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Hello, ladies.

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Welcome to
the Hourly to

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Exit podcast.

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I am very excited
about today's guest,

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Greg Alexander, who
I've been a big fan

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of since I first
heard him on the

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Vito Sell Radio with
John Warlow talking

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about his exit.

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So welcome Greg.

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I'm very
thrilled to have

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you here.

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Well, it's a
pleasure to be

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here and thanks
for having me.

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Yeah.

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Will you introduce
yourself to the

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audience please?

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Sure.

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My name is
Greg Alexander.

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I am the founder
of Collective 54.

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Collective 54
is a mastermind

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community dedicated
to boutique

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professional
services firms.

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And, we got about,
I think it's

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300 members now.

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And what we really
help them with is

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how to grow scale
and someday exit

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their services
firm, which I

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know, you are very
passionate about.

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Yes.

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And completing the
entrepreneurial

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journey in
services is a very

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nuanced thing.

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So that's what
we're focused about

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and it's, it's
wonderful to speak

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to y'all today.

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Wonderful.

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So there is a story
behind the name

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Collective 50.

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Yeah, so the
story is, so

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the number five,
four is the North

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American industry
classification code

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for professional
services.

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Mm-hmm.

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So within that,
that is lawyers,

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accountants,
consultants,

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marketing agencies,
IT service

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providers, pretty
much anyone who is

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marketing, selling,
and delivering

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their expertise.

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And, it's the
second biggest

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sector in the US
economy, trailing

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only oil and gas.

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It's about, 2
trillion per year

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spent in this sector
with a 5% organic

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growth rate, employs
10 million people.

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so we're very
lucky to be in

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that sector.

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And that's the
reason for the

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name, or I should
say the 54.

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The reason for
the collective

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is because that's
what we are,

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we're a community
or collective

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of business.

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That

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is fantastic.

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I did not realize
that that sector was

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so large, and maybe
it explains why I

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sometimes struggle,
frankly, to define

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who I'm talking to
because it is such a

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large group and very
diverse group within

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that expertise based
business group.

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So yeah, I find
myself sometimes

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talking to the
soloists and

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sometimes talking
to the c e o

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and, That's back
and forth, but a

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lot of the same
issues among

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them.

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yeah.

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it's big.

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So therefore it's,
hard to define,

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you know, and I
have that problem

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sometimes as well.

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I mean, I might
speak to somebody

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who's running a
marketing agency and

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they'll say, what
do I have in common

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with a law firm?

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And I'll say A lot
more than, you know.

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Mm-hmm.

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Like, you're in the
service business,

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you're in the
people business.

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you're marketing
your expertise.

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the business
model is the same.

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Yes.

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The domain
is different.

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Mm-hmm.

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But the business
model is the same.

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Yeah.

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So you're collective
if, a mastermind,

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like how are you
different from

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other masterminds?

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We're different
really in

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three ways.

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So first is the
obvious way.

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We're only
focused on a

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single industry.

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Mm-hmm.

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most mastermind
communities, and I'm

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a member of some,
I'm a member of Y

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P O Tiger 21, and
they're wonderful

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organizations, but
they're not focused

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on one industry.

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They have literally
dozens of industries

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and our contention
is,  Industry

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context matters.

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So that's the
first thing.

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The second thing
is we're focused on

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the segment Within
that industry.

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We refer to it as
the boutique, and we

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define that based on
number of employees.

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So you have to have
more than 10, but

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fewer than 250.

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these are kind
of post startup,

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but  pre-ex
exit, the analogy

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I use is that
they're in their

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kind of awkward
teenage years.

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they're not a kid
anymore, but they're

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not an adult.

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So we're really
focused on that.

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And then the third
thing is we're

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laser focused
on the founder

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or co-founder.

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Because a lot of
what we do with

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our programming
is around building

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wealth as opposed
to generating

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an income.

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So I would say
those are the three,

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primary differences.

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However, I do
encourage everybody

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to be in as
many communities

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as possible.

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The limitation
there, of course,

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is how much time do
you have to dedicate

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to these things?

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But I'm a big
believer that

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learning from.

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Is the best
way to learn.

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Yeah.

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Yeah.

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You mentioned
the difference

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between earning
income and building

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wealth, which is
sometimes hard

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for people to wrap
their head around.

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Can you explain to
the audience, like

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how you like to look
at the difference

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between the two?

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Sure.

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So I mean, in
the context

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of a services
firm, how do you

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earn an income?

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Well, you run a
profitable business,

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which means you
can charge enough

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for your service.

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And the cost to
deliver the service

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can be maintained
or reduced over

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time and you
earn that spread.

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And that's the
business model

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of services.

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However, not all
revenue is the same.

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So the mental
model shift is to

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get off the income
statement and start

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thinking about
the balance sheet.

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And that's
where wealth

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is determined.

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You know, assets
minus liabilities.

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And say to yourself,
if somebody was

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to try to buy my
firm, how would

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they place a value?

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For example, if
you are running

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your firm and you
basically are the

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firm as the founder,
there's no wealth

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to be created there
because God forbid

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something happened
to you, the business

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would go away.

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However, if you
built a real robust

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team, so much so
that you as the

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founder, no longer
sell work and no

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longer deliver work,
the team does it.

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Then there's
real wealth to

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be created there.

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In addition, you got
to generate revenue

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from sources other
than the billable.

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hour and you talk
an awful lot about

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this, and I'm so
pleased to meet you

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because we share
that in common.

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these are assets
of various kinds.

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sometimes they're
protected assets

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and intellectual
property, and

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you can generate
royalties or

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licensing fees off
of that, and that's

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a wonderful thing.

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Sometimes it's
intellectual

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capital that might
not be protected.

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However, you can
monetize by charging

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a premium for your
service because of

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some methodology
or tool that comes

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along with the
pair of hands.

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So those are the
ways that wealth

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is created within
the professional

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services segment.

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Yeah, you know, I'd
like to say that

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I'm my own avatar
that I have been,

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a soloist since
2006, I believe.

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And so someone
asked me like, how

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long you've been in
business, and I have

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to say, well, I've
been on my own since

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2006, but I've been
selling my time.

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I was selling my
time for a good,

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10 years, without
really thinking

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about, building
a business.

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So I like to
say I've been in

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business for three
years, although

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I've been on my
own since 2006 cuz

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I really was just
selling my time and

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earning an income,
not creating.

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Any assets and so
to the point of

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creating assets
and intellectual

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property.

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so when people are.

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Providing their
services, they have

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their expertise.

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They are used
to going out to

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get clients and
fulfilling whatever

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the needs are for
their clients.

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how do they make
that shift to, okay,

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I'm going to start,
thinking about,

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creating either
methodologies around

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that or creating
materials that are

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protected materials
around that.

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cuz people get
caught up with

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things like software
and courses and

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books, you know,
the big shiny.

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Intellectual
property pieces,

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but there's so
much more than that

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that helps create a
well-run business.

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Yeah.

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Well, you know, I'll
share a little bit

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about my story prior
to Collective 54,

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because it might be
a good illustration

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of that point that
you just made.

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So I started a
firm, a management

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consulting firm
in 2006, and it

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was called Sales
Benchmark Index

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or SBI for short.

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And I sold that
business in 2017,

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and it was one of
the larger exits.

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We sold it for
162 million.

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And the important
thing to keep

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in mind there
is we only had

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30 employees.

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So how do you sell
a consulting firm

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with 30 people
for 162 million?

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It's because we
had these assets.

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Mm-hmm.

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And the primary
asset was what we

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called the revenue
growth methodology.

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And it wasn't a
software tool.

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it wasn't a
training course.

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It was a consulting
methodology.

269
00:07:31,593 --> 00:07:33,836
And it was used
by our clients,

270
00:07:33,836 --> 00:07:36,386
which were largely
software companies

271
00:07:36,386 --> 00:07:37,616
that had very
large sales.

272
00:07:38,469 --> 00:07:40,367
And even a modest
improvement in the

273
00:07:40,367 --> 00:07:41,927
productivity or
effectiveness of

274
00:07:42,007 --> 00:07:44,359
10,000 salespeople
could have a really

275
00:07:44,359 --> 00:07:46,460
large impact on
their share price

276
00:07:46,460 --> 00:07:47,828
and their own
profitability.

277
00:07:48,157 --> 00:07:49,867
And it was the
methodology that

278
00:07:49,867 --> 00:07:50,467
they wanted.

279
00:07:50,472 --> 00:07:50,677
Now.

280
00:07:50,677 --> 00:07:51,217
Yes.

281
00:07:51,377 --> 00:07:53,207
with the methodology
came people and we

282
00:07:53,207 --> 00:07:54,724
helped them get it
implemented in their

283
00:07:54,724 --> 00:07:57,033
shop, but it was
a methodology and

284
00:07:57,033 --> 00:07:58,893
what that allowed
us to do is to do

285
00:07:59,273 --> 00:07:59,853
standardized work.

286
00:08:00,277 --> 00:08:01,682
So instead of
going from shop

287
00:08:01,682 --> 00:08:04,202
to shop and every
project is a custom

288
00:08:04,202 --> 00:08:06,385
project, that's
a non-scalable

289
00:08:06,385 --> 00:08:06,925
business.

290
00:08:07,195 --> 00:08:07,285
Mm-hmm.

291
00:08:07,765 --> 00:08:08,845
And when we went
from shop to

292
00:08:08,845 --> 00:08:10,255
shop and we were
starting with

293
00:08:10,255 --> 00:08:11,905
this methodology
and then it was

294
00:08:11,910 --> 00:08:13,796
just a question
of customizing it,

295
00:08:13,801 --> 00:08:16,076
maybe 20, 25% for
that particular

296
00:08:16,081 --> 00:08:17,862
client situation
that allowed for

297
00:08:17,867 --> 00:08:20,111
scalable work and
how that shows up

298
00:08:20,143 --> 00:08:21,493
in the financials
and therefore it

299
00:08:21,493 --> 00:08:23,565
creates wealth, is
that when you have

300
00:08:23,955 --> 00:08:26,029
standardized work,
you can hire really

301
00:08:26,029 --> 00:08:28,228
bright people maybe
with not a ton of

302
00:08:28,228 --> 00:08:29,638
experience, but a
lot of potential

303
00:08:29,794 --> 00:08:31,438
and teach them
how to deliver

304
00:08:31,438 --> 00:08:32,098
for the client.

305
00:08:32,341 --> 00:08:33,931
So in that case,
you're selling to

306
00:08:33,931 --> 00:08:35,731
the client something
that's very, very

307
00:08:36,191 --> 00:08:37,531
valuable, but you
can deliver that

308
00:08:37,536 --> 00:08:39,829
service with maybe
less experienced

309
00:08:39,829 --> 00:08:41,599
people and therefore
a less cost.

310
00:08:41,850 --> 00:08:43,387
The best example
that I've seen of

311
00:08:43,417 --> 00:08:44,947
this, and maybe this
could be inspiration

312
00:08:44,947 --> 00:08:47,186
for your audience,
is Goldman Sachs.

313
00:08:47,449 --> 00:08:48,649
Everybody knows
Goldman Sachs.

314
00:08:48,939 --> 00:08:49,139
Mm-hmm.

315
00:08:49,219 --> 00:08:50,239
They're one of the
largest professional

316
00:08:50,239 --> 00:08:51,579
services firms
in the world.

317
00:08:51,770 --> 00:08:54,055
And they have 40,000
employees, but

318
00:08:54,055 --> 00:08:55,255
only 400 partners.

319
00:08:55,542 --> 00:08:57,612
So there's 400
people keeping

320
00:08:57,612 --> 00:08:59,592
40,000 people busy.

321
00:08:59,871 --> 00:09:00,748
Now how can
you do that?

322
00:09:01,081 --> 00:09:03,211
And 73% of their
employee base are

323
00:09:03,211 --> 00:09:03,901
in their twenties.

324
00:09:04,264 --> 00:09:04,624
Wow.

325
00:09:04,979 --> 00:09:06,324
And people hear
that and they say,

326
00:09:06,324 --> 00:09:07,044
are you kidding me?

327
00:09:07,194 --> 00:09:08,694
Like, Goldman
Sachs is in every

328
00:09:08,694 --> 00:09:10,051
boardroom, in
every company

329
00:09:10,056 --> 00:09:10,591
in the world.

330
00:09:10,803 --> 00:09:11,578
And you would
think, cuz.

331
00:09:11,578 --> 00:09:12,988
So sometimes I
hear from people,

332
00:09:12,988 --> 00:09:14,728
well, I can't hire
junior inexpensive.

333
00:09:15,540 --> 00:09:17,150
Because the clients
won't tolerate that.

334
00:09:17,150 --> 00:09:18,140
Well, that's
not true.

335
00:09:18,140 --> 00:09:19,070
If you have
intellectual

336
00:09:19,520 --> 00:09:20,360
property or your
intellectual

337
00:09:20,360 --> 00:09:22,279
capital, they're
not just buying

338
00:09:22,279 --> 00:09:24,122
the pair of hands,
they're buying all

339
00:09:24,122 --> 00:09:26,244
the expertise that
comes with that

340
00:09:26,244 --> 00:09:26,814
pair of hands.

341
00:09:26,814 --> 00:09:28,203
So it's, these
models are

342
00:09:28,203 --> 00:09:28,713
out there.

343
00:09:28,839 --> 00:09:30,699
Goldman Sachs is
one of many, and,

344
00:09:30,699 --> 00:09:32,014
that's what we
all the smaller

345
00:09:32,014 --> 00:09:33,574
firms, all of us
on this call, we

346
00:09:33,579 --> 00:09:34,973
should be shooting
to replicate.

347
00:09:35,543 --> 00:09:35,796
Yeah.

348
00:09:35,796 --> 00:09:37,190
I like to say
like instead of

349
00:09:37,190 --> 00:09:38,690
being an expert
based business,

350
00:09:38,690 --> 00:09:40,460
be an expertise
based business.

351
00:09:40,465 --> 00:09:41,810
Yeah, you're an
extra based business

352
00:09:41,810 --> 00:09:43,583
then it's just,
you and another, an

353
00:09:43,583 --> 00:09:45,473
expensive expert If
you get more experts

354
00:09:45,473 --> 00:09:47,363
or you can have that
expertise that can

355
00:09:47,363 --> 00:09:49,428
be, utilized and
delivered by less

356
00:09:49,428 --> 00:09:50,568
expensive resources.

357
00:09:50,573 --> 00:09:51,078
So, yeah.

358
00:09:51,539 --> 00:09:51,819
I love that.

359
00:09:51,965 --> 00:09:53,653
So I love this
what you have on

360
00:09:53,653 --> 00:09:56,263
your website, stop
running Shin first

361
00:09:56,263 --> 00:09:59,040
into these, three
common problems.

362
00:09:59,040 --> 00:10:00,540
Earning too
little, working too

363
00:10:00,540 --> 00:10:01,380
much, struggling.

364
00:10:01,380 --> 00:10:01,770
The exit.

365
00:10:01,770 --> 00:10:03,054
I love the
imagery of running

366
00:10:03,054 --> 00:10:03,504
Shin first.

367
00:10:03,509 --> 00:10:05,494
Cause we've all had
the pain of, Running

368
00:10:05,494 --> 00:10:07,234
into something
with our shins.

369
00:10:07,601 --> 00:10:10,447
when people come
to Collective 54,

370
00:10:10,661 --> 00:10:12,602
are they struggling
with something

371
00:10:12,607 --> 00:10:13,352
or are they
just looking for

372
00:10:13,357 --> 00:10:14,513
community or both?

373
00:10:14,579 --> 00:10:14,939
why do they.

374
00:10:15,524 --> 00:10:16,857
It's a great
question, and I

375
00:10:16,857 --> 00:10:18,567
would say that
there's three types

376
00:10:18,567 --> 00:10:19,887
of people that
come to Collective

377
00:10:19,887 --> 00:10:21,777
54 to answer
this succinctly.

378
00:10:22,071 --> 00:10:23,537
So, and I would
classify these

379
00:10:23,537 --> 00:10:24,778
kind of as three
problems that

380
00:10:24,778 --> 00:10:25,588
they're focused on.

381
00:10:25,982 --> 00:10:28,232
So the first group
is that group

382
00:10:28,232 --> 00:10:29,732
that's not making
enough money.

383
00:10:30,058 --> 00:10:32,128
these tend to be
smaller firms, maybe

384
00:10:32,188 --> 00:10:33,690
younger firms, and.

385
00:10:33,986 --> 00:10:35,246
What happens to
them is they get to

386
00:10:35,246 --> 00:10:36,566
the point when they
launch their firms.

387
00:10:36,566 --> 00:10:38,006
What they say to
themselves is, my

388
00:10:38,546 --> 00:10:39,386
ambition is this.

389
00:10:39,659 --> 00:10:41,018
I want to be able
to make a living

390
00:10:41,048 --> 00:10:42,758
and work for myself
and not have to work

391
00:10:42,763 --> 00:10:43,688
for a corporation.

392
00:10:43,990 --> 00:10:45,470
And then they have
the courage and they

393
00:10:45,470 --> 00:10:46,220
start their firms.

394
00:10:46,220 --> 00:10:47,090
They have a lot
of respect for

395
00:10:47,090 --> 00:10:48,140
'em, and they get
to that point.

396
00:10:48,515 --> 00:10:50,375
But then maybe two
or three, four years

397
00:10:50,380 --> 00:10:51,635
into the journey,
they say, okay,

398
00:10:51,635 --> 00:10:53,165
well my ambition
has expanded.

399
00:10:53,195 --> 00:10:55,448
That's no longer
enough and I want to

400
00:10:55,448 --> 00:10:56,438
earn an exceptional.

401
00:10:57,308 --> 00:10:59,388
And then they
struggle with, how

402
00:10:59,388 --> 00:11:01,498
to go from just,
billing out their

403
00:11:01,498 --> 00:11:02,968
time or maybe
billing out the

404
00:11:02,968 --> 00:11:04,843
time of a couple
of other people and

405
00:11:04,843 --> 00:11:07,828
growing enough to,
have a substantial

406
00:11:07,828 --> 00:11:08,578
income coming in.

407
00:11:08,583 --> 00:11:09,778
So that's one
group that comes

408
00:11:09,778 --> 00:11:11,221
in and we have a
whole programming

409
00:11:11,221 --> 00:11:12,888
set associated
with that, cuz

410
00:11:12,888 --> 00:11:14,388
our membership
is tiered across

411
00:11:14,748 --> 00:11:15,588
these three tiers.

412
00:11:16,239 --> 00:11:18,700
The second use
case, Somebody

413
00:11:18,705 --> 00:11:19,840
enters collective
and they're

414
00:11:19,840 --> 00:11:20,740
past that point.

415
00:11:20,860 --> 00:11:22,474
They're making a
great living, but

416
00:11:22,474 --> 00:11:23,944
they're working 70
hours a week and

417
00:11:23,944 --> 00:11:24,784
they're killing
themselves.

418
00:11:25,130 --> 00:11:26,690
And their approach
is largely brute

419
00:11:26,690 --> 00:11:27,890
force at that point.

420
00:11:28,113 --> 00:11:29,769
And they say,
listen, I gotta get

421
00:11:29,769 --> 00:11:31,329
some scalability
into this business.

422
00:11:31,739 --> 00:11:33,860
I've gotta get
some repeatability.

423
00:11:34,112 --> 00:11:34,922
how do I do this?

424
00:11:34,922 --> 00:11:36,872
So we call that the
working less group

425
00:11:36,872 --> 00:11:38,552
or the scale group
to be funny with it.

426
00:11:38,867 --> 00:11:39,587
And we got a
whole set of

427
00:11:39,587 --> 00:11:40,487
programming on that.

428
00:11:41,087 --> 00:11:42,442
And And then the
third group are

429
00:11:42,442 --> 00:11:44,122
folks that wanna
sell their business.

430
00:11:44,552 --> 00:11:46,342
And usually they've
tried to sell

431
00:11:46,342 --> 00:11:47,898
it and they were
unable to because

432
00:11:47,898 --> 00:11:49,608
maybe they have an
unsellable business

433
00:11:49,698 --> 00:11:51,863
or they were able
to sell it, but the

434
00:11:52,293 --> 00:11:53,453
purchase price of
the terms weren't

435
00:11:53,458 --> 00:11:54,473
attractive to them.

436
00:11:54,860 --> 00:11:56,021
And they know
what their issues

437
00:11:56,021 --> 00:11:57,311
are and they
have to fix them.

438
00:11:57,311 --> 00:11:59,021
And they come to us
and we try to help

439
00:11:59,021 --> 00:12:00,921
them kind of knock
those warts off, so

440
00:12:00,921 --> 00:12:02,241
to speak, so they
can go back out

441
00:12:02,291 --> 00:12:03,911
into the market and
get a great exit.

442
00:12:04,159 --> 00:12:05,269
those are the
three reasons why

443
00:12:05,269 --> 00:12:05,809
people come to.

444
00:12:06,484 --> 00:12:06,874
Okay.

445
00:12:06,934 --> 00:12:07,504
Very nice.

446
00:12:07,534 --> 00:12:08,951
And so those who
are struggling to

447
00:12:08,951 --> 00:12:11,211
exit, do you kind
of like a pre-ex

448
00:12:11,216 --> 00:12:12,191
exit planning type?

449
00:12:12,191 --> 00:12:13,121
Or how do
you work with

450
00:12:13,121 --> 00:12:13,841
Yeah, yeah.

451
00:12:13,841 --> 00:12:15,343
So maybe I should
have started

452
00:12:15,343 --> 00:12:15,643
with this.

453
00:12:15,643 --> 00:12:17,648
our point of view
is that the life

454
00:12:17,648 --> 00:12:19,568
cycle from launch
to exit for a

455
00:12:19,568 --> 00:12:22,192
boutique pro serv
firm is 15 years.

456
00:12:22,503 --> 00:12:24,264
This three stages
grow, scale,

457
00:12:24,264 --> 00:12:26,021
exit, and there's
about five years

458
00:12:26,021 --> 00:12:26,861
in each stage.

459
00:12:27,361 --> 00:12:28,816
So why does it
take five years

460
00:12:28,816 --> 00:12:29,596
to exit your firm?

461
00:12:29,596 --> 00:12:30,796
Well, it doesn't,
once your firm's

462
00:12:30,796 --> 00:12:32,716
ready to sell, that
might take a year.

463
00:12:33,028 --> 00:12:34,710
But leading up to
that, it's quite

464
00:12:34,715 --> 00:12:35,220
a bit of work.

465
00:12:35,220 --> 00:12:36,892
For example, a
lot of these small

466
00:12:36,892 --> 00:12:38,932
firms have a lot of
client and revenue

467
00:12:38,937 --> 00:12:39,712
concentration.

468
00:12:40,005 --> 00:12:41,625
maybe their top
five clients are

469
00:12:41,625 --> 00:12:43,295
half their book of
business, that's

470
00:12:43,295 --> 00:12:44,675
an unsellable
business, right?

471
00:12:44,680 --> 00:12:46,325
So it's gonna
take some time

472
00:12:46,325 --> 00:12:48,035
to diversify your
revenue stream,

473
00:12:48,244 --> 00:12:49,924
or some of these
business are

474
00:12:49,924 --> 00:12:50,834
founder-dependent.

475
00:12:51,585 --> 00:12:53,545
And yes, they can
sell their firm, but

476
00:12:53,545 --> 00:12:54,675
the person that's
buying 'em says, you

477
00:12:54,675 --> 00:12:56,025
gotta stick around
after the sale.

478
00:12:56,025 --> 00:12:56,985
Well then what's
the point?

479
00:12:57,261 --> 00:12:58,988
So then we help
them develop a

480
00:12:58,988 --> 00:13:01,262
succession plan and
replace themselves

481
00:13:01,262 --> 00:13:01,742
over time.

482
00:13:01,742 --> 00:13:02,782
Well, you don't
just flick the

483
00:13:02,782 --> 00:13:03,532
switch on that.

484
00:13:03,562 --> 00:13:03,862
Right.

485
00:13:04,113 --> 00:13:05,523
Replacing a founder
is a really hard

486
00:13:05,523 --> 00:13:06,783
thing to do because
these founders are

487
00:13:06,783 --> 00:13:07,473
brilliant people.

488
00:13:07,766 --> 00:13:11,065
So ready for the
exit is a big piece

489
00:13:11,065 --> 00:13:11,995
of what we focus on.

490
00:13:11,995 --> 00:13:13,705
The actual exit
itself, there's

491
00:13:13,705 --> 00:13:15,651
investment
bankers and m and

492
00:13:15,656 --> 00:13:16,881
a advisors, and
they're really

493
00:13:16,881 --> 00:13:17,331
good at that.

494
00:13:17,331 --> 00:13:18,871
And that's not
our area of e.

495
00:13:19,502 --> 00:13:19,707
Got it.

496
00:13:20,001 --> 00:13:21,208
All right, so
going back to the

497
00:13:21,208 --> 00:13:23,008
diversifying their
revenue stream by

498
00:13:23,008 --> 00:13:24,642
that, if they have
too much client

499
00:13:24,642 --> 00:13:26,022
concentration,
by that, do you

500
00:13:26,027 --> 00:13:27,870
mean getting more
clients with the

501
00:13:27,870 --> 00:13:30,127
same business model
or diversifying the

502
00:13:30,127 --> 00:13:31,530
way that they serve

503
00:13:31,530 --> 00:13:32,070
clients?

504
00:13:32,660 --> 00:13:34,341
Well, the inflection
point is usually

505
00:13:34,341 --> 00:13:36,980
this, you get to a
point where word of

506
00:13:36,980 --> 00:13:38,480
mouth and referrals
is no longer

507
00:13:38,480 --> 00:13:40,961
sufficient, and you
have to get good.

508
00:13:41,533 --> 00:13:43,423
Selling to people
who don't know you.

509
00:13:43,657 --> 00:13:43,747
Mm-hmm.

510
00:13:43,987 --> 00:13:46,357
Which usually means
expanding outside

511
00:13:46,357 --> 00:13:48,157
of your own little
circle of influence.

512
00:13:48,467 --> 00:13:50,747
And because up
to this point

513
00:13:50,747 --> 00:13:52,067
the founder
hasn't done that.

514
00:13:52,305 --> 00:13:53,803
There's a lot
of concentration

515
00:13:53,808 --> 00:13:55,363
because it's
concentrated in

516
00:13:55,363 --> 00:13:56,743
that founder's
kind of personal

517
00:13:56,743 --> 00:13:58,618
network or their,
personal reach.

518
00:13:58,841 --> 00:14:01,236
So this requires
building a

519
00:14:01,374 --> 00:14:03,527
commercial sales and
marketing engine.

520
00:14:03,625 --> 00:14:05,781
That can do this
on a regular basis,

521
00:14:05,811 --> 00:14:07,161
like a real funnel.

522
00:14:07,521 --> 00:14:07,641
Mm-hmm.

523
00:14:08,196 --> 00:14:10,562
Other people in the
firm, can bring in

524
00:14:10,562 --> 00:14:12,062
work other than the
founder and really

525
00:14:12,062 --> 00:14:12,872
expanding out.

526
00:14:12,877 --> 00:14:14,445
So it's a wonderful
thing to have

527
00:14:14,595 --> 00:14:17,325
longstanding client
relationships with,

528
00:14:17,482 --> 00:14:18,682
high quality fees.

529
00:14:18,985 --> 00:14:20,571
But if three or
four clients are

530
00:14:20,576 --> 00:14:23,331
the whole show, one
of two bad things

531
00:14:23,331 --> 00:14:24,651
happens and you're
in real trouble.

532
00:14:24,651 --> 00:14:26,151
So you gotta,
develop that next

533
00:14:26,151 --> 00:14:27,081
set of clients.

534
00:14:27,171 --> 00:14:27,261
Mm-hmm.

535
00:14:27,801 --> 00:14:29,061
So that's how
you diversify it.

536
00:14:29,439 --> 00:14:29,919
Gotcha.

537
00:14:30,085 --> 00:14:31,506
And the other thing
I think certainly

538
00:14:31,511 --> 00:14:33,246
that solos will
come up against is

539
00:14:33,270 --> 00:14:34,362
when you're fully.

540
00:14:34,470 --> 00:14:36,240
occupy, like you
can't do another

541
00:14:36,240 --> 00:14:36,810
hour of work.

542
00:14:36,810 --> 00:14:38,229
Like why would you
do any business

543
00:14:38,229 --> 00:14:38,709
development?

544
00:14:38,709 --> 00:14:40,149
Like how do you
even do that?

545
00:14:40,444 --> 00:14:41,895
And then you lose
that client, then

546
00:14:41,900 --> 00:14:43,557
you're starting from
scratch, to fill

547
00:14:43,557 --> 00:14:44,517
that slot again.

548
00:14:44,517 --> 00:14:47,323
And I think that
is one of the main,

549
00:14:47,368 --> 00:14:48,388
pain point for
a lot of people.

550
00:14:48,393 --> 00:14:49,188
So that's a
tough one.

551
00:14:49,577 --> 00:14:50,807
something that
you might enjoy

552
00:14:50,807 --> 00:14:52,307
and maybe your
listeners, is that

553
00:14:52,337 --> 00:14:54,107
we have a tool on
our website, which

554
00:14:54,107 --> 00:14:56,147
is collective54.com,
and it's called

555
00:14:56,147 --> 00:14:57,377
the Firm Estimator.

556
00:14:57,781 --> 00:14:59,613
And it's a 10
question estimator

557
00:14:59,613 --> 00:15:00,963
and you can ask
the questions

558
00:15:00,963 --> 00:15:02,436
and it tells you
an estimate of

559
00:15:02,436 --> 00:15:03,726
what your firm
might be worth.

560
00:15:04,065 --> 00:15:05,770
What made me think
about that tool is

561
00:15:05,770 --> 00:15:06,940
something that you
just brought up

562
00:15:07,203 --> 00:15:09,133
because two of the
10 questions have to

563
00:15:09,133 --> 00:15:09,973
do with that issue.

564
00:15:10,183 --> 00:15:12,249
One question is,
do you as the

565
00:15:12,249 --> 00:15:14,099
founder of sell
work, To answer that

566
00:15:14,099 --> 00:15:14,909
question is yes.

567
00:15:14,909 --> 00:15:16,289
Then your evaluation
goes down.

568
00:15:16,764 --> 00:15:18,130
The second question
is you as the

569
00:15:18,130 --> 00:15:19,390
founder, you
delivering work.

570
00:15:19,838 --> 00:15:21,098
The answer that
question is yes,

571
00:15:21,128 --> 00:15:22,238
your evaluation
goes down.

572
00:15:22,238 --> 00:15:23,138
Now why is that?

573
00:15:23,198 --> 00:15:24,937
Well, you should
have grown your firm

574
00:15:24,937 --> 00:15:27,506
to the point where
you personally are

575
00:15:27,506 --> 00:15:28,556
not constrained.

576
00:15:28,900 --> 00:15:29,970
By what you just
mentioned, I

577
00:15:29,970 --> 00:15:31,470
just literally
can't take on any

578
00:15:31,470 --> 00:15:32,310
more capacity.

579
00:15:32,576 --> 00:15:33,711
You know, you've
built a system

580
00:15:33,711 --> 00:15:35,082
underneath you
that you can

581
00:15:35,082 --> 00:15:36,492
bring in more and
more work and it

582
00:15:36,492 --> 00:15:37,362
can be serviced.

583
00:15:37,722 --> 00:15:37,812
Mm-hmm.

584
00:15:38,057 --> 00:15:39,852
Because you have
this proper capacity

585
00:15:39,852 --> 00:15:41,963
planning process,
so you might play

586
00:15:41,963 --> 00:15:43,057
around with that
tool a little bit.

587
00:15:43,119 --> 00:15:44,439
it's a fun
tool to use.

588
00:15:44,439 --> 00:15:46,314
It takes 10 minutes
and gets you

589
00:15:46,314 --> 00:15:47,784
thinking about those
types of issues.

590
00:15:48,085 --> 00:15:48,438
Yeah.

591
00:15:48,461 --> 00:15:49,751
I think what you've
described is.

592
00:15:50,212 --> 00:15:52,217
Is commonly referred
to as, being the c e

593
00:15:52,217 --> 00:15:53,837
o by working on your
business and what,

594
00:15:53,897 --> 00:15:55,217
instead of working
in your business

595
00:15:55,544 --> 00:15:56,104
and getting there.

596
00:15:56,218 --> 00:15:56,818
that's great.

597
00:15:56,818 --> 00:15:57,688
Thank you for that.

598
00:15:57,957 --> 00:16:01,204
So what are you
seeing in 2023

599
00:16:01,204 --> 00:16:02,914
and beyond, like
as we come out of

600
00:16:02,919 --> 00:16:06,122
the pandemic and,
maybe people who

601
00:16:06,127 --> 00:16:08,594
were, just kind of
making it as well

602
00:16:08,594 --> 00:16:09,966
as they can and
now they're looking

603
00:16:09,971 --> 00:16:11,956
to grow, what was
happening out?

604
00:16:12,537 --> 00:16:12,846
Yeah.

605
00:16:13,119 --> 00:16:15,093
So, I have this
wonderful study

606
00:16:15,093 --> 00:16:16,899
group called
Collective 54,

607
00:16:16,989 --> 00:16:18,159
and I can tell
you our members

608
00:16:18,159 --> 00:16:18,759
are thriving.

609
00:16:19,009 --> 00:16:20,509
they're doing
extremely well.

610
00:16:20,759 --> 00:16:22,744
we do a, quarterly
benchmarking

611
00:16:22,744 --> 00:16:24,484
survey and we
collect financial,

612
00:16:24,484 --> 00:16:25,444
operational
and human

613
00:16:25,444 --> 00:16:26,450
capital metrics.

614
00:16:26,955 --> 00:16:28,084
And I can tell you
that our members

615
00:16:28,084 --> 00:16:30,034
are growing on
average, about 25%,

616
00:16:30,313 --> 00:16:31,123
year over year.

617
00:16:31,314 --> 00:16:32,694
And when you
double click on

618
00:16:32,694 --> 00:16:34,104
that and you say
what's driving

619
00:16:34,109 --> 00:16:36,786
it, when economic
conditions sour,

620
00:16:37,052 --> 00:16:38,837
it's really good
for professional

621
00:16:38,837 --> 00:16:40,187
services
firms, which is

622
00:16:40,187 --> 00:16:41,597
counterintuitive,
but here's why.

623
00:16:41,906 --> 00:16:43,301
Large corporations
start laying

624
00:16:43,301 --> 00:16:43,901
people off.

625
00:16:44,264 --> 00:16:46,271
However, the
work still needs

626
00:16:46,276 --> 00:16:46,871
to get done.

627
00:16:47,226 --> 00:16:48,876
10,000 people leave
a company, all

628
00:16:48,876 --> 00:16:50,466
that work's gotta
land somewhere.

629
00:16:50,800 --> 00:16:52,370
So what they say to
themselves is, okay,

630
00:16:52,370 --> 00:16:53,960
I'm gonna rent it
instead of owning

631
00:16:53,960 --> 00:16:55,702
it, and they turn
to professional

632
00:16:55,702 --> 00:16:56,182
services.

633
00:16:56,766 --> 00:16:58,356
To kind of have
that variable

634
00:16:58,361 --> 00:17:00,345
workforce, and we're
seeing that happen

635
00:17:00,345 --> 00:17:01,245
a lot right now.

636
00:17:01,245 --> 00:17:03,070
So a lot of our
members are catching

637
00:17:03,070 --> 00:17:04,781
that work and
they're thriving.

638
00:17:05,026 --> 00:17:06,304
They do have a
different problem.

639
00:17:06,550 --> 00:17:08,198
The problem is
finding enough

640
00:17:08,198 --> 00:17:09,818
talented employees
to be able to

641
00:17:09,818 --> 00:17:11,588
do the work on a
consistent basis.

642
00:17:11,884 --> 00:17:13,204
Unemployment's
still in the threes.

643
00:17:13,894 --> 00:17:14,014
Mm-hmm.

644
00:17:14,279 --> 00:17:15,569
the labor market's
really tight

645
00:17:15,569 --> 00:17:16,727
right now, but
that's a good

646
00:17:16,732 --> 00:17:17,357
problem to have.

647
00:17:17,357 --> 00:17:19,755
I'd rather be
supply constrained.

648
00:17:19,845 --> 00:17:20,775
Demand constraint.

649
00:17:21,015 --> 00:17:21,165
Right.

650
00:17:21,646 --> 00:17:22,420
That's excellent.

651
00:17:22,739 --> 00:17:24,430
So unlike most
of my clients,

652
00:17:24,430 --> 00:17:25,930
you are someone
who's already been

653
00:17:25,930 --> 00:17:26,950
through an exit.

654
00:17:27,204 --> 00:17:28,633
So usually I ask
if they have a

655
00:17:28,633 --> 00:17:30,613
plan to exit their
business someday.

656
00:17:30,918 --> 00:17:32,408
but you have
a new business

657
00:17:32,413 --> 00:17:33,438
collective 54.

658
00:17:33,528 --> 00:17:34,749
What is your
long-term plan

659
00:17:34,754 --> 00:17:35,829
for Collective 54?

660
00:17:35,919 --> 00:17:38,259
Yeah, so I'm very
blessed that I sold

661
00:17:38,259 --> 00:17:40,149
my company and I
was 47 years old.

662
00:17:40,309 --> 00:17:41,929
and I sold it for
more money than I

663
00:17:41,929 --> 00:17:42,949
could ever imagine.

664
00:17:43,282 --> 00:17:45,622
So my motive is no
longer financial.

665
00:17:45,956 --> 00:17:47,726
I read a very
impactful book that

666
00:17:47,726 --> 00:17:49,196
was given to me
by a mentor called

667
00:17:49,196 --> 00:17:51,328
Halftime, how to
Move From Success

668
00:17:51,328 --> 00:17:52,318
to Significance.

669
00:17:52,861 --> 00:17:54,131
And what I learned
by reading that book

670
00:17:54,131 --> 00:17:55,571
is that the second
half of my life,

671
00:17:55,571 --> 00:17:57,573
I'm now 52 years
old, I get more

672
00:17:57,573 --> 00:17:59,253
fulfillment out of
making an impact

673
00:17:59,253 --> 00:18:01,143
on others than I do
putting more zeros

674
00:18:01,148 --> 00:18:01,863
in the bank account.

675
00:18:02,124 --> 00:18:03,517
So I don't
plan on selling

676
00:18:03,517 --> 00:18:04,357
collective 54.

677
00:18:04,757 --> 00:18:04,997
Mm-hmm.

678
00:18:05,082 --> 00:18:06,517
Now, I may live
to regret that

679
00:18:06,522 --> 00:18:07,957
statement down
the road cuz some

680
00:18:07,957 --> 00:18:09,277
of my employees
might want to sell

681
00:18:09,277 --> 00:18:09,817
down the road.

682
00:18:10,032 --> 00:18:11,055
But right now,
we're only

683
00:18:11,055 --> 00:18:11,775
three years old.

684
00:18:11,825 --> 00:18:13,805
we launched in
January of 2020

685
00:18:14,131 --> 00:18:14,705
I, I get so.

686
00:18:15,099 --> 00:18:16,179
Fulfillment out
of being in the

687
00:18:16,179 --> 00:18:17,289
community and
working with

688
00:18:17,289 --> 00:18:17,919
entrepreneurs.

689
00:18:17,919 --> 00:18:19,813
So my plan is we,
we want to try to

690
00:18:19,813 --> 00:18:22,123
get to 5,000 members
and we're at 300

691
00:18:22,123 --> 00:18:23,533
right now, so we got
a long way to go.

692
00:18:23,832 --> 00:18:25,092
But, that would
be a wonderful

693
00:18:25,097 --> 00:18:27,139
thing to accomplish
because, I get

694
00:18:27,139 --> 00:18:28,879
to meet all these
fascinating, brave,

695
00:18:29,029 --> 00:18:30,499
courageous founders
that are trying to

696
00:18:30,499 --> 00:18:32,004
change their lives
and I, coaching

697
00:18:32,004 --> 00:18:33,114
them and helping
them, even in a

698
00:18:33,114 --> 00:18:34,201
small way is very,

699
00:18:35,260 --> 00:18:35,881
That's wonderful.

700
00:18:35,886 --> 00:18:36,841
I love to hear that.

701
00:18:36,841 --> 00:18:38,576
part of the mission
with Hourly to Exit

702
00:18:38,576 --> 00:18:40,506
is to help people,
create that wealth

703
00:18:40,506 --> 00:18:41,976
so that they have
a legacy so that

704
00:18:41,976 --> 00:18:44,343
they can do have
another half another

705
00:18:44,343 --> 00:18:46,203
chapter that is
more impactful and

706
00:18:46,208 --> 00:18:46,863
more meaningful.

707
00:18:47,302 --> 00:18:48,652
one thing I would
say to you, Aaron,

708
00:18:48,652 --> 00:18:49,972
is I know you're
passionate about

709
00:18:49,977 --> 00:18:51,442
helping women
and something

710
00:18:51,442 --> 00:18:52,672
that happened
by accident, but

711
00:18:52,672 --> 00:18:54,412
I'm very proud
of is that 41%

712
00:18:54,412 --> 00:18:55,612
of our membership
is female.

713
00:18:56,119 --> 00:18:57,054
Oh, that's
wonderful.

714
00:18:57,234 --> 00:18:57,504
I know.

715
00:18:57,504 --> 00:18:58,956
And, it wasn't
intentional.

716
00:18:58,956 --> 00:18:59,046
Mm-hmm.

717
00:18:59,316 --> 00:19:00,006
It just happened.

718
00:19:00,006 --> 00:19:02,170
And there's certain,
industry segments

719
00:19:02,260 --> 00:19:03,640
that are dominated
by females.

720
00:19:03,640 --> 00:19:05,554
For example,
marketing agencies.

721
00:19:05,654 --> 00:19:06,824
there's some
brilliant

722
00:19:06,962 --> 00:19:08,780
female leaders,
entrepreneurs that

723
00:19:08,780 --> 00:19:10,070
are running these
marketing agencies.

724
00:19:10,304 --> 00:19:11,270
I've learned a
ton from them.

725
00:19:11,638 --> 00:19:13,678
HR consulting is
also another great

726
00:19:13,678 --> 00:19:15,450
field where a lot
of, females are in.

727
00:19:15,799 --> 00:19:16,369
I think it's great.

728
00:19:16,369 --> 00:19:18,167
I think, this field
of professional

729
00:19:18,167 --> 00:19:20,133
services might
not have some of

730
00:19:20,133 --> 00:19:21,903
the barriers that
other fields do it.

731
00:19:22,196 --> 00:19:23,653
It still has some
for sure, and I'm

732
00:19:23,658 --> 00:19:25,003
aware of that,
but it's a little

733
00:19:25,003 --> 00:19:26,743
bit less of an
old boys network.

734
00:19:26,773 --> 00:19:26,983
Mm-hmm.

735
00:19:27,373 --> 00:19:28,718
and that's been
great, to have that

736
00:19:28,718 --> 00:19:29,978
level of diversity
in the group.

737
00:19:30,430 --> 00:19:31,256
That's wonderful.

738
00:19:31,600 --> 00:19:33,250
So I know people
will want to keep

739
00:19:33,250 --> 00:19:34,990
in touch with you
and follow up.

740
00:19:34,990 --> 00:19:36,090
So where can
people find.

741
00:19:36,744 --> 00:19:37,734
I'd say a
couple things.

742
00:19:37,734 --> 00:19:39,414
So first obviously
is collective

743
00:19:39,414 --> 00:19:40,884
50 four.com,
and that's the

744
00:19:40,884 --> 00:19:41,964
number five four.

745
00:19:42,223 --> 00:19:44,160
And, we offer a
newsletter you might

746
00:19:44,160 --> 00:19:45,060
subscribe to that.

747
00:19:45,180 --> 00:19:46,380
It comes out
once a week.

748
00:19:46,659 --> 00:19:48,218
It delivers, three
things in it.

749
00:19:48,564 --> 00:19:52,091
a blog on Mondays, a
video on Wednesdays,

750
00:19:52,091 --> 00:19:53,351
and a chart of
the week, which

751
00:19:53,351 --> 00:19:54,641
is benchmarking
data on Friday.

752
00:19:54,641 --> 00:19:55,241
So you might
check that.

753
00:19:55,875 --> 00:19:57,610
And then I am a
published author.

754
00:19:57,610 --> 00:19:59,154
I, I have a book
out called The

755
00:19:59,159 --> 00:20:01,194
Boutique, how to
Start Scale and

756
00:20:01,194 --> 00:20:02,844
Sell a Professional
Services Firm

757
00:20:03,061 --> 00:20:04,640
by yours truly,
Greg Alexander.

758
00:20:04,640 --> 00:20:06,170
And you can find
that on Amazon

759
00:20:06,465 --> 00:20:07,790
and that might be
useful as well.

760
00:20:08,193 --> 00:20:08,958
Fantastic.

761
00:20:08,958 --> 00:20:10,158
Thank you so
much for joining

762
00:20:10,163 --> 00:20:10,578
us today.

763
00:20:10,583 --> 00:20:12,146
And all that
information will

764
00:20:12,176 --> 00:20:14,226
be in the show
notes so everyone

765
00:20:14,226 --> 00:20:14,606
can find you.

766
00:20:14,606 --> 00:20:15,326
Thank you so much,

767
00:20:15,326 --> 00:20:15,686
Greg.

768
00:20:16,316 --> 00:20:16,796
Okay, my pleasure.

769
00:20:16,796 --> 00:20:17,486
Thanks for
having me.