53. Forget revenue, look at client potential
Business Consulting Insights with Steve Potts [Everything Business Consulting EP 2]
In this episode, we interview Steve Potts about his business consulting journey, gaining valuable insights and lessons.
1:45 - I was involved in running my company – Steve tells us what he was doing before he became a business consultant, including his experience working as a policeman in the criminal investigation branch
4:15 - What attract Steve to business consulting?
5:40 - I realised that it was a head down back side up; I very quickly had confirmed to myself that I had to get out and get in front of as many potential clients as I could - Steve talks about his first 6 months as a business consultant
6:00 - I remember putting my first business plan together after going through a number of meetings and following the Consultx program, thinking god if it takes me this long to do this what’s going to be like once I get 7 or 8 clients?!; now takes me probably 20% of the time that used to put things together – Steve tells us how he got used to the whole process and how much his work got efficient
7:40 - I got my first client through telemarketing; I then actually got another one through unusual way which was direct enquiry to the business; I got the rest through the referrals, or just talking to people - Steve tells us how he got his clients at the beginning and later
9:10 - when you walk through the door based on referrals or talking to people, you have a very warm appointment right from the first minute; there is trust fact comes in straight away; that breaks down a lot of barriers fairly quickly – Steve talks about advantages on getting clients through referrals
10:05 - The program gave me a parkway to follow from start to finish, which, when you first put the feet on the ground, is pretty assuring that you know there’s something backing you up - Steve describes the benefits that he gains from Business Success Programme
12:36 - Structure of all businesses are exactly the same, what they do is a bit different – Steve tells us about his diverse clients’ businesses
14:35 - Businesses that have probably not formed as well as I would have wished, I would say that common denominator would be that they haven’t helped themselves as accountable as they should have and ensuring to get all the identified business improvements or what we call tasks done in a timely manner – Steve analyses his experiences.
17:05 - Steve gives us some examples of how he helped clients to build better businesses
21:55 - My average is around about 3 years and my longest time of the client is 4 years, and we celebrated that last month – Steve talks about average lifetime of his clients
23:35 - I’ve got a small holiday home out of town on the bed of lake and I sometimes go there Thursday afternoon; 9 o’clock of Friday morning I’m sitting at my dining table with the view overlooking the lake and doing my work sitting there - Steve talks about his lifestyle
29:40 - Steve is not usually getting inspiration from books, but he recommends two books that helped him to become a better consultant
Author of the book “The Revenue Growth Habit: The Simple Art of Growing Your Business by 15% in 15 Minutes Per Day” that Steve recommended – Alex Goldfayn
Show Transcript:
Hi, Steve, welcome to our weekly podcast interview section. Steve is based in Auckland, New Zealand, and has been with ConsultX for four years approximately. Steve, are you all fired up and ready to go?
Steve: Yes, ready to go, David. It's great to be able to tell my story.
David: Good. Well, you’ve been involved in business consulting for a time now, please tell us what you were doing before you became a consultant?
Steve: David, I was involved in running my own company. This company sold products to grocery and hardware outlets, plus a few other types of things like pharmacy, etc. I had sales reps and merchandising representatives right in New Zealand. I actually still have a financial interest in that company, but I'm not involved in it on the day-to-day basis of running it.
David: What were you doing before that?
Steve: Well, I was 20 years with doing that. Before that, I had come out of a multi-national background. After being in the multi-national background for about 15 years, transferring around the country, and a little bit of overseas work, I realized that wasn’t the type of path I wanted to take, so that's when I first decided to start up my own business, which I did.
David: What I'm driving at is, for the benefit of everybody listening, is that I believe that you were a policeman for a while?
Steve: Yep, that was a few haircuts ago. So I started off, I came from a farming background initially. And one morning I pulled up outside the police station and saw what they were paying. And I pulled outside the police station; I might like to add, to get something to eat because there was a takeaway place right across the road. I went across and read their notice board. And to cut a long story short, six months later I was in the police college or the police academy as some might call it.
I went through to becoming in the criminal investigation branch on the robbery squad, catching bad guys that robbed banks and shops and things like that.
David: I asked that question because one of the things that people who are thinking of becoming a consultant, they worry a bit about what their particular background is. And I say to them it doesn’t really matter what your background is, it's the passion and the motivation and wanting to do what business consultants do that's the most important thing. It's not a lack of a profession that stops people; it's a lack of desire and passion that stops them. So that's why I pushed you on that policeman question.
Steve: I can't help but agree with you and what you just said.
David: Well, that probably comes in handy too with some clients doesn’t it?
Steve: Yeah, that's right, exactly. I don’t have the resources to do as much as I used to be able to in certain aspects of that business.
David: So what attracted you to business consulting?
Steve: Well, as far as I wanted to own my company David, I knew I wanted to get out on my own and do something, as my other business has become reasonably large with a number of staff. And I had realized that I needed to escape the beast again, so I sort of reinvented the beast. And I did a lot of research about a number of different businesses, and I saw business consulting as going straight to the top of the list, as it was an area that I could pass on my business experience to others and work for myself.
I also saw that I could build a lifestyle around the consultancy style of business, and I recognized that it would give me flexibility in both my work and personal pursuits, and it certainly hasn’t let me down in that area.
David: That's excellent. New people that are wanting to come in talk a lot about lifestyle options in a business like this. They tell me that they are stuck on the motorway for three or four hours a day, and more if there is an accident. And really to get their life back is what they're looking for. And most of the people in our network agree with that.
Steve: Yes, I would absolutely agree with that. And a lot of consultants, as you know, have family commitments as well, and all of a sudden they’ve found their family again, and that's great for them as well.
David: So what was your experience in your first six months as a consultant?
Steve: I realized that it was head down and backside up. I very quickly had confirmed to myself that I had to go out and get in front of as many potential clients as I could. Certainly, if you sit on your seat, they won't come knocking on the door. I remember putting my first business plan together after going through the number of meetings following the ConsultX Programme, and thinking if it takes me this long to do this, what's it going to be like once I get seven or eight clients.
But I very quickly learned that the business owners also really started to rely on me to be their other partner in their business, except for me having any ownership of course. And as time went on, I became far more efficient in getting business plans together, and then getting the whole process running smoothly. And now it takes me probably about 20 percent of the time it used to, to put things together.
David: Yeah, that's what I found as well. I found that when I started back in 2005, I was very slow, and I kind of built systems to help me to speed things up and to become more efficient. Because what you're trying to do, as I see it, is you're trying to cut your time down so that you're not overworked, but also get the output out that's enough output to justify the fees that you're charging.
So it's like a set of scales, it's balancing in the middle is to find out what they're willing to pay for, for the time that you're able to give. So you need to be pretty much leveraged, I think. I think you would agree with that.
Steve: Yep, I agree. I do agree with that, but also balancing that with not thinking that your total worth to the client is spending a lot of time in their business because that will backfire on you fairly quickly too in many cases.
David: Yes, it's the quality of the information that you're giving them is where the money is in.
Steve: That is correct.
David: It's not the work.
Steve: Yes, exactly.
David: Can you tell our listeners how you got clients at the beginning and then compared to how you get them now?
Steve: I got my first client through telemarketing. As you know, we had a telemarketing setup, and so I went and followed up with a number of inquiries based on appointments made by telemarketing. So that's the first one with a tech beside it. I then actually got another one through an unusual way, which was through a direct inquiry to the business. This business that inquired was in the region I was servicing, so I got that taken on.
And then really I got the rest through referrals, or just talking to people I meet about what I do. And that would be whether it was in a casual conversation in a café, or at a barbeque, or another client’s Christmas function. I've found that if I actually talk to people about what I did with businesses, I didn't find anyone that didn't want to know more about it. And so the next lot of clients, probably from about at least three through, to at one stage I was running a 10 or 11 clients that were all done through that referral and just talking and networking with people.
All of my clients that I've signed have been fairly long-term clients. As that happened, the need to look for new business did diminish as I got on top of what I got, in not a short time, but a relatively short time. So I found that a great way to do it was a very personal way to get business, and when you walk through the door based on referrals or talking to people, you had a very warm appointment right from the first minute.
David: And it's about 90 percent money in the bank from a referral?
Steve: Yes, that's correct. I don’t get too many that say no after they have been referred. And you can set it up right from the first minute as a very positive experience for them. And there's a trust factor that comes in straight away because generally someone that they know very well, or someone that they’ve done a lot of business with has referred you to them, so it breaks down a lot of barriers fairly quickly.
David: Yeah, that's great. You’ve used the business success program right from the start; can you describe to our listeners the benefit you’ve gained from it?
Steve: The program actually gave me a pathway to follow from start to finish, which when you first put your feet on the ground is pretty reassuring that you know that there's something backing you up. I won’t say it's quite like painting with numbers, but it's certainly step one to step two to step ten, as such. There's actually too many facets to describe it in this conversation. However, the program has a set formula. One of the things I really like is it also has a flexibility, which enables you to stamp your own mark on it, and that suits me.
And of course, as we realized, each business has its own little idiosyncrasies, and it's good to be able to adapt around what their desires, needs, or actions that are needed, rather than have something that brought you the whole way through and is inflexible. The process of using the business success program that's called ConsultX, and the client acquisition is great. And I really can't emphasize this part of it enough.
It enables you to move a prospective client from a state of uncertainty to a position of, why wouldn’t I sign up? And I think that's important. It takes them through a process over two meetings, with the final meeting being the signup meeting, and it really points out the reasons why this business program will work for them. And they have a soft close with all the detail you need to ensure that your prospect is fully informed, which is great.
It gives the prospect, slash client, it gives them a sense of security that they’ve done the right thing, because the program points out, as I said before, the exact reasons why they need us and they need the ConsultX Business Success Programme.
David: Yeah, I learned very early on in consulting that I actually needed a track way, a pathway to run on. And that was how the business success program started because I like you had a lot of clients, and it was pretty confusing when you're dealing with 14, 15, 16 clients simultaneously, it can be very easy to get mixed up. So I put the thing together and made it systematic, for me initially, and it worked.
So then it was how we unrolled the thing and how we developed it long-term for the rest of the network. Can you tell our listeners how many clients you have today, and very quickly what type of businesses that they are, just so that the people listening can get a bit of an idea as to who we work with?
Steve: Yes, I have eight clients currently. I think over four years that I've signed 13. I can't quite remember, 13 or 14 clients. The businesses that they cover, from electrical and cable installation to commercial furniture sales, they get the product manufactured in New Zealand mostly, some imported product to go out to offices and showrooms, etc.
An importer or an exporter of foodstuff and confectionary, a heavy machinery mechanical workshop, a light vehicle mechanical workshop, printing and design, top of the market copy machines bought out of Germany, and supplies for offices and showrooms, etc. And an edible flowers and garnishes to the restaurant trade in New Zealand, and recently we just broke into the hot market in Honk Kong as well.
I've just finished with a jewelry company, after three and a half years, the owner deliberately downsized to suit her lifestyle and to save a bit of money. And that's pretty well the spectrum, so it's pretty diversified.
David: When I'm talking to people they ask me that question, and really the only answer to it is that it's everything and everybody. There's no any one type of industry, or profession, or business, it comes from the whole spectrum, doesn’t it?
Steve: As we've certainly been shown, and they have proven to us over time, is that a structure of all businesses are exactly the same, it's what they do with it that's a bit different. And the expertise of what they do is actually in the business. We get that structure right and get the expertise flowing in the right direction, and generally, you’ll find that you’ve got a working business.
David: Yeah, I agree. Can you tell our audience, I don’t want to be negative, but what client failures that you’ve had, and what you could have done, if you had your time again, maybe you couldn’t do anything, but just quickly talk about that?
Steve: I’d like to think that I haven’t really had total failures. Most of the businesses I've finished with have been done on my terms, or the business concerned has been sold to someone else. I had a business actually a year or two ago, where the owner was down at the bottom of the south island, so it was best just to leave that alone. If I was to generalize over all the businesses that have probably not performed as well as I would have wished, I’d say that the common denominator would be that they haven’t held themselves as accountable as they should of in ensuring to get all of their identified business improvements, as we call it tasks, done in a timely manner.
And I've found that a great learning curve, and something that even four years down the track, or probably three years down the track has sort of come up behind me and gave me a clip on the ear. Part of my responsibilities, as you know David, is to manage them through that and get them responsible for completing tasks. Now even with that, I've found that if the will isn't there, they struggle to accomplish things. And it seems as though you start losing the fight when that happens.
On the reverse side of it all though, just finishing on a positive on that statement, the clients that enthusiastically drive themselves to accomplish goals and tasks are the ones that are succeeding the best. So that's the secret, as experienced consultants know what to do, how to go about it, etc., but you need that passion coming from the inside to the outside as well.
And those that you can get to move their business mind and their personal mind into being passionate about what they're doing. And seeing that they will have good business results, or improved business results, by being that way, you’ll get the best success with.
David: Yeah, they make the best clients, don’t they?
Steve: Yes, they are more enjoyable to work with as well, obviously. You know, there's nothing sort of more disheartening than going into the next meeting and knowing that 50, or 60, or 70 percent, sometimes everything, just isn't being done. And trying to hold them accountable, and of course, they're all bottom-line people, below-the-line people, they’ll find every excuse under the sun to why things haven’t been done.
David: Can you give our listeners a couple of examples of how you helped your clients to build better businesses?
Steve: Yes, I certainly can. My first example would be the commercial furniture company. And it's something that's a bit of a common theme I use, but I really concentrated on them seeing the value in what they were doing and being able to portray it in such a way that their clients wanted to use them as their preferred supplier. So I got them to have belief in themselves and what they were doing. Now as a result of that and just taking a step back and portraying their products and their services as a value-added proposition.
In reality, it was exactly the same as what they had been doing before, but without the belief and thought, they didn't portray that to their customers. Interestingly enough, over the last three years, we've moved their gross margin, or GP, from around the 25 percent mark, and that's where they thought they had to be to be competitive, it's now starting to hit the 45 percent mark.
David: Wow.
Steve: And that's happened in a relatively short period of time. And in the same process, we've doubled their sales. Their inquiry work is up 250 percent. And we now have two employees in other major centers around the country. And we are doing some exporting into Fiji next month. I'm trying to wrangle a trip; I don't know whether it will happen or not. And it's for a major hotel refurb, which would even be better. There has been growing pains with that company David, but however, with the GP now being in a great position, it's a lot easier to support that growth.
And these guys are stunned at themselves. And they still mention it probably at least three or four times a year that they are able to sell that same product for that price and make a good profit out of it.
David: That's a great story.
Steve: So I do enjoy that one I must say. My other company is an import/export company, and sort of turned their business a little bit on its head there as we identified customers, who we wanted to deal with. They had a number of customers, not a huge amount, but a number. And one of the things I asked them was, who are your customers that you would really like to deal with out of the list, and who are the ones that are difficult to deal with? As a result of that, we put the good guys to the top and the not-so-good guys to the bottom.
And it was very hard for them to accept that initially, because the not so good guys were very, very big companies, and they saw that as something that they were just pushing away, and could impact on their turnover negatively, or their growth, probably would be a better word to say, negatively, because they had a lot of business with them. However, the story is by prioritizing our customer's list, we were then able to allocate the correct resources to each of those customers.
We approached the top customers on the list and basically said, in the ideal world, what could we do for you to make your job easier and your business more profitable? And that was the question we asked exactly like that. Having that story short, by doing this we increased overall sales with the company by 35 percent in one and a half years, and increased profitability by around 5 percent. A company that we would have say sold around about one 20 foot container for Easter that went to the top of the list, we did nine 20 foot containers to them this Easter.
They're an easy company to deal with. They don't quibble too much on price. They want to work with you, not against you. And once you sell them that product for that price, then it certainly is not take, take, take, after that as we know in some parts of the industry there is. And so that was a great success story. And actually identifying who we should deal with, and then allocating the resources, and assertively growing the business within.
David: I think when you're consulting to a client, that should almost just about be a standard procedure to go through their clients and rank them in the same way that you did.
Steve: Yes.
David: That is very important.
Steve: That is a very good procedure on that. And you know we all like to deal with people we like as well, so there in itself is a major opportunity. If those businesses are sitting at the bottom of the list, just because of turnover, let’s put the turnover to one side, look at their potential and take them to the top of the list.
David: Good idea. Tell me, a lot of people are interested in average lifetime of clients, and I think in the network, you're probably almost the best just about, can you tell us what the average lifetime is of your clients?
Steve: Yes. Well, you're right, I've pretty well been going four years and three months; I think it is, out in the field. After, as we did in the old days, intensive training, spread out across a few weeks. And I just sat down and worked it out for that question. So my average is around about three years for me. My longest time with a client is four years, and we celebrated that last month, so that's the one I got pretty much straight away, and then with saying that, my newest client has been on board for three months.
What I've found there is that my clients know, if they don't know before I walk through the door, they know within ten minutes of me walking through the door at the first interview that this system is all about longevity. It's all about achieving a lot of things over a long time, not trying to be a star in a short time. And as we know, many people underestimate what they can do in the medium long term and absolutely overestimate what can be achieved in the short term.
So I frame businesses and people up that are involved in the business, on more than one occasion, to let them know that this is all about being around for a long time, and that's the way we will get the results. And so far it's worked, so I must be doing something right.
David: Yes, As I mentioned before, you seem to have the clients with the longest retention factor, which is really good. Now, I'm going to ask you this question here, and then I'm not going to listen, but you can tell our listeners, can you tell us a bit about your lifestyle as a consultant today, compared to 9:00 to 5:00 employment? So I'm going to put my fingers in my ears now.
Steve: You accuse me of all sorts of things, David. What I've found is I have the flexibility to work when I don’t want to. And don’t get me wrong, I've put the hard yards in, but it was my choice, no one else’s. I can take time out almost whenever I want to. And if I need to make up time, putting in a couple half days over a weekend or into the evening is a small, very small price to pay, actually.
Hey, you're still at your house anyway, your wife’s around the corner doing something different, and you can get up and walk through and make coffee or tea, whenever’s your choice, at any time, and have a chat. And I love that flexibility of being able to do that. As you know David, I've got a small holiday home out of town a bit at a lake, and I sometimes go down there on a Thursday afternoon. I can throw in my laptop and a bit of work in the boot, or in the trunk, depending on where you are listening to this, and head south.
By 9:00 on Friday morning, I'm sitting at my dining table with a view overlooking the lake and doing my work sitting there. I've got spare office equipment there that I can use, printers, etc. And I always finish by 2:30 when I do that on a Friday because I need to be in town by 3:00 to have a nice refreshing beer with a couple of mates, which is great. It’s a tough world as I say to them.
David: You just can't do that when you're in corporate, can you?
Steve: No, you can't. And the other side of that too is, you know, in corporate, going back a little while, is of course if you're doing something in-between times that possibly you shouldn’t be, like ripping into a shop to a buy a new jacket or something, the atmosphere is generally one of looking over your shoulder all the time. You certainly don't have to do that. All you have got to do is be your own judge and look at your own outputs.
And if you can do that, look at your own outputs and be satisfied with what you're doing, and have the ability to push yourself to achieve what you desire, then you can build that around lifestyle. I actually work a two-week cycle. I load 90 percent of my appointments in one week, keep my next week fairly free to be able to do any follow-up work, adjustments to appointments if someone is away, other meetings, etc., and that works extremely well. I couldn’t recommend it more highly.
David: That's great because that's what it's all about. There are millions of people around the world, who want the lifestyle that you’ve just described. And I'm not saying business consulting is the only way to achieve that, but if you come from business, and if you got a bit of business experience or management experience, then it's certainly something worth considering because it can be very lucrative, and very easy on your time.
Thanks for that. Can you give our listeners a bit of advice on the best path to entering the consulting profession and why? I'll give you an example with me. When I started consulting, I actually went out and I got some business cards printed, and some letterhead paper printed, we don't do that anymore, and I just went out and started talking to people. And it happened relatively quickly, but I did identify that I never had a track to run on. I never had a system or a process.
And I often think back, if I had a system like our system, and being trained on our system, I would have been like a rocket ship. I was more like a 747. So you invested into a system like this, so do you think it was the best path for you, or do you think there is another path?
Steve: I would straightaway say that it's the best part to use is having a system such as the ConsultX System. As I said earlier on, it gives you the ability to start at point one and finish at point ten. It gives you a form of confidence in knowing that if you use it properly, you're covering all the aspects that are needed in consulting in business. And it gives you the ability to produce the results that are required, results that as we know many businesses need.
To be able to go out on your own, or try and set up your own system or Google different systems and bring them all together is not a very good way to do it. And as you know David, we have a number of ex-consultants or consultants that had tried it that way and found it very difficult and have moved through to this system, and it’s given them the confidence to move forward and build their business.
David: And it's not really my system, like sure I built the skeleton of it starting in 2005, but as people like you joined the network, everybody started contributing to it. So it became a product of probably 100 plus people, and their clients, what was learned from their clients. So it certainly is in a continuous improvement process, and that's why it works so well.
Steve: That's certainly something that is absolutely to prospective people is that there is no sitting on the hands within the organization. It's been a learning process, and input from a whole lot of different people within our network, which has ended up in getting something that we can all work with.
David: I agree. So tell me, do you have two favorite books that have helped you to become a better consultant, and why do you choose these books?
Steve: I have to be truthful; I'm not huge on getting inspiration from books. I usually find that I've got to get it from within me. If I can't find it within me, a book isn't necessarily going to teach me. However, I do realize it's not the same for everyone. And a couple of books that I have read and found useful: Persuade Your Customer to Pay More, which is the speaker we had at our conference a couple of years ago, Ian Brooks.
So I suppose mine is not really learning, and I'm not trying to sound smug here, but reconfirming how I think because it really suits what I've always tried to do with my clients. And there are great examples on how to add value over and above or dissuading discounting of price. So I do recommend that to people. And he lectures. I think he’s a Canadian now living in New Zealand but certainly lectures all around the world, Great Britain, Australia, United States, Canada, etc.
David: I think he said in that conference, he said that he was on the Toyota payroll, and they shoot him around the world doing stuff.
Steve: That's right. Yes, he does that. He’s talked to some pretty powerful groups when you read his bio. It's an interesting read, too. And the second one is something that I've just recently read, and it's called Revenue Growth Habit: The art of growing your business by 15 percent in 15 minutes per day. Actually, I haven’t got the author to that. I didn't make a note of that. And I'm about three-quarters of the way through it. But once again, it's pretty simple stuff, it's easy to read. It's actually quite an interesting read.
What I like about that and the previous book I talked about, it's actually easy actionable advice and blows a lot of modern thinking theory out of the window. It talks a lot about what a lot of businesses think about Facebook, etc., or they all think they have to be involved in that. He tends to blow that theory out of the window because he talks about the fact that business to business is not necessarily the right way to go. And of course, if you're business to customer, coming in off the street, it could be.
It is easy to read. As I said, it's actionable advice, and that would be one of my suggesting because I like books that if you're going to learn from something, it's something that you can actually apply. And that's what both those books are; they have things that you can apply in your consulting career.
David: I'll go and look up the name of Ian Brooks’ book, and the author of Revenue Growth Habit, and I'll put them on the show notes for everybody who is listening, and they can have a look at that after. Well, Steve, thanks for your frank and interesting interview. I'm sure our listeners will have gained a lot from it.
Steve: Thanks, David. I'm pleased to be on the show. And good luck to all those that are coming into the profession. I will see you on the ConsultX Facebook pages at some time in the future, and you never know, at a conference in Hawaii, or Sidney, or Fiji, or something like that, that would be great.
David: Yes. Well, we're moving into the States, and that will probably mean that at the end of 2017, I think the most central place is going to be somewhere like Hawaii. It would be great to have a conference there, wouldn’t it?
Steve: Well, I say, it's a tough profession, but someone’s got to do it.
David: Right. Thanks for that and I'll talk to you soon.
Steve: Okay, David, thanks.