Member case with Ken Yager
As a firm scales, it must make a significant change to its sales strategy. On this episode, we interview Ken Yager of Newpoint Advisors to understand how he invested in business development management, coaching, and training to scale his firm.
TRANSCRIPT
Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54 for 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.
My name’s Greg Alexander. I’m the founder, and I’ll be your host today. And on this episode, we’re going to talk about business development during the scale stage, and we’re going to do so with one of our members, Ken Yager. Ken, welcome to the show. And would you please introduce yourself?
Ken Yager [00:00:50] Thanks, Greg. Glad to be here. I’m Ken Yager. I’m the founder of New Point. We are a nine-year-old turnaround consulting firm exclusively focused on small, distressed companies trying to address a problem in our industry, which was that it was unaddressed – that problems with small companies were unaddressable by the industry structure that we were in.
Greg Alexander [00:01:11] Interesting. So so who hires you? Is it the banks that are doing the work out or how? How does it work?
Ken Yager [00:01:18] You’reu right to the point? I like that, yes, our industry is a two step sort of thing. We have to have it. We tend to work off referrals. Lenders will send us to companies and companies will hire us, and then we have to find a balance where we’re representing all parties. Okay.
Greg Alexander [00:01:34] So can I have to tell you the only member that I’ve met so far that I hope I never do business with? Because I’d only do business wtih youyou if I were in trouble?
Ken Yager [00:01:42] Yeah, exactly. You don’t want to see me darken your door. But and I never wish our services on anyone, but we’re there when you need us.
Balancing new and existing clients
Greg Alexander [00:01:49] Yeah, that’s a good point. OK. So we were talking about business development, which is a very particular thing. Those two words during the scale stage. And I’ll set this up briefly and then I’ll ask Ken some questions. So when you’re a young firm – not like Ken, nine years into his journey- you don’t have any clients. So all of your business development efforts are spent on acquiring new accounts because you have to, as you establish yourself. When you enter the scale stage, which is typically somewhere between years six and tenor so life gets easier and it gets easier because you have happy clients.
You’ve done work with them, they’re referring their friends, you’re getting some word of mouth. So the sales effort gets easier. It’s never as easy as you want it to be, but it’s easier than in the early days. However, it does require a change in the way that you sell because again, you have these clients that you can go back to and you can get expansion sales from them as opposed to going to new clients.
Now, I’m not saying that you don’t need new clients. Of course, every boutique owner needs new clients, but the mix changes. Personally, I believe the mix should be about 80/20 at this stage, 80 percent from existing accounts and 20 percent from new accounts. Particularly if you can hold on to your clients for a while. Sometimes it doesn’t always work out that way. Maybe it’s 60/40, you know, existing to new. But the point here is it should be. The majority should be revenue from existing accounts as opposed to new accounts as you’re starting to scale. And that’s a good barometer. So let me start there with you., Ken. If you were to maybe speak in percentages in terms of mix, what’s your pie chart look like right now between revenue from existing accounts versus new accounts
Ken Yager [00:03:38] It’sgoing to be 80 percent existing accounts. And of course, the twist here for us is that we are talking about referral sources, people who are sending us these potential new clients to work with. But yes, it’s really consistent.
Greg Alexander [00:03:53] So in that scenario, a lender is your client and they – they’ll have a portfolio of loans. They hire you to help them with one situation that goes well. Next time they have that situation, you’re the first call. And I understanding that correctly,
Ken Yager [00:04:07] That’s pretty close to it. Yes, it’s sometimes you have to live with a list of three, but if you’re sort of a favored son and you get an extra nudge into – into the crowd. All right.
Investing in relationships
Greg Alexander [00:04:17] So when you think about your efforts as a leader of the organization and you’re going to direct your time, your people, your budget towards generating business, given the fact that it’s an 80/20 split for you. How do you invest in those existing relationships in order to grow them?
Ken Yager [00:04:36] Well, it’s sort of a time management. It’s well, we like to teach everyone. Yes, definitely a time management skill, which is to be consistent and constant and not coming and going. Typical consultant things are to get real busy. Forget the client for a while. The referral sources then wake up one morning in a wee bit of a a panic and go back. Yeah, so we work very hard and making sure everyone knows this is a weekly exercise and this is how you intentionally fit it into your schedule with all your client duties.
Greg Alexander [00:05:03] So it’s a weekly exercise.
Ken Yager [00:05:05] Yeah, you know, it’s there are certain people you will touch for a whole quarter, but every week there’s someone you can be reaching out to on a list of people that you should be talking to.
Greg Alexander [00:05:14] And you as a leader of the firm, how do you inspect or make sure that that’s happening because I love the frequency of that. And that’s probably a reason why you guys are doing so well, but that’s a lot. How do you make sure it’s happening?
Ken Yager [00:05:27] We work also. Well, first off, we have a CRM system. We work off Zoho. We have a – we have retained a part time sales manager that helps coach everyone to make sure that they’re on that system. And then we constantly train people on how to use the system so they get past the awkwardness. We have a lot of professional service people who for years didn’t use a CRM, and now they’re using one. It’s a bit of a trick, to get used to it.
Greg Alexander [00:05:53] Yeah, that is a new behavior for them to learn. I want to explore this part time sales manager. That’s an innovative approach. So what led you to that?
Ken Yager [00:06:03] Well, we couldn’t afford a full time person for sure, not of the caliber we wanted. So part time is a way to sort of sip at it, if you will, and take that take as much as we can, but bring the professionalism at the same moment to people. So they kind of went -one of our teammates is struggling with the sales issue. They’re going to someone who they can really trust and feel like they’re a senior person. Yeah, and we treat that person as a senior person. Everyone kind of gets the sense that they’re a person to go to.
Greg Alexander [00:06:28] Yeah, that’s really interesting. I hadn’t heard that example in this use case, and I like it quite a bit. So the thinking was was pretty basic. You couldn’t afford a full time person, but you wanted to – you wanted somebody to play that role because it was that important to you. Now I’m assuming that those dollars that you’re investing in, that part time sales manager are, I mean, there’s no billable hours to place against that. So that’s a true investment. Is that correct?
Ken Yager [00:06:57] That’s exactly right. So it needs to pay for itself. And so those people that we’ve given sales duties to need to find deals and convert. Yeah.
Investment courage
Greg Alexander [00:07:06] And. I’m curious as to how you had the courage to do that, sometimes when faced with the decision I can, I can pull money out of the business and stick it in the front pocket of my jeans, or I can invest it in a part time sales manager. It requires courage to make the investments so, so think back to when you didn’t have the part time sales manager and you made the decision to do it. What? What was your decision making process and how did you finally say, screw it, I’m going to make this happen?
Ken Yager [00:07:36] This is a classic. I was feeling pain. I was at a pain point, and it was that the sales were, you know, as much as I knew, we had to build a sales force. I knew I couldn’t put all the pennies and dollars into it. I was watching it literally slip through my fingers, trying to manage it myself. And so I said, nNo, no, this task has to be broken off to someone else or I’m never going to get there. And so that’s – that pain started and it kept growing and I finally listened to it one day.
Greg Alexander [00:08:05] That’s excellent. OK. Part of that pain, of course, is in most process firms. They don’t have a dedicated sales team at this stage. They’ll have kind of producer types who also happen to sell. And that time management, which is an item that you brought up that I want to dive into now a little bit in more depth, which is OK, o I have X amount of hours. I’m trying to get to a utility utilization target. Let’s just for today, say at 75 percent that I need to build myself out at – that remaining 25 percent, that non billable time. Some portion of that needs to be invested back into these relationships. Was it that formulaic for you? And are you measuring time that precisely or is it more guidelines, gut instinct?
Ken Yager [00:08:54] The precise side of it was a bit of gut, which is to say, I’m going to trust you to know how to apply your time. But we sell people like we would like you to be will be able to build 30 hours a week. We want you to dedicate 10 hours a week to our call admin and team meetings and stuff. We can’t build a clients for training and things like that.
And when you’re at full capacity, I want to see you at 10 hours of marketing a week, orup to, trying to do research or trying to talk to people. And if you just give him that, that sense of the precision of like, Oh, I can now look at my calendar and say, Oh, 10 hours, where do I put the 10 hours in? Or Coach teaches them how to put that on their calendar. So it’s actually there when they show up to that time slot in their – in their week. And then we also kind of build a model that shows them if you put – if you make so many touches, it converts eventually to so many leads to so many deals when you got to go back to those hours you had available. And so they kind of can do the math off of that, it helps. Yeah.
Allocating for relationships
Greg Alexander [00:09:54] Listen, I absolutely love what you’re doing. Sometimes we forget that non billable hours is a budget.. When I talk to members, sometimes they say, Well, I don’t have any market – I don’t have a marketing budget. I suggest you do. You’re already spending money on it right now and you just don’t know it.
So a portion of people’s non billable time is going towards developing these relationships. Do you know what that portion is? And can you track the fact that it’s consistently happening and is equality? So in your scenario, you’ve compartment – compartmentalized everybody’s time, you’re directing the hours in quantity and quality, and you’re providing them a coach to make it happen. That’s absolutely fantastic. It’s a lot for us to learn today on that example alone.
Sometimes this is a tough question to answer, but I’ll ask it anyways, because as many things that can contribute, but that approach that you’re using. What have been the results? Can you point to anything specifically?
Ken Yager [00:10:54] Yes. I’d say four years ago, so right about that five year mark, I was 100 percent of our sales. And now about 25 to 30 percent of our sales.. So it’s starting to happen, and a lot of that group is loaded in very late. Unfortunately for us, came in during COVID, which had a couple of twists and turns for our team, our team in our industry. So some of those people really haven’t even had to flourish yet. So a lot of investment at this moment that we’re waiting to kind of see what happens. I think it’s going to break out pretty nicely here the next year.
Greg Alexander [00:11:23] So congratulations on that. I mean, the fact that you’re cutting it in half. So the business continues to grow, but your personal selling efforts have been cut in half, which is great because some day if you want to retire and sell your firm down the road, you’re going to have to prove to a potential acquirer that you’re not required in order to generate revenue. There’s other people in the company that are doing it, and they’re doing it well. And because you’re tracking it in the way that you’re tracking it, you’ll precisely be able to say to them, just like you did to me – Hey, at this date, here’s what happened. Here’s a before and after results. Do you ever foresee in the future you representing zero percent?
Ken Yager [00:12:00] Oh yes, I have a stated mission that I aim to get fired from marketing projects and admin at various stages in the -My career, so I’m working very hard getting fired, I –
Getting conulstants into sales
Greg Alexander [00:12:12] those sound like your three favorite activities. Yeah, that’s funny. That’s fantastic. One – one last question for you. Sometimes consultants. They don’t like the word sales. They’re slightly more willing to accept the term marketing. But when they when they get asked to do this type of activity I’ve seen in some scenarios, I don’t want to say they think they’re above it, but they don’t think it’s part of their job and their job is to execute the work once it’s been sold. Have you run into that and do you have any advice for those that are listening on how to deal with that?
Ken Yager [00:12:48] Two pieces that come to mind. One, we actually go even further than networking and marketing. We talk about networking and just telling your -we’re talking about telling your friends about what you do, which is a very it kind of simplifies it for construction and for people who are more professional service kind of driven.
And we also talk about instead of territories, talk about tribes. So it just your friends, the people that you like and be with them and try to make it as natural as possible. And – and then the last it is…. I’m trying to think. Pardon me, choking on my words here.
The other part is some people don’t make it, you’re – you’re really not going to turn it. Here’s the first thing. You’re not going to turn someone who isn’t totally motivated to sell into, you know, into a selling machine. Maybe over time, a long time, maybe their careers, their lives change. We’ve had one or two of those moments. Well, you’re talking about changing someone 15, 20 percent. So if they’re not going to do it, don’t torture themselves or yourself.
Conclusion
Greg Alexander [00:13:53] Yeah, that’s good advice. I love progressive past marketing networking, and I love moving from territories to tribes. That makes it approachable for the people that we just described there. It makes it more doable for them. All right, Ken, we’re running out of time here. But listen, that was awesome. I mean, you shared some brand new insights for us. Not surprised that you’re having as much success as you are. I appreciate you being a member and making a contribution today.
Ken Yager [00:14:21] Thank you, Greg, for the time today and I enjoy being a part of Collective 54. It’s been a really great ride. Greg Alexander [00:14:26] Great. OK, for those that are listening, if you want to learn more about this topic, business development during the scale, stage or others like it. Pick up a copy of the book The Boutique How to Start, Scale and Sell a professional services firm, which I’m proud to say, just hit number one on Amazon in our little niche. And if you want to meet great people, I can consider joining our mastermind community to find us a collective54.com. Thanks again. Take care!