I hope you enjoyed last week’s message about the etiquette connecting on LinkedIn. I received more than the normal amount of feedback, so I’m guessing the post made an impression.
On to this week. We’re accountants … most of us, CPAs. We value other people’s businesses … for a living. We’re supposed to be smart … and deliver insights that assess value. Why, then, do most of us operate a one-dimensional business model? You know, the thing that generates our cash flow. What would a valuation specialist say about your practice?
And if you’re new here, welcome aboard. This is what we do!
Your Business Model Builds Your Brand
Our professional services brand is a function of our reputation and visibility.
Brand = ƒ (Reputation + Visibility)
Maybe it’s (Reputation x Visibility). There could be some constants or exponents, too. But you get the picture.
However you quantify it, our brand gets wrapped around our business model. And it’s our business model that earns us money. So let’s look at three professional services business models.
Model #1: One-to-One
This is the traditional client service model. It’s a 1-to-1, 1-and-done (for the most part), fixed-fee (generally speaking) business model.
We sell valuations to one client at a time. The valuations are “custom ordered” and “custom made” … we can’t resell them “as-is.” We’re constantly on the hunt for new clients to replace the ones that only needed our services for a one-off project. We trade our time for client dollars. And since there are only so many hours in a day, we can only serve so many clients at a time.
As a result, this model does not scale if you’re a sole practitioner. It works if you’re a firm with staff, but that creates other challenges – finding qualified analysts, managing them, and keeping them busy. It’s what I call Leverage 1.0: throwing bodies at work and billing them out at more than you pay them.
It’s the epitome of working harder, not smarter.
Model #2: One-to-Many
Imagine creating a course that is taught every year at an industry or trade association conference in the niche where you specialize – and you get paid a flat fee or a per capita rate. Once the course is finished it only needs annual updates, requiring much less time than the original preparation.
Maybe it’s a quarterly value improvement mastermind program for presidents of companies in your practice area (you screen the applicants so there are no competitors). Every quarter requires fresh content, but you can charge whatever the market will bear. (Some mastermind groups charge $10k or more per head).
You are consulting, not doing. Both examples are repeatable: you can do the consulting over and over. Both examples are scalable: no incremental work is required for one more attendee. Both examples are useful for generating leads. That could bring us back to the 1-to-1 model, but then we could replace our current “C” clients with new “A” and “B” clients. We get to diversify and upgrade our revenue base.
Model #3: One-to-Masses
This model involves using our accumulated intellectual property to create apps, books, checklists, courses, newsletter, templates, or webinars that hundreds of players in our respective practice niches are interested in and will want to buy.
The most successful and wealthy entrepreneurs in the world are the ones who create and sell intellectual capital. ~ Dan Sullivan, founder of Strategic Coach®
It starts with being known for what you know. Then leveraging that knowledge, educating your niche, and selling that product multiple times and charging per order – which makes this work repeatable and scalable. It’s what I call Leverage 2.0: creating a product and selling it many times over.
It’s the epitome of working smarter, not harder.
I think every practice should strive for some mix of 1-to-1 Client, 1-to-many Consulting, and 1-to-masses Leverage:
- It’s less risky.
- It creates alternative streams of revenue.
But based on conversations with fellow practitioners, I think most of us will always operate in the 1-to-1 world (our comfort zone) because we tell ourselves we’re too busy serving that world to think about the potential of the other business models:
- Even though we complain that our 1-to-1 client fees are being squeezed by [add your reason here].
- Even though the greater leverage potential is in the 1-to-many and 1-to-masses models.
In real life
As we head into Q4 2015 and look beyond to next year, this is something to seriously reflect on. And if other practitioners don’t change their business models, it creates more opportunity for those that do.
The ball is in our court. Think about what you can do to build a more diversified business model. One that a valuation specialist would speak highly of.
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