The Rainmaker’s Dilemma. What if your flair for making money for your business ultimately led to its downfall? That’s the risk faced by business owners who remain the primary revenue generators for their companies. One of GROW’s partners, The Value Builder System, has gathered data showing that while owners who assume the role of Rainmaker can, at first, rapidly accelerate business growth, they eventually hit a ceiling.
The prevailing wisdom among pundits and authors is that business owners achieve success when focusing on their strengths. Yet, while an owner who leverages their strengths can catapult their business to a successful start, a study of 23 158 companies suggests that there may be a downside.
The research reveals that if said strength is in driving business profits – which was the case for almost half the founders analysed – business growth may ultimately stagnate. This is because with split responsibilities, owners ultimately have limited time and resources to focus on income generation.
Understanding the Rainmaker
Gathering data from the Value Builder Questionnaire, a survey designed to assess how valuable a company currently is, the researchers analysed the role of the owner by studying responses to two questions:
- How much of your company’s revenue do you personally generate?
- Do you know all your customers by name?
Based on the responses, the researchers identified two defining characteristics of a Rainmaker, namely:
- An owner who generates 75% or more of the company’s revenue. These owners serve as their company’s economic engine and are likely the primary sales and marketing resource.
- An owner who knows all their customers by name and is exceptional at developing and maintaining customer relationships.
When the Rain Evaporates
When starting your company, being a Rainmaker is essential. Rainmakers’ ability to secure new business and maintain customer relationships generates revenue rather quickly. However, the research suggests a plateau is on the horizon. This isn’t a damaging revelation but quite the opposite. Encountering the Rainmaker’s Dilemma is an indicator of a successful business. Without highly-skilled, driven, and motivated owners, most companies fall flat.
Yet, there are only so many hours in the day to bring money in the door. If an owner continues to be the only Rainmaker, they will eventually reach their capacity. The researcher’s analysis suggests that once maxed out, a Rainmaker’s revenue growth stalls, and the transferrable value in the business also flatlines.
This is particularly problematic when business owners decide to sell their businesses. The research reveals that only 8% of Rainmakers have received a written offer to acquire their company. This demonstrates that companies with Rainmakers are less liquid and less valuable, making them harder to sell. What’s more, it was found that the majority of Rainmakers receive lower acquisition offers for their businesses. Indeed only 15% of companies headed by Rainmakers receive a premium (greater than six times its pre-tax profit) business purchase offer.
Enter the Architect
So, what’s a business owner to do? Evolve into an Architect. In other words, adopt a more strategic leadership philosophy once your business has secured its place in the market. In contrast to Rainmakers, Architects do not personally generate revenue or handle customer service. Rather they devise strategies for these critical business functions and train and empower others to execute them.
In other words, instead of being the central financial drivers for their companies, Architects design, implement and refine a sales process and marketing infrastructure that work without them.
Rather than being consumed with customer service, Architects shift their focus elsewhere. They design an escalation process, train staff, and implement technology that resolves issues and keeps customers happy without intervention.
Architects, therefore, take a more holistic approach to running their companies. And, because Architects develop businesses that are not dependent on them, they will be twice as likely to receive both a written and premium offer when exiting.
How to Transition from Rainmaker to Architect
But just how does a Rainmaker become an Architect? For those identifying with the Rainmaker’s Dilemma, The ValueBuilder System developed nine strategies to kickstart the transition to becoming an Architect.
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Design Marketing Funnels That Work While You Sleep
A visual representation of the process of turning leads into customers, marketing funnels should ideally work without you driving them. Use your industry knowledge and product expertise to provide insight into how your customers typically think and behave.
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Document Your Sales Process
Often Rainmakers will work and be successful without knowing how they did it. Consider writing down what you did to be so effective at rainmaking, for example, your winning sales process for acquiring new customers.
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Hire Salespeople Used to Selling Products
People who sell services are more likely to use consultative sales methods. People who sell products do not have the luxury of reinventing the wheel. When you can touch and feel a product, it must be presented in a way that is attractive to every customer. This repetition increases your salespeople’s chances of success.
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Limit Complexity
While entrepreneurs thrive on creative problem solving, salespeople thrive on repetition. They enjoy mastering a pitch or presentation and need simple solutions that do not change over time. The Rainmaker’s Dilemma
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Avoid Customising
Customisation (adapting your product to meet the needs of a specific customer) is the enemy of the consistency that salespeople need to succeed. It’s best to limit this.
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Set Your Salespeople up as Experts
Account managers, product specialists, solution architects… More aspirational phrases and labels can set your salespeople up for success as credible product experts compared to more transactional titles.
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Never Attend a Meeting Alone
Always bring a sales or account executive along to an initial customer meeting. This should be someone who can take the relationship capital you have created, inherit that, and grow it over time.
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Create Customer Testimonials
Customer testimonials speak volumes, making it easier for even more junior salespeople to sell your products and services without your involvement.
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Offer Guarantees
Formalising a guarantee empowers your sales executives to sell and mitigate risks on behalf of your customers. This also lowers the temperature in the sales cycle and allows them to do more selling.
By harnessing their expertise to create systems, policies, and procedures that allow the business to thrive without them, business-owners move closer to the ultimate reward: the freedom to do what they want with their business and in their next phase of life.
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