’re not used properly. So why is this? Why should leaders of boutique professional firms care about what you’ve just been sharing? 

Nate Keivman [00:11:15] Because it will grow you exponentially. I mean, we have we have a I have a great management consulting firm and they’re but on the smaller end of the companies that typically start with us, they started about six hundred thousand dollars right when COVID hit. And we help them understand this methodology and the combination of understanding some of the tools that we’ve outlined, right? The tools are the beginning, the sales process, the impact analysis that by itself should double triple quadruple, sometimes topple your your price. They went from a seventy thousand average deal per year to a $500000 average deal per six months. Wow. And then on the back end of their contracts, they got a three year contract at a million dollars a year, so they went from all that and just over the last 18 months, and now they’re a $5 million firm. So I think about the speed of impact and the speed of growth. You can grow in three primary areas really, really fast as a management consulting firm, increase your price right there over a shorter term or consolidate the term over a longer period of time either way, and then close more deals and get more leads, like if you can do all three at the same time, you’ll have exponential growth and it’s almost guaranteed. So that’s where I think that if what I’m saying resonates, you know, an impact analysis, understand how to build a rapport and have a really well-structured first call because you win the deal on the first call and and then understand that process will increase your prices very quickly. And that’s the fastest and easiest way to grow your company. I did that 100 percent growth for three years straight, and all I did was focus on my price and my term. 

Sean Magennis [00:12:52] So those are outstanding points. And, you know, brings me to brings me to a question. So a lot of our listeners will get off this podcast and they’ll go, OK, so how do I implement this? How do I get started in this? Give them some. Give them some tips on what to do immediately after hearing. You know what you’ve just said 

Nate Keivman [00:13:13] Sure, I think. It’s really hard to get to your own core value. I was just looking at a website of a person I’m talking to later today, and he’s in the management consulting space and I’m like, Wow, they really struggle to articulate their value. And so what happens is most management consulting firms grow from referrals because they can’t articulate their value clear enough for people to actually want to desire it because they’re not saying it clear enough, right? And so. So I think that the starting point is to get really, really clear on your core value to the market, right? And how to articulate that spend time, spend money on that because that’s going to create the big breakthrough, right, where we’re working with one of the largest financial institutions in the world coming up and the first thing they’re hiring us for is that as the core message, right? What’s the core value? How do I crack through on the messaging first and then we can go start sharing that message with the market? And so the second thing I would say is an impact analysis is a simply put, it’s an Excel sheet that grabs certain assumptions and articulates everything you do into a monetary impact on their organization. So like the the company I mentioned earlier, that went from six hundred to five five million a year culture transformation company and well, that’s a hard one to articulate into. You know, what’s the financial impact of this? Yes. And so but but there’s a lot of ways to do it, and so turn everything from whether it’s time saved or it’s hours saved or it’s, you know, you know, risk eliminated or whatever it is that all translates to dollars. Figure out how to translate it to a dollar and a bottom line impact and then use that into your process. And then what it is is it’s a little quick gut check, and what it becomes is a business case that helps you win the bigger deal, right? 

Sean Magennis [00:15:13] Yeah, I love that night. I absolutely love that. That’s very practical, very doable. And obviously they can always reach out to you, which would be really in a very important for those that would need your type of expertize. So this is great. There is no part of the boutique that this information will not change. Every sales script changes. Every process to deliver a service would get rewritten to reflect this enhanced understanding of the client. So a firm should change its marketing messages, its pricing position and the hiring profiles realistically of its staff. So to win bigger, faster and more often requires the boutique to obsess over the client every little detail without this information dynamically updated regularly. You’re not client focused. So this is a good reminder tools that can truly help you understand your client. OK. 

Sean Magennis [00:16:11] This takes us to the end of the episode. Let’s try to help listeners apply this. We end each show with a tool. We do so because this allows a listener to apply the lessons to his or her firm. Our preferred tool is checklist, and our style of checklist is a yes or no questionnaire. We aim to keep it simple by asking only 10 questions in this instance. If you answer yes to eight or more of these questions, you know your client strategy is working. If you answer no too many times, your lack of client knowledge will impede your ability to win more business. Nate has graciously agreed to be our peer example today. And Nate, I’ll ask you the yes no questions, so we’ll all learn from this example. So let’s begin. 

Sean Magennis [00:16:58] Number one, do you have a demographic profile of your target client? 

Nate Keivman [00:17:03] Yes. 

Sean Magennis [00:17:05] Number two, do you have a psychographic profile of your target client? 

Nate Keivman [00:17:11] I do. 

Sean Magennis [00:17:12] Number three, do you have an elevator pitch that speaks directly to the target client? 

Nate Keivman [00:17:19] Absolutely. 

Sean Magennis [00:17:20] Number four, do you understand the personal goals of the client? 

Nate Keivman [00:17:26] I do. 

Sean Magennis [00:17:27] Number five, do you understand the professional goals of the clean? 

Nate Keivman [00:17:32] I do. 

Sean Magennis [00:17:33] Number six. Do you understand the obstacles preventing the client from accomplishing their personal goals? 

Nate Keivman [00:17:42] Yes. 

Sean Magennis [00:17:43] And number seven, do you understand the obstacles preventing the client from accomplishing their professional goals? 

Nate Keivman [00:17:51] Yes. 

Sean Magennis [00:17:53] Number eight, do you understand the likely objections that your client is going to submit to you? 

Nate Keivman [00:18:00] Yes. 

Sean Magennis [00:18:02] Number nine, do you understand the client’s top priorities? 

Nate Keivman [00:18:07] Yes. 

Sean Magennis [00:18:08] And number ten, do you understand the emotional makeup of the client? 

Nate Keivman [00:18:15] Most of the time. 

Sean Magennis [00:18:17] I love that, you know, and this is an example to our listeners, somebody like yourself that literally this is your business should answer yes to those. And the challenge to our listeners from both you and I need is please think through all of these, apply them to your business. And if you can’t answer sufficiently, then go back to work and really focus, focus on getting to know your client. So in summary, know thy client. Get inside their hearts, their souls, their minds. Try to know them better than they know themselves. Take this knowledge and drive it into everything you do. Because when a prospect bumps into you, they should say to themselves, These people get me, Nate, thank you for sharing your expertize with us. It’s great to see you.

If you enjoyed the show and want to learn more. Pick up a copy of the book The Boutique How to Start, Scale and Sell the Professional Services Firm. Written by Collector 54 founder Greg Alexander.

And for more expert support. Check out Collective 54 the first mastermind community for founders and leaders of boutique professional services firms.

Collective 54 will help you grow, scale and exit your firm bigger and faster.

Go to Collective54.com to learn more.

Thank you for listening.

Posted on

Episode 50: Are you Losing to “Do Nothing”? – Member Case with Beth Trejo

Beth Trejo, CEO, and Co-Founder of Chatterkick, discusses how to stop losing to a competitor we call “Do Nothing.” Boutique professional services firms lose more deals to “Do Nothing” than any other competitor. If you want to bring on new clients, you will need to defeat this competitor to grow your professional services firm.

Transcript

Sean Magennis [00:00:17]: Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. Our goal with this show is to help you grow, scale, and exit your firm bigger and faster. I’m Sean Magennis, Collective 54 Advisory Board Member, and your host. 

I will make the case that boutiques lose more deals to a competitor, we call “Do Nothing” than  any other competitor. I’ll try to prove this theory by interviewing Beth Trejo, the CEO, and co-founder of Chatterkick. Beth educates business leaders on social media tools and gets their digital recruitment, social media, and digital customer service efforts working. You can find Beth at chatterkick.com. Beth, great to see you, and welcome. 

Beth Trejo [00:01:14]: Thank you, I’m excited to be here today. 

Sean Magennis [00:01:16]: Likewise, we’re so excited to have you. So, Beth, our description of the competitor we called “Do Nothing” refers to the project that went away. The prospect did not hire a firm, any firm. They just decided not to move forward with the project. In other words, they decided to do nothing. Has this problem occurred for you in your line of business? 

Beth Trejo [00:01:40]: Yes, and we actually see this a lot. We focus on the social media platforms, and many times these are the first things that people set aside when they’re busy, or they hand their social media keys to an intern, and then the intern goes away. And so it’s one of the most overlooked opportunities that I think a lot of businesses have in multiple categories, not just direct retail. 

Sean Magennis [00:02:03]: Yeah, you know, that’s what we find, too. And so, just following up from there, do you feel that this is a top competitor that boutiques must defeat to grow? And why do you feel that way? 

Beth Trejo [00:02:16]: Yes, I do, and I think the “Do Nothing” competitor really does demonstrate a core value that a lot of the professional services firms have, which is expertise and their advice. And let me give you an example. 

Sean Magennis [00:02:30]: Yes, please. 

Beth Trejo [00:02:31]: One time that we had a particular customer and they were looking to recruit a salesperson, and this “Do Nothing” approach actually cost them millions of dollars. So, what happened was they were in this business. They were a manufacturing company, and their lifetime customer value is really high. So, they were looking to recruit a sales individual that, you know, they were super excited about when they found a candidate. 

This candidate had expertise in the industry, and they were going to take this new product line and really get it off the ground. He’s super excited about this candidate, the business buzz. And they got to the final stage of the interview process, and they offered the candidate position, and the candidate declined. And they were just completely perplexed. They couldn’t figure out what happened. 

And they asked the candidate, and the candidate said that they had multiple offers from this business and their competitor, and they felt like their competitor, the offer they accepted, felt more “modern” than this business. And this business was innovative. It was high technology-driven. It was all of the things. 

Sean Magennis [00:03:51]: Yes. 

Beth Trejo [00:03:51]: But online, they had a website that was old school. 

Sean Magennis [00:03:56]: Yes. 

Beth Trejo [00:03:57]: They had a social media presence that was pretty much nonexistent. And maybe a couple of tweets that were left from Happy Memorial Day a few years ago. And so it really was. They didn’t have a presence, so they didn’t get to tell their story, and their story was formed for them, which was that they weren’t a modern company, and they lost the candidate. 

Sean Magennis [00:04:22]: That is such an extraordinarily good example, and it just showcases the nuances and the importance of having all of these elements defined. And then, you know, there’s this concept of mystery shopping where, you know, I think it’s so critically important for people to mystery shop themselves so they know what candidates you know, think, and feel. Is that something you guys do? 

Beth Trejo [00:04:45]: Yes, we definitely just kind of take a customer journey approach. Can people find basic information about you? Do you have a presence online that is an authentic reflection of who you are?  I don’t think that people are looking for perfection, whether it’s candidates or it is customers. But, they want to feel like they have good information and they want that authenticity. So, stock photos – throw them away. I would rather have a candid picture of your team over lunch than a stock photo of people that don’t look like those who work at the business.

Sean Magennis [00:05:18]: Yeah, that makes total sense. So, OK, defeating this “Do Nothing” competitor. It sounds like it will save founders a ton of time and boost revenue. I’d like to get your thoughts on some of the best practices that we recommend in this area. 

There are four specific things I’ll walk you through, and I’ll have you share your thoughts on each? The first is to be sure you can state the problem you solve for your clients clearly. I often ask a professional services firm  founder what problem they solve for clients. And they typically tell me about their solution. So, what are your thoughts about this? 

Beth Trejo [00:05:56]: Yeah, and I really think from our angle, the power of social media really lets you cross multiple operational areas of your business. Yes. The first is it does give you a competitive advantage because if you have a microphone, you can tell your own story. And it’s not just the story that your employees that maybe left in an unfavorable way could tell about you. It’s not the story that your history necessarily defines you. 

But, if you have these channels, they really are a communication channel. And so it can build loyalty, gain a competitive advantage, and help you build real connections. Yes, because I do think that that is the currency of our future. It’s how deep can you connect with your audience? 

Sean Magennis [00:06:41]: You’ve hit the nail on the head. The second thing to do is to determine if the problem you’re solving is pervasive. So to grow your professional services firm, we need lots of sales opportunities. What are your thoughts on this concept? 

Beth Trejo [00:06:55]: So, I think for as it relates to social media, I think and even just creating a digital presence, we really are living in a world of you need that existence online, and you need to make sure that you have proof or validation. 

It’s funny. Testimonials are not as important in terms of the word testimonials. People like the word review because review feels less forced than testimonial. And we want as consumers, again across all categories, to feel like we have control to source information about our businesses and the people that we work with, and we don’t want it dictated to us in, you know, a non-authentic way. 

Sean Magennis [00:07:39]: I like that. So the concept of reviews rather than testimonials that’s very powerful. Number three that we recommend is it’s a problem proving the problem is urgent. So when a founder pitches a prospect, a prospect of determining what he or she, you know, is hearing is worthy of making it on the priority list, what do you think of this idea? 

Beth Trejo [00:08:03]: I think, especially as it relates to the “Do Nothing” competitor, urgency is really important because what can happen is if you’re complacent and you just let your presence exist online, or you’re not actually trying to make it better, your story gets told for you. And people are really busy picking up little pieces of breadcrumbs. 

We see this all the time with reviews and again, especially in professional services industries. They don’t collect and capture reviews as much as maybe retail businesses may. But what happens then is if you get two bad ones and you had zero, now you have two two-star reviews. And you start making that times ten, and all of a sudden, you’re not ahead of that, and it’s a really difficult thing to fix.. 

So, my recommendation from an urgency perspective is you have to get ahead of it because this is our world of people leaving reviews and talking about your business. And so, if you’re not getting ahead of the curve and it is urgent, you’re going to be missing out. 

Sean Magennis [00:09:10]: And it’s a 24-7 all on environment. So having the discipline to look at those to respond, to capture them, to learn from them, I guess, is equally important. 

Beth Trejo [00:09:22]: Hundred percent. 

Sean Magennis [00:09:22]: Yeah. So the fourth recommendation to defeat “Do Nothing” is to confirm that a prospect is willing to pay for the solution. Often founders make the pitch, the prospect says yes, and then they see the price, and then that yes, becomes a no. What are your thoughts on this? 

Beth Trejo [00:09:39]: Yeah, I think there’s a little bit again, especially in the professional services category of the what is the cost of “Do Nothing” right? And this is a pure cost of losing a critical employee or losing your current employees because, you know, the grass looks greener on the other side. 

Yes, the cost of PR mitigation strategies, I can tell you that’s very expensive, very expensive. And we see this example all the time. And I mentioned this on the review side of things. But if there was something said about you, and there was a swarm of people that just really hurt your reputation, you’re going to need not only just an outside person to help navigate that, but your employees are also going to have to spend a lot of time. 

So there are definitely resources internally that you’re probably going to have to put on that. And I’m sure that those all could be calculated into a total cost analysis. 

Sean Magennis [00:10:34]: Yeah, I think that’s an excellent answer and unpacking of that. Beth, this has been fantastic. There are four ideas: state the problem clearly, pursue only pervasive problems, prove the problem is urgent and use a cost justification to increase the prospect’s willingness to pay. These will defeat “Do Nothing”, and they’ll help our audience members grow. 

OK, so this takes us to the end of the episode. Beth, let’s try to help listeners apply this. We end each show with the tool. We do so because this allows the listener to apply the lessons to his or her firm. Our preferred tool is a checklist, and our style of checklist is a yes or no questionnaire. We aim to keep it simple by only asking 10 of these. 

In this instance, if you answered yes to eight or more of these questions, your strategy to defeat “Do Nothing” is working for you. If you want to know too many times, not identifying the problem is likely getting in the way of your attempts to grow. So, Beth has graciously agreed to be our peer example today. Beth, I’ll ask you the yes, no question so we can learn from this example. 

Sean Magennis [00:11:47]: So, number one, can you explain the problem to your family? Do they understand it? 

Beth Trejo [00:11:55]: Yes, social media is relevant in multiple categories and industries. 

Sean Magennis [00:11:59]: Outstanding. Number two, when you explain the problem to your friends, do they understand it? 

Beth Trejo [00:12:06]: Same answer, I don’t think that anybody would argue that social media isn’t baked into all of our lives. 

Sean Magennis [00:12:11]: Number three, does the problem exist in more than one industry? 

Beth Trejo [00:12:17]: It’s a human-to-human  world these days, and we need to make sure that we’re not just living in a B2B or B2C space. 

Sean Magennis [00:12:23]: I love that answer. Number four, does the problem exist in companies of all sizes? 

Beth Trejo [00:12:30]: Absolutely, from a small little retailer to a large manufacturer. 

Sean Magennis [00:12:35]: Yeah, to a one-man band up to, you know, a global multinational. Does the problem exist in many geographies? 

Beth Trejo [00:12:43]: Yes, and I would argue that it connects us to more geographies than we don’t even probably realize we’re connected to. 

Sean Magennis [00:12:49]: Again, completely agree with that. Number six, are clients paying to solve the problem today? 

Beth Trejo [00:12:57]: Yes, they’re either paying with their time, or they’re hiring someone to help them. 

Sean Magennis [00:13:01]: Number seven, have clients been paying to solve the problem for years? 

Beth Trejo [00:13:07]: As long as social media has existed, they realized that it takes a lot of work, and the trickiest part about it is it doesn’t shut off. 

Sean Magennis [00:13:14]: Yep, that’s 100 percent. Number eight, if the client does not solve the problem, are the consequences severe? 

Beth Trejo [00:13:22]: Very much so, we gave that example with that PR crisis or just losing a key candidate. 

Sean Magennis [00:13:26]: Yep. Number nine, is there a trigger event that puts the client into the market for your solution? 

Beth Trejo [00:13:34]: I think if you start a business, you need to have a presence online. 

Sean Magennis [00:13:37]: Yeah, I think that’s a baseline. That’s table stakes today, right? 

Beth Trejo [00:13:41]: Exactly. 

Sean Magennis [00:13:42]: And number ten, when clients have the problem, do they work to get it solved by a certain deadline? 

Beth Trejo [00:13:49]: Yes, and I think from a deadline perspective, it really does kind of come in waves. But, the consistency is half the battle of social media, and it’s more than just posting on the holidays. 

Sean Magennis [00:13:59]: You know, I love that, and that’s such an important lesson for listeners to understand and then to model. I’m assuming that there are great examples out there that people can, you know, fast follow. What are your thoughts on that? 

Beth Trejo [00:14:12]: Oh, there are so many businesses that are doing it right, and they’re upending different categories. These smaller companies are really competing against large behemoth brands just by connection. And that’s the thing that I would encourage your listeners to do. Social media isn’t just about pushing information. It’s about really listening and building true relationships with your audiences and developing a community. 

Sean Magennis [00:14:37]: Beth, thank you. I mean, this has been extraordinary. And again, I would encourage our listeners to reach out to you if they have any needs in this particular area. So, in summary, “Do Nothing” is defeating you at least 50 percent  of the time, whether you know it or not. 

To beat this competitor, be sure to pick a problem to solve that is pervasive, it’s urgent, it’s one that prospects are willing to pay to solve and be sure you can explain it simply. In other words, start with the problem, not the solution. And in the context of social media, make sure that you are very prepared and that you are literally following it 24-7. Big thank you to Beth for sharing these great examples for us today. 

Sean Magennis [00:15:23]: If you enjoyed the show and want to learn more. Pick up a copy of the book “The Boutique: How to Start, Scale and Sell the Professional Services Firm”, written by Collective 54 founder Greg Alexander.

And for more expert support, check out Collective 54, the first mastermind community for founders and leaders of boutique professional services firms. Collective 54 will help you grow, scale and exit your professional services firm bigger and faster. Go to our website to learn more. Thank you for listening. 

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Episode 49: The Boutique: WHAT TO DO IF TRAPPED INSIDE A LIFESTYLE BUSINESS?

The opportunity cost of spending your prime in a lifestyle business is too large. On this episode, we discuss a 3-part framework to address this issue and demonstrate how to use it.

TRANSCRIPT

Sean Magennis [00:00:16] Welcome to The Boutique case study series with Capital 54, a podcast for owners of professional services firms. My goal with this show is to help you grow, scale and sell your firm at the right time for the right price and on the right terms. I’m Sean Magennis, CEO of Capital 54, and your host. On this episode, I will make the case you do not want to be trapped inside a lifestyle business. The opportunity cost of spending your prime in a lifestyle business is too large. I’ll try to prove this theory by interviewing Greg Alexander, chief investment officer and founder of Capital 54. Greg has developed a three part framework to address this issue, and today he’ll demonstrate how to use it. Hey, Greg, welcome. 

Greg Alexander [00:01:13] Hey Sean, good to be with you, big, big topic today, let’s see if we can help some folks escape the trap of a lifestyle business. 

Sean Magennis [00:01:18] Fantastic. You know, it reminds me of Harry Houdini, right? We’ve got to give you that capability. So Greg, can you provide a brief overview of your three-part framework? 

Greg Alexander [00:01:31] Sure, let’s start by identifying the signs of this trap. Listeners are wondering if they are trapped or will they become trapped. Our listeners tend to be people who do not want a lifestyle business. They want to scale to something more substantial. Here’s some thoughts help diagnose if you are trapped. And Sean, allow me little leeway here, because… 

Sean Magennis [00:01:55] Absolutely. 

Greg Alexander [00:01:56] Sure, please. A lifestyle business is an average business. It’s not a bad business, it’s not a good business. It’s certainly not a great business. It’s OK. It provides a decent living, does not require an unreasonable level of effort. It fits nicely into one’s lifestyle with a wonderful work life balance. It’s better than working for a soulless big corporation. Owners of a lifestyle business are never going to get rich. And for some, that’s OK. Lifestyle firms are never going to quote put a dent in the universe, as the great Steve Jobs used to say. 

Sean Magennis [00:02:33] Yes. 

Greg Alexander [00:02:35] They’re not going to attract the most interesting clients with the most fascinating problems. A lifestyle business will be filled with really nice people, but maybe not top talent. Top talent avoids lifestyle businesses they want to grow, to be stretched and to really go for it. And there’s nothing wrong with the lifestyle business at all. For many, this is perfect. However, many who are operating a lifestyle business today wish they were not. They launched their firms with higher ambitions and with different intentions, but they fell into a trap unknowingly trap is if it ain’t broke, don’t fix it. When things are quote unquote fine, there was no reason to break glass rock the boat. The bills are getting paid. The grief factor is low. The founder is happy. Life is all right. The problem is complacency sets in year after year passes by, the founder has been lulled to sleep. Then one day he or she wakes up and says, I want something more from life, my life’s work should mean something. Someday I’m going to want to retire. I’m going to need to sell my firm. I do not want to keep doing this. It’s my 60s, 70s and God forbid, belong beyond that. I got to turn this into more than a lifestyle business, or I’m never going to be financially secure. This trap carries a huge cost. Cost I’m referring to is the opportunity cost. This cost can be quantified. Let me give you an example. A boutique life cycle is approximately 15 years from cradle to grave. Ask yourself at the end of the 15 years, what do you have to show for your efforts? Compare this to what you might have had if you took a different path, whatever that different path may be. And in my experience, this produces a gap and the gap is big. Let me share some data to make my point. And then we can jump into the three part framework. 

Sean Magennis [00:04:47] Excellent. 

Greg Alexander [00:04:49] A lifestyle business in pro serve has about 20 employees doing about four million in revenue, and approximately eight are in the province. An owner of this type of business will pay him herself about a half million dollars. After taxes this is about, let’s say, 250k 300000, depending on where you live and after you satisfy your living expenses, maybe you can save about $100000 per year. So over a 15 year period, that’s 1.5 million, or maybe a little more due to investment returns that’s rounded up to a goal to make. This is not enough to be financially secure, given inflation and life expectancy increases. In reality, it’s not enough for much of anything. The cost of living 15 years from now is going to be much higher, especially in key areas such as health care. Yeah, under this hypothetical approach, you’re going to work yourself right into the cemetery. If I compare this outcome to the alternatives doesn’t compare, well, heck, you might be better off with a civil service job and 40 hours a week, three weeks vacation and a pension. There are other ways to spend your prime your career that will produce a lot more, and you, the brave founder the person who creates jobs for people. You just you’re worth more than that. And I feel the saddest thing in life is a wasted prime. So I wanted to come and speak to you today and urge you not to waste your prime and avoid the trap of a lifestyle business. That makes sense Sean? 

Sean Magennis [00:06:25] Greg, it makes 100 percent sense. I mean, this is strictly I mean, this is so important, it’s a wake up call for many. I see it all the time, and I know you do. The good news is we are making our listeners aware of it, so hopefully they can avoid this trap. So, Greg, if I’m someone who is concerned with this, what would I do? 

Greg Alexander [00:06:48] OK, good question. So this is where the three part framework comes in. So a founder of a boutique has three options trapped in a lifestyle business. Option number one is to shut the business down and do something else. Option number two is the pivot, this means course correct before it’s too late. An auction number three is to persevere in this means to stay the course. 

Sean Magennis [00:07:10] OK, Greg. So three options shutdown, pivot or persevere. You provided me three checklists, one for each option to help listeners determine which option is best for them, and I’d like to have you demonstrate each checklist for the audience. I’ll take you through each option and get your recommendations on each. So option one is shut the business down and there are four questions to answer. Number one, are we out of moves? 

Greg Alexander [00:07:41] So if you’re contemplating shutting the business down, it’s a tough thing to think about. So are we out of moves? What does that mean? Well, have you tried everything you can? Have you studied all the best practices? Try to get them implemented? Have you sourced all the best advice if you’ve already done all that and you’re still a lifestyle business, shut it down. The opportunity cost is too great. If you haven’t exhausted all of the best practices and the advice it’s available to you, we keep going but make a commitment to yourself that you’re going to implement some of the things that you want. 

Sean Magennis [00:08:12] Excellent. So number two is, are we miserable? Do we hate the clients, our coworkers, et cetera? 

Greg Alexander [00:08:19] Yes. So you’re contemplating shutting the business down? That’s the section where one right now that’s option one. 

Sean Magennis [00:08:24] Yup. 

Greg Alexander [00:08:25] You know, if you’re miserable, you hate coming to work every day. If you find yourself daydreaming about something else to do and your heart’s not in it. So if that if you find yourself in that situation, then you’re better off to shut the business down if you’re not in that situation, if you still love what you’re doing. Then stick with it, because you probably can crack the code. 

Sean Magennis [00:08:45] Excellent. So again, in the context of shutting the business down, this question is do you still believe in the vision for your business? 

Greg Alexander [00:08:55] Yeah. So one thing I learned on my journey is a vision changes over time. You know, I look back at the original vision I had for myself. My ambition was modest as time went on and I had some success. My my ambition kept expanding. So periodically, it’s a wise move to take a pause and say to yourself, Hey, if I realize my current vision, am I going to fulfill my dreams? The answer to that question is yes, don’t shut the business down. Keep going for it. The answer a question is no. Then what do you do when you’re running in place? You’re pursuing a vision that, even if you’re successful, isn’t worth it? 

Sean Magennis [00:09:30] Yep. And then the fourth one and this is is the window of opportunity closing? 

Greg Alexander [00:09:36] Yeah. And this is the one that’s outside the control of the of the founder. So are you running out of time? Are your competitors beating you? Are there lots more competitors coming into the market today? So this window of opportunity, all businesses have, you got to make sure. You know, is that window open? How long is it going to be open for? And that’s a critical thing to consider if you’re contemplating shutting the business down. 

Sean Magennis [00:09:58] Yeah. Excellent. Thank you, Greg. So the next option is to pivot pivot. It’s an overused term. You feel there are seven types of pivots specifically for boutique professional services firms. Let’s see if we can get through these efficiently. So the first one is what you term a zoom in pivot where a single feature becomes the whole service offering. What are your thoughts on this? 

Greg Alexander [00:10:26] So if you’re going to pivot, you’re not going to shut the business down. You want to get out of a lifestyle business. One of the pivots to consider is to zoom into it. This means sometimes founders over engineer their service offerings. So this type of pivot would result in a much simpler service to deliver, which will mean much higher profits. And with those profits, you can fund your expansion plan. And if successful, you’ll get yourself out of a lifestyle business. So if the answer yes to this question, then execute a service offering pivot. If you answer no, then the solution to a lifestyle business trap is not associated with assuming to the excellent Greg. 

Sean Magennis [00:11:07] The next one is a zoom out pivot. The current service becomes only a feature. What are your thoughts on this? 

Greg Alexander [00:11:15] So this is the flip side of that coin. So sometimes a service line is not compelling enough. There are things that need to be added to it to compel clients to buy it. So ask yourself that question. You know the problem that my client is having, can I truly solve? If you can’t, then you’re going to have to add things to your service line, so if you find yourself in that situation, then you might want to execute the zoom out pivot. If you don’t, you probably. You probably should not. 

Sean Magennis [00:11:43] Excellent, Greg. The third is client segment pivot, a shift to a new set of target clients. Unpack that for us. 

Greg Alexander [00:11:54] Yeah, so oftentimes owners of lifestyle businesses are unclear as to who their ideal client really is. And this results in wasting resources, pursuing the wrong business and lifestyle businesses. A resource constraint is there’s only so much time going, so much money going, so many staff members. So you can’t waste these resources. So getting really tight. I knew that client is an ideal client is super important. And ask yourself the client to serve, and today they’re going to get you out of the trap of a lifestyle business. If the answer is no, then execute a client segment. Go after different client with a different set of problems. 

Sean Magennis [00:12:34] Very important. Greg Number four, a client problem pivot. So the current problem of the focus is not urgent enough. This is critical. Greg, what is your what are your thoughts on this? 

Greg Alexander [00:12:47] Yeah. So this is the kissing cousin of the client segment. Right? So sometimes lifestyle boutique partners, they’re selling vitamins, not painkillers. So this pivot would be going after only urgent problems that are clients are willing to pay to solve. I see this all the time somebody launches a firm. It’s a nice to have is a small number of clients that are willing to hire you for that nice to have. And then you stall up because the problem isn’t urgent. It’s not pervasive. So by definition, you’re trapped in a lifestyle business. 

Sean Magennis [00:13:23] Yep, makes total sense. Number five is a business architecture pivot, and there are two types of business architectures. One High margin, low volume we call elephant hunting. Number two low margin, high volume rabbit hunting. What are your thoughts on this? 

Greg Alexander [00:13:43] This is a big one. Problem is trapped in a lifestyle boutique. Try to run two business models at the same time. There’s never enough money. There’s never enough talent to pull that off. This pivot would be to focus on one business architecture and be good at it. The added commentary I’d give you here is we tend to lie to ourselves on this. We like to say we have we apply discretion to the type of business we take. It’s really not true. Sometimes in the early stages, especially if your lifestyle, business or revenue is good revenue. But that’s the trap. That’s the trap that puts you in a lifestyle trap. So avoid that pick the business architecture. You’re going to fall with elephants or rabbits and stick to it. 

Sean Magennis [00:14:27] I like that, Greg very much. Number six is value capture pivot. This is a monetization model change. For example, should you switch from hourly billings to retainers, fixed beds, performance based contracts, licensing subscriptions, events or royalties? What are your thoughts on this? 

Greg Alexander [00:14:49] Yeah. So this is where all the breakouts are happening right now. So we try to roll role model ourselves after companies that have escaped the trap of a lifestyle business. What do they share in common? Well, services firms are prioritizing their services. Which allows them to switch their pricing strategy or their monetization strategy. And because they’re able to do that, they can go from one time fees to recurring revenue. And there’s probably nothing more powerful than escaping a lifestyle business in recurring revenue. So this is what everybody should be thinking about is value capture, pivot and the ingredient to execute that is the ability to prioritize your services. 

Sean Magennis [00:15:28] Greg, I couldn’t agree with you more. And if you and I look at our members within collective 54, those that are truly scaling have recognized the value of this capture pivot. You know, they monetizing their expanding their service line and their revenue sources. It’s remarkable what some of them are doing. And for our listeners, you know, consider looking at collective 54 from that standpoint because it’ll add tremendous value to your enterprise value when you decide to sell one day. Yup. So Greg, number seven, go to market pivot the three types of go to market approaches of a boutique. One is viral. So word of mouth and referrals to what we call sticky landing and expanding in the client, and three paid outbound cold outreach and marketing support to drive inbound. What are your thoughts on this? 

Greg Alexander [00:16:24] Yeah. So historically, the most common cause of being trapped in a lifestyle business is the lack of a commercial sales engine. Founders rely solely on word of mouth referrals. Well, this eventually runs dry as a personal network is finite. So if your only source of leads is word of mouth, you are trapped and you’re going to stay trapped. So if you find yourself in a lifestyle business, are you worried that that might happen to you in the future? You’ve got to build this commercial sales engine that can allow you to scale beyond the benefits of word of mouth. 

Sean Magennis [00:16:56] Greg, that was incredibly thorough. We now know what the term pivot really means to a boutique professional services firm. And this brings us to the final option, which is to persevere. This option would be sticking with the current plan, but executing it better. Give us your thoughts on this, Greg. 

Greg Alexander [00:17:19] Sure, well, executing the current plan better as opposed to pivoting usually means three things. It can mean swapping out the team. It can mean training the team, or it can mean giving the team more time. A word of caution here. Kicking the can down the road and taking no action is not persevering. That’s procrastinating. To prevent yourself from procrastinating. Remind yourself of your opportunity cost. The cost of inaction for a founder trapped in a lifestyle business is very large, and it’s growing every day. Your prime is X number of years. If you think you have the right strategy. And the key to escaping is better execution, take a very hard look at the team. Sean, one of the things that I would like to mention here is that the material that I shared with the audience today is not original material of Greg Alexander. I’m standing on the shoulders of giants people like. Stephen Blank, Eric Rice from the lean startup, etc.. Yes. And and I just wanted to make sure that I gave them proper credit. What I’ve done is I’ve curated it and edited it to make it uniquely applicable to the boutique professional services firm. But there’s a huge body of knowledge behind this topic. Should I shut the business down? Should I pivot or should I persevere? 

Sean Magennis [00:18:48] Outstanding, Greg, and thank you for that acknowledgment because that body of knowledge is accessible to our listeners. I love the way you synthesized it. I love the way you’ve simplified it. And that’s a huge, huge benefit to our listeners. So it’s super clear that answering these three questions do we shut the business down? Should we pivot and course correct? Or do we persevere? Are the keys to getting out of the trap of a lifestyle business? This brings us to the end of this episode.

A huge thank you to you, Greg, for sharing this today.

If you enjoyed the show and want to learn more. Pick up a copy of Greg’s book, titled The Boutique How to Start, Scale and Sell a professional services firm. I’m Sean Magennis.

Thank you for listening.