Business development is the lifeblood of any professional services firm, or any organization that sells anything for that matter.
Business health and sustainability begins and ends with revenue. If there is not enough revenue every year, it becomes a slow road to bankruptcy or sale since cost cutting can only go so far.
Leadership’s role in driving business development is fairly simple — a three-legged stool comprising of (a) setting the expectation; (b) training/coaching; and (c) accountability for results. Small and midsize CPA firms struggle to achieve significant annual organic growth. Business development is also a three-legged stool, in its simplest form composed of (a) building your network; (b) creating opportunities: and (c) closing the sale. So why is it so difficult for so many accounting firms to consistently drive substantial net organic growth?
It starts with leadership: firm leaders, practice leaders and niche leaders. In too many firms, leadership accepts the premise and therefore communicates the expectation that business development is something that only “rainmakers” can be successful doing. Those firm leaders accept the idea that most partners are not capable of BD and should focus on getting the work out the door, letting the rainmakers drive new clients and organic growth. They look at revenue with a sort of bilateral view — rainmakers bring in new clients and the rest of the partners' service clients. Carrying this further, since firm leadership has no expectation of BD from most partners, there is no training or coaching and no need for accountability. Is it any wonder that so many firms struggle with achieving significant net organic growth year after year?
What are the major actions leadership needs to take to drive significant annual organic growth and build a successful BD engine?
Expectations: Firm leaders need to clearly communicate that it is every partner’s responsibility to be successful at BD and drive top-line growth. BD goals need to be established for every partner — goals that are stretch goals and that take into account each partner’s strengths. The issue here is not to give every partner the same revenue goal, but to give every partner a revenue goal.
Training and coaching: Just like any sports team, there is a range of ability from the superstar to the team member who just makes the team. On every sports team, the coach understands the span of ability among the team members and as well as the responsibility to ensure that every member of the team improves their ability. It’s no different with a partner group. The firm leader must ensure there is a strong training and coaching model in place to provide continuous improvement to the entire partner group as it relates to their BD ability.
Accountability: For the above two steps to achieve the overall goal of driving revenue and successful BD, there needs to be an effective accountability model in place. Every partner has to be held accountable for their performance against their goals and accountability needs to be focused on helping each partner achieve greater levels of performance, versus laying blame for not achieving their goals. Accountability needs to be seen by all partners as a motivational and training tool, not as a billy club. Accountability is a key ingredient necessary to drive every partner’s success in BD.
Firm leadership should be held accountable for creating and implementing a successful BD model throughout the firm.
Let’s look at the three major legs of an effective BD model:
- Building a network: BD starts with each partner building their own personal network of contacts that are in a position to create an opportunity for the firm. This is the single most challenging piece of the BD puzzle and one that generates so much fear and concern for most partners. The bottom line is that most partners just are not comfortable going into an industry conference or local business association meeting and making contacts that matter. Firm leaders need to understand this and build training and coaching programs that will help each partner learn and become comfortable with building their personal network. There is no one approach, and each partner needs to develop a process that works for them. For example, a very strong technical partner may find the best way is to become a thought leader, write articles or give talks at conferences as a way to build their network. Others have the natural ability to walk into a room and meet people. The approach to building the network as well as the training/coaching model needs to match each individual partner’s strengths.
- Creating opportunities: The value of a personal network is in the opportunities provided for new clients. A major mistake that many partners make is thinking any contact is a good contact. That is wrong. Unless the contact is a decision maker at a potential client, or the contact is a key influencer with access to target clients, the contact has limited value in terms of the potential for opportunities. Turning a contact into a valuable contact is a critical process that includes training, mentoring and a defined plan of action. Most critical in this process is the contact must be able to build trust in the partner. As one of my most valuable contacts told me, “If you ever embarrass me in any way with any client I refer you to, it will be the last time I ever refer a client to you.” This contact was a partner in a Big Four firm who was one of my best referrers of new business. I made sure that he was never embarrassed.
- Closing the sale: All the above means little if the win percent is not where it should be. Most conventional wisdom pegs a 33 percent win as doing well. I don’t agree. If the BD model is effective at building the right network, then the win percent from the opportunities that come from that network should exceed 50 percent. One of the major issues affecting the win percent is that most firms chase almost any opportunity, regardless of the type of prospect.
There are three types of prospective clients:
- Price-driven: This type of prospect is only interested in the lowest price. If that is the type of prospect you want to chase, your win percent will be low, probably below 30 percent. Don’t fall into the logic that once we win it, we will be able to sell other services at a much better rate so the overall profit on the client will be acceptable. That never happens.
- Relationship-driven: This type of prospect is a reasonably good prospect who has a direct relationship with part of your network, or was referred by someone who has a good and trusted relationship with the prospect. Price may still be a driver, but the relationship often trumps price as long as the price is reasonable. This type of prospect is one where your win percent should be closer to 40 percent or higher, depending on whether the relationship is a direct one or a referred one.
- Value-driven: This type of prospect is the gold standard as long as your firm is a value-based firm and not a compliance-based firm. Value-driven prospects never use price as a factor in selecting their firm, as long as they can see the connection between what your price is and the value that you deliver. The challenge for most firms is moving from a compliance mindset to a value mindset and having the services and service delivery focused on adding value to the relationship — always making a difference in the success that the client is achieving in their business. This type of prospect is one where your win percent should range between 60 and 80 percent, depending on how good the sales team is in communicating your value differentiation in a believable way.
The best prospect is one that is both relationship and value driven. As the firm or practice leader, you have to create a winning BD model that will drive organic growth every year, with each partner improving their BD success every year. For your firm to achieve significant annual growth, the best path is to implement a BD model that capitalizes on every partner’s strengths, sets clear expectations, and holds each partner accountable for results — the results being the actual new clients won.
It takes courage to move from the comfort of compliance and seeing your job as just client service to accepting that all partners have a responsibility to sell — to grow the top line with quality clients. John Maxwell, a prolific author of books on leadership, captured the essence of this transformation so well. Partners that have not been active and successful at business development have to step out of their security zone and develop new patterns of behavior. If they do, they will build relationships that have meaning and value, and start on the road to BD success. Effective business development by partners starts with strong leadership.
