Sales Cycles Taking Too Long?

Sales Cycles Taking Too Long?

Members are complaining that their sales cycles are taking too long. But, when asked why, they cannot answer.

Here is a helpful chart: sales cycles in professional service firms typically get held up in four areas:

      1. Setting appointments
      2. Sales calls
      3. Queue time
      4. Decision making

Ask yourself “how much time does it take to progress in each stage?”. By doing so, you can locate the bottlenecks, remove them, and increase throughput, i.e., shorten the sales cycle.

For example, a sales methodology used to prep for every sales call improves each call resulting in the need for fewer of them. Fewer sales calls results in a shorter sales cycle.

Upselling and Cross-Selling: How to Sell More Services

Upselling and Cross-Selling: How to Sell More Services

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Generating expansion revenue from existing accounts is often neglected. So how can your team become more disciplined when it comes to upselling and cross-selling?

In this video, we discuss the value of upselling and cross-selling. We also offer ideas on how to get non-sales people within your organization to upsell and cross-sell, and why these functions are important if you want to sell your firm one day.

In this video, you’ll learn:

    • Why expansion revenue is critical for scaling your business
    • The power of the share of wallet exercise
    • The fundamentals of upselling and cross-selling
    • How to get non-sales people to upsell and cross-sell

Should You Outsource Your Sales? 4 Ways to Know Yes or No

Should You Outsource Your Sales? 4 Ways to Know Yes or No

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It’s no secret that outsourced sales efforts can save your firm time and money. But that doesn’t mean you should jump right in. Deciding whether to outsource requires you to know the specific needs of every potential client.

In this video, Greg Alexander, founder of Collective 54 and Capital 54, examines four types of needs you’ll find in the field, how to identify them, how to best serve them based on their needs, and which needs are better suited for outsourced sales.

In this video, you’ll learn:

    • The 4 types of needs you encounter in the field
    • Scenarios that should make you hesitant about outsourcing sales
    • When it makes sense to outsource sales
    • Things to consider before you decide to outsource sales

Selling Professional Services – Do You Need a Sales Team?

Selling Professional Services – Do You Need a Sales Team?

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Moving from Founder-Led Sales to a Commercial Sales Team

Are you relying on one person to generate business through referrals? The path from a small business to a market leader requires you to build out a professional commercial sales engine. In other words, you need a team of people, excluding the owners, that are bringing in work with a predictable and consistent process. Join us to learn about the attributes that make up the engine.

In this week’s video, Greg shares:

– How to build a team that doesn’t rely on the heroics of a few individuals

– Developing a consistent process for recruiting and training sales talent

– What you should know if you plan to exit your firm one day 

Episode 102 – How A Young and Small Firm Became’s #1 North American Partner in Less than 3 Years – Member Case with Noah Berk

Marketing and selling professional services as you grow and scale your firm is one of the most popular topics at Collective 54. You must focus on attracting new clients while generating additional revenue from existing clients. On this episode, Noah Berk the Co-Founder of OBO shares how he has mastered his go-to-market strategy to accelerate revenue growth.


Greg Alexander [00:00:15] Welcome to the Pro Serve podcast with Collective 54, a podcast with founders and leaders of boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated exclusively and entirely to the boutique professional services space. And for those that are looking to grow, scale and maybe someday exit. My name is Greg Alexander. I’m the lucky guy who founded this place, and I’ll be your host today. And on this episode, we’re going to talk about leverage, all kinds of leverage, financial leverage, operating leverage, and how to use process and people and technology to increase the leverage ratio that you have in running your professional services firm. And we’ve got a fantastic role model, Noah Burke. And Noah is a member of Collective 54 and he’s got a lot to share with us on this topic. That’s why he was selected for this. So, Noah, great to see you. Please introduce yourself to the audience. 

Noah Burke [00:01:18] Thanks for having me here. Greg My name is Noah Burke. I’m one of the co-founders of OBO. We specialize in digitizing sales, marketing, service and operations for clients using CoSport, Salesforce one, an icon working with everyone from young venture backed companies to Fortune 500 firms. 

Greg Alexander [00:01:37] Okay, got it. Okay. So this topic of leverage, let me let me set it up a little bit. So. Couple of people hanging shingle. Start a firm. They know something that the rest of the world either doesn’t know it, doesn’t know it as well as them. And they shake the trees and they generate some referrals and they get their first set of clients. And every time they’re doing something, they’re doing it for the first time, which means it takes forever and it costs a lot and it’s lots of mistakes. And then over time the firm matures, the quality of the client improves. You start hiring some people, you start training them, and you wake up one day and you say, You know, I want more than a lifestyle business. I’ve already proven to myself that I don’t need a job to work for the man. I can work for myself and make a living. But now that I’ve cleared that hurdle, you know, I want to build a real firm, not a lifestyle business. And what that means is I need leverage. I need to create ways of doing things so everything isn’t dependent on me. Other people can do what I can do as well as I can do it. And therefore it frees me up to do other things to make money. That’s what the leverage is. And in the professional services space is actually a ratio for this. It’s called surprisingly the leverage ratio. And what it basically says is for every senior person, typically a partner at our world of boutiques, very often, if not almost always an owner, how many people can they keep busy? So for example, let’s say one person and I have ten people that I’m keeping busy. You know, my book of business is keeping ten people busy. I have a leverage ratio of 10 to 1. And how you create that is the key to to scaling your firm. And there’s lots of ways of doing that. So no, let me let me throw it over to you at 30,000 feet. Given that definition of leverage, how have you created leverage at Obio? 

Noah Burke [00:03:50] Well, I think it’s similar to what we do for our clients. I like to think of as a force multiplier and to create leverage in a couple of different ways. One is accountability and efficiency inside of the organization itself. So is having the systems in place to measure work, assign work and distribute work to individuals? Two, It’s also the type of people we have. So you just mentioned, you know, obviously senior people with perhaps junior people. So in our organization, we have senior people and then we also have junior individuals. And we spend a lot of time through what we call our residency program, training individuals to be able to take on the type of work necessary. And this particular residency program that we have. What’s really great about it is that they go through about four months of training and this is actually classroom training several hours a day. They go through real world examples, they take on assignments, and eventually at the end when they graduate from the residency program, they get assigned to a team that has more experienced individuals on that team. So they’re able to leverage those resources once they get on the team. Is how do you organize work in an effective way that your team is is billable and that you’re fully utilizing the team at any given time? That means now you need to have systems in place that you can actually measure work, that you can hold individuals accountable, but also see how work is getting done. So you can start creating systems and processes in place that make things easier to do. So I think you had mentioned earlier that when you’re just a two person shop, it’s it’s kind of simple, but when you have 45 people, it gets a little more complicated because you can’t do it all yourself. So you have to have people who you trust in a position who can do the work and assign the work and be able to follow through on what they do. And in this particular case, in our organizations around process, as much as training, as much as the team structure. So we work more in a team environment. Over here at OBS, there’s always a junior person, senior people who are working together. 

Greg Alexander [00:05:50] So the thing that kills leverage and let’s go there first and boutique process firms is two things. Number one, you have senior people who in theory cost more doing work that junior people could do. So therefore that work is expensive or more expensive needs to be. And that crushes margins and that ruins leverage and gives you a bad leverage ratio. And that happens all the time. Then you have the opposite of that. You have junior people doing senior work and they don’t have the experience for it. And the client gets upset because quality, depth and you end up losing revenue and that’s just as bad. You know, if we if we simplify it to that and I know it’s way more complicated than that, but if we simplify to that for a 15 minute podcast, what does OBO do in the first instance? How do you make sure that senior more expensive people aren’t chewing up their hours on kind of commodity stuff? 

Noah Burke [00:06:52] Well, I think it comes down. We understand what work is, quote unquote commodity. We also understand what work is senior. Sometimes what we don’t necessarily want to do is miss an opportunity to train or teach our junior employees. So sometimes we do eat. Some of that time when a junior employee is working on the senior employee lesson integration project or a particular migration project that they’re learning in that particular experience where we may not actually be billing for their time. We’re really going for the senior person time and the junior person is participating with that individual on it. But I think. 

Greg Alexander [00:07:32] I’m sorry to interrupt you, but I actually do that, and I’m sure you do too. That’s why you’re doing it. I view that as an investment. Like to me, that’s what it is. That’s a positive strategy, not a negative strategy. So let’s stay on that for a moment. Is there ever a situation where that senior person is doing junior work? Not for the purpose of developing an apprentice. They’re doing it anyways. 

Noah Burke [00:07:54] Yeah. I mean, in any professional service organization, sometimes that can creep into the mix where they may be doing work that really they shouldn’t be necessarily doing themselves. They’re doing it simply because it’s either easier. The transfer knowledge is going to take a while and they’d rather just get it done right. And so they’re just going to do it. I think in any organization it’s human nature to be like, Well, I know how to do this, so let me just go ahead and do it. Yep. Versus well, let me spend a little bit of extra time here, not necessarily billing the client for the time, but working with the junior employee to help them get up to speed. And we try and really through our four month residency program, get the team members up to speed on what is that, quote, commodity work. So we’re trying to teach them how to learn, try and teach them how to fend for themselves and where to get information and knowledge and how to grow themselves. Because you can keep showing them and showing them and showing them, but eventually they have to be able to figure out things. On their own. So we hire for a certain degree of curiosity. Everyone in our organization will be curious. They have to want to learn. They have to want to absorb new information. They also have to be okay with the unknown. So the unexpected, especially when you’re new inside organization. Almost everything is new and you’re not comfortable with those situations and experiences. It’s very difficult to rise and grow inside a company like ourselves. So it is part of the culture of the organization to have people who want to learn and want to grow. And you are constantly looking for what else can I do to further my own career? And the senior people gravitate towards them. Because if you’re going to teach someone, you want to teach someone who has a thirst for knowledge. I mean, yes, quote part of your job. But it’s easier. The other person is really receptive to what you’re sharing with them. 

Greg Alexander [00:09:38] Now, a four month residency program, that’s a big investment. And I love it. 

Noah Burke [00:09:42] Because. 

Greg Alexander [00:09:43] Yeah, and most of the process firms at scale have some version of that. It’s a grow your own approach. Now the people that are in the residence program during those four months, are they completely on the bench. No bill ability at all. 

Noah Burke [00:09:58] On a yeah. On the bench and availability. Wow. So it is it’s an incredible investment that we made our program. Just give me an idea of the number of applicants. We’ll get anywhere between 800 to 1000 applicants for four open positions. Sure. And even then, sometimes even higher four. That’s how exclusive it is to get in. So we’re looking for people who have the right attitude, who have that desire to learn and who’ve excelled somewhere else. Hmm. 

Greg Alexander [00:10:28] Interesting. 

Noah Burke [00:10:29] And in in our space, it’s really difficult to find talent who while we’re in the technology space, we did have technology deployments where we’re HubSpot elite partners for money dot com North American Partners of the year we’re Salesforce partners. And it’s not just how do you implement and how do you take a task, but how do you think through process? How do you align people, process and technology? And that’s very difficult to find. It’s easy to find a pure dev, we’ll say is maybe easy to find a pure analyst. You can just say people. It’s hard to find people who can think through not just what the requirements of an individual are, but how that process should work and flow. And then how will that be translated to technology and how do we implement? And we have special specialists in and organization. So we have individuals who are more project manager roles versus individuals or individual contributors, all equally valued inside the organization. And individuals can pick their path. But more often than not, they have to have some customer facing ability. And that’s a really difficult skill set. It’s something you learn and you have it. And then you also need that type of fortitude as well. 

Greg Alexander [00:11:40] Yeah. Now, when we have the Fri member Q&A, I guarantee you all the questions are going to come around this residency program probably. Yeah, because it’s very unique. And so let’s give them a little taste. So maybe think like, I don’t know, a table of contents where you would spell out to me one of the chapters of this program or the components of this program at a high level. 

Noah Burke [00:12:04] So depending upon where and what particular path we’re looking for, so sometimes we have needs for more project managers versus individual contributors or how we gear the program. So I took my business partner, Rob, my co-founder, about nine months just to develop the curriculum. So the full curriculum that each week, every day they’re working on different items. There’s guest speakers coming in within the organization or lectures and it’s geared towards the different applications we work. And so you’re not necessarily and the reason why is four months is partly thinking through it. You know, we work with several different technologies and most of our clients have two or more of them. I mean, HubSpot and Salesforce, maybe they have Salesforce on Monday, they have HubSpot on Monday. And so they have to be able to understand how these technologies work, what’s the principles behind them? What is a deployment look like? What are the needs of the organization? So it kind of walks them through what is a sales organization, what’s a marketing organization? What’s a customer service organization? How does operations and project management work? What does that flow look like in the customer journey process? What are the needs of the different individuals and each side, each of those individual departments? So as you can kind of start building on top of one another, it becomes a it’s an entire education that they’re getting into the space. By the time they get on team, they can generally handle about 50% of the use cases that are thrown at them. But one of the beautiful parts of the power structure, there’s always someone on there who can help them. They get stuck. 

Greg Alexander [00:13:42] Your clients, do they know that you put your people through this process? 

Noah Burke [00:13:47] Sometimes I do talk about it. It’s very exclusive. We have incredibly high retention rate inside the organization. Both. I think that’s due to our culture, our training, our development and also the people that we tend to hire are just brilliant. I mean, we have brilliant team members over here. And they like the level and the type of work we do there, like how we structure our work. They like how they get to structure their days and how they get to work on these individual items. And there’s it’s always new. Yeah. For what they’re. 

Greg Alexander [00:14:17] Solving. I mean, if I was a prospect and I was considering you and, you know, 20 other firms that claim they do what you do and you explain to me that process, I’d be like, Damn. I mean, I would view that as a real differentiator and probably pay a premium for it because I would the implied quality lift that comes with that is is very real. How about your technology partners, the Mondays, HubSpot to Salesforce? Do they know that you put this program together? 

Noah Burke [00:14:44] Yes. Yes. So we’re one of hotspots. Half percent of partners worldwide. We’ve built a reputation inside the community as being the go to company for think of their biggest engagements, their most complicated engagements, simply because we built a reputation that not only can we get done what we need to get done, but we got the team to be able to do it and reposition ourselves as a really technology company for implementations. Whereas most of our competition in that particular space isn’t the same thing applies on Monday. Same thing applies to Salesforce. Salesforce the idea of companies like us is more, I’d say, readily known. Whereas in Hotspot on Monday less so. But the needs and requirements are expanding and our clients are now our clients. Our partners are aware of our talent. They know what we’re investing and we’re making enormous investments. And so our people, the training, development, getting them up to speed, we’re also one of the very few companies to have enough pipeline of talent to actually handle the work coming to us. Very few companies simply have the skill sets and have the it’s almost like an aptitude inside the organization. And I give a lot of credit to my my co-founder and his background being very tactical, process oriented and like to be problem solvers. So it’s definitely helped us considerably with our partnerships with all three of them because they are aware that we do and we make these investments. And it’s also important for them to know that their partners are making these investments. 

Greg Alexander [00:16:18] Yeah, and I would imagine that’s why they’re throwing you work because they know you’re going to get it done. I mean, that’s how you win the award. North American Partner of the year. I would imagine. 

Noah Burke [00:16:29] We pretty much our entire businesses via referral. Yeah. From from partners from travel our clients as we call them, people finding us through inbound you know, is a real it’s an awesome thing to have just all these opportunities coming our way, but that also means we have to deliver every single time because our partners revenue is based on how good are we at what we do and our partners leverage us to help and close more business. So we’re also known as closers. In that sense, when a client generally comes to us and they’re trying to sell them on working with that individual partner, we actually end up becoming a benefit to have on their call. And so it’s in our training, our team and just how we do work is, is a critical component of our success. 

Greg Alexander [00:17:19] Yeah. I mean, if I was a sales rep for one of those tech providers and I was trying to convince somebody to buy my software package and all the licenses that come with it, I would bring you guys on that call because the the prospect is probably wondering, like, am I going to be able to pull this off? And then they meet you. And there’s a great sense of comfort and it gets them over their fear. 

Noah Burke [00:17:42] All the time. Yeah, all the time. And there’s not very many of us that can do what we do. And so they when they when they get the opportunity, they do. 

Greg Alexander [00:17:53] Yeah. Okay. Listen, is is you have it is exactly how you have it. You want to create leverage in your business. You want to scale, you want to increase margins. This is how you do it. I mean, this one example and no problem has got 25 others of this residency program is how leverage is built directly into the business. I mean, just think about the recruiting number. A thousand people apply for four spots. You know, we’ve got a lot of members and collective 54 that their biggest problem is they don’t have enough people. And here you are, you know, turning away, you know, hundreds of people. You don’t have that problem. And that’s what leverage is all about and that’s how you scale an organization. So, no, I could talk to you forever. I can’t wait for the Friday Q&A with the members, but we got to cut it short here. But thanks for being here today and sharing a little bit of your story with us. 

Noah Burke [00:18:41] You got it. Thanks for having me. 

Greg Alexander [00:18:43] All right. All right. Well, if you’re not a member and you think you might want to be because you get a chance to meet folks like Noah and be in a community of real peers, go to collective 54 dot com. You can fill out an application for membership and we’ll take that seriously, if not quite ready to apply. But you want to consume some more content and educate yourself. Again Collected 54 dot com. Subscribe to C54 insights. You’ll get you get a weekly podcast like this one, you get a blog, you get access to our bestselling book and you’ll get some, some charts which visually represent some benchmarking data that I think you’ll find interesting. So check that out. Okay. So thanks for listening and I look forward to our next episode.

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.


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,, 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 Dan, thanks a bunch. Take care. 


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

Episode 38: The Boutique: How to Market and Sell Like a Pro

Founders of boutiques can increase their rate of growth by professionalizing their marketing and sales approach. On this episode, learn the fundamental building blocks to professionalize your firm’s sales and marketing skills.


Sean Magennis [00:00:15] Welcome to The Boutique with Capital 54, a podcast for owners of professional services firms. My goal with the show is to help you grow scale and sell your firm at the right time for the right price and on the right terms. I’m Sean Magennis, CEO of Capital 54 and your host. On this episode, I will make the case that founders of boutiques can increase their rate of growth by professionalizing their marketing and sales approach. I’ll try to prove this theory by interviewing Greg Alexander, Capital 54’s chief investment officer. Greg founded Sales Benchmark Index in 2006 and went on to become one of the world’s foremost experts in the field of sales and marketing effectiveness. Today, he will offer you the fundamental building blocks to professionalize your sales and marketing efforts. Greg, good to see you. Welcome.

Greg Alexander [00:01:20] Hey, Sean. So in prep for this show, I did a little homework on myself. So the year 2020 was my twenty seventh year carrying a quota, so to speak. And I have made my number 25 out of 27 years, which is 92 percent of the time. I missed in the year 2000 while I was at EMC in the dotcom bubble burst and I missed it in 2020 while at Capital 54 because the global pandemic destroyed the economy. I mention this not to brag in any way. When I saw the title of the show, How to Market and Sell Like a Pro, I felt compelled to check myself to see if I am indeed a pro. And I’m a proud I’m very proud of that 92 percent success rate over almost three decades. But more importantly, gosh, I learned a lot and I’ll share that with you guys today.

Sean Magennis [00:02:09] And you’re still doing it, Greg, which I admire tremendously. So, yes, it’s these lessons from the battlefield that I want you to share with the audience. But first, why is it that you think so many of our listeners struggle in this area?

Greg Alexander [00:02:23] Yeah, well, most CEOs and founders of boutiques are not natural marketers or salespeople. They are experts. Many are giants in their field. In some cases, some are on TV. The best seller list, the speaking circuit. However, when I look at their panels, I’m shocked to see how little revenue they bring in. I asked myself, how can this be? Well, these brilliant experts would rather go to the dentist and make a sales call. They simply do not know how to go to market with their services. And their personal networks only generate so many referrals so they they never grow past the point of a nice little lifestyle business.

Sean Magennis [00:03:01] Greg, this is so accurate. I mean, we’re living this, you know, today with so many of our collective 54 members. I see it every day. What I find frustrating is many of these brilliant boutique CEOs, they know this. They want to fix it. They just don’t know how to. What advice do you have for these folks?

Greg Alexander [00:03:21] So these CEOs need to be great at two things. Number one, they need to attract new clients. And number two, they need to generate additional revenue from existing clients. And when I say great, I mean it. They need to develop these as fundamental core competencies on par with their domain expertize.

Sean Magennis [00:03:42] Agreed. So these are the two fundamental building blocks and the standard to deliver to is great, not good, but these are a little abstract for me. So can you unpack this a little more?

Greg Alexander [00:03:55] How much time do we have?

Sean Magennis [00:03:57] Let’s say about 10 minutes.

Greg Alexander [00:03:58] OK, here are the Cliff Notes. I will start with the seven building blocks of a great sales model. So number one prospecting process. This is a consistent way for business developers to find opportunities. Number two, buyer journey map. This is an outline of how a prospect buys your type of service. Number three, sales methodology. This is a step by step method to convert opportunities into clients. Number four, channel optimization. This is how the right services will be sold to the right clients at the right time. Number five, incentive system. This is a compensation mechanism that motivates every employee to generate revenue. Number six, training program. This is a program to increase the effectiveness of each employee when pursuing sales opportunities. And lastly, number seven, coverage model. This is a headcount allocation plan to ensure that the target market is properly covered. Well, that was quick. Listeners should ask themselves, do they have these seven building blocks in place? Are you ready for the marketing Cliff Notes?

Sean Magennis [00:05:09] Yes, go for it.

Greg Alexander [00:05:11] OK, so here are the marketing Cliff Notes. There are nine building blocks of a great marketing model, number one brand strategy. This is an inspiring story uniquely relevant to your target clients. Number two, value proposition messaging. This explains to a client how they move from the problematic status quo to an opportunity filled future by hiring your firm. Number three, positioning statements. This articulates why your firm is better than the alternatives. Number four, campaign strategy. This is hyper targeted marketing campaigns that hit the sweet spot of your market. Number five, content strategy. This allows you to earn brand preference by satisfying the information needs of your target clients. Number six is budget. This is dollars and non billable hours assigned to specific accounts to stimulate demand. Number seven is agency. This is a trusted service partner who can help you execute all of this and has two more. Number eight is lead generation. This is a method to attract the right clients to your firm and the right quantity. And lastly, number nine is clients marketing. This is a method for delivery staff to locate new opportunities inside the current client base. So listeners should gut check themselves against these nine basics. I went through that really quickly that I communicate clearly.

Sean Magennis [00:06:43] Yes. Greg, you did this worked out this worked out well. Listeners think of these as two checklists to run yourself through to see if you are marketing and selling like a pro. If you do not have these items, you are behaving like an amateur. And this may be the reason revenue growth is not where you want it.

Greg Alexander [00:07:04] You know, one last thing, Sean, I want to mention, if I may remember, that marketing and selling services is entirely different than products. So why is this? Well, products are sold and consumed and services are bought and experience, and that’s a big difference. So, for instance, I watch the halftime show on Super Bowl. It featured the artist called The Weekend. I went to Spotify, listen to his music music and I bought it. I never met the weekend. It was sold to me. I consumed it. In contrast, I recently needed to update my estate plan, I hired an attorney, we met, we worked together to produce the new estate plan. The service and the person delivering it cannot be separated. The service is experience, not consumed. The attorney did not sell it, but rather helped me buy it through a great experience. The point is to not make the rookie mistake of trying to use best practices to market and sell products in the professional services industry. They just don’t work.

Sean Magennis [00:08:06] That’s great practical advice. Greg, thank you. And now a word from our sponsor, Collective 54, Collective 54 is a membership organization for owners of professional services firms. Members joined to work with their industry peers to grow scale and someday sell their firms at the right time for the right price and on the right terms. Let us meet one of the collective 54 members.

Kris Sugatan [00:08:38] Hello, my name is Kris Sugatan. I own Sugatan.IO. We are founders of E Commerce Brands all over the world. These clients turn to us for help with scaling their brands by acquiring new customers profitably. We solve this problem by creating video and graphic ads that convince the viewer to buy your product. If you need help with acquiring a new customer profitably, reach out to me at [email protected] That’s [email protected].

[00:09:15] If you are trying to grow scale or sell your firm and feel you would benefit from being a part of a community of peers, visit OK, there was a lot to absorb, this takes us to the end of the episode, let’s try to help you, the listener, apply this. We end each show with a tool. We do so because this allows a listener to apply the lessons to his or her firm. Our preferred tool is a checklist and our style of checklist is a yes-no questionnaire. We aim to keep it simple by asking only 10 questions. In this instance, if you answer yes to eight or more of these questions, your marketing and selling strategy is working for you. If you answer no too many times your marketing and selling strategy is more than likely getting in the way of your attempts to scale. Let’s begin.

Sean Magennis [00:10:21] Number one, is it obvious to prospects who you serve and how you serve them? Number two, is it obvious to prospects why you are the best at what you do?

Greg Alexander [00:10:36] So this goes to both value proposition and positioning statements.

Sean Magennis [00:10:40] Number three, are you in front of enough prospects to hit your revenue targets?

Greg Alexander [00:10:45] Lead generation.

Sean Magennis [00:10:47] Number four, do you understand how clients decide to hire someone like you?

Greg Alexander [00:10:53] How they buy versus how you sell.

Sean Magennis [00:10:56] Number five, can you consistently win more than 50 percent of the time?

Greg Alexander [00:11:01] Now, some listen again and say that’s too high of a bar to clear. And I would call B.S. on that. If you close rates beyond 50 percent, you’re pitching the wrong clients.

Sean Magennis [00:11:09] Right. So if you’re targeting is right, if it’s working properly, generation, psychographic, demographic, you’re going to exceed that 50. Number six, are you extending your reach through multiple marketing channels?

Greg Alexander [00:11:22] And here’s what’s unique about a boutique. You don’t have brand recognition. Nobody knows who you are. So you got to get the word out.

Greg Alexander [00:11:28] Right.

Sean Magennis [00:11:28] Yep. Bingo. Number seven, but you and your team motivated to bring in more revenue?

Greg Alexander [00:11:35] Put your money where your mouth is.

Sean Magennis [00:11:36] Incentivize. Number eight, are you and your team highly trained to win new business? Sharpening that saw. Number nine, are you covering your market sufficiently?

Greg Alexander [00:11:49] Often overlooked, but coverage is a big issue.

Sean Magennis [00:11:52] And number 10, do you have an agency capable of multiplying your efforts?

Greg Alexander [00:11:58] Don’t go it alone here? Listen, you don’t clean your own teeth, go to a dentist. So when it comes to marketing, in particular, find an agency and hire them.

Sean Magennis [00:12:05] I love that, Greg. And we have many great agencies in Collective 54. So in summary, I bet you the listener is an expert in your field, a true giant who knows more about your domain than just about anybody. I’m here to tell you that is not enough. If no one knows about your brilliance, what good is it? The world is filled with bankrupt ideas. Master your go to market, elevate your marketing and sales capability to professional grade. Earn what you were worth. If you enjoyed the show and want to learn more, pick up a copy of Greg Alexander’s book titled The Boutique How to Start Scale and Sell a Professional Services Firm. I’m Sean Magennis. Greg, thank you. And thank you, our audience, for listening.

Why Revenue Growth Flatlines in Professional Services Firms

Episode 8: The Boutique: The Real Reason Revenue Growth Flatlines inside of Professional Services Firms

Transitioning away from a partner-led sales model to a commercial sales engine is  key to creating wealth for owners of professional services firms. In this episode, Sean Magennis and Greg Alexander discuss why boutiques find themselves in this position and how they can overcome this inflection point. 

Various Speakers [00:00:01] You can avoid these landmines. It’s a buy versus build conversation. What’s the root cause of that mistake? Very moved by your story. Dive all in on the next chapter of your life.

Sean Magennis [00:00:16] Welcome to the Boutique with Capital 54, a podcast for owners

of professional services firms. My goal with this show is to help you grow, scale and sell

your firm at the right time, for the right price, and on the right terms. 


I’m Sean Magennis,CEO of Capital 54 and your host. In this episode, I will make the case that transitioning

away from a partner-led sales model to a scalable commercial sales engine is key to

creating wealth for professional services firm owners. I’ll try to prove this theory byinterviewing Greg Alexander, Capital 54’s chief investment officer. Greg is truly one of the

world’s leading experts in sales effectiveness. Greg, a pleasure to have you again today.

Why is this transition point a key milestone for professional services firms?

Why is Transitioning Away From a Partner-Led Model a Milestone?

Greg Alexander [00:01:14] It is a key milestone. You know, kind of the natural

progression of a professional services firm is a startup that becomes a growth firm then becomes a scalable firm and eventually sells. 

This transition point usually happens in between that growth and scale stage, and let me kind of walk the audience through this, and I point out that kind of evolutionary track, if you will, to really highlight the word here milestone. So this is something to shoot for, and it’s something that has to happen if you truly want to create an investable asset. 

Startups become boutiques by having the partners generate referrals, and boutiquesbecome market leaders by building a commercial sales engine. That’s the difference.

Sean Magennis [00:02:00] Yes.

Greg Alexander [00:02:01] You know, when you’re kind of a lifestyle boutique, you’ve got

some partners. They have great personal networks, and they’re able through positive word

of mouth, to generate business. So what’s different between them and a high-growth professional services firm that can become a market leader? It is somebody who builds the commercial sales engine.

And investors like Capital 54 and others want to see a maturing commercial capability before they make a buying decision and the sales and marketing process has to be proven capable of scaling. Otherwise, you’ll be a natural kind of limitation on the size of the market. 

So there’s an inflection point that all professional services firms run into head-on and this is when sales generation happens by employees and not by the partners. These kind of young pre-scale firms did not invest in building a professional commercial sales engine. They don’t have to. 

The partners are experts. They have very large personal networks, and these networks expand as they gain exposure to their niche. Then partners harvest these networks with businesses, and successful projects lead to more happy clients, and happy clients lead to positive word of mouth. 

And on and on it goes… You know, and the partner can really, with a group of partners, can really kind of carry the firm. I’d say for good five years, and then all of a sudden, it flatlines.

Why Does Revenue Flatline For Professional Services Firm Owners?

Sean Magennis [00:03:35] So why does it flatline, Greg?

Greg Alexander [00:03:38] So there are 52 weeks in a year, and each of those weeks has five business days and a hardworking partner is going to put in roughly a twelve hour day. Folks in professional services, particularly the partner level, work their tails off.

Sean Magennis [00:03:53] Yep.

Greg Alexander [00:03:54] This means that each partner has about three thousand one hundred and twenty hours to produce. If you subtract some holidays, a few sick days, a vacation or two, it’s more like, let’s say, twenty five hundred hours. And these twenty five hundred hours are not spent entirely on sales activity. After all, the partners are running the boutique, and as the firm scales, partners have only about half their time available for business development. So, therefore, once each partner is tapped out, sales flatline.

Sean Magennis [00:04:30] The obvious question is: Why not just add more partners?

Greg Alexander [00:04:34] Well, most professional services boutiques are very reluctant to do this, as I was, and I don’t blame those that are reluctant to do this. This is a for-profit business. We’re here to make money. 

So the profit pool is distributed to the partners. Dividing the pie by, let’s say, three partners are better than dividing the pie between ten partners. So if the sales engine requires adding more partners, it doesn’t scale. The current owners and partners end up making less, and even worse, their equity gets diluted. That’s why it doesn’t happen. That’s why they don’t just add more partners.

Sean Magennis [00:05:14] Yes, I can see how this is an inflection point, Greg. So follow-up question, what options are then available to the owners?

How Can Professional Services Firm Improve Revenue Growth Decline?

Greg Alexander [00:05:23] Yep, so the owners have to ask themselves. They’ve got to

choose between really two approaches to sales. Let’s call them option A and option B.

Option A is a partner-led model, and this means more sales but less wealth for the owners. It requires more partners to scale, as I previously discussed. 

Option B, which is my recommendation, is a professional sales model. This means more sales and more wealth for the owners. It does require investment, but it does not eat into the equity, and that is the most important piece.

Sean Magennis [00:05:58] Critical piece.

Greg Alexander [00:05:59] Yep. The partners/owners invest budget dollars in hiring a professional sales force. The partners no longer sell; the sales team does the selling. Now, investors typically want to buy boutiques that have made it through this inflection point. It indicates to them that this boutique actually has the sales capability to scale.

It’s important for the listeners to keep in mind that acquirers are buying the future growth of the boutique. They’re not buying the past – they are buying the future. So the more likely a boutique is to grow, the more they will want to buy it. Boutiques that can generate sales without the owner’s involvement are simply more likely to grow, and boutiques that take this approach can grow sales cost-effectively. A commercial sales team is less expensive than adding partners.

Greg Alexander [00:06:58] When I look at firms, and I see them either just completing this transition or in the process of this transition, I get very excited, and it makes me want to invest in the firm. 

Why is this? Number one, they become aware of the need, which is not obvious to many. Number two, they had the guts to pursue it, which is the type of people that I’d like to invest in.

Sean Magennis [00:07:22] Me too, Greg.

Greg Alexander [00:07:23] Now, I should point out that building a commercial sales team inside a boutique is not easy to do, and this is one reason why so few owners become market leaders and fail to pivot away from the partner-led sales model results in many lifestyle businesses. And as a result of that, potential acquirers are not interested in these lifestyle businesses. And I might add just one more thing if I can. 

You know, I’m making a comment that it’s not easy to do, and here’s why. When a client meets with a partner and the partner is selling the work, they say to the partner that “you’re going to be involved in the project.” And when the partner says, “yes, I’m going to be involved in the project, he or she says that because they’re trying to close the deal. 

Now, that’s the worst thing you could do because now you’re stuck. You can’t tell the client you got to be involved in the project and then be MIA for every key meeting. But partners are very reluctant to say “no, I’m not going to be involved in the project, and that’s a mistake.” 

And what I recommend, they say, is, “Mr. Client, no, I’m not going to be involved in the project and oh, by the way, that’s a good thing for you. My ability is not in delivering client work. I’m the worst project manager in the firm. My knowledge is in creating the methodology, hiring the staff, training the staff, and running the firm. I’m going to introduce you to my team who are about ten times better than delivering this work than I am.” 

And then you bring the delivery team into the sales call and then the client gets to experience your exceptional engagement manager and your analyst, et cetera, and they say, “yeah, I agree, you don’t have to be involved” and then the client, the partner, can move away. So that’s the key thing that stands in the way. Most owners of boutiques feel they have to remain committed to the project after selling it.

Sean Magennis [00:09:13] Outstanding advice. This is a big milestone, and I can also see why so few make it through this transition. That’s a challenge for businesses and for partners that are so hands-on.

Greg Alexander [00:09:24] Yes.

Sean Magennis [00:09:25] But to scale, it makes total sense, and I can see why why those professional services firm owners that are successful at doing that really become wealthy.

Greg Alexander [00:09:33] Yep.

Sean Magennis [00:09:37] We will be right back after a word from our sponsor. Now, let’s turn the spotlight on Collective 54 members who are making an impact in the professional services field. 

Collective 54 is the only national peer-to-peer advisory network for owners of professional services firms who have focused exclusively on growing, scaling, and maximizing business valuation. Today, we have the pleasure of introducing you to Jon Jones, president, CEO, and co-founder at Anthroware, an On-Demand Innovation Force creating high impact digital solutions firm.

Jon Jones [00:10:20] I’m Jon Jones, CEO of Anthroware.Anthroware makes beautiful digital products. We do this by studying people, your customers. We put them in the center of our process to make tools that they both need and love to use. 

Our work ranges from MBP apps for funded startups to big HIPAA compliant platforms for large established companies. We’re smart, a little rebellious, and we love working on hard problems.

Sean Magennis [00:10:49] Please get to know Jon and other business owners who are leading innovation in the professional services industry by visiting Learn more about how Collective 54 can help you accelerate your success.

Questions to Ask When Transitioning Away From the Partner-Led Sales Model

Sean Magennis [00:11:09] So, in an effort to provide immediate take-home value for you, I prepared a ten-question, yes or no checklist. Ask yourself these ten questions. If you answer yes to eight or more of these questions, you’ve made it through this inflection point. 

Number one: Are the owners removed from the sales process?

Greg Alexander [00:11:31] So let’s talk about that. So with diligence, when I pull the sales report.

Sean Magennis [00:11:36] Yes.

Greg Alexander [00:11:38] Typically, from a CRM system, every opportunity of business has a name associated with it. If that name associated with that client record is one of the owners, I’m not in. I become less interested in making an investment in that business because that tells me the owners are driving the business. 

If their name is nowhere near any of those records and there’s somebody else in the firm who doesn’t have an equity stake in the firm who’s the person that owns that client, has sold the work, and is delivering new work – that’s a real positive. Now, if you lined up ten owners of professional services firms right now and you asked them what their forecast was for the next 90 days, they could recite it. 

And if I told them all that they could not go in the next sales call, the next five sales calls, the close of business, what would they tell you? We’ll lose the business as a result. So they have to have the courage to step away.

Sean Magennis [00:12:33] Absolutely.

Greg Alexander [00:12:34] And trust your employees that they can get the deal done.

Sean Magennis [00:12:37] Brilliantly, said Greg. So question number two: Are there are employees generating all the sales? Number three: Is business being generated from scalable sources in addition to referrals? Number four: Have sales increased consistently without adding partners or new owners? Number five: Are your financials able to handle the expense of a commercial sales team?

Greg Alexander [00:13:12] Yes. So let’s talk about that. This is another obstacle. The cost of building a commercial sales team goes into the overhead bucket. Those aren’t billable resources. So partners have to be willing to make the investment, and very often boutiques come to us at that moment in time because they don’t have enough free cash flow to do this. So they need an outside investor to help them.

Sean Magennis [00:13:33] Excellent. And that’s where we provide the growth capital, the stimulus. And by the way, your extraordinary experience in building these commercial sales teams.

Greg Alexander [00:13:42] Correct.

Sean Magennis [00:13:43] Question number six: Have the sales results from the commercial sales team been consistent over time? Number seven: Have the win rates with the commercial sales team been on par, and I’m going to throw in or exceed the partners?

Greg Alexander [00:14:00] Yep. So some advice to the owners out there. The first time you do this, the win rates will drop substantially. Just hang in there.

Sean Magennis [00:14:09] Hang in.

Greg Alexander [00:14:09] You got to go through that period. You got to give the employees a chance to improve. Eventually, their win rates will be as good as yours, but there’ll be a difficult transition there. So just buckle up for that transition.

Sean Magennis [00:14:21] Well said, Greg. Number eight: Have the deal sizes with the commercial sales team been on par with the partners?

Greg Alexander [00:14:28] Same thing. Originally, the non-partners are going to sell smaller deals, or they may cave under price objections, et cetera. You just got to hang in there and get through that period.

Sean Magennis [00:14:39] Great. And number nine:Have the sales cycle links with the commercial sales team been on a par with the partners again?

Greg Alexander [00:14:46] Correct.

Sean Magennis [00:14:47] Good. And then finally, number ten: Can the commercial sales team be expanded significantly without breaking the boutique?

Greg Alexander [00:14:55] Yeah. So this is a really interesting component. In fact, this one can be a show in and of itself. So for every quote, sales head you have you’re going to have an assumption for the amount of revenue that they can bring in. And that’s going to be impacted by a lot of things linked to the sale cycle, win rate, the size of the deal, is the salesperson generating their own leads or the leads coming from another source. 

There’s a lot of factors that go into that. But in the end, you’ll get to a point where you’ll know plus or minus 10 percent with the revenue production, per sale said is. Now, you’ve got to think through how that impacts your service deliver, because, in theory, if you go out and hire ten salespeople, you’re going to generate a lot more business. Can the back end handle it?

Sean Magennis [00:15:42] Exactly.

Greg Alexander [00:15:43] So, figuring out how to tie the delivery engine of the back of the house to the front of the house is really important. And this question number 10 is really important because sometimes that’s overlooked. They hire all the salespeople, they generate all the new business. Everybody’s excited, and next thing you know, the delivery team is 120 percent capacity.

Sean Magennis [00:16:04] And you can’t deliver the business.

Greg Alexander [00:16:05] Can’t deliver it, and then clients sat falls, employee sat falls and you actually create a problem for yourself.

Sean Magennis [00:16:10] Yep.

Greg Alexander [00:16:10] So don’t forget the downstream impact of this.

Sean Magennis [00:16:13] Outstanding, Greg. Outstanding. So the path from a boutique to market leader results in creating a viable, superb commercial sales engine. Potential buyers would rather wait until you have made it through this inflection point. Jumping in prior to this is simply too risky for many. 

If you want to sell your firm, invest resources into developing a scalable sales and marketing engine. If you enjoyed the show and want to learn more, pick up a copy of Greg Alexander’s book titled “The Boutique How to Start Scale and Sell a Professional Services Firm.” I’m Sean Magennis. Thank you for listening.

Episode 3: How to Prove Your Firm is Not a Body Shop

How to position your firm in its marketplace is strategically important. Learn how to position yourself well in your market which is a critical way to determine the strength of your value proposition.

In Episode 3 of The Boutique, Sean and Greg talk how to position your firm in its marketplace is strategically important. Learn how to position yourself well in your market which is a critical way to determine the strength of your value proposition.



Various Speakers [00:00:01] You can avoid these landmines. It’s a buy versus build conversation. What’s the root cause of that mistake? Very moved by your story. Dive all in on the next chapter of your life.

Sean Magennis [00:00:16] Welcome to the Boutique with Capital 54, our podcast for owners of professional services firms. My goal with this show is to help you grow scale and sell your firm at the right time for the right price and on the right terms. I’m Sean Magennis, CEO of Capital 54 and your host. On this episode, I will make the case that the position of your firm in its marketplace is strategically important.

I’ll try to prove this theory by interviewing Greg Alexander, Capital 54’s chief investment officer. Greg is an expert in identifying a market position and in helping firms take actions to achieve this position. An acquirer of your firm will find your boutique attractive if you are positioned well in your market. Market position is a way to determine the strength of your own value proposition. A strong market position can indicate excellent competitive positioning. So, Greg, what is
the first step in establishing the most attractive marketing position one can get for your firm?

Greg Alexander [00:01:36] You know, I think it’s important to underline something that you said there, which is market position is a way to determine the strength of your value prop. So that’s what we’re really after here is the strength of your value proposition. So with that as a grounding. Right. The first step is to think like an investor and ask this
question. How will a potential, potential buyer of my firm measure the strength of our value proposition otherwise said measure our position in the market? So there are some obvious ways to measure the strength of your value problem. So, for instance, fee level in fee volume are two basics in any due diligence process. A fee level below, let’s say 250 bucks an hour, will suggest that your body shop. Body shops, if they sell, typically do so for a very low price and on very unattractive terms, you don’t want to be a body shop. A fee level, let’s say 500 bucks an hour will suggest that you have monetize real intellectual property. You’re not selling time. You’re not selling arms and legs. Instead, you’re selling knowledge and skills. So firms such as this are capable of selling and when they do sell, they do so at a premium price. Fee volume, on the other hand, indicates market position by suggesting the size of the overall market. So, for example let’s say you’re doing 50 million dollars a year. So that’s fee volume is 50 million a year, suggests a large market opportunity. Now, why is that? It’s understood that boutiques are not the market leaders. They’re the emerging market leaders and they typically penetrate their markets at, let’s say, somewhere between one and ten percent. So in this example, if you’re doing 50 million dollars a year in fee volume, that suggests that you’re working in a market opportunity that’s greater than five hundred million dollars and could be quite a bit larger than that and buyers of firms want to buy firms that are high growth, but that also still have a lot of runway in front of them. So when they’re thinking about their position that you’re boutique has in its market relative to the competitors and they’re trying to understand the strength of your value proposition. Some of these basics, like fee level and fee volume, are ways to prove that you’re not a body shop.



Sean Magennis [00:04:07] Got it, Greg. And obviously that runway comment is vitally important to have lots of runway ahead of you. So how about some suggestions beyond the basics, such as fee level and fee volume? What else what else is there, Greg?

Greg Alexander [00:04:20] Sure. So savvy acquirers are going to consider more precise indicators of your market position. So an example that might be client return on investment and this is often overlooked in it’s absolutely critical. You know, the slang term for this is client ROI. So boutiques that can scale to market leaders can prove their worth to clients. So what’s a simple way to illustrate this? Let’s say a client buys a service for half a million dollars and the realized benefit from that project is, let’s say, five million. So this is a 10 times return on fee. That’s a clear client ROI and if you’re a firm that can prove that you’re gonna be very attractive to a buyer. That’s a savvy buyer looking at the strength of your value proposition. Is there a clear before and after result? In contrast, let’s say that a client buys a service for half a million and it’s realized benefit is something subjective, such as
well trained employees. That’s poor client ROI. Well trained employees are at benefit from the project for sure, but it’s not quantified and it’s not in relation to the cost of the project. So these boutiques are likely not to become market leaders and a savvy acquirer is gonna know that. Another way that investors measure a boutiques market position is call point.

So what does that mean? So call point refers to the title of the person buying your service. For instance, if board members are buying your service, that’s a high call point. If the CEO or the CEO’s direct reports of buying your service, that’s a high call point. However, if your call if your call point title is like a director or manager, that’s considered by investors to be a low call point and firms with low call points have a hard time scaling. This is, that’s because they’re really selling a service that’s not worthy of an executive’s time to solving a problem an executive has delegated to junior staff and this indicates that the boutiques
service is not as, not that important to clients and that’s going to make it very hard for a boutique to scale. And investors are looking for high growth firms that have lots of runway in front of them and they can scale and one way to assess that is who do you call on? Who buys your service? And maybe one more just off the top of my mind is cycle resiliency. This is particularly important as we record this. The world is suffering from COVID-19.

Sean Magennis [00:07:00] Yes.

Greg Alexander [00:07:01] And a cycle resiliency is often considered by acquirer’s as an indicator of market position or the strength of your value prop and this cycle resiliency refers to having a boutique perform in periods of recession. Recessionary periods cause clients to cut most all non-essential budgets and unfortunately, this can include discretionary budgets that many boutiques rely on. Firms that see steep declines in financial performance during recession, that have poor market position and those that do well and maybe even expand during a recession have very strong valued propositions and it’s those boutiques and have the best chance of selling their firm’s.

Sean Magennis [00:07:48] Outstanding points Greg, and lot to unpack and think about here. So client ROI call point and cycle resiliency. These are all great market proof points. Greg, when you sold your firm SBI, how did you demonstrate to the buyer that you had a really strong market position?

Greg Alexander [00:08:12] Yeah, so in my case, the strength of our value proposition and our position in the market was obvious. Our acquirer evaluated us through the lens of each of those attributes and we we happen to show really well in each category. However, we probably shined brightest when it came to cycle resiliency and in fact, I can I can tell you with clarity that that actually drove the purchase price. In fact, our purchaser paid more for our firm because of how well we did during recessions and just some quick history for those that don’t know my personal story. I found in my firm sales benchmark index in 2006
and many fragile young firms were wiped out during the great financial crisis of 2008 through, let’s say, 2010. Yet we pushed right through this period with no problems and looking back, it’s really remarkable to say that and it’s in it’s a testament to the great employees that we had there and the loyal clients that we had. You know, SBI was only three years old when the world fell apart and we were selling a discretionary item that was easily cut by clients during those brutal times but our clients didn’t cut our services. In fact, just the opposite. They added to that and our revenue and profit growth really accelerated during the Great Recession and on a peer to peer comparison basis, we were growing at roughly twice the rate of our peers during that part, period and after the deal closed, you know, the acquirer’s mentioned to us that, you know, that really struck them as to how strong our market position was and it gave them great confidence to pay a premium for our service because they felt that if we made it through the Great Recession, if another recession hit, we were likely to make it through it again and as I understand it, the firm is
doing really well during COVID-19 so that that, you know, proved out. So cycle resiliency was a big deal for us.

Sean Magennis [00:10:14] Thank you Greg, and what a great set of examples and a testament to you and your team and obviously what I’m hearing too is your loyal customers really profound. So listeners, as you can see, market position is really important to potential acquirers. It tells them whether you have a compelling value proposition. It also tells them are you a position relative to your competitors.

Sean Magennis [00:10:43] We will be right back after a word from our sponsor. Now, let’s turn the spotlight on Collective 54 members who are making an impact in the professional services field, Collective 54 is the only national peer advisory network for owners of professional services firms who are focused exclusively on growing, scaling and maximizing business valuation. Today, we have the pleasure of introducing you to an exceptional person. Joe Gagnon, he’s CEO of Performance Tea, where his mission is to help people achieve their potential.

Joe Gagnon [00:11:23] Hi, I’m Joe Gagnon, the CEO and co-founder of Performance Tea. I see myself as an adventurer, entrepreneur and innovator. I’m the author of Living the High-Performance Life, an Ordinary Joe’s Guide to the Extraordinary. I’m a multi-time turnaround CEO and founder of the High Performance Life, a philosophy regarding techniques for mental toughness, Creative Problem-Solving leadership and personal effectiveness. As an advisory board member, I provide expertise in growth strategies to emerging companies. I’m an avid blogger and passionate endurance athlete, having completed 75 marathons and ultra races and in 2017 I ran a marathon on six continents on six consecutive days.

Sean Magennis [00:12:11] Get to know Joe and other business owners who are leading innovation in the professional services industry by visiting Learn more about how Collective 54 can help you accelerate your success.

Sean Magennis [00:12:31] Greg, here we go again with our top 10 checklist. Greg Alexander [00:12:34] Drumrolls.

Sean Magennis [00:12:35] Drumroll. In an effort to provide you immediate value, I prepared again 10 questions on a yes no checklist. Please ask yourself these 10 questions.

Sean Magennis [00:12:48] Number one. Is your average fee level above five hundred dollars per hour? Question number two, if not, can you prove that you are not a body shop. Number three, is your fee volume big enough to prove that you are in a large market? Number four, if not, can you prove that you are in a large and growing market with a lot of runway ahead of you. Number five, do you have a clear client return on investment? Number six, if not, can you prove that your clients realize a good cost benefit tradeoff? Number seven, do you call on the board of directors of your target client? Number eight, do you call on the CEO of your target client? Number nine, did your financial performance hold up well during the last recession? And number 10, can you prove to a potential acquirer that your boutique is cycle resilient? If you answered yes to eight or more of these questions, you occupy a really strong position in your market. If you answered no to eight or more of these questions, you have a weak market position. It would be wise to hold off on your sales process until this is addressed. Acquirer’s want to buy firms with validated market positions. This reduces their risk and increases their upside. There are many ways for a market position to be evaluated. Please be sure that your case is bulletproof.

Sean Magennis [00:15:00] If you enjoyed the show and want to learn more, pick up a copy of Greg Alexander’s book entitled, The Boutique How to Start Scale and Sell the Professional Services Firm.

Sean Magennis [00:15:14] I’m Sean Magennis. Thank you for listening.