Business owners and entrepreneurs are sometimes notoriously closed off to advice from others, including from their own accountant. Do you know anyone like that? Ahem.
The barrier to input often comes with an unforeseen high price to business owners since accountants are uniquely qualified and equipped to examine and provide advice regarding the true underlying financial condition of their clients.
During a recent Sageworks webinar, “Why Business Owners Don’t Buy Coaching from Their Accountant (and What to Do about It),” John Warrillow, author of “Built to Sell: Turn Your Business into One You Can Sell,” discussed a major hurdle for accounting firms that are making the transition from compliance work to value-added services. He provided accounting professionals with insight and tools so they can work through those quirky barriers to provide the guidance and services that business owners really need. Understanding clients’ unique personalities and psychology will help firms more easily achieve their own strategy goals that lead to recurring and predictable revenue, the creation of larger profit margins, and more overall career satisfaction in general.
Why are business owners not open to getting advice? Warrillow suggests it’s the way they’re wired. He recorded his research and findings on the psychographics of business owners in his body of work named, “The Value Builder System.” Warrillow’s analysis and research results on psychographics were first compiled via his own quantitative research and marketing business, where clients included IBM, GE, Microsoft and other large industry giants. It was around the time he was compiling this research that Warrillow found himself in attendance at an Apple board meeting listening to Apple’s head of small business expounding on and openly referring to the contents of Warrillow’s book, “Built to Sell: Creating a Business That Can Thrive Without You.” Apple was the most highly valued and highly capitalized company in the world at the time, and as Warrillow ruminated on the fact that the largest company in the world had looked to set strategy from his research, he gained great confidence that his analysis and findings derived from over 10,000 business owners could be put to practical use and work well for the accountants in the real world.
Discerning your client psychologically is foundational for selling advisory services. “In order to sell coaching services to business owners, you must first know your client’s psychological motivation in order to communicate with that client beyond their resistance,” Warrillow said during the webinar. “To coach, you also need to show how your advice is going to help them make money, and that varies dramatically by psychological profile.” Knowing what gives business owners pride as individuals will also help you build trust as you communicate with these clients, he added.
Warrillow described business owners from his research by categorizing them into three distinct psychographic profiles that define their motivation:
• Mountain Climbers: Focused on revenue, goals associated with a threshold, and aspirations all around top line growth, bar none.
• Freedom Fighters: Focused on being independent: when to work, who to work with and what to wear. They prefer creating and overseeing their own ideal culture.
• Mastery/Craftsman: Love to achieve mastery of the craft they have chosen. For example, they like to be known as the best photographer in the market, best plumber or entertainment artist. They are the most risk averse of the three types.
To begin understanding the type of business owner you’re working with, Warrillow suggested simply looking for key traits in social and other settings. For example, check business card titles. Titles often give clues to primary motivations and the way your clients perceive their own roles. A “mountain climber” will call him or herself the founder, CEO or chairman, even if they only have a handful of people in their firm. The “freedom fighter” will often classify him or herself as the owner or president, while the craftsman may describe their profession or trade as a title.
Another quick check is to probe pain points. A mountain climber has a hard time identifying employees who live up to expectations since they project their own high expectations for themselves onto others. Warrillow offered Jeff Bezos as an example. Employees at Amazon have historically lasted only 18 months on average. Why? The turnover trend at Amazon trickles down from the very top and out through managers to the entire employee base, according to Warrillow. A freedom fighter would differ in that he or she may tend to cultivate more so-called dead wood since keeping a nonproductive employee is more acceptable in an environment where topline revenue goals and threshold aspirations are not as important as having an independent or ideal company that may include family members. Mastery/craftspeople are the most risk averse and don’t tend to take on many employees.
Warrillow also suggested checking Linkedin profiles. “Mountain climbers will often have several businesses at once, or a portfolio of companies listed in their history since achievement defines who they are,” he said. “A freedom fighter is one who is more prone to run the same company for many years. Craftspeople may have a pattern of being in and out of the economy in synch with the employment rate.”
Warrillow stressed that it’s important to know the client’s profile for other reasons beyond breaking through resistance or barriers the client may have to input. Personality profiles are also significant since they will steer the selection of the services you can offer. For example, mountain climbers will have to share equity to fund growth and will have a complex capital structure that will require advisory services that differ from that of a freedom fighter. Warrillow noted, “Freedom fighters want independence, and will generally avoid sharing equity at all costs since sharing equity is nearly the opposite of how they are wired.”
For more details about breaking through resistance and communicating with your clients to sell advisory services, you can watch a replay of the webinar here.