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Episode  123 – How a Pioneer from the SaaS Era is Jumping on the AI Wave to Re-invent his Firm – Member Case by Jeff Pedowitz

Jeff Pedowitz, CEO of The Pedowitz Group, was one of the pioneers of the SaaS era by driving adoption of marketing automation technology from Eloqua, Marketo and others. This allowed his firm, The Pedowitz Group, to dominate his niche for almost two decades. Now, Jeff sees the next big wave, AI, and he shares with Collective 54 how to ride it all the way to the bank.

TRANSCRIPT

Greg Alexander [00:00:10] Welcome to the ProServe Podcast, a podcast with leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community focused entirely on the unique needs of ProServe firms. My name is Greg Alexander. I’m the Founder and I’ll be your host today. On this episode, we’re going to talk about A.I. artificial intelligence and its impact, in particular around B2B sales and marketing and overall revenue generation. And we have a fantastic role model today, and his name is Jeff Pedowitz and he’s fantastic for a reason, and are many reasons, I should say. But the one that is relevant to today’s topic is the last time we had a major tech wave was the SaaS wave, and Jeff was a pioneer in that space. He and a very small number of people I believe, can claim attribution for the mass adoption of marketing automation. And having gone through that entire journey all the way from a nascent industry to maturity, which it is today, his perspective is profound, and I think he can take those lessons and apply them to AI because it’s early, early days there, and he maybe more than most, can probably share with us where this might be headed. And what we hope to accomplish today is by listening to that story and applying past lessons to new tech, maybe we can get ahead of the curve, learn to learn a few things, and maybe profit from them. So, Jeff, it’s great to see you. Would you mind introducing yourself and your firm to the broader audience, please?

Jeff Pedowitz [00:01:59] Sure thing. Greg, good to see you too and thank you for having me back. So I own the Pedowitz Group and we are a sales and marketing consulting company. We work with sales and marketing leaders who want to drive more revenue and we specialize in digital channels. And of course, AI is probably the best emerging digital channel we’ve seen in quite some time.

Greg Alexander [00:02:21] Yeah. And I understand that you just did a bunch of homework on a new book that you got coming out in just a couple of weeks. What’s the title of the book?

Jeff Pedowitz [00:02:27] It’s called The AI Revenue Architect. Great.

Greg Alexander [00:02:33] So why don’t you kind of give us the outline of what’s in the book and maybe we can use that as a framework for our talk today?

Jeff Pedowitz [00:02:39] Yeah, absolutely. So. Well, my job, my company’s job is to follow technology because that’s what our customers want us to do, is to implement technology so they can scale their sales and marketing engine. So AI and various components of AI have been around for several years now. It’s just this whole emergence now generated by AI and what that Open AI platform are doing are bringing it into the mainstream and really starting to help a lot more people visualize the tremendous possibilities. As I start to think about this and the problems that my company and I have been solving for the last 16 years. There are still systems are still siloed. There’s data that’s everywhere. And people spend more and more and more on technology and data, but they still can’t run sales and marketing any more effectively than they could 15 years ago. They just have a lot more tech now to deal with it. So as I started thinking about the potential of AI, the first thing I wanted to do was really just help companies solve their problems better. And so the book introduces a concept called Rain, and that name was chosen intentionally because in sales, of course, we’re always trying to make it rain. But in this case I took Matt and it really stands for a Revenue Artificial Intelligence Network. And what it does is it connects all your systems and processes both inside and outside through AI. So you can actually, through one single interface, actually start to direct and manage your revenue engine. So it controls scale.

Greg Alexander [00:04:15] Mm hmm. I love the acronym. So let me make sure I understand that. So Revenue Artificial Intelligence Network.

Jeff Pedowitz [00:04:23] Yes.

Greg Alexander [00:04:24] Okay. And the way that you just described it to me, I find myself wanting to apply past frameworks to it. So is it is it middleware in your perspective or is that an incorrect analogy?

Jeff Pedowitz [00:04:39] Well, in some ways, yes. Right. So it’s it could be taken into something like a Boomi or Mule Sox or automatic or any of these integration in all areas. But combining it with AI so that you can train the systems that you have. So even some of the routine, mundane tasks can be done quickly. But as that starts to supplant, you can actually be a lot more productive. So just some typical use cases we scoring, which is something that we had Eloqua pioneer back in 2004 for the first time, largely has not changed dramatically. Most of the input for sales marketing is made, scoring is manually derived. Well, I think we should get ten points for a website, visit it five points about an email or 17 points of view or a demo. And then the models are relatively rigid, and then we send over what I suppose to be qualified ways to scale sales based on this framework, grade spec and prioritize. But with A.I., you don’t actually need an artificial or an arbitrary model. It can actually analyze the real activities, the demographic data that customers really did to come up with a scientific data, factual-based model that will continue to sell, learn, and even more importantly, become more predictive. Wow. So that’s just one example of where AI can play a major role. There isn’t a sales and marketing person I know that loves cleaning up data. We love getting more data, but we don’t actually like going in and cleaning out fields and systems and building new segments and doing all that well. That’s another way that AI can actually do that, because once you train it on what data standards you want for your company, you can start doing that automatically. Content creation and response. No matter what sales methodology is in today’s modern B2B selling environment, our customers are 90% and 95% of the way through the sales cycle. This is not like what, Greg, when you and I are personally, I wish we could control everything. So that inherently puts us at a disadvantage. So if you can use AI to do more informed research on your prospect customer, write better correspondence, look at their content, come up with unique differentiators, anticipate possible objections your buyer might have, and be ready with response to be more proactive. You’re now starting to get ahead of the game.

Greg Alexander [00:07:09] Those are fantastic use cases. It’s causing me to creatively think about how to get them implemented. What I want I would like to do speak to you about a question I have here in my notepad is, you know, selfishly, I’m trying to help the members of collective 54. I know what you’re doing is much bigger than that. But in this particular case, about 85% of a proserve income statement. The expenses are labor. And so if you can replace labor with tech in theory anyways, you can significantly increase profit margins. Now, some people view that as a negative, you know, and a lot of the stuff you read about AI right now is all these scare tactics. But as a capitalist, I view that as a huge plus. I mean, if my members could take their workforce from 110 and keep the revenue the same, I mean they’re going to make a lot more money and scale a lot faster. So is that hype? Is that real? I mean, do you see the tech replacing humans?

Jeff Pedowitz [00:08:05] Well, it’s a little bit of both. I mean, it doesn’t outright replace humans. And it should be noted that we talk about AI as a general category. AI in its truest sense, means artificial intelligence, sentience, self-awareness, emotional awareness, what we’re all talking about, this general of AI, ChatGPT. It’s not that, it’s machine learning. Now it can take large amounts of data and it can learn quickly in a process to make decisions. But it’s not self-aware and has no emotional understanding. It doesn’t understand context. It doesn’t understand nuance. It is still just a tool in the hands of a skilled practitioner. So I view this as the third major generational change since I’ve been in the workforce. The first, of course, being the rise of the Internet. The second, the introduction of the smartphone. And now this. Now, when the Internet first came out and I got my first marketing job in college, I did catalog marketing the bank. There was no email. There was no Internet. There was no nothing. Did catalog marketing go away? No. Did two new digital channels come into play? Yes. Some people that were very skilled in direct mail moved over into email, digital channels and developed new skill sets. When the smartphone came out, it also introduced the whole new apps and mobile advertising and all new ways of doing things. So I think if you’re just doing simple, repetitive tasks and you’re not willing to adapt like any other moment in human history, if you don’t evolve, sure you will get left behind by an unknown space. AI doesn’t replace the human. It can’t because it’s not a human. It can make us a lot more productive. It can make us a lot smarter. And it can process things faster. So sure, it will introduce new margin providing that professional service owners can really think about how to apply it in the best way for their business. So let’s talk about some immediate practicalities. Almost all of us in professional services are doing research with our clients. We’re doing interviews, we have transcripts, We provide some kind of report or presentation that, well, today that takes a lot of manual activity. It requires our senior and junior people to crunch data and do that. Those tasks can be replaced by AI and done in seconds, which will free up more value added time for those professional people to add more quality insights based upon that data back to the client. Mm hmm. And you use AI. to automate the data gathering. So if you’re doing a subjective in-person interview today with your client and you have them, just go to a site, they fill out a survey,  AI processes all that information in real-time, speeds up that discovery period, adds more value. Yes. So there are a lot of different ways that AI can enhance it, but I think it gets a little overhyped to say that it will replace.

Greg Alexander [00:10:55] Okay. So if I’m listening to this, my first thought is I need an AI strategy for my firm. I’m intimidated by that because it’s evolving. I mean, just just in the last 10 minutes, you’ve dropped more things on me that I knew were possible and that I’m imagining that pace of change is going to continue. So what do I do? I mean, how do I develop a strategy for myself and how do I keep it up to date?

Jeff Pedowitz [00:11:24] Well. Try not to make it bigger than it is. Right, because it’s going to keep evolving and changing. So if you can appreciate that this is a way of streamlining and take improving analytical capability processing. Make a list of your business today. Look at your operational things that you do, your sales things, your marketing, and then look at whatever your professional service on or whether you’re on an architecture firm or a law firm or you are on a consulting firm. What are the things that you’re delivering to your clients? Go back and look at your recipes, your statements of work, and say, okay, if I was going to just add AI to my things, what would that look like? How can I just improve my offering? If I was just to AI enable. Many of us have some type of maturity level, some type of tiered offering with our clients, could you take your top tier and introduce AI to it bigger and more advanced? Or conversely, could you introduce AI to your basic tier and make it more palatable for your prospects and clients and thereby lowering your cost of delivery and acquisition? And I would just start there. So build a simple spreadsheet and go through and that’s how you start to frame out a strategy. Don’t sweat about whether or not you got the right tools or not. Start off with something simple like ChatGPT or Bard, which are conversational and generational. Don’t get some. I mean, there are literally since the time you and I talked about doing this podcast, there’s been 500 applications that have hit the market, but only in the last month or so. But a lot of them are crap, you know, and a lot of them are just small little widgets. Don’t get to fall into that trap of getting consumed. Like you’ve got to go out and buy all this stuff. That’s not necessary. Use the free stuff.

Greg Alexander [00:13:15] If you think back to the two previous key changes of your career, the Internet, the smartphone, and now this. What did you with retrospection now, what did you learn from those two previous major moments that you think you can apply to this moment and allow you therefore to take advantage of this moment, maybe more than you did the previous two?

Jeff Pedowitz [00:13:36] Well, as an investor, I definitely wish I would have added that on some of those .coms, not the ones that last, but the ones that I really I, you know I think that I would have gotten involved sooner and incorporated it even much faster in the business. Well, the benefit of hindsight, I think, always makes us all more prescient. But in light of that. I reflect back on the earliest part of my career, I did not understand truly what the Internet was going to become. I had no. I mean, again, this is we’re talking early nineties, mid nineties here. There was no Google, no SEO. We had dialing with AOL and.

Greg Alexander [00:14:18] No one had any.

Jeff Pedowitz [00:14:19] I decided to hear that we got mail. So I’m certainly not going to claim I mean, certainly with the revision I could be a futurist, but at the time, no, I didn’t know. But I think I would have embraced it more and seen seeing where it’s gone. Same thing with a smartphone. I mean, when I first came out, I was I love my BlackBerry like everybody else. I was just like I was reluctant to switch over and what actually got me to do it is a good friend of mine, Dave Lewis, owned a rival firm. We were at some conference up in Toronto and he was showing me all the stock prices of his clients, his public clients that he was helping since he got involved on his smartphone. And I thought that was just the coolest thing, you know what I mean? Basically saying, Hey, what’s going on? Since we got involved this is what my clients are doing. So I went out and got the phone the next day, haven’t looked back. Yeah, but even then, you know, this first couple of years, you think about us here in the States, we would not even think about using it for banking. I know. And working out. I’m not going to have my information out there. I still got to go to the bank like everybody else and deposit my checks. But today, do any of us think twice about just aiming our phone somewhere? Those of you that are listening, I’m like aiming my virtual phone here. Now. I mean, so it’s changed, you know, we get it and it’s proven over and over again that as consumers, we will trade privacy for convenience. Yeah. So at first, what we’re reluctant to until we realize what we’re ever afraid of. So, yes, I mean, the concerns out there right now are real. And I don’t mean and I don’t want to minimize it in any way. I mean, there are definitely ethical concerns. There’s definitely a built in bias to some of these systems and tools. But that doesn’t mean that they still can’t be highly productive. And you just you know, you exercise with some common sense and some caution but today’s fears will be abated by tomorrow’s gains and productivity and the things that we’re going to be able to do because of AI are going to be mind-blowing. In fact, just like I mean, even though I’ve thought about a lot of things, there are so many things that we haven’t even possibly contemplated yet that are going to happen in the next 2 to 5 years because of this change in technology. And that’s the great thing about the human race, is our endless ability to create and to innovate.

Greg Alexander [00:16:33] Yeah, I agree. I mean, if you just think about the health implications of what we’re going to be able to do medically because of these tools, I mean, it’s amazing. And I’m with you. I think the the pros outweigh the cons tremendously. Okay. Well, we’re out of time here. So, Jeff, thanks for being here. Give us the name of the book again, because by the time this airs, we should be able to buy it. And I’m assuming you’re going to sell it on Amazon.

Jeff Pedowitz [00:16:55] You got it. The AI Revenue Architect.

Greg Alexander [00:16:58] Okay, very good. So I encourage everybody that’s listening to this to pick up a copy of that. Jeff is a qualified author, to say the least, so I’m sure it’s well-researched and well-written. Couple other things for you. Obviously, members, you should make sure you attend the Q&A session we’ll have with Jeff when that gets scheduled. You can ask your AI-specific questions to him at that point. If you’re not a member, of course I encourage you to do so. Go to Collective 54.com and apply and one of our reps will get in contact with you. If you want some more content, check out our newsletter Collected 54 Insights. You can find that on the website. And of course our book is called The Boutique: How to Start Scale and Sell a Professional Services Firm. You can find that on Amazon. But until next time, I wish you the best of luck as you try to grow, scale and exit your firm. Take care.

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Episode 88 – How a Founder of a Training Firm Scaled his Firm by Scaling Himself – Member Case with Tom Abbott

Scaling a boutique takes a team but firms are often started by a single founder. On this episode, Tom Abbott, CEO and Co-Founder of SOCO Sales Training, shares how he transitioned from being involved in every aspect of the business to focusing on team development. 

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. My name is Greg Alexander. I’m the founder and I’ll be your host today. And on this episode, we’re going to discuss how a founder of a boutique processor firm is able to scale the firm by replicating himself in an executive leadership team. This is a really fascinating topic because we’re combining a couple of different chapters from our book, The Boutique, and we’ve got a great role model with us today. His name is Tom Abbott, and Tom is in the throes of this as we speak. And he’s had the courage to attempt to do this. And we’d love to hear his his story. So. So, Tom, welcome to the show. And and if you wouldn’t mind, please give the audience a proper introduction. 

Tom Abbott [00:01:20] Hey, thanks for that, Greg. Yeah, a real pleasure to be here. Tom Abbott here, co-founder and CEO of So called Sales Training. We help companies to optimize their sales performance, so we do that through virtual instructor led training, through webinars and through our e-learning platform called SOCO Academy. So anything about sales, we help B2B companies particularly to optimize their performance. 

Greg Alexander [00:01:44] Okay. Very good. Okay. So let me set this up a little bit. So sometimes founders and co-founders like Tom suffer from what I call the hero syndrome. And the hero syndrome is that we as human beings, we love to feel needed. We love to feel like the hero. We have our personal identity wrapped up in the firm, and it feels good. We get validated when when clients say, Hey, you have to be in the key meeting, or when employees come to you all the time with major decisions that get made. And this insecurity can get in the way of scaling a firm. And the fix here, if your aspiration is to scale beyond a lifestyle business, is to build a firm that is not dependent on you, a firm that can run without you. And this requires, you know, being able to kind of check your ego, so to speak, and surround yourself with an executive leadership team that can do what you can do as well as you can do it. And if you’re able to do that, you’re you’re able to overcome the founder bottleneck and scale yourself by replicating yourself and others. And this is a big stumbling block for many. So so, Tom, as I understand it, this was once a stumbling block for you. And it’s either no longer or it’s in the process and partially no longer a stumbling block. So would you would you share with us kind of where you are in your journey and how you first became aware that maybe you had this problem and maybe what your first steps were, etc.? 

Tom Abbott [00:03:18] Wow. Okay, so there’s a lot to that question. The first the first part is it’s always a work in progress. I think the first key is realizing that you suffer from hero syndrome. And that’s the first part is the awareness. And then sort of realizing is this is this working for me? Right? Is this really helpful? Does this help me grow the business? Do I feel like a hero that I can swoop in and save the day, but at the expense of doing other things like actually growing the business and thinking about strategy and expanding and doing the kind of, you know, boss stuff. So, you know, typically, you know, that’s always a challenge. But I came to that realization, you know, probably about three years ago, I imagine, where it just became really apparent that this this company won’t grow beyond me if I don’t kind of get out of my own way. So the first step for me was to say, look, I’ve got to stop doing sales and I’m awesome at sales. So that was very difficult and I’ve got to stop delivering training programs and I’m a great facilitator and trainer, so that’s really hard, you know, you know, I’m still available for keynotes for companies still engaging to come in and do the big, you know, motivational rah rah as a thought leader. But when it comes to the training for a half day or one day or a two day program, we’ve done a really good job of of of getting freelance trainers certified through me and our training program, which I can talk about later to deliver that on our behalf. And that’s just been honestly a game changer because the training is happening all over the region, all over the world. Sometimes when I’m asleep, it’s just it’s just been a game changer. All right. 

Greg Alexander [00:04:56] So I want to I want to probe in a little bit because you are great at sales and you are great at facilitating. But one of the reasons why you’re great at both is because you love it. So I think founders don’t do what you did because they they love what they do and they don’t want to. Doing what they love doing. So how did you reconcile the conflict between, Hey, I can go out and sell the next client, which I love doing, that I get energy from it it feels good with. Yeah, but that’s in the way of me trying to scale my firm. Like, how did how did you how did you put those two things together? 

Tom Abbott [00:05:35] I think what I did, Greg, was I realized that there were other things that I also love to do. So I love to train. But then I could change my love for training sales teams to training my own sales team. So I can I can do that. I can change my love for, you know, sales for well, let me let me coach my sales team and then they can bring me in for some deals. On some cases, if there is, you know, three or four C-suite people on a call, they’re like, hey, Tom, if we get you on this call, you know, you sprinkle a little founder’s magic 3 minutes. That’s all I need from your time in and out. And you’re good. That’s fine, because then I can still have the team do the grunt work, the follow up to put the proposal together, to send the brochures, to answer the questions, to schedule meetings, all of that stuff that I should not be doing. Because something I realized a long time ago is I was the most expensive trainer on the planet. I was the most expensive salesperson on the planet, probably the most expensive data entry clerk on the planet, like everything we’re doing as founders. And I realized a few years ago, I always ask myself, Is this making me money? And if the answer is No, this isn’t making me money, then I’ve got to stop doing it and get someone who’s, you know, cheaper to do it for me. Yeah. 

Greg Alexander [00:06:49] One of the primary, if not the primary reason why boutiques don’t scale is they have senior people doing junior work, which is what you were just talking about, because in the most senior person in the firm is the founder who happens to be the most expensive. So if you’re doing something that a junior person can do, by definition, you’re eroding all your margin. And that’s a great realization and a great reminder. So I love your answer around how you didn’t sacrifice job satisfaction to make this happen. You just redeployed your love in other areas that lended itself to scale. For example, instead of training clients, train your own staff. That’s a great example. What would you say to founders who say this to me all the time? And it’s somewhat of a religious battle between me and them at the moment that says, Well, I’m special what I do, nobody else can do. So it’s impossible for me to replicate myself. Junior people can’t do X, Y, Z. What do you say to that? 

Tom Abbott [00:07:46] Well, the first thing I say is two things. One, I totally get that because I struggle with that. And you’ve got to get over yourself, because if no one’s going to be as great as you and I’ve realized that I feel, you know, and maybe, maybe we’re wrong, okay. Founders maybe were wrong. Okay. There’s a slight possibility that maybe we’re not as amazing as we think we are. However, we’ve all taken our businesses to a certain point, which means we’re great at a lot of things. But the point is, and I’ve said this to people, my 80% in front of a classroom in a workshop selling my 80% is probably most people’s hundred. Right? So if you can get someone who’s 80% of what you’re able to deliver, that’s pretty darn good. So do you want to have 100% of a small piece of the pie or get someone who’s 80% but you’re able to scale? So if I can get, you know, three salespeople who are 80% my level, that’s still better than me at 100%. There’s no comparison. If I can get three, four or five, six trainers around the region delivering training at 80% of what Tom Abbot would normally do, that’s fine. Now, a good way to solve that problem and we started doing this this year is we charge the same rates for our training across the board with a so-called certified sales trainer. But if they’re insistent on having me hey, Tom, you know, you worked with us last year. We’d love to have you back. I’m happy to do it. It’s at 50% more than our usual rate. 

Greg Alexander [00:09:22] Wow. 

Tom Abbott [00:09:23] Yeah. And I’ve had some people take me up on it, which is great. Okay, I’ll get out of bed for an extra 50%, like, why not? Yeah, you know, because I still love to do it. So don’t get me wrong, all the founders out there, we still love to do what we do. We’re still great at it. But we have to realize that if we want to scale, we need to get more people on the team doing what we do. And look, there’s there’s no magic. You can document this. I can talk about that, too. You can document the process. You can train people to do it. So let’s get out of our own way and leave the ego at the door. It can be done. But in the event that, you know, people are like, We really insist on having you, the answer is yes. And here is what the investment is. Take it or leave it. Yeah. 

Greg Alexander [00:10:05] Which is a great way to quantify it in the eyes of the customer. And some people will say, you know what, time, yeah, you are worth it. So here’s the premium. And some people will say, okay, you know, I’m okay with. You’re a certified person and that gets you out of it gracefully. Right. It’s a it’s a really excellent example of that. And 50% is a big number. Okay. So here so I’m going to play the role of of these. 

Tom Abbott [00:10:24] And let me tell you, I a 50% is a big number, but it has to be big because I played around with that. And if it’s too close to the regular rate, they’ll just pay that all the time. And then you will never get out of doing that delivery ever. 

Greg Alexander [00:10:37] Okay. So here’s the next objection that when you speak to our members in the future about this subject, this is what you’re going to hear. They’re going to say, okay, I get it. However, I’m time starved. So the time it takes for me to teach somebody to do what I do as well as I do, it just takes forever. I can just do it myself in half the time. So I’m going to scale that way. What do you say to that? 

Tom Abbott [00:11:02] I say that’s actually going to take a really long time. And the reality is the quickest way to scale. Get someone to follow. You want a sales call? The quickest, easiest thing to do. You’re already doing it. Get someone to shadow. You want to call, get them to follow you on a sales call. That’s number one. Number two, hit the record button on Zoom. Super easy. That doesn’t take any time. You can. Then what we’ve done is we’ve recorded all of my sales calls over the last two years. And look, we’ve been in COVID for so long. If you haven’t been recording your Zoom sales calls, you’ve missed out on a tremendous opportunity to start this learning bank. So it’s a lot easier than you think. So we’ve got literally dozens to hundreds of different sales calls that we label and tag. Oh, this was an inbound prospect. This was a discovery call. This was a follow up call. This had multiple stakeholders, you know, whatever. This was a follow up call. So you can tag those. And then when you’re onboarding your reps, you just send them the link. Hey, watch this, watch this, watch this. So it’s not as hard as we think. And then you just start documenting. So you’ll notice that with your emails that you send out, you’re probably doing your own kind of a copy paste almost every time. So it’s just a matter of, you know, you save those, you put them in a folder, you copy paste, he put those on on a note, you put it in Dropbox or put it on Google Drive before you know it. Before you know it, you’ve got the makings of a sales playbook. It’s not as easy. It’s not as hard as we think. And you could be doing it right now and you don’t even know it. 

Greg Alexander [00:12:29] A lot of our members have handled this issue in the sales function, meaning other people are now selling work on their behalf. Most of them have done that because they’re not like you. They don’t enjoy selling. You know, if I’m a management consultant that specializes in cybersecurity, I can geek out about all the possible hacks that I might deal with. But I don’t want to talk to a client and sell it. So they they delegated that just out of the fact that they didn’t enjoy doing it where they really get nervous about delivering the work. So a client hires me to go to do X, Y, Z. I’m supposed to be an expert with charging them a lot of money, and then I’m going to trust somebody else to deliver the work. It scares them. So how have you overcome that? 

Tom Abbott [00:13:12] Well, there’s a couple of ways. The first thing we do is we we certify all of our facilitator. So how do we do that? One is, you know, knowledge. So we’ve got testing. So I’ve written two books on sales, for example. So we make sure that they read the books, they watch all of our videos and so called Academy, which is our e-learning platform, and then we actually test them on content. Are you a sales expert? Are you a subject matter expert? I can’t teach you to do that. I don’t have time for that. So are you competent and confident in training sales? Do you know your stuff? That’s number one. Then number two is the the skill of actually facilitation. So that’s what we need in our business. Number one is you’ve got to have the sales acumen and knowledge. But the second is you need the delivery skills, the so-called platform skills. Can you engage an audience? Are you good, coach? Do you know how to answer tough questions? Can you put people in breakout rooms and facilitate discussion and role plays? So that’s all part of my world in the training world. So preferably we get people that have had some certification in training. They’ve gone through a training program. They understand about curriculum development or they are or were an internal trainer within a large company. So they’ve got their chops. Having done that, I don’t have to teach them how to do that. So we would test them. So test them in knowledge, which is a written test, some multiple choice, some, you know, short answer as well as delivery. So we get them to actually deliver a sample session with our team and we recorded on Zoom and then internally we look at it and give them feedback so we can see them in action if they’ve got a demo video even before they come to the interview process. Even better. So that’s how we can guarantee that, okay, we’ve got good people. Then they’ll work with me personally and I will train them. Okay, so this is how I handle this situation. This is how we do it here at SOCO. So there’s you as a sales trainer, and then there’s how do we do it here at SOCO? So then we just have to be able to guarantee to our customers that the experience will be the same. So a lot of people think that it’s about the trainer and in a sense it does have a lot to do with the trainer for sure. However, what most of our customers want is a consistent framework or a consistent methodology for all of their sales teams around the region or around the world. We’re able to do that through the certification program. So that’s that’s been really helpful for us. 

Greg Alexander [00:15:32] Okay. And then the last objection I get sometimes is, hey, if I hire these people to do what I do, I got to pay them. I’d rather just put the money in the bank account and not pay anybody to do this. So what do you say to that? 

Tom Abbott [00:15:46] I mean, you can do that. But again, it’s you know, do you want just like a mom and pop, you know, like a hobby business or what? But do you want to grow? Right. So if you actually want to grow and you want more business, you have to find a way to meet the needs of customers. And there’s just not enough hours in the day. I know that. There’s just not enough hours in the day to to service everybody. Now, maybe you’re happy just having a lifestyle business and maybe say, look, all I want to do is this many hours and and that’s fine. But if you actually have aspirations of, you know, reaching as many people as possible, like, you know, I have a goal. I don’t want anybody on the planet to lose a sale because they can’t sell. That’s that’s my mission. So I want to reach as many humans on this planet as possible. Tom Abbott can’t do it all by himself now. It took me about eight years to realize that, but I can’t do it all by myself. So I got to work with people. Yeah. So and it’s very hard when you feel like you’re really good to actually start bringing people on because there’s a danger in going, Yeah, but she’s not exactly like me or I wouldn’t have done it that way. That’s your biggest problem right there? Yeah, maybe they do it their own way, but following a framework, if that makes any sense, kind of, you know, you’ve got some things you need to do, but you do it your own way. You focus on the what and the why and let them focus on on the how in the sense. And and, you know, that’s just going to help you grow. You’ve just got to build that team and just trust, trust in your process. So what I’ve done, Greg, is I’ve been able to say, look, I’m going to take my energy away from sales. I’m going to take my energy away from training and put it towards training my team and becoming a leader and developing them. And I see my number one role as a CEO is to step up and be a CEO. Yeah. And run the company the way a CEO would. Yeah. Get out of my own way. 

Greg Alexander [00:17:36] Well, listen, you have a tremendous amount of self-awareness. You know, being an entrepreneur is a journey. Right. And you’ve been on it for eight years, and you probably didn’t know what you know now back then. And you now know. And it’s just a wonderful pleasure to have you in the membership because of your level of self-awareness, your humility, your modesty, because you’ve had a tremendous amount of success. And just on behalf of the membership, we’re up at our time window here, but I just wanted to thank you for your contribution. You know, the way the collective works is we’ve got to contribute to the collective body of knowledge, and you’ve just made a great contribution. So thanks, Tom. 

Tom Abbott [00:18:11] Hey, my pleasure. And thank you, Greg. I’ve gotten a lot from my membership in Collective 54, and I was just thrilled to be invited on the podcast to kind of give back because I’ve gained a lot already. So thanks to you. 

Greg Alexander [00:18:22] Okay, fantastic. And for those that are interested in this topic and those like it, you can pick up a copy of our book, The Boutique How to Start Scale and Sell a Professional Services Firm. And if you’re interested in joining our mastermind community and meeting great people like Tom, check us out at collective54.com. Thanks again. Take care.

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Episode 86 – How a 43-year-old Marketing Agency Handled a Generational Transfer – Member Case with Rob Rankin

Decision making evolves as your firm scales and the founder must be replicated in the successor. On this episode, Rob Rankin, CEO at Clarity Coverdale Fury (CCF), shares his perspective on developing the next generation of the firm, with a focus on succession planning and how decisions are made. 

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. My name is Greg Alexander and I’m the founder and I’ll be your host today. And on this episode, we’re going to discuss power. And when I say power, basically what I am referring to is how decisions get made inside of a boutique. And how that changes over time as we move through the lifecycle of a boutique from growth to scaled exit and even beyond. When the first generation is transitioned into the second generation and the second generation is transitioning to third generation and so on and so on, the decision making power dynamic tends to morph when that happens. That’s really important because decisions in a small firm are easy. There’s not a lot of them. They’re simple. They’re not complex. The founder who’s making the decisions can play the role of dictator because he or she is still really close to the business and has great instincts. But as you get bigger in, the founder or co-founders might be two or three steps removed from the day to day or the clients, you know, they might not be the best people to make decisions anymore because their inputs have changed quite a bit. So that’s what we’re going to discuss today. And we have we have a great role model, Rob Rankin, and Rob is in the middle of this. He has a really great perspective because he has been through a generational transfer and has a viewpoint from that standpoint. So, Rob, welcome to the show. It’s great to have you. And would you mind, please, giving a proper introduction of yourself? 

Rob Rankin [00:02:06] You got it. Thanks, Greg, and thanks for having me today. My name is Rob Rankin and I’m president and CCO of CCF, we’re a marketing communications firm that was founded in 1979 based in Minneapolis. And our sole world headquarters are still in Minneapolis. 

Greg Alexander [00:02:23] And what type of clients do you serve? 

Rob Rankin [00:02:26] About 60% of our book of business is in health care and health and wellness. And what we like to call we know health care from all four angles. So public health manufacture, payer and provider. 

Greg Alexander [00:02:39] Okay. Got it. And Rob, we wanted you to speak on this subject because as you just mentioned, your firm was founded in 1979, and right now it’s 2022. So there’s been a journey. And I’m sure the decision making power has changed over time and there’s been generational transfer. So if you wouldn’t mind, maybe kind of walk me through briefly that history from then till now and how the power dynamic changed. 

Rob Rankin [00:03:06] Yeah, so I joined the firm in 1998 and it was founded in 1979 by three Gentlemen’s Clarity, Coverdale and Furey. And in 1978, I was just an account guy and then grew up into a more leadership role account supervisor and ultimately running a department. It was also at that point in time where the gentleman who founded the company were getting ready to retire. One was very ready and the other two weren’t very far away. So over probably a 3 to 5 year period of time, we started to have discussions about a transfer. A few of us, what we call Gen two, formed a team and moved into that and we bought that firm in 2014. We’ve been running it successfully ever since. I’ve since lost one of my partners to retirement and another just is trying to retire this year. And we’re we’re going to get her out of the door to her own accord shortly here. And we’re building that Gen three team that can ultimately take it over from myself and my two other partners. 

Greg Alexander [00:04:13] Yep. And this progression. Gen one, gen two, gen three. You know, this is very common in professional services because it’s a people business. And very often there’s the next generation that wants to stay and wants to continue to do what they’re doing. And there’s an opportunity, if you handle it this way and handle it correctly, you know, for each generation to benefit for not only financially but in other ways. Rob When, when Gen one was transferring to, to Gen two, you and your partners, did it go as smoothly as you had hoped or was there, were there any bumps in the road? And what type of lessons might we learned from that, from that tale? 

Rob Rankin [00:04:59] Yeah, I’m super blessed in that it did go what I would say, relatively smoothly. Perfectly. Absolutely not. And the founding partner, Tim Clarity and myself used to say, because we intended at least to keep the name the same, that if we wake up five, seven years from now and no one know you guys bought it, it worked. And it worked really, really well. And that actually happened. I will say that there were some speed bumps early on as we were forming our Team Gen two and there was a person in place who just wasn’t going to be partner material. And so there were some really, really hard discussions that had to be had to let him know that. And to say that was what was easy. It wasn’t it wasn’t easy at all, but it had to be done or we would have been setting ourselves up not for success, but for failure. And so that was probably the most difficult thing. And then the other thing, at least from Gen two, is perspective being patient because we had we had a kind of a phased approach with each of the partners where they wanted to phase out over time for different reasons. And we allowed that to happen. And from an outside looking in perspective, it still appeared like they were in charge even though they weren’t. And that was important to them and it was okay with us. You know, it wasn’t something where we needed to be seen front and center. We also didn’t want to reinvent the enterprise. We didn’t want to rename it. We didn’t want to rebrand it. We didn’t want to blow the whole thing up. They had a model that was working and had worked for a really long time. And we felt the blow up, that type of equity in the marketplace would have been a big mistake. So that required a little bit of discipline, but we were able to do that as well. 

Greg Alexander [00:06:38] You know, what jumps out at me about your story is that, you know, you joined as a young account person and grew up to where you are right now, which means that those that Gen one did an excellent job of identifying high potential employees and grooming them to take over bigger and bigger responsibilities. That that happened in the typical kind of apprenticeship model where it was just through osmosis or was there some formal system put in place? 

Rob Rankin [00:07:05] It was really more of an apprenticeship model. Tim Clarity I tend to be the type of person that if you give me a lot of room to move, I work better. If you constrain me, I’m not good being micromanaged. And so that’s kind of the philosophy in the culture here. We hire really responsible people and let them do their way, do their job, and we do our best just to get out of their way. That doesn’t mean they don’t need coaching. It doesn’t mean they don’t need training. It doesn’t mean they don’t need mentoring of sorts. But but we let them do their job. And Tim allowed me to do that and allowed our media director at the time, Danny there to do the same thing and in and of it. She and I both kind of grew up together in the business and became somewhat area parents at the end of the day. Diane was probably interested in retiring sooner while she was. She’s already retired sooner than I and and she’s since moved on. And because of that, she didn’t want as big a share when we transitioned. But we had a third person internally who also had really was a finance person and had really great, great credentials in that space. And so she worked in that and she was interested in buying in a little bit more. And between the three of us, we found we found a good balance for each of us. 

Greg Alexander [00:08:21] Now, you mentioned buying, so I’m assuming there was some type of transaction that happened from Gen one to Gen two. And was it the traditional way where the first generation kind of set up, maybe like a sellers note and they transitioned a piece at a time based on profits that were being generated by the business? Or did you guys have to go out and raise the money to pull this off? 

Rob Rankin [00:08:42] No, we were really fortunate. There was an owner financed buyout over a five year period of time with an option for a year, six and seven, if needed, at the seller’s discretion. So we didn’t control that, and then we did have to have some skin in the game. So there was a certain percentage of the overall price that we agreed upon that we had to we had to go to a bank and we had a we had to find financing for that. And based on our individual percentages, that’s what we had to put up. 

Greg Alexander [00:09:13] And they structured that way because they wanted skin in the game. Or was that the only way to close the gap in price? 

Rob Rankin [00:09:19] They wanted to know that we were serious and 100% owner financed buyout, I think and I believe that it was the right decision for us. It was the right decision for them. They wanted to know that we were serious and that, you know, being able to have needing to go to a bank and taking out some form of a loan, you know, it it ratcheted things up just a bit. 

Greg Alexander [00:09:40] Right. And during that transition, let’s call it five years. Back to the main topic here, which was how decisions are getting made or the power structure externally. It was important to them to still be perceived to be in charge. But internally, you and your partners were running the firm. Sometimes this gets messed up because the generation that’s on their way out, sometimes they don’t want to give up control and they they stick their nose where it doesn’t belong at times. How did that happen at all? 

Rob Rankin [00:10:09] And in not to a not to a degree where it was terribly difficult to the partners that simply wanted their name still on the door, it was more that they just wanted to be seen as still the important person that started the company, and rightfully so. They’re fantastic gentlemen, their friends and mentors to this day. There was one that loves to do the work and is just passionate about the work and was an in 30 until the day he walked out the door. But it wasn’t difficult and there wasn’t anything that was acrimonious or needed, lawyers or anything like that. 

Greg Alexander [00:10:46] Okay. You know, and then Gen2 takes over and some of them are retiring, as you mentioned. Is there like a mandatory retirement age or is there some some rules around when somebody can walk out the door there? 

Rob Rankin [00:11:02] There aren’t, other than once you decide to walk out the door. The firm has up to ten years to purchase your stock at the firm’s discretion. I say so we can do that over time. But you can’t hold on forever. And you also can’t be the one that drives that. You can’t walk out the door and say, I want to get paid tomorrow. 

Greg Alexander [00:11:23] Very good. I mean, that makes a lot of sense. That keeps everybody on the same page there. It sounds like to me you had some great legal counsel that held your hand here and put these things in place to make sure that, you know, there was no unnecessary tension and drama. Is that fair to say? You had great counsel. 

Rob Rankin [00:11:40] We we had fantastic counsel. And my only disappointment is that he moved on and went and worked for his dad’s company. So he’s no longer my lawyer. So. 

Greg Alexander [00:11:52] And would you advise our members that might attempt to do this, not to do it themselves and find the right attorney to help? 

Rob Rankin [00:12:01] 100%. I would say that unless you’re an attorney yourself, and even if you are, it would be a mistake to try to do this without the one. Putting the structure in place from a legal standpoint. Kept us all in line. Yeah, we all knew the rules. We agreed to the rules, and we knew we had to follow them. And we did. Yeah. 

Greg Alexander [00:12:18] And that’s the important thing. And everybody agrees upfront, right? So there’s, there’s no surprises. And when I’ve seen this and I’ve seen it several times now, it’s very rare. Does a dispute wind up in court because of this? I mean, it was it’s friends cell and a friends, so to speak. And it’s a very natural, organic thing to do. And this is well-worn territory. This isn’t something for those that are listening. You don’t have to go invent the wheel here. I mean, this has been going on for a long time period just because it’s the first time that you may be doing it members. It’s not the first time that it’s been done. Okay. So now let’s fast forward a little bit. So your partners are retiring. At some point you’re going to retire and you’re going to have to go to June three. Do you plan on using the same approach or are things the world is different now than it was back in 1979, 1998, even 2014 does is the process still workers? Is it changing? Does it need to be modernized? 

Rob Rankin [00:13:13] I think it can work, but we have to be sure that certain components are in place. So right now we have one gentleman who’s actually a member of Collective 54 as well, because he’s brought in and is a partner and and he’s a candidate to take that lead. Now, we have to do a few things. We have to surround him with people just like I was surrounded with great team members to be a part of that. And so if we can do that over the next 3 to 5 years, then we’ll have a gen3 and I think it can work pretty seamlessly. If not, we do need a plan B, you know, whether that’s a merger and acquisition selling, where we’re bringing on talent to help round out that individual or surround him, I should say, with others that can help him with the day to day business. And then that’s an option too. So I’ve seen several people in our space, specifically marketing communications, be left at the altar by that internal person who was supposed to buy. And so I know that we do need a plan B. 

Greg Alexander [00:14:14] Yeah, I’ve seen that happen too, you know. And then also, I mean. Can you go so far as to think about zero on Jan three? Can you peak down to Jan four? Is that too far of a stretch? Too many years will pass by by then. 

Rob Rankin [00:14:27] I think for me I don’t I think by by the time I hand off the torch it’s it’s then there’s to have and I think that’s part of what really worked with us is the guys never came back and wanted to be back in the business. They let they let Jan to run it the way they they saw fit. And there’s also just a spirit and a culture here that’s been built, starting with Jan one, carried on by Jan two. That’s really important. Yeah. And it’s why I know that while it’s likely, maybe even probable that we could get more money if we did an external sale, it’s not in the spirit of the enterprise and what the guys were gracious enough to do for me and my other partners, we want to do for those that have been working with us side by side for years as well. 

Greg Alexander [00:15:11] Yeah, well, this is a great story. You’re a fantastic role model. This topic is underrepresented in the world. It’s not talked about enough. And the way these collectives work, ours and others, is that, you know, people have to make a deposit into the collective body of knowledge, and that’s how we all get smarter. And you did that today, and I’m very grateful. So on behalf of the members, thanks for being here and sharing your story with us. 

Rob Rankin [00:15:37] You got it. Thanks so much, Greg. And I’ll see you at the boutique on Friday. 

Greg Alexander [00:15:41] Okay. Very good. And for those that are listening to this and they want to learn more about this topic and all the other ones related to growing, scaling and exiting, if you haven’t already, pick up a copy of the book The Boutique, How to Start Scale and Sell a Professional Services Firm. And if you’re not a member and you’re listening to this and you want that type of tribal knowledge, which is very tough to come by and meet, really interesting people like Rob consider becoming part of our community and you can find that at Collective54.com. Thanks again, Rob. 

Rob Rankin [00:16:15] All right. Take care.

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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 Innovative Services

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 innovative services 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 andyour firm to the audience? 

Scott Conard [00:00:55] Yeah, thank you, Greg. My name’s Scott Conard, my firm is Converging Health, we’ve been in business for the last seven years and we do ITconsulting for broker consultants and directly to corporations to help them decrease the costs and increase the value. 

The Cost of healthcare

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, expertise, 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 andtheir 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 itelucidates 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. 

Innovation in services

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 anda 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 afterbarrier 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 dive 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 United Healthcare 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 system was on doctors, both personally and trying to manage them, and then realized that the broker consultant world has tremendous leverage if they woulduse 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 want to say, intellectual abilities- , because 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 analytic, 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. 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, rider,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 is 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. 

The Converging Health solution

Greg Alexander [00:08:52] Hmm. 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. 

Convincing the corporate customers

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 t…o 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… I 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 delegate 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 like it.. 

Scott Conard [00:13:03] Yeah. 

Health Convergence early adopters

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 andwalls 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. COVIDreally, 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 telland there areother 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 Istarted 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. Ihave 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 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. 

Breaking assumptions

Greg Alexander [00:16:00] Yep. So, audience member, there’s there’s a lesson here that I want to underline through Scott’s  fantastic example. When you truly are innovative ,and he isand 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 – I mean, 40 issubstantial. And now he’s got this new wonderful market segment to go after,g iven 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. 

Conclusion 

Scott Conard [00:18:16] Well, Greg, thanks so much. And you 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 X 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.

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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.