Developing Entrepreneurs: Emulating The Right Role Models
Excerpted from: Building Entrepreneurial People by Allan S. Boress, CPA, CFE
New business is the lifeblood of every CPA firm. Some firms today are being forced to merge with other firms, are being bought out under less than desirable circumstances, or are slowly going out of business before the partners' eyes because not enough new clients and new work are coming in.
Most firms were started and developed by entrepreneurs. These people brought in business because they had to in order to eat and pay the mortgage. Most effective rainmakers are born that way or are the result of the environment they grew up in. Many accountants, however, have learned to be entrepreneurs. This booklet will help you guide your staff members to emulate the behavior and thought processes of such top business producers and, thus, become entrepreneurs themselves.
Developing Entrepreneurs -- Emulating the Right Role Models
If you want to improve your golf game, would you talk to Jack Nicklaus or the average player? The same principle applies to developing the entrepreneurs currently on your firm's staff. The key is to have them emulate the behavior of those who are already successful at bringing in business.
Unfortunately, rainmakers are rarely able to describe how they built their practices. They usually say things like, "I just went out there and met people." or "I just did it." One CPA, when asked how he built his firm into the second largest in a major city, said, "I stood in the hallway and shook hands."
Top Business Producers are Models of Success
Guide your staff members to emulate the behavior and thought processes of top business producers. Identify attributes of the top business producers to enable your staff members to guarantee their own success. Consider how rainmakers think and what they do, step by step, to build their practices. You will notice that these thought processes and activities are not what one would expect from a typical CPA.
How Top Business Producers Think
They work smarter. Do not misunderstand this thought process of the top business producers: It does not mean they work harder, it means they work smarter. Most successful business producers maintain their market presence every day of the year because people are always in the "buying cycle." The buying cycle ranges from "not interested" to "must buy it immediately."
Chrysler, AT&T, and other successful companies advertise and market to their prospective customers every day because they do not know when you will be at the "must buy" position, and they want to be right in front of your face the moment you get there. If they are not, you are likely to choose a competitor.
The same theory applies to the purchase of professional services by clients and prospective clients of CPA firms. Only accountants stop all activities other than getting out the work for three to five months each year. Over 90% of CPAs do no personal marketing during busy season. It is difficult to maintain a market presence when you take yourself out of the market for a certain time each year.
The top business producers in the accounting profession do something every day -- even during busy season -- to build their practices. Whether by meeting for lunch, breakfast, or drinks with a client, prospective client, or referral source; sending an article to someone; or making a phone call, these CPAs make some form of contact every single day. This is unlike most CPAs, who conduct such activities sporadically, if at all.
Working smarter does not mean spending your weekends and evenings at Chamber of Commerce meetings. However, many top business producers do mix social activities with business, killing the proverbial two birds with one stone.
That is working smarter. Rainmakers have made personal marketing a habit -- they do it every day. Because they are always in the marketplace, when a prospective client or client needs their services or a referral source is in a position to refer, they are right there, fresh in people's minds.
"Many times I'll run into somebody at a social event and they'll say 'Steve, I was thinking about you. I need to call you about some tax advice and I'm glad I saw you. Let's get together next week to talk about it,' " says Steven Messing of KPMG Peat Marwick, Miami. "I would hate to think that if that person had not seen me, they wouldn't have called me, but it's probably true. When you are out of sight, you are out of mind... You have to be seen by as many people as possible."
Also, working smarter means that top business producers see the business development implication in everything they do. They understand that they are always marketing.
Because so much of a CPA's new business must come from his or her existing clients and referral sources, rainmakers make an extra effort to remind themselves they are still in the "romance" stage of every professional relationship. Unlike most CPAs, who take their clients for granted and pay little attention to business relationships, entrepreneurs are constantly aware that everything they do affects these relationships. They understand that delivering and reviewing the audit report is marketing. They know that every contract they have with a client will bear upon that relationship in some way. They are constantly looking for opportunities to help their clients succeed.
Budding entrepreneurs must see the business development aspect in everything they do. The idea that the client pays their salaries must be conveyed in every staff and partner meeting. Also, staff members must emulate the top business producers by making business development and personal marketing a habit, even during the busiest and most important times of the year.
They always think about business development. Top business producers understand that building and keeping a practice is a game of analysis, strategy, and implementation, like chess. Like any game, the more you think about it and try to improve, the more successful you will becomes.
Unlike their competitors, entrepreneurs think about business development most of the time. Although the work needs to get out and they have other obligations and concerns in their lives, the thought of building and caring for their clients is foremost in their minds.
Rainmakers' antennae are always up. They have a nose for business. They are constantly thinking about business opportunities and new ways to win at their game. Because of this, they rarely miss opportunities that their competitors -- who have their noses so deeply embedded in their daily work that they do not notice opportune moments -- pass right by. From the time they wake up in the morning until the time they go to bed, entrepreneurs are playing and winning the game of business development.
My favorite example of this, although extreme, illustrates the point well. One of my clients is the managing partner of a very successful firm and for years has brought in the business that keeps the firm at the forefront in the marketplace despite tremendous competition. Because his antennae are always up, he close an appointmen that led to a sizable audit client -- at his daughter's wedding! Standing in the receiving line greeting guests, this rainmaker met someone he did not know. After the introductions, the CPA asked his guest about herself.
In our culture it is perfectly acceptable to ask someone what they do for a living as a way of breaking the ice. Because he always thinks about business development, this CPA has made a habit of asking his question in every social situation -- even his daughter's wedding. The guest replied that she owned a local business, and the entrepreneur took note. Later, while circulating among his guests, he made a point of stopping to talk with this new prospective client.
The CPA decided to allow eight minutes to make an appointment with the business owner, and not a minute longer. So he reintroduced himself and asked about the guest's business. When the eight minutes were up, the CPA said, "Did you know that I am the managing partner of the XYZ CPA firm here in town?"
Pay close attention to the way the CPA worded his question -- it has helped him close much more than his share of business over the years. By focusing on business development, he has already thought about his phrasing and questioning, which are some of the tools of selling. He did not blurt out stale lines like "Can I call you for an appointment?" or "I'll be in your neighborhood. Would Tuesday at 9:00 or Thursday at 11:00 be better for you?"
Instead he said, in the least threatening tone possible, "Should we be discussing your accounting work?"
Most people find this question to be nonthreatening because it starts with the word should, not can. It creates a team effort by using the word we. The CPA does not sound like he is begging for the business -- the word discussing creates a relationship. With one sentence, the rainmaker has caused the prospective client to think about her accounting work and the nature of her relationship with her current CPAs. Most people find it almost impossible to respond negatively to this question.
Are the members of your firm missing opportunities because they do not focus on business development? Are you missing a chance to develop entrepreneurs because you do not regularly hammer this idea home?
They pursue only golden opportunities. Unlike most CPAs, who will pursue any kind of business at all and then let the ball drop from their fingers because of poor follow-through, top business producers concentrate only on those opportunities they want and follow them meticulously and tenaciously until the sale is closed. Many CPAs wait for a client's call, even though they think they have a gret shot at securing the work. Remember, follow-through is your job.
This is true of referrals, too. CPAs cannot afford to be so busy that they do not follow through on referrals in time, if at all. CPAs are probably the most disciplined people in business about writing things down, yet they fail to use their calendars to track referrals and secure business. A well-organized calendar is a powerful business development tool.
When rainmakers lose opportunities they should have won, many continue marketing by putting lost prospects on the firm's mailing list or inviting them to the firm's functions and social events. This lets the prospective client know the firm still wants their business. In more than a few cases, the rainmaker will automatically pick up that lost opportunity because he or she is still marketing when the client realizes they made the wrong choice in CPA firms.
Similarly, sometimes all a firm must do to regain a lost client is allow the client who has left to save face when returning, listen intently to the client's reasons for leaving, and perhaps change partners or staff on the job. As one successful rainmaker puts it, "I continue to market to the firm's lost clients even if they weren't my own personally. I feel such situations are better than only pursuing cold leads and strangers because former clients are already familiar with our firm and may feel they have made a mistake."
Top business producers also track their ideas about marketing, client relationships, and selling. CPAs should set aside at least one page in their calendars to record their ideas for building and keeping their practices. This then becomes their personal marketing plan, and all they have to do is prioritize and implement these ideas.
Be sure that your staff members know what they should be looking for, not only that they are supposed to "bring in business." Teach them how to use a calendar effectively. Provide a time management course for them, or at least encourage them to take one. Also, be sure your firm keeps in contact with lost opportunities and lost clients.
They think like entrepreneurs -- not accountants. Consider your most successful clients: Do they think and act like CPAs? Although many entrepreneurial business people could probably be more disciplined, most are successful specifically because they do not run their businesses like CPAs often do.
From my research on how CPA firms dealt with the recession during the late 1980s and early 1990s, I discovered that over 95% of CPA firms dealt with the recession by firing people and cutting costs. Less than 5% changed their marketing efforts or the way they interacted with their clients. My most successful clients, however, confronted the economic downturn by trimming costs and laying off their least important people in addition to pursuing new marketplaces, bringing out new products, offering new incentive programs, and even hiring more salespeople.
The biggest competition accountants have is other accountants. If a person wanted to know how not to run a business, he or she might look first to the typical CPA firm for guidance. Because CPA firms are typically run like democracies, it becomes very difficult for them to take action quickly. CPAs tend to grieve over every dollar spent. They usually do not invest as much as they should in their businesses, often sucking it dry with partner distributions. Also, they tend to ignore their clients. If CPAs owned a football team, the owners would play the games to save on salaries. Successful clients, however, manage their business and their employees, keep their customers happy, and constantly seek new business.
Amazingly, some firms have fired their best business developers and client managers, but kept the technicians and, thus, lost clients. Keep in mind that technical people are important -- somebody has to do the work. But top business producers see beyond the technical and have a quite different outlook on business from their fellow CPAs.
Entrepreneurial accountants see the long-term, overall picture for their firms. They are visionaries. They know where they want themselves and the firm to be in three or five years. On the other hand, most CPA firms do not have a business plan; some do not even have budgets.
Top producers look at more than the bottom line. Many of them know that once they pass breakeven, a lot of the new incremental business falls right to the bottom line. Some CPAs are intent on micromanaging the bottom line, creating a smaller practice in order to boost profits. When that happens, the firm loses market share, word-of-mouth advertising, and referrals. By failing to create the opportunities for the up-and-coming stars to stay with the firm and become partners and by over-managing the bottom line, firms can manage themselves out of business.
One CPA firm was intent on eliminating the administrative function of its 10-partner firm, thereby saving about $10,000 per partner. The partners' idea was to abolish the very department that had made their firm's success and growth possible by freeing them from the mundane details of the business -- only to add a few bucks to their $250,000 average draws. This certainly does not seem like common sense, but I have discovered that with CPAs, common sense is not all that common.
Top business producers invest in themselves and their staff members. They know that to build their firms, they must provide the training and support for the people who must go to market.
Entrepreneurs also invest in their personal appearances, their collateral materials (such as stationery), and their offices, knowing that the impression they make affects clients', prospective clients', and referral sources' opinions of them and their abilities. Many CPAs who wonder why they cannot being in business apparently have never looked in a mirror and asked themselves, "What does my prospective client want to see?"
Sadly, some firms skimp in other ways, damaging not only their business development efforts, but also the quality of their daily work. In too many accounting offices, there is poor lighting, depressing decor, and less equipment than there should be, all because the partners do not want to spend money. All of these issues effect the attitude of the firms' employees, the quality of the work they produce, and the way they interact with clients.
Top business producers are open-minded, not closed-minded like most CPAs. They look everywhere, at everything, for ideas on how to grow profitably. Top business producers delegate as much of the day-to-day accountnig work as possible to free them to sell and take care of their clients and referral sources. They take time to properly train their staff so they do not have to be tied to their desks. They take risks, knowing that the greatest risk in building a practice is not venturing beyond their comfort level.
Stop focusing only on the bottom line. Plan the growth of your firm. Train your staff to sell and improve client relationships. Take more business risks. Always try to increase your firm's market share.
Consider the thought processes of the top business producers in the accounting profession discussed here. How are they different from those of most CPAs? These differences separate entrepreneurs from their less proactive competitors. Encourage your staff members to become more entrepreneurial by changing the way they think about business.
How Top Business Producers Build Their Practices
Consider the following activities of those partners and managers who bring in the most business. Help the members of your firm develop their entrepreneurial abilities by having them concentrate on the actions that will lead to faster business development success.
They select their targets. The top business producers in all of the professions tend to select their clients, rather than letting the marketplace rule them. One can attempt to appeal to a broad array of business, or one can limit his or her focus, making a directed effort, which is usually far more successful than the general approach.
Accounting is the last profession to specialize. Consider the medical and legal fields -- these professions have indeed changed. If you had a back problem, you would go to an orthopedist, not a general practicioner. If an employee was suing your firm for sex discrimination, you would go to a labor attorney, not a general business attorney. So it is with all the other professions, except accounting.
However, there are some forward-thinking frims, such as Friedman, Eisenstein, Raemer & Schwartz (FERS), Chicago, which has totally reorganized along industry lines. This gives FERS a tremendous competitive edge over firms that are still organized around traditional A&A and tax functions.
Specialization gives FERS a leg up on the competition because the partners now know exactly where to devote the firm's time, effort, and energy in marketing and related activities. The firm can speak to prospective and existing clients as an expert in their industries, rather than as a generalist. It can train staff members in a very directed way, along industry lines, making them experts at an earlier stage in their careers. Also, this pattern of organization differentiates FERS from other firms that still seek every kind of business, even if they have no market penetration in a particular industry or specialty.
Unlike most of their individual counterparts, accounting's top business producers tend to have specialized their client bas along industry or service lines, thereby deciding ahead of time who they want their clients to be. Have your staff members select an industry niche or specialty they want to become experts in. Decide who you want your clients to be -- do not be a victim of the general marketplace.
They market to their existing clients. The most effective marketing mix is based on the following formula for new business:
Existing clients. 60 - 70% of new business should come from existing clients purchasing additional services, both through, nonattest services and their referrals.
Referrals. 20 - 30% of new business should come from referral sources, people outside your client base who are in a position to send business your way. Referral sources include those who have traditionally been in a position to send CPAs busness, like bankers, attorneys, and industry-specific sources such as sureties and bonding agents in the construction business. Make sure your firm's budding entrepreneurs do not ignore other, less obvious, sources like securities brokers, insurance salespeople, real estate agents, vendors, friends, family, and other accountants specializing in different niches, as well as their fellow employees.
New contacts. About 10% of new business should come from outside your firm's existing relationships.
Unfortunately, most CPAs tend to ignore marketing to their existing clients and referral sources and waste an inappropriate amount of recources marketing to those they will have the most difficulty attracting -- total strangers. In one very successul 10-partner firm, each partner manages a pyramid of 17 people. This firm was started 25 years ago by a sole practicioner with no clients and no business. Today it grosses well over $10 million. The secret to this firm's success is that it markets to its clients and referral sources almost exclusively, and they spend 4% of the firm's gross revenues on marketing.
Basically, the firm invests this money and effort by entertaining and being with its existing clients and referral sources. When asked why he thought this approach worked, the managing partner replied, "Most CPA firms are too darn cheap to take care of their clients and those wonderful people who send them business. We treat our marketing as a fixed cost, just like rent... By spending time and money on our clients and referral sources constantly, consistently, and continuously, we have secured relationships that our competition will never realize."
Teach your firm's business developers to devote their time, effort, and resources where they will achieve the greatest return: building their existing relationships with clients and referral sources.
They turn their clients into a sales force. Most CPAs never approach their clients for referrals. Yet they are in the best position to hand-carry the good news about their CPAs to other prospective clients just like them.
In 1989 a national marketing organization surveyed over 100 clients of CPA firms nationwide, asking them, "Do you give your CPAs referrals?" Interestingly, 50% of the clients interviewed said yes, they did or had given their accountants referrals. The other 50% said now, they did not. The number one reason clients did not give their CPAs referrals: They did not know the CPA was looking for new business. In fact, many remarked that every time they talked to their CPA, he or she was very busy, sending the message that the firm was not available or looking for new business.
Your clients cannot help you unless they know what you want. Direct your staff members into new, assertive behavior by having them ask your clients for referrals.
They win the inside game. Top business producers pay attention to two sets of relationships their competitors often ignor or mishandle. Rainmakers are smart about winning the inside game with the people at their clients' and referral sources' offices and within their own firms.
CPAs usually have one person they deal with in a client's office, but there also tend to be subsidiary infulencers who affect the total quality of the client relationship. Not only are these people sometimes in a position to refer business to their CPAs, but they are sometimes able to save the client if the primary contact leaves the client's business. Top business producers nurture these secondary relationships as carefully as the primary ones.
In contrast, most CPAs do not look beyond the controller, CFO, CEO, or owner. They expend all their efforts on one individual, and if they lose that relationship they can -- and often do -- lose the client's business altogether.
Top business producers also win the inside game in their own offices. CPAs are notoriously difficult employers and publich accounting places high demands not only on employees' physical and mental makeup, but also on their families, especially during busy season. Worse, it seems the only time one hears feedback in a CPA firm is when something goes wrong.
Rainmakers acknowledge these basic facts of life in accounting and go many steps beyond typical CPA firm policies: They treat their employees with respect, generosity, and even affection. They create relationships with those who work directly and indirectly for them that inspire loyalty and devotion. They are much more flexible and logical in their dealings with their staff.
Recently I received a phone call from a marketing director at a client CPA firm. Although revenues were up a staggering 22% from the previous year after installing a marketing program and training staff members to carry it out, there was a problem. According to the marketing director, the managing partner was "reverting to being an accountant," destroying the morale of the people who had created the firm's growth!
The managing partner was once again making the kinds of arbitrary, thoughtless decisions CPAs tend to make regarding their staff members. For example, several employees had approached him about using a sick day when their children became too sick to attend school or daycare. The managing partner flatly refused their request. This was not an unreasonable request. This practice would have prevented the employees from having to lie about being sick to stay home with their children. Only someone inflexible and unaware of the importance of team morale to building a practice would deny such a petition.
John Johnson, son of a sharecropper born and raised in poverty in Arkansas City, Ark., and the multimillionaire genius who founded a publishing empire based on the first African-American directed publication, knows how to win the inside game. In the 1950s, Johnson was losing promising executives and staff members to other black-owned magazines. He knew he could not be successful without his people to support him, so he installed a chalkboard in his office, displayed so he saw it every day. On that chalkboard he wrote the names of the 30 or so key people he absolutely could not afford to lose.
Every day, Johnson would look at that board and ask himself, "What can I do to improve the relationship I have with one of these people? What can I do to make their life better?" From then on, Johnson never lost a single one of those employees to a competitor.
Perhaps the people around you are not motivated enough to become more entrepreneurial because you are not doing enough for them as human beings to make their lives easier and more enjoyable. Public accounting is not an easy ride, but it does not have to be miserable. Accounting's top business producers go out of their way to win the inside game.
Mike Dugan, managing partner of Dugan & Lopatka, Wheaton, IL, is such a managing partner. Dugan uses the designation "Director of Joy," and takes it upon himself to ensure that his employees actually love what they do. He constantly seeks ways to make their jobs better and even fun.
By winning the inside game in their own offices, entrepreneurs have more freedom to do what is in their own best interestes, and the firm's. Instead of only doing the bare minimum, their employees are more productive and take on additional responsibilities and challenges. Top business producers tend to have little turnover in their offices, leading to greater continuity and better service.
Also, entrepreneurs' employees usually know their personal goals. Staff members know their employer's philosophy on client service, the vital importance of new business, and often how much business he or she wants to generate each year. Because staff members have this information, they can help the business developer reach his or her goals, they can remind him or her of these goals, and they bacome part of a team effort.
People love to be on a team working toward a common goal. It makes their work lives that much more fun and rewarding. Gerald Greenwald, CEO of United Airlines, said of his learning experience at Chrysler, "I got my first real exposure to what happens when a large number of employees focus on one common goal. Once it starts, it is a steamroller to success."
However, staff members' goals must be consistent with yours. Do not believe for a second that your employees will get excited about helping you get rich. There must be rewards for them as well -- and these rewards generally go beyond money.
Similarly, your clients and referral sources need to know your goals for your practice, as well as for their businesses. Then they can help you, and vice versa. Accounting's top business producers discuss their goals with clients and referral sources.
Have your employees nurture the relationships they have with their clients -- without losing independence, of course. Make them very aware of the relationships they have with other members of the firm. Win the inside game in your own office by making your employees happier in their jobs, and they will become better business developers.
They build alliances with fewer but better referral sources. I always expected to find that the rainmakers in the accounting profession have many more referral sources than the typical CPA. In fact, the opposite is often the case. Top business producers tend to have fewer but more intense alliances with referral sources with whom they have developed a strong personal rapport, and who they have identified as being able to help build their practices.
Also, top business producers become close personal friends with their referral sources. They understand that the basis of business is relationships. More often than not, referrals are made on behalf of CPAs who are not technically exceptional, but superior in their relationships with the referrer.
To create these powerful and productive relationships, rainmakers typically identify a few people they want to be in referral relationships with and "romance" them over a long period of time until the relationship becomes productive and secure. One cannot devote this kind of time, effort, and energy to a legion of referrers.
Also, accounting's top business producers are judicious about monitoring the give and take in referral relationships. One CPA keeps a payback list on her computer and looks at it every week. When a relationship tilts against her -- that is, more referrals are going out than coming in -- she prints a hard copy of this list and sends it off to the referral source in question.
Have your staff members diagnose the quality of their current referral relationships. Guide them to create relationships with people who can help them directly. Teach them that creating productive relationships requires an investment of time, effort, and energy over an extended period of time.
They build their personal reputations through marketing to strangers. Top business producers usually address this aspect of practice building last on their lists of priorities. Early in their careers, rainmakers may devote a lot of time to speech making, article writing, and such, but most begin their careers by nurturing the relationship they have and building on them, rather than by marketing to strangers.
Some CPAs try to build their practices by becoming famous accountants, recognized for their extraordinary technical prowess, serving on technical committees and the like. However, such endeavors do not always pay off as planned because people tend to hire people they know, like, and trust. People outside of the accounting profession often have a difficult time distinguishing or caring about technical powers.
Make sure your employees are devoting their energies where they will pay off in business generated, unless you are specifically trying to bolster their professional reputations. Realize that furthering their technical careers may not generate the business you had hoped for.
They know how to sell. When all is said and done, accounting rainmakers can close the deal when the opportunity presents itself -- they know how to sell. If they did not figure out how to sell by themselves, they made the effort to learn selling skills and continued to improve them because they realized that it is the most important task of a successful CPA. A CPA may be great technically, but if he or she has no clients to buy his or her services, it all goes for naught.
Make sure your firm's future rainmakers understand the importance of knowing how to sell effectively. Also, make sure they have the training necessary to develop effective selling skills.
Allan S. Boress, CPA, CFE is one of America’s most sought after speakers and trainers on the subject of personal marketing, systematic selling and client retention. He is the author of the "I Hate Selling Tapes" available on his web site. You may reach him at 954/345-4666 or at mailto:email@example.com or http://www.ihateselling.com