John Borrowman CPC
Borrowman Baker LLC
My mother used to say (as mothers are wont to do), “the problem with experience as a teacher is that she gives the test first and the lesson afterwards”.
We took the time to talk with some BV practitioners about the lessons they had learned and what they would have done differently, if only they had known then what they know now.
Hindsight is nearly always 20-20. And it can be easy to sit in judgment and declare where it is you went wrong. It can be a bit harder to look back and say what you would have done differently. That’s exactly what we asked these sole practitioners to do, however. In exchange for their candor, we agreed to maintain their confidentiality.
Not surprisingly, some themes emerged from these conversations. One of the most consistent had to do with collections. Our interviewees agreed that this was one of the toughest areas in which to develop the best approach. One distinction that showed up clearly and quickly was between the client who was a company, or corporation, and the client who was an individual. Most often, the company client is accustomed to paying consulting fees and has the cash flow to handle those payments. Individuals, on the other hand, can present a range of obstacles to collecting your fee. As one practitioner indicated, sometimes the client will pay all but the last few thousand dollars, knowing that the cost in time and effort to collect probably exceeds the value of the amount owed. One interviewee has countered this problem by requesting 100% of her fee, up front, from individual clients. The ultimate counter to this problem, as another practitioner has found, is to not release the final report until the bill is paid in full.
While collections can be a challenge upon completion of an engagement, price sensitivity was something our interviewees consistently encountered on the front end. Again, a distinction arose between the company as client and the individual as client. Companies seem to be more acquainted with the cost of quality professional services and less likely to push for deep price-cutting. Many individuals, on the other hand, can’t seem to understand why you can’t just do a few calculations on the back of an envelope and give them a number. Our interviewees agreed about the undermining influence of websites, less-than-fully-educated business brokers, and well-meaning friends and neighbors with their “rule of thumb” multiples. When you’re first hanging out your shingle, it’s normal to want to take every job you can in order to get your practice going. The real trick, it would seem, lies in knowing what jobs you can safely accept, and how to get the retainer that will cover your investment of time in the project. Sometimes, says one of our practitioners, you have to politely offer to refer the potential client to “someone who may be able to handle your needs better”.
Finally, our practitioners admitted that though they knew there would be a lot of work in building and running a practice, they were still surprised at how all-encompassing it really turned out to be. Referring to the “chief-cook-and-bottle-washer” role, one practitioner commented on the challenge of juggling the non-productive administrative load and burning up time with it, then carving out enough time to do a good job at marketing and getting out there in order to attract work. Once you do, of course, there’s the execution, billing and collections.
Live and learn. We seem to have the “live” part pretty much in hand. It’s the “learn” element that can be toughest. Rob Schlegel, of Houlihan Valuation Advisors in Indianapolis, is leading an effort to publish a book of commentary from MCBAs on perspective, proportion, and experience items you can’t find in the theory or procedural texts.