Does The Time Your Partners Spend Developing Business Really Pay For Itself? Here's How To...

Expert Q&A

Accounting firm partners are expected to develop new business, but they don't always have the time and desire to make rain. It's essential that the time they do spend on business development generates a worthy return for the firm. Here, consultant Larry Bildstein, a CPA and CEO of The Whetstone Group in Marion, Iowa, provides expertise on how to leverage partner time on business development activities to generate the greatest return on investment (ROI).

Q: How do you

A: Use average partner income plus a factor for partner expenses on the financial statement. Take that cost tunes the number of hours you spend with growth activities. Compute a 20% return on that investment and then consider the margin on the average dollar of revenue the firm produces to determine the revenue that must be generated from the time investment in business development activities. Here's an example:

* 300 hours per year on growth @ $ 150/hour

* Cost per partner = $45,000

* 20% ROI on partner time = $54,000 ($45k + 20% of $45,000)

* Revenue at 30% margin = $ 180,000

Q: What should we do with this information?

A: This scenario demonstrates how important it is to focus on the right activities. Once a partner sees the need to bring in $180,000 in sales this year, he or she will likely concentrate on activities that produce results. After thinking of ROI on business development in this way, partners should ask themselves:

* Am I spending too much time but not getting the results? If so, maybe I need training.

* Am I positioned with the right centers of influence to attract this much annual volume?

* How am I going to accomplish this goal? Should I spend all of my time promoting one-time project work, such as cost segregation studies, instead of pursuing clients who will pay $25,000 per year for an average of 10 years?

Q: How can our firm improve the overall ROI of partner time spent on business development activities?

A: One of the best ways to improve the return on business development time invested by the partners is to formalize the role of sales manager in the firm. The sales manager is usually the managing partner, but the role can be delegated to a business development partner. For firms that are organized in niche teams, the team leader can take the role of sales manager for the team.

To improve ROI and have a successful sales force, a sales manager needs to perform certain duties, including:

* Lead: Facilitate internal sales meetings and determine everyone's role in growth.

* Motivate: Hold success rallies and recognize success both with existing clients and new client acquisitions.

* Energy: Keep the business case for taking action in front of the sales team.

* Training: Plan and schedule growth training for groups and individual partners.

* Tracking: Measure and track results; make adjustments as needed.

* Accountability: Meet with sales team individually once per quarter; monitor activities.

Q: How can I take specific business development activities, such as networking, and increase ROI?

A: If a partner goes to a networking event a couple times per month, chances are good that he or she leaves the office just in time to make the event, makes small talk with others, says hello to several clients, meets a new commercial banker in town - and then goes back to the office and waits for the phone to ring. This approach is not the right way to maximize ROI. Instead, take 15 minutes before the event to ask yourself, "Why am I going to invest two hours in this business development activity? What do I expect to gain from this time?" Think about who will be there, who you want to meet, what questions you want to ask to engage the new banker to interest him or her in your firm. The day after the event, pick up the phone and follow up with the people you met. During that conversation, suggest a specific next step in building a referral relationship.

Q: How can I increase ROI on community involvement?

A: I was speaking with a partner who serves on the board of directors of an area hospital, along with two other partners from competing firms. During a board meeting, the administrator announced a new agreement with a physician group that would lead to several specialists moving into the community. Immediately after the board meeting, he asked the administrator to introduce him to the group. The other CPA firms' partners went back to their offices and hoped the phone would ring because they were hospital board members.

Guess who snagged the client? The partner taking action spent the right amount of time positioning himself on the board and moved to the next step in the sales process. The other two spent hours of their time positioning themselves on the board but didn't get a return on that time, because they didn't capitalize on the positioning.

Q: I network with a lot of influential people in the business community, but I don't get the referrals I'd like to have from them. What do you suggest?

A: Centers of influence (COI) are an important business development tool. Many partners spend a lot of time getting to know COIs in the community. They know 10 to 15 people by name but really don't establish a close relationship with any of them, so you can usually count the number of referrals in a year from them on one hand.

Here's a quote from an e-mail that was sent by a banker who had referred a manufacturing company to a CPA:

"As you know, when you refer a client to someone, you put your own credibility on the line. Of course, I knew your firm would take good care of my customer, but I still wanted to pass along my thanks to you for making me look good!"

You will get a much better ROI in the time you invest with COIs if you spend the time with two or three instead of 10 or 15 - and really build the relationship to the point where the COI feels no risk at all in recommending you.

Q: Should all the partners have the same goals and expectations for business development results?

A: No. Partners will do the things they have passion for. They find the time to do the things they like to do and feel confident in their ability to perform. Activities they weren't successful with in the past, or situations that cause them fear, are the activities partners never have time for.

Sales managers should assess strengths and weaknesses of every partner. Based on honest feedback, determine with the partner the activities that do make sense. A sales manager shouldn't pressure partners to do activities that won't work for them.

I was with a 50-something-year old partner who told me he was not very good at small talk but was going to work on it. My reaction - sure he will work on it, but is that really the right way for this partner to spend his time? We discussed what he felt confident doing and laid out a plan: to create white papers for use in direct marketing campaigns, to get him published in the local business journal, and to help write the technical content of the next seminar. If a sales manager allows partners to be frank about what works (and doesn't work) for them and puts a specific plan of activities together, the firm will realize a much greater ROI in the time invested than if they expect the same things from every partner.