The dependency on founders in consultancy business development
The Founder's Burden and the Director's Dilemma
Over the last 20 years, I’ve advised over 200 boutique consultancies and their founders on growth or exit. The most common challenge I see in the sub-£7 million revenue bracket is the dependency on founders for business development. This reliance can have significant implications for the company’s future, including longer earn-out periods, diminished valuations, and, in dire circumstances, the risk of business failure if a sale is not pursued.
Founders often shoulder the heavy burden of business development, acting as the linchpin for the company’s growth. This dynamic creates a bottleneck, where the next generation of Directors or Partners is not empowered or equipped to drive business development independently – or even adequately.
From a financial perspective, this leads to a lower valuation of the consultancy as the business is perceived to be overly reliant on the personal skills and networks of its founders. This is a critical factor for potential buyers who may be concerned about the company’s ability to sustain revenue generation post-acquisition. It also acts as a chokehold on growth as the founder reaches the limit of their sales potential and can also lead to friction between ambitious seniors and the owners who are seeking to exit.
In many boutiques I have advised, there is a perception among seniors that the founder’s success in business development is a form of ‘magic’—an innate charisma, a well-established network of senior decision-makers, or an international reputation that seems impossible to replicate. This is akin to the fixed mindset of Carol Dweck: those that believe that skills and capabilities are innate or fixed are usually those that don’t develop them.
However, the truth is that founders are not born with a network of willing buyers. Back then, they sold because they had to – because the mortgage wouldn’t get paid and because their fledgling team would lose their jobs. The founder’s success is not a product of mystique but of necessity and effort – which means it is likely possible for most people to achieve.
Demystifying the Founder’s ‘Secret Sauce’
After two decades of observing successful founders, it becomes clear that their ‘secret sauce’ is not so secret after all. It is a combination of deliberate actions and a relentless drive to succeed. Here are the steps that encapsulate this ethos:
- Pick up the phone. To existing high potential clients and strong leads. Do this often. Even if you have nothing to say – ask them how they are doing. Try to add value with every phone-call.
- Set regular time aside in your diary to strengthen relationships, make phone-calls, ask for introductions, and re-kindle old relationships.
- Set regular time aside in your diary to produce quality content that speaks to the specific challenges your clients have (like this post!!) – and show that you can fix it. Consistency of content creation is more important than you realise.
- Think strategically about the distribution of your content. Re-use, re-post, and re-format this content. Use Buffer to re-use and reschedule. Use a VA to repurpose webinars into blogs into articles into posts.
- Build a referral system so that you are consistently asking for the best referrals you can get at the right time in the project lifecycle. While you’re at it, visit old clients and ask them for referrals too. Referrals are the most effective way of generating new sales.
- Believe in your services. Are they great? Do they work? Do they add value? If not, then leave. But if they do, then you have a moral responsibility to persuade leads to use them. Talk widely and proudly about how great your services are and use case-studies and testimonials illustrate this.
- Believe in yourself. Any external, objective advice is great. It’s even better with your experience and passion. Add in your good looks and your charm and any client would be a fool not to want to work with you.
- You are not an island, and should be part of a wider machine. If you don’t have a sales system and a marketing machine, you must help create one. You should work with other seniors to create content, networks, meetings, and events that work for the firm, not just you.
- Get mentoring from the founder. Learn their tricks, be introduced to their network, come along to their meetings. You don’t have to sell in the same way they do, but they can add value to your skills and efforts.
- Get doing. Go meet key clients and leads. “I’m in your area on Thursday, do you have time for a catch up?”. Pick up the phone. Send people interesting things – even if they’re not yours. Build the relationship so that even if they’re not ready to buy now, you will be the first person they think of when they are ready.
Handing over the reins
Seniors are partly responsible for their success, but the founder who does not support them psychologically, practically, and systemically in these efforts will see limited success.
Psychologically, an essential aspect of ensuring the sustainability of a consultancy is the founder’s ability to overcome the mindset challenge of letting go of the reins. It is crucial for founders to trust their successors and allow them to make mistakes and learn from them. This process is often uncomfortable for founders who have invested significant time and effort into their businesses. Supporting, not micromanaging, seniors allows them to flourish.
Practically, the founder needs to support the seniors by mentoring them, introducing them to his network, and providing them with his or her time, providing advice on outreach and giving them space to fail. The founder should also be clear about the rewards for achieving success with business development – for the firm and the individual!
Systematically, seniors need to be supported with sales training, supported practice in ‘safe’ and ‘new’ environments, and to be seamlessly integrated with the efforts of marketing. The firm’s value proposition and service/sector targets should be clear, and the entire effort should be supported by a CRM system that everyone uses.
The path to minimising founder dependency is not a secret and results from consistent, persistent effort by both founders and the senior team. By demystifying the founder’s role and adopting a proactive approach to relationship building, content creation, and self-promotion, the next generation of Directors and Partners can drive the company forward, ensuring its growth and sustainability long after the founder has stepped back. The transition from founder-led to a more distributed leadership model is not just a shift in responsibility but a strategic evolution that can significantly enhance the consultancy’s market position and resilience.
This is a guest blog which contains the views of the author and does not necessarily represent the views of the IoD.