What Your Expertise is Worth
When pursuing new engagements, financial consultants often face competition from others who are willing to accept below-market rates. This fee-based competition can be demoralizing and frustrating, but the tips shared in this article may help.
When pursuing new engagements, financial consultants often face competition from others who are willing to accept below-market rates. ¬†This fee-based competition can be demoralizing and frustrating, but the tips below may help.
First, do not assume that every prospective client is going to choose the lowest bidder.¬† After all, your prospective clients do not drive the cheapest cars that they could have bought. ¬†They do not wear the cheapest wristwatches and they did not buy the least expensive houses. ¬†Most people associate price with quality and want the best services they can get. ¬†However, they do not want to pay any more than necessary and do not want to pay more than someone else paid for a similar service or product.
In your discussions with prospective clients, remember that the value of your expertise may be much greater than the value of your services. ¬†You are a knowledge worker and should help your prospects understand the expertise that you have accumulated. ¬†They only know what you tell them, and so you may need to explain your credentials and show how they will benefit the prospect. ¬†Giving examples of how you have used your expertise on previous projects may be enlightening to the prospect.
Help the prospect understand that neither your expertise nor your work product is a commodity. ¬†No two financial consultants have the same education, experiences, and skills.¬† To go a step further, no two reports are going to be alike.¬† When business valuators prepare analyses with the same facts, they do not necessarily come to similar conclusions.¬† In fact, their conclusions of value often vary dramatically.
Remember that your prospective clients may be aggressive negotiators. ¬†This certainly applies to many attorneys and business owners. ¬†If you are not a good negotiator, you will usually be at a disadvantage when discussing the payment terms for your services. ¬†There is a lot of truth in the old saying that we get what we negotiate, not get what we deserve. ¬†Consider getting some formal training on negotiation skills and do not think of it as a one-and-done proposition. ¬†Instead, include training on negotiation skills in your continuing education every second or third year.
Practice makes perfect and that certainly is worth considering when preparing to discuss your value and your price with a potential client.¬† Practice that discussion just as you would prepare to give a speech.¬† Think carefully about what you are going to say and how you are going to say it.¬† Anticipate questions and objections that you are likely to hear.¬† When discussing your price, you will likely have the prospects‚Äô full attention and they will watch to see how confident you are in your own fee structure.¬† They will interpret any lack of confidence on your part as an invitation to negotiate.¬† In other words, prospective clients will never have more confidence in your fee schedule than they think that you have.
Do not be intimidated when a client asks for a discount.¬† Many negotiators are trained to use that technique.¬† Declining to grant a discount does not mean that you will necessarily miss out on the engagement.¬† In fact, you may make yourself more appealing to the prospect when they see that you do not cave to pressure.
Be sure to tie your fee to the end of the engagement and not the beginning.¬† It may not relieve the client‚Äôs stress to tell them that you will get started on the engagement today if they agree to your fee.¬† However, you may give them considerable comfort by promising to provide a draft of your report at least a week before the final report will be needed.¬† Too often, consultants discuss the start of an engagement while the potential client is highly focused on the completion of the project.
To distinguish yourself from others, consider these fine points.¬† Listen very carefully to your prospect and resist the temptation to interrupt.¬† Commit to staying involved in the project even though much of the work may be done by less experienced staff, acknowledging receipt all correspondence from the client, and providing regular updates so the client knows what has been done and what you anticipate doing next.
Consider that business owners like long-term relationships. ¬†They prefer long-term employees and long-term customers. ¬†In many circumstances, they also want on-going relationships with their advisors.
Be selective about the clients and engagements you accept. ¬†Do not be bashful about letting people know you are selective. ¬†We may think we are the right advisor for everyone, but that simply is not the case.
Ask plenty of questions when talking to a prospective client.¬† This will help you find out whether you are qualified for the project, whether you want this client, whether their expectations are realistic, and what their hot buttons are.¬† You may also pique their interest by asking questions.¬† For example, you may ask about a certain type of value that other valuators have never mentioned.¬† When you ask about traffic to the company‚Äôs website, their name recognition, and the value of their workforce in place, the prospect realizes you see value where others do not.
Be sensitive to the fact that most clients see their projects as being urgent. ¬†From their viewpoint, the sooner you provide your services, the more valuable the services are.
Remember that clients often put a premium on industry experience. ¬†Yet, broad industry experience may not be enough. ¬†For example, it is unlikely that anyone is looking for a specialist like you who has experience in the healthcare industry. ¬†They drill down further than that. ¬†If the prospect is a cardiology practice, they are looking for someone who has experience with cardiology practices. ¬†A hospice will look for someone who has hospice experience. ¬†For this reason, it would be advantageous to keep a record of your client engagements. ¬†One day you may be talking to a dental practice and will find it very helpful to be able to say that you have provided services to fifteen dental practices over the last ten years.
On invoices, consider whether you should provide a listing of your input or a listing of your output. ¬†Your input may include discussions and phone calls. ¬†Your output may involve answering the client‚Äôs questions and resolving issues.¬† Most of the time, the client will perceive your output as being much more valuable than your input.
Perhaps one of the most important points is to look at yourself, your website, and your correspondence from the viewpoint of the potential client.¬† If prospects perceive you as a salesperson, they will probably want to end the discussion quickly. ¬†On the other hand, if they perceive you as an expert, they will value what you say and will want to hear more from you.
Stephen D. Kirkland, CPA, CMC, CFC, CFF, helps business valuators normalize owner compensation. He also serves as an expert witness in Tax Court cases involving reasonable compensation.
Mr. Kirkland can be reached at (803) 724-1414 or by e-mail to Stephen.Kirkland@AECG.biz.