Value-Based Fees: How to Charge—and Get—What You're Worth: A Guide for Consultants, Second Edition

10.2. TRANSITION TO A "GOING CONCERN"

I love the accountants' term going concern, which indicates that a business is, essentially, breathing, eating, and ambulatory without life support. I use the term here to indicate that once the practice is established and the bills are being paid, there is a new phase—and new strategy—toconsider.^[]

^[] Most accounting authorities feel that a small business has become a going concern after about three years, when the founder has run out of original friends and contacts and has had to generate new business to support the operation. About 80 percent of all new businesses fail within the first three years.

Some of you are in the going-concern phase, because you've never bothered to market or expand your horizons so that you enter the "word of mouth" stage (to be discussed shortly). These are the hallmarks of the going-concern phase:

• Referral business has begun and is not unusual.

• About 70 percent or so of all business is repeat business.

• There is still a tendency to reduce fees if competition is perceived or if any degree of buyer resistance is encountered.

• Fees are about 50 to 65 percent of where they could be and are not methodically examined.

• Some business is turned away, but not much.

• The business is still far too labor-intensive, and margins are relatively low.

This is often the phase in which consultants don't want to "rock the boat." The problem is that by not rocking the boat, they stay adrift, withoutpropulsion or direction. The going concern ...