Practice owners can improve the value of their businesses by following 10 steps to reduce principal dependency
While key person dependencies can never be eliminated, there are some practical steps that can be taken to manage and mitigate this business risk:
1. Ensure you introduce all of your key staff to your clients. If your team is one of your greatest assets, make sure they are not your practice’s best kept secret.
2. Continually promote your support team. Publish their names and photos on your website, arm them with business cards, have them speak at your client seminars and develop a “who’s who in the zoo” contact flyer that you can include in your client induction material.
3. Make sure you are not the problem. Be disciplined and immediately delegate all administration calls/queries to the appropriate member of your team. Don’t get involved unless there is a problem and delegate the $20 an hour tasks to someone else – your time is better invested elsewhere.
4. Wherever possible, conduct all your client facing appointments on your premises. Make a point of involving your key support staff in these meetings and take clients and prospects on a “guided tour” of your office to showcase the capacity of your team.
5. Be mindful of the terminology you use. Refer to your business, your practice, your firm and your team. Always “we” and never “I”.
6. Proactively manage any personnel changes. While it is a fact of life that people move on, don’t let the first your clients hear about it be when they ring and ask to speak to someone who is no longer with you. Make sure you put a plan in place to proactively manage the transfer of client relationships.
7. Find reasons for your key support staff to regularly speak with your clients. Supplement your face-to-face contact with a proactive client communication program that includes all of the key members of your team. All communication/contact does not have to come from you.
8. Channel all initial client enquiries through your support team. Encourage them not to put calls straight through to you and always ask “can I help” or “may I ask what it was regarding?”
9. While reducing principal dependency delivers obvious upside for your practice, in all your discussions with your clients, reinforce the benefits for them. Continually explain to me why I am better off dealing with your team and not solely you.
10. Don’t forget your referral partners and centres of influence. While you will need to handle these relationships a little differently, it is just as important that your alliance partners are comfortable and confident dealing with anyone in your practice.
And finally, while we are very mindful of the old adage “lies, damned lies and statistics”, perhaps the last word should go to the numbers themselves. While it is now universally acknowledged that principal dependent businesses have a much lower capital value, our HealthCheck data also shows that those practices that have an effective succession plan (which of course includes identifying and addressing any key person dependencies) deliver 141 per cent more profit per principal than those who have don’t. A return worth the investment on your time and effort?
