You Need Business…But Do You Need a Business Developer?
Reprinted with permission from Accounting Today
For years your firm has done just fine, thank you, without the assistance of a business development executive, or BDE. But is it time to reconsider? The changing professional environment and new demands on CPA firms and partners suggest that it just may be.
Let’s review some of the arguments in favor of the practice, and provides some tactical direction in how to pursue it.
Business development experts, also known as sales professionals, are increasingly being welcomed into CPA firms. For the first time this year, the Association for Accounting Marketing offered an education track devoted to sales and business development at its annual meeting, and attracted business developers from all over the country. I asked the audience at one of the sessions how many of their firms had BDEs on board. An astounding 70 percent or so of the hands went up, a huge increase from a couple of years ago!
Why this sea change? I believe there are three primary reasons.
One: Large opportunities continue to fall out of the top end of the market, with no end in sight. At many firms, top rainmakers have an excellent portfolio of skills but may lack consistent experience with large pieces of business. They don’t typically have as much ease and familiarity with large opportunities as BDEs who have spent their entire professional lives pursuing them. Significant opportunities must be approached differently. The environment is more competitive and managing them requires a specific, more sophisticated methodology.
Two: Partners cannot afford to spend as much time on opportunity pursuit when their technical talents are in such demand.The paucity of talent in accounting today means firms must leverage existing technical strength. And many partners are not available enough, because of workload demands, to commit to the intense effort and urgent response time required when large opportunities are rushing down the pipeline. They often have experienced a more leisurely pace with referral sources and relationships that evolve over months and years. A dedicated business developer is trained and available to quickly identify and guide execution of the appropriate next step in a hot competitive situation. They know to quickly evaluate whether the execution of our strategy enhanced our odds to win and recalibrate our strategy and tactics accordingly. If correctly done, each “next step” in large opportunity pursuit yields more information and a commensurate adjustment in strategy. It’s not uncommon to change strategy 4 or more times during pursuit. This takes focus, attention, and proper timing.
Three: Firms are embracing the benefits of specialization.Optimizing the unique strengths of everyone in the organization is the modus operandi of successful firms. Much as they acknowledge that some partners are best at rainmaking and others at delivery, firm leaders are beginning to embrace the idea that business development is a specialty skill set.
Is This Cost Effective?
Deploying a partner as a full-time business development executive, or hiring a sales person to fulfill this role, can yield a high-leverage result. A $300 per hour partner can generate $6,000 for every 1% increase in utilization – about 20 hours worth of work. But a good business developer can generate much more revenue in the same 20 hours, especially when looking at the value of a recurring annual revenue stream. Compare a partner’s $1.5M book of business which took 10 to 30 years to develop, to the annual revenue contribution of a good BDE – $400,000 to $1 million or more per year! And compare the annual compensation of a BDE to the revenue contribution they can generate to pay for themselves. After about $400,000 to $600,000 of revenue, at average firm gross margins, the BDE has covered his/her compensation, and the rest is revenue generated with very little cost of sales. The big firms know this, which is why the Big Four, most of the nationals, larger firms like BKD, and Blackman Kallick, and many mid-sized firms like GBQ and Barnes Dennig, have built out impressive business development functions.
Armed with good reasons to proceed, how do you begin? For starters, cast your net widely, including beyond CPA firms. You’ll find top BDEs in fields including technology consulting, engineering, architecture, law firms, and human resources and business consulting – places where developing a sales territory is required. You’re less likely to find the best fit in banking or corporate America where territories are very structured and where internal selling is not required. It’s critical that BDEs be aware of the need for, and adept at, selling the partners on their value.
A key strategy is to lay the groundwork to assure a BDE is properly appreciated at your firm. It can require considerable effort to convince some partners that a business developer can use proven strategies to achieve a higher win rate than partners who have worked for decades to develop relationships and referrals.
Is a BDE right for your firm? Chances are it’s time to consider the possibility…and the potential.