Learning From The Best

Of all the accountants I’ve had the pleasure of working with, Michael is the best business developer. His practice focuses upon businesses with annual revenue ranging between one and twenty million dollars. The billings his efforts have generated since 2004 average over $3,000,000 annually. He personally manages a book of business approximating $1,000,000 and has spread the other clients among younger, but nevertheless highly capable accountants in his firm.

We had a pleasant lunch recently and in response to my prompting Michael gave me an overview of his success formula.

He began his practice with a few clients he “inherited” from a retiring accountant. By conventional personal marketing tactics, e.g. encouraging referrals, networking, socializing, getting involved within his community, etc., he slowly grew his practice to the point where he was working approximately 65 – 75 hours a week.

He then made his first hire. He selected an experienced, knowledgeable and relatively highly paid former staffer for one of the national firms. He delegated everything he could to her, and within a month her efforts had freed up almost half of his time. (Since then several more professional staff have been added; each one hired only when revenue growth could support the added overhead.)

The strategy was then to contact every one of his business clients and arrange an informal lunch date. When he met with each client he had a simple business development strategy he refers to as “casual probing.”

Here’s how it works: (In advance of the meeting Michael has reviewed the client’s latest financial docs so he’s very familiar with the numbers.) He begins by thanking them for their business. Then there’s a bit of chit chat to catch up on personal events and at an appropriate point he asks, in effect, “So, how’s the business doing?”

As the client responds, Michael interjects comments like, “Yes, I noticed your year over year margins have dropped about 5 percent,” so the client knows Michael is up to speed and they can discuss details. By asking more questions (probing) Michael isolates various issues the client perceives as problems. Michael then offers casually phrased suggestions about possible courses of action, e.g. “The best way to anticipate what funding package will be optimal to purchase the tractor is to do some projections so we can predict where you’ll be with cash, the bank line and profitability,” or, “We know that closing the Kansas City sales office will cut expenses, but it’s more complex than that. You need to run the numbers out so you have a handle on how this impacts longer term profitability, cash, quantity purchase discounts with vendors, and other factors.”

As Michael makes these comments, he’s mindful to never suggest any course of action that doesn’t have intrinsic value to the client. In other words, he never suggests anything that doesn’t have an obviously excellent ROI. In the first example above, the tractor will cost around $250,000, so paying Michael, say, $4000 to run a fairly detailed projection is an easy decision to make because a funding package that is poorly thought out could cost much more in terms of interest, lost opportunity, etc. In the second example, closing or not closing a sales office is another action that has significant ramifications. It involves personnel, leases, revenue, costs, client/customer service, and a host of other meaningful issues. Again, the prospective dollar impact will be much greater than the cost of the study to examine the elements.

Michael never goes into business development mode during these meetings. He keeps the luncheon discussion completely conversational and he picks up the tab.

If he doesn’t act like he’s looking for work, how does Michael benefit from this process? First of all, he retains ALL of his clients. They don’t go somewhere else because they aren’t getting enough love. They send him an inordinate number of referrals because he’s helpful and expresses an interest in them. And, approximately half of them will engage Michael on the spot to do some sort of project work or schedule a consulting session!

Whenever his client activities involve interaction with an attorney or consultant, he ALWAYS repeats the above procedure and invites them to lunch. He thanks them for their help and cooperation; talks about mutual interests and asks them about their business. Because he is so experienced with this methodology, he can “wing it” as they talk about their business and toss in valuable suggestions and ideas.

Even if they don’t hire Michael as their accountant, they more frequently than not become part of his network and send him referrals.

Michael averages about 75 lunch dates a year with clients, attorneys, consultants and others individuals who are centers of influence. This process has made him millions of dollars and generated hundreds of loyal clients. The other accountants in his office are expected to adopt the same approach.

As a caveat, Michael mentioned that these lunch meetings are not the only time he interacts with his clients. He deliberately creates situations where he will be talking with and/or actually visiting his clients, especially the ones that generate significant revenue.

As Michael points out, with this method he doesn’t ever have to “sell.” He only talks, asks some questions, expresses interest in the client, makes them feel appreciated, picks up the lunch tab and offers some casual advice. He recognizes that an important element of his continuing success is that the suggestions and ideas he offers are based upon solid knowledge and a sophisticated understanding of how for-profit enterprises really work. This level of acumen has taken years to acquire, but when he began he knew no more than any other accountant with a couple of years experience. Nevertheless, the method worked well right from the beginning.

There you have it. That’s how one of the masters does it. Can Michael’s method work for you?