In case you missed last week: Finding the time to write a book (or any activity that will build your authority in our BVFLS profession) shows that know matter how busy you think you are, the “time math” reveals we do, in fact, have the time. In fact, this post may make you wonder where you are spending your time.
On to this week: BVFLS firms report that almost one-half of their practice revenues come from attorney referrals. This makes sense to me … but are there alternatives that can lessen that dependence?
And if you’re new here, welcome aboard. This is what we do!
Is BizEquity a threat to us? In my opinion, not yet because the business owners who are attracted to BizEquity’s current platform are most likely not our ideal client archetype. But that could and probably will change.
If you hear BizEquity’s footsteps in your background, I recommend that you follow them on LinkedIn. That way, you can read their announcements and see what they are up to.
And if BizEquity is not on your horizon, I recommend that you occasionally check their news feed just to keep tabs on them. I saw that one of my blog posts is a featured article.
By the way, did you know you could earn a Certified Business Valuation SpecialistTM credential through BizEquity’s Business Valuation Institute?
One of the fun projects I participated in earlier this year was the compilation of the BVR Firm Economics and Best Practices Guide, 2019/2020 Edition. The survey results are grouped into eight chapters, including one on marketing.
The following table and narrative are in response to this question: What percentage of your BVFLS business came from the following referral source groups in the last 12 months?
Firms with business from lawyers get over 44% of their BVFLS revenue from this source, as shown in Exhibit 67. In fact, 40% of all firms in the survey received more than half of their work from this source.
Still, only 5% of firms in the entire survey database depend on one client group only, proving that BVFLS client development is a complicated activity. Lawyers are the top market, for sure, but no one is dependent on legal referrals alone.
Non-BVFLS partner referrals and previous or existing client referrals are the other major sources of engagements. CPA firms with BVFLS practices have an advantage here—they are twice as likely to receive new work from client referrals as BVFLS-only firms are, likely because they already have the trust of their tax and audit clients.
Many BVFLS firms have become quite savvy at marketing to lawyers. There may be an opportunity for some firms to expand their marketing efforts toward the “secondary” market groups, however. [emphasis added]
This is particularly true for BVFLS partners at CPA firms; they tend to be more reliant on referrals from their CPA partners—and lawyers—and less attentive to other potential sources of business.
CPA firms—“Big Four” or otherwise—business brokers, investment bankers, and the M&A world are also smaller but dependable sources of business for some firms.
I totally get this dynamic. And I am not suggesting that we stop marketing to attorneys. But I do have three observations.
#1 – I find that many BVFLS practitioners fall all over themselves to get in front of attorneys at the top tier law firms. I consciously market to attorneys at the 3rd and 4th tiers and fellow solo practitioners. These attorneys are underserved, underappreciated, and frankly, less arrogant easier to work with.
#2 – I find it interesting that less than 1 out of 5 (17.2%) sources are actual business owners whose companies we do the work for. Showing up (as well as speaking to and writing for) chamber of commerce, industry association, and trade organization events that are attended by business owners (as well as attorneys and CPAs) could raise that percentage.
#3 – Forging strategic partnerships with other professional service firms, particularly smaller CPA practices that do not have in-house valuation professionals, is another way to bring in business. In my mind this is, again, and underserved and underappreciated market.
In real life
Attorneys will always constitute the lion share of our referral opportunities. But I imagine they see us approaching them like a group of Hare Karishnas at an airport … which can make it hard for some of us get in front of them.
I think it would be valuable to make developing less obvious referral partners part of your 2020 marketing plan, particularly if you are in a 1-3 person practice.
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