rod burkert

Turn the practice you have into the practice you want!

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How do you come up with a price?

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Greetings! We are still in Wisconsin … still a few miles from the Mississippi … still at my in-laws … and still working on the interior RV furbishings and modifications.

I hope you found my last video about 10x-ing (not 2 or 3x-ing) your goals to be useful. Because for the intelligent, sophisticated, experienced, nuanced business appraisers and advisors we’re supposed to be, we are kind of stuck in our ways! #differentiationthroughinnovation

On to this week. This is a conversation about pricing. And why do we struggle to price the value of a business valuation? Or a forensic accounting assignment? Or the mother of all unknowns, a litigation support engagement?

And if you’re new to the blog, welcome aboard. This is what we do!

Though this post will allude to value pricing, here is a NextGen accounting firm’s podcast that discusses the subject head on: Pricing Creativity.

My prediction: Timesheets and the billable hour will be dead by 2020. It’s only a matter of “time” until you decide to raise your white flag and embrace the change.

So all of you BVFLS experts out there … what makes a $10,000 business valuation worth $10,000? Let me tell you why it’s not worth $10,000.

Your hours worked

It’s not worth $10,000 if you base your price/client cost on the number of hours you estimate it will take to complete. When a mother gives birth, no one cares (for long) about the number of hours of labor … we just want to see the baby and count fingers and toes. If you are more effective and efficient than a colleague, your price will be lower all other things equal. If you are less so, your price will be higher all other things equal.

But the valuation is worth what it is worth regardless of your hours worked.

Your hourly rate

It’s not worth $10,000 if you base your price/client cost on your standard or effective (or desired) hourly rate. Question: Who decides your hourly rate? Answer: You do. Sure, you can argue that “the market” decides. But which market, exactly, are you talking about?

  • The market for your years of experience?
  • The market for the type of service rendered?
  • The market for where you practice?
  • The market for where the work will be performed?

But the valuation is worth what it is worth regardless of your hourly rate.

So if it’s not the hours or the rate, what is it? What makes the price/client cost of a valuation equal to its value?

The value of the problem

Now I am not saying hours and hourly rates mightn’t influence your price. But hours times rate IS a price, NOT a value … and we should know the difference. So it’s up to you to divine and communicate the value of the problem you are solving and reflect that in your pricing.

If your client has a $1 million dollar problem, your $10,000 fee is a no-brainer. But it’s up to you to demonstrate (or confirm) to the client that s/he has a $1 million dollar problem.

Here’s a stretch example – as in ok, Rod, I get it, but it’s a stretch. Your next client also has a $1 million dollar problem. Your hourly rate is $300. And you solve the problem in five hours because of your on-point knowledge/experience/resources. Will you only charge $1,500?

Because you can’t say hours times rate equals $10,000 to the first client and not say hours times rate equals $1,500 to the second client. And really, neither fee is priced correctly in those two scenarios.

One more example. If your client has a $10,000 problem, your hours times rate equals $10,000 fee is a tough sell. And you must decide the problem-to-fee ratio where s/he will bite.

So what

You’re writing an engagement letter. You determine the scope of work based on a discussion with the client (and face it, many times we’re telling the client what we think they need), and then you price it out.

What if, instead, you had a conversation with the client to scope out the actual problem? Then lead with the value of the problem you’re solving, not with your cost to do the work.

Our fees should be based on the value our client receives (the pain relieved). We need to get comfortable with some projects that yield $1,000 an hour AND those that yield $100. AND position ourselves to get more of the former and less of the latter!

[Idea for a marketing tagline: I solve million dollar problems.]

Note also that the same service could have different values to different clients. That’s why one of the mantras of value pricing experts is to price the client, not the service. Otherwise, if the service will take you 40 hours and your hourly rate is $250, you will be leading with $10,000 as the price for the client with the $1 million problem AND the $10,000 problem.

 In real life

Back in the day, I (along with many others) charged $10,000 for a $10,000 problem (when the annual gifting exemption was $10,000). But actually, the problem was half that – the tax saved on the gift. Frankly, I’m embarrassed.

But clients are smarter today. And there are more provider alternatives – more appraisers and more options like BizEquity.

We have little or no reality check for our fees – just anecdotal evidence we’ve gathered about what someone else charges or what “the market” will bear (and distorted by confirmation bias). We have to offer our clients something better.

Reading that can help

I have recommended this book many times on this blog: Implementing Value Pricing: A Radical Business Model for Professional Firms by Ron Baker.

Are you still row, row, rowing your boat? How to 10x your goals: the trick, the example, the proof.

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This is a follow up to my last video … about how to get stuff done.
And I offer this analogy when it comes to getting BIG STUFF done.
We imagine ourselves in a rowboat.
To get anywhere, WE have to row.
To get anywhere of consequence, WE have to row HARDER or LONGER.
Today, let me pass on a trick that someone passed on to me so you can stop rowing … an example of how it works … and proof that it does work.

Hey, what’s up everyone! I’m Rod Burkert.
And welcome to my Practice Development Corner.
The place where business valuation professionals like you come to learn how to turn the practice they have into the practice they want.

So … first, here’s THE TRICK.
My wife and I are products of a program called Strategic Coach.
In that program, we were prodded not to think about how to “just” double or triple a goal … but rather how to 10x it.
The rationale is to set the bar so high that we could only achieve it by working smarter, not harder.
To continue my analogy, then, instead of US rowing HARDER or LONGER the answer is … find a better way to power the boat!

Now … here is THE EXAMPLE.
Let’s say your goal is to grow your 2018 revenue by 10%.
You might try to get there by taking on more engagements and working more hours to complete them.
That’s working harder.
But if your goal is to grow your 2018 revenue by 100%, you might think of products and services that you could create one time and sell hundreds of times to get there.
That’s working smarter.

And … here’s THE PROOF.
There are plenty of practitioners in our industry who have already done it.
In alphabetical order:

  • Pete Butler – the Butler Pinkerton Calculator
  • Lance Hall – his restricted stock study
  • Jim Hitchner – his newsletter, webinars, toolkits
  • Spencer Jeffries & Bruce Johnson – their Partnership Profiles data
  • Chris Mercer – QMDM; books
  • Brian Pearson – his pre-IPO studies
  • Jack Sanders – has BizComps
  • Chad Sandstedt – he created FetchXL

The possibilities are certainly not endless, but they sure are varied.
I imagine you know others in and out of our industry that you could emulate.
What have THEY done that you could adapt to YOUR AUDIENCE?

That’s it for this episode.
What alternative can you come up with for powering your rowboat?
Let me know what you think by taking just a few seconds to like, comment on, or share this video.
Thanks for watching!

Cheers!

 

 

 

Action Items

– If something resonates and you want to reach out directly, email me.

– If you think we share common interests, connect with me on LinkedIn.

– If you like my blog, please recommend it to a colleague.

– If you want to get a sense of how well your practice is working for you, get a Practice Self Assessment.

 

Smile: you’re on candid camera. Or you could be.

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Greetings from Wisconsin. The RV is parked just a few miles from the Mighty Mississippi where we will be hanging out for a few weeks while my father-in-law (a retired carpenter and one of the handiest men I know) helps us with some inside-the-coach projects.

I hope our last conversation (literally, since it was a video of me talking to you) about getting sh!t done by focusing on the who, not the how inspires you to look at your task list in a new light. First, does the task need to be done (how long has it been on your list)? Second, could it be completed more efficiently and effectively by someone you can find on Fiverr or Upwork?

On to this week. Local TV. What a great – and inexpensive – opportunity for you to get exposure to businesses right in your backyard that you would only be too happy to value. Let me tell you about someone who is doing it.

And if you’re new to the blog, welcome aboard. This is what we do!

Posted in a LinkedIn BV group by Jim Horvath, FCBV, ASA, CPA, CVA and Managing Director of ValuQuest out of Toronto, Canada. What do you think? What quadrant are you in?

So a coaching client presented this opportunity on a recent call.

Through a little bit of luck, timing, and diligence, my client now has a regular spot on a local TV program series. He’s talking about (marketing) the basics of business valuation with his particular BVFLS practice niche in mind. And he’s the only one doing it in his market.

Here’s what he is getting:

  • One taped 5-minute interview segment per month
  • Each segment airs for one week at least 7 times in an episode of the program
  • YouTube links of his appearance that he, in turn, can link to
  • Airing of one 30-second commercial featuring him and his practice that runs 2 times a day, 60 times per month

And that will be for each month for the next six months.

Here’s what it is costing him:

  • His monthly interview preparation and recording time
  • $250 a month payable to the TV station (not a typo … $250)

Plus a one-time, $200 investment to produce a 30-second animated “explainer” video about who he is, what he does, and why it’s important. That he can use for that commercial and then over and over again on any digital marketing platform. Prepared by someone he found on Fiverr. $200.

So what

We think nothing of local CPAs going on local radio or TV to discuss income tax matters, particularly (and primarily only) during tax return preparation season. Why not BVFLS practitioners?!

And this is a 6-month gig. At least. Imagine the exposure he will get during that time. And who knows what that will lead to.

Want to know how he got his foot in the door? He asked.

In real life

Organizations of all stripes are looking for good content … whether it be in the form of written articles, speaking presentations, podcast conversations … or even broadcast video.

All you have to do is knock on their doors and make the ask.

Cheers!

 

 

 

Action Items

– If something resonates and you want to reach out directly, email me.

– If you think we share common interests, connect with me on LinkedIn.

– If you like my blog, please recommend it to a colleague.

– If you want to get a sense of how well your practice is working for you, get a Practice Self Assessment.

To get sh!t done focus on the WHO, not the HOW

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Many professionals I meet say they would like to do something big or different or new with their practices.
But they don’t.
I’m pretty sure I know the reason why, and I would like to share that reason with you so you can easily overcome it.

Hey, what’s up everyone! I’m Rod Burkert.
And welcome to my Practice Development Corner.
The place where business valuation professionals like you come to learn how to turn the practice they have into the practice they want.

Most practitioners I know want to grow.
They want to build.
But they don’t grow or build anything.
And if they do, the pace of change is glacial.
Because when we imagine what we want, we immediately think about all of the steps it will take to get there.
That’s natural. We are step-analyzing problem-solvers! It’s what we do!

But the prospect of US accomplishing all of those steps to do something big or different or new with our practices is daunting.
And that’s because we focus on the HOW, not the WHO.
More specifically, we think: HOW are WE going to accomplish all those steps … instead of WHO can HELP us take those steps.
We imagine ourselves as being the only one in the rowboat.
And if we only row harder or longer – by ourselves – we can do it – by ourselves.
Instead of adding another person to the rowboat.

Let me give you a simple example.
Say you have the idea to create an industry newsletter.
No one else in your niche is doing it. You doing it will make you stand out to your audience of leads, prospects, clients, and referral sources.
But first, you need a way to distribute the newsletter.
To do that, you need names and email addresses of people to send it to.
To do that, you need a place where they can sign up.
To do that, you need a lead magnet to induce them to give you their name and address.
All you wanted to do was create a newsletter that your audience would find valuable.
And now, you’re mired in the many steps to get there.

And as a corollary – because most of us are accountants – we think it would be cheaper to do the steps ourselves rather than hire someone.
Even though we know it will take us longer to do because each step is outside of our core competency.
And because we don’t know how to do it, we first have to research it.
Then learn it.
Then apply it.
So it doesn’t get done.

An ancient saying is: The road to hell is paved with good intentions.
And I can’t tell you the number of practitioners I’ve talked to who have good intentions.
But they have given up believing they will find the time to do it by themselves.
And that newsletter? It’s still just an idea.

So to get stuff done – focus on WHO, not HOW.
And don’t be cheap. Hire the help you need.
That’s what Fiverr and Upwork are for.
Got that? Great!

That’s it for this episode. What do YOU think? Do we have a plan?
Let me know by taking just a few seconds to like, comment on, or share this video.
Thanks for watching!

Cheers!

 

 

 

Action Items

– If something resonates and you want to reach out directly, email me.

– If you think we share common interests, connect with me on LinkedIn.

– If you like my blog, please recommend it to a colleague.

– If you want to get a sense of how well your practice is working for you, get a Practice Self Assessment.

Your 3 greatest fears about niching

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Greetings from Iowa. The RV is parked just outside of Winnebago headquarters where we are taking part in what RVers call a “rally.” People from all over the country (about 1,000 rigs are expected) come together to exchange ideas and learn from others’ experiences … kinda like this newsletter.

So my last conversation about the potential disruption created by BizEquity’s alliance with TD Bank – all while a big chunk of the profession is mobilizing about credentials (and before that, standards) – caused quite a ruckus. My most common response to people who emailed me was not to denigrate BizEquity, their reports, or the clients who buy them. Rather, put yourself in the client’s shoes, figure out what they really want/need, and compete on that basis.

On to this week. There is a lot of disruption going on in our industry – from Accounting/BV firm mergers to big data valuation solutions to estate tax valuation services. Now is the time to either leave or dig your heels in. One way of doing the latter is by specializing in a niche and being so damn good at it that you can’t be ignored. But it’s hard to do that if you try to be everything to everyone. Why doesn’t our profession mobilize on a subject like this?

And if you’re new to the blog, welcome aboard. This is what we do!

I normally use this space to point out something new that I found. This time, I want to say that this week marks the 3-year anniversary of this newsletter. So …

Thank you for allowing me into your practice in whatever way you deem useful.
Thank you for your calls, your notes, your comments, and your suggestions.
Thank you for letting me offer value to your world in the ways I know how.

If you have followed my blog for any length of time, you know I often write about specializing in a practice area or industry niche. But rather than being a hard ass about it, let’s just say I believe you need to give niching a fair shot if you have more of a generalist-type practice.

I’ve known, and coached, practitioners who struggle to get the attention of prospects. Most often it’s because the practitioner has no concrete area of expertise. And if a prospect doesn’t believe you can help them, they won’t hire you.

When I discuss niching with them, though, they pull back … like a turtle receding into its shell. Based on my conversations with many practitioners, here is a composite of the three most common reasons why they don’t niche … and why it’s time to get over them.

Fear #1 – I will lose opportunity

Many practitioners rightly believe that if they niche, they will lose opportunity. Yes, you read that correctly — I said: “rightly believe.”

Because when you pick a niche, 99% of the world will ignore you. But who cares. Because the 1% you go after will take notice. And you will have their full, captivated attention.

You might lose some opportunity in terms of the width of potential engagements if you believe anyone and everyone will hire you. But you will gain an extraordinary amount of opportunity in the niche you end up choosing because so few people choose to niche. So there will be less competition.

Fear #2 – I don’t know which niche to pick

Practitioners ask themselves, “How do I know the right niche to choose? I don’t want to commit myself, change my entire business model, and later find out I made a mistake.”

I get it … sort of. Finding the perfect fit can take time. But if you’ve been in this business for any length of time and have participated in a variety of projects, you should know the kind of work you like doing and the clients you enjoy serving.

Second, there’s no need to change your entire business model. When you first test your new market for fit, only niche your marketing. Just because your marketing says you do X doesn’t mean you can’t do Y if the opportunity presents itself.

Fear #3 – I will get bored doing the same kind of work

Practitioners are scared that niching will put an end to the variety of their valuation projects and their practices will become boring and monotonous.

The truth is, if you have a niche, you’ll go super deep into it and end up learning everything there is to know about it. So what you give up in width, you gain in depth. This gives you an incredible amount of capability! Think about a practitioner who specializes in veterinary practices and can do a business valuation for any purpose in that niche.

Also, think about the tremendous impact your work can have on/for the clients in your niche. Because you will know the niche better than anyone else, you will bring more value to the table than anyone else.

So what

When I started doing this work in the mid-1990s, the entire field of BV was considered a specialty; niching within BV wasn’t a thing. Times are changing … circumstances dictate that we change.

I am re-reading Never Eat Alone by Keith Ferrazzi, and I came across this quote about fear: People with a low tolerance for risk, whose behavior is guided by fear, have a low propensity for success.

In real life

Several of my friends and colleagues believe I should branch out to accountants and attorneys since what I coach my BVFLS clients on is applicable to most professional service providers. In fact, it is. But I would be so uncomfortable pretending to know what is going on in the accounting and law worlds. It wouldn’t be easy money, and it would take a lot of time to get up to speed … time that would be better spent going narrower and deeper in the BVFLS world.

There are BVFLS professionals who specialize in a niche and are successful. One might argue they are successful because they have a niche. You know them. So you know it can be done.

Reading that can help

A past newsletter: 20 questions that will help you find your practice niche.

Cheers!

 

 

 

Action Items

– If something resonates and you want to reach out directly, email me.

– If you think we share common interests, connect with me on LinkedIn.

– If you like my blog, please recommend it to a colleague.

– If you want to get a sense of how well your practice is working for you, get a Practice Self Assessment.