by Scott Bushkie, CBI, M&AMI
Allow me to step back from my standard M&A updates for a month to talk about building your business. I coordinate a quarterly nationwide survey of the M&A industry, and one of the questions we ask advisors is where they get their best clients. Every quarter, the top answer is referrals.
With all the different things they can do to bring in new clients, referrals always lead the list at roughly 60 percent. And note, we don’t ask advisors where they got any client; it’s how they got their best ones.
When I talk to people who are preparing their business for sale, I always talk about sprinting toward that finish line, driving top and bottom line growth and finishing strong. That may take some advertising or attending trade shows, but we can’t forget about face-to-face meetings and relationship building.
Next in the Market Pulse Survey (conducted by the IBBA, M&A Source and Pepperdine University’s Graziadio School of Business and Management), we go another layer deeper and ask advisors where their referrals come from. Usually, the number one source is past clients.
For businesses that are transactional, like Cornerstone, the big reminder here is to make sure you follow through on your commitments. Do what you say you’re going to do. Turn your clients into fans of your business, because fans go out and talk you up to others. Providing excellent service to your existing clients is the best advertising you can possibly do. Also, stay in touch with your clients after the transaction and ask the question, “do you know of anyone who could use our service?” When they stop and think about it they may have a name or two.
As for other referral sources in our industry, accountants and financial advisors also rank high. For the fourth quarter 2012, financial advisors took the top spot at 37 percent versus 25 percent for past clients.
At Cornerstone, we call these professional advisors our “Centers of Influence.” These are the people our future clients know and trust and look to for guidance when it comes time to sell their businesses. Think about the centers of influence in your own industry and cultivate relationships with a range of colleagues.
It’s funny where a referral chain can take you. Several years ago I was introduced to a financial advisor in Appleton who referred me to a client in Russia. That client’s attorney was based in New Jersey, and after having a positive experience on the sale, he referred me to one of his local clients. And once that business closes, the seller tells me he has a friend ready to sell his business too.
So what started with a breakfast with a financial advisor in Appleton has literally taken me around the globe with several successful transactions.
Remember, when someone gives you business opportunities and referrals, they’re sticking their neck out for you. Make your referral source look good by under promising and over-delivering. Do that and you can count on them to mention your name again and again.