Believe it or not, I have a guru, and he’s not a financial guy. Nor is he old and wizened (well, not old, anyway). He doesn’t have hair to his shoulders (he could only wish), and his beard is what results from an occasional truce in the daily battle with his razor.
His logo has appeared on all 96 issues of this newsletter. (Can you believe it? 8 years now!). And his imprint on my writing style â€” and, occasionally, my content â€” is indelible.
Michael Katz, Chief Penguin, take a well-deserved bow!
During our years together, Michael’s practice of advising individuals and entities of all sizes on the subtleties of creating an informative and readable newsletter has brought him and his many clients, including me, success. It turns out, however, that his newsletter advisory was just the ante. Michael in the past two years has raised the stakes and is now focusing, like any hungry penguin should, on a much bigger school of fish â€” all of those solo practitioners whose need for self-marketing transcends the newsletter. His full suite of tools is on display â€” once you sort through the self-deprecating comments about his recession-proof (i.e. non-existent) hairline â€” at bluepenguindevelopment.com.
It’s axiomatic that a marketer’s contribution to an organization is most often measured by revenue: your top line is the marketer’s bottom line. When the organization â€” you â€” is just one talented person, it often doesn’t take a lot of marketing â€” the right marketing â€” to turn your Google Calendar from all white to all red as you fill in the week’s time slots.
Well, twenty-five years ago, I had that apparently-happy problem as my company, Financial Managers, began to stretch its legs. By promoting my part-time CFO services, F.M. over a two-year period went from a solo practice with five clients to one with nineteen clients, four full-time employees, and a paid college intern. There was a ready market, and I thought that I was ready for it.
Of the many challenges that I faced the greatest was quality control, to ensure that my associates were delivering services at the high level that I had established for myself during five years of self-employed apprenticeship. As I ran around to client sites checking in with them several times a week (pre-email) while also marketing, selling, and delivering, I realized that my employees were having all the fun, working directly with our client companies and advising them on best practices.
So, ultimately, I decided that my real satisfaction came not from developing my associates’ talents â€” although I did a lot of that â€” but from connecting in person with the client owners and senior managers to help them achieve continuous profitable growth with adequate liquidity. When I realized that epiphany (in the context of going two years without a vacation), I gradually downsized the client base and successfully “graduated” most of my employees to full-time controllerships in non-client companies, once again becoming a single shingle.
I reflected on that experience this week as I considered the possibility of adding a small service company â€” coincidentally one of Michael’s protÃ©gÃ©s â€” to my client base. In business for six years as an extension of the founder’s technical expertise in pharmaceutical compliance, this company is en route to a substantial increase in year-over-year revenues for 2012, primarily through the use of well-qualified independent consultants. In our initial meeting, the founder and I spent most of our time together discussing his operational challenges â€” e.g. payroll vs. non-payroll; mark-up and margins; credit and collections; etc. But, as I told him subsequently, if I had it to do over again with my own business, I would confront the following strategic issues right out of the gate:
- The Big Dream, or just a little one â€” At an early stage, you need to decide whether you are building a sustainable company for the long-term or simply trying to enhance your individual revenue during your work life.
- Retaining vs. Hiring â€” Using independent contractors (ICs) to help deliver your services provides greater flexibility in dealing with revenue variations. Having employees creates payroll overhead but affords better oversight and control.
- Mark-up â€” You’ll need to price with a 3x-4x mark-up on your fully-loaded payroll cost to cover overhead, including marketing costs and down time with employees. With ICs who share your risk of a lapse in business, you can do well billing at two times what they charge you.
- T & M vs. Fixed Fee â€” The days of time and material billing are past: savvy buyers want fixed fees. The onus is thus on you, the outside service provider, to deliver quality work on time and within budget.
- Your Brand â€” It helps to have a unique value proposition, which is usually an extension of your resume. It’s even better to have a memorable brand (e.g. “Aren’t you the one who writes that ‘Alligator Bites’ thing?”)
- Growth â€” Building your business in the early stages is an investment in time which, of course, is an opportunity cost. You can’t be so wrapped up in maximizing revenues by delivering your services that you fail to market them effectively.
- Maintaining client connections â€” As you schedule assignments for your employees (or ICs), you must continue to be the primary connection with your clients. Unless they see you as adding significant value, their temptation to cut a side deal with your representative will be strong.
- Scoping â€” A standardized, focused service with deliverables broadly defined allows you to get in the door and start figuring out the problem on the client’s dime rather than investing a lot of your time (= money) up front.
- Accountability â€” Scheduling and reporting are critical to your ability to retain control, and there are multiple software tools available for this. You always have to know where all of your players are and what they’re doing if the client is to continue coming to you for the answers.
- Persistency â€” Reliable and effective service providers frequently trigger the client’s “off” button when they try to up-sell or expand their roles. Your employees/ICs should identify additional opportunities, but in consultative fashion, you should be the one to sell them.
I may have upped the ante and lost my bet twenty years ago, but I’ve stayed in the game, and my roster of satisfied clients is now well past the 200 mark. Were I a betting man, I might bet that Howe’s Bayou will top 200 sometime in the next decade. But I’m supposed to be past the point of upping the anteâ€¦