All in the family not always the best way

The story you are about to read is based on an actual case from our files. It was described to us by our client, Henry Olsen. However, all of the names and telling details have been changed to preserve client privacy.

Kyle was the type of client Henry wanted: young, successful and enterprising.  The only catch: Kyle was already dealing with his brother-in-law. It was almost two o’clock, and in twenty minutes Henry would know whether his plan had worked or not. The odds were certainly against him, but Henry had an angle that might just land him the deal.

At two o’clock Henry entered the offices of Kyle Benton. Kyle was a software developer who had found a profitable niche to exploit. In his first year of business, Kyle had landed a seven-figure contract. In his second year, annual revenue had been $2.5 million. For the current year, revenue was projected to be $6 million. Henry was awed to discover that Kyle was still in his twenties.

Henry first heard about Kyle months ago through a mutual friend, Peter. Kyle was the type of person Henry wanted as a client — a successful small business owner with a bright future. He was eager to obtain an appointment. There was only one catch: according to Peter, Kyle had a brother-in-law in the business. “He’s pretty tight with his family,” Peter had told Henry. “You don’t stand a chance of stealing the business from his brother-in-law.” Henry had heard objections like ‘I have a brother in the business’ before. He had told Peter, “Don’t worry, I have a plan.”

As Henry opened the door to Kyle Benton’s office, he felt his chest tighten slightly with nervous energy. He was about to find out if his plan would work.

A few minutes later, Henry was seated across from an obviously distracted Kyle Benton.

“Hello, Mr. Benton—” Henry began.

“—Kyle’s fine,” Benton interrupted. “Listen, Henry, I’m giving you fifteen minutes because Peter speaks highly of you. But you should know that my brother-in-law’s an advisor. I’m probably going to give him the business.”

This was the objection he had prepared for. He thought back to the time when he himself had been the brother-in-law. Four years ago, Henry had approached his sister’s husband, Serge. Henry had thought he was a shoo-in. He and Serge had a long history together. In a relaxing, hour-long meeting with Serge, he had explained his services and talked about the kinds of products he sold. Unfortunately, three weeks later he found out that Serge had gone with another advisor. He was devastated. If he couldn’t even sell to his relatives, how was he going to build a career as an advisor? He and Serge had shared burgers at backyard barbecues, and played hockey together regularly. But what Henry later figured out was that their familiarity was a roadblock. Serge hadn’t seen him as a financial professional, only as his brother-in-law. This was the lesson that would help him with Kyle. No matter who you approach, you have to earn their confidence and show them exactly how you can help them.

Now, Henry hoped to make that painful lesson pay off. He braced himself, then began, “Kyle, first of all, I’m not here to take away anyone’s business. If you’re happy working with your brother-in-law, that’s exactly what you should do. In fact, that’s what I’d do.”

Henry noticed Kyle’s eyebrows rise in interest. He knew Kyle had been expecting a defensive comeback, or at least some kind of waffling response. His confident reply had done the trick. He now had Kyle’s attention.

“The reason I asked to see you this afternoon is to show you how we can work together,” Henry continued. “If what I say interests you, then we can move forward. If not, I’ll be happy with whatever you decide.”

Henry watched Kyle nod, then continued. “Kyle, I work with a number of successful small business owners. My role as their advisor is to minimize their risks. You see, as a business owner you spend most of your time running your business. And that’s exactly what you should do. That’s your expertise. But at the same time, you’re exposed to a great deal of risk, because your equity is tied up in your business. Were anything to happen to your business — let’s say one of the software giants makes a sudden entry into your market — you would feel the pain personally. What I can do is help you offset that risk by helping you build up wealth outside your business.”

Henry had done his homework. He knew that Kyle, like any small player in the software business, faced the continual threat of competition from larger, more powerful multinationals.

“We’re quite aware of the competition, Henry,” Kyle replied. “We’re not a fly-by-night operation. We’re constantly developing and diversifying.” Kyle seemed to be on the defensive — this was exactly what Henry was looking for.

“And that’s what I’d like to do for you, Kyle — diversify your investments to minimize your risk. While you’re diversifying inside your business, I’ll be doing the same thing outside.”

Kyle leaned back, and looked to the ceiling pensively. Henry remained quiet. The phone rang and broke the silence. Kyle picked up the receiver and mumbled a few words. Briefly he glanced at Henry, “Okay, thanks for coming to see me.”

Henry stood up and extended his hand across the desk. They shook hands quickly, but Kyle was already lost in another world.

Henry walked out of the office, wondering if he had managed to pull it off or not. He had done what he had planned to do, and that was all he could ask for. As he walked across the parking lot to his car, Henry imagined what would have happened if he had begun the meeting by asking Kyle questions about his business. He knew Kyle didn’t have time for that. It would have gone badly. Instead, Henry had taken the fifteen minutes he was lucky enough to get and used it strictly to show Kyle that he understood what his problems were, and that he could help him. He knew that Kyle’s brother-in-law would have to do the same. His experience with Serge taught him that people don’t let just anyone manage their money — family or not. They have to be confident that you know what you’re doing.

A week later, Henry hadn’t heard from Kyle. He was getting a bit nervous. Maybe he wasn’t going to win the deal. He decided to put a call into Kyle.

When Kyle answered, he said, “Yeah, Henry, come in and see me next week.”

Henry met with Kyle three more times over the next few weeks. Eventually, Kyle turned over $300,000 for Henry to manage. When the deal was closed, Henry asked Kyle why he hadn’t gone with his brother-in-law. Kyle told him, “Because you knew what you were doing. He didn’t.”

Lessons Learned

This case that Henry described shows a great solution to a problem all advisors face:

All advisors have heard the objection that a family member is in the business. But, as Henry correctly guessed, people don’t give their money to someone they don’t have confidence in. Henry’s solution hinged on his ability to show Kyle that he understood him, and could help solve his problems. If he could do that better than Kyle’s brother-in-law, he would win the business.

Henry knew that to win Kyle’s confidence and his business, he would have to make Kyle think about the risks he faced. Otherwise, Kyle would never believe he needed Henry’s services. Henry knew his challenge lay in the fact that he wouldn’t have enough time in their fifteen-minute appointment to conduct an exploration of Kyle’s risks. Instead, he knew he had to come prepared. To do that, Kyle used Best Practice Number 2 — Know your client. He thought about the risks Kyle, as a small business owner in the software development business, faced. Right at the beginning of the meeting, Henry introduced the topic of risk. When Kyle responded defensively about competition in his industry, Henry knew that Kyle was now emotionally involved in the risk of being a business owner. And that was exactly where Kyle wanted him.

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The Covenant Group is referred to by many as where entrepreneurs go to become Business Builders. They are considered to be thought leaders and authors of the best-selling books, The 8 Best Practices of High-Performing Salespeople, The Entrepreneurial Journey, and The Business Builder.