Are you an income producer or a business builder?

The following is based on one of The Covenant Group’s clients. All of the names and telling details have been changed.

Robert couldn’t break through his income ceiling because he hadn’t learned to harness the efforts and talents of others.

When we first met Robert, he had been an advisor for eight years and had grown a practice that generated $555,000 in gross income the previous year. His charisma, natural sales skills and extensive knowledge of financial services had taken him beyond the half-million-dollar mark, but he felt that he’d hit his ceiling.

Before contacting us, Robert had visited our website and completed an assessment to find out what type of advisor he was: an income producer or a business builder.

An income producer is primarily concerned with replacing employment income with income earned working for themselves. While they enjoy not working for others, they don’t really want others to work for them. They may hire some support people, but they prefer to retain the responsibility for sales, relying on their own creativity and hard work.

By contrast, business builders view their organization as more than a source of personal income. They focus on creating value in their organization. When an income producer stops selling or goes through a dry spell, they don’t generate revenue, whereas business builders hire other revenue generators, support staff, and develop systems so that the business isn’t solely dependent on their efforts. A business builder has the potential to generate more revenue than an income producer and will have a much easier time finding a buyer who will pay fairly for their business.

Robert realized that becoming a business builder would help him break through to new levels.

When we first sat down with Robert, we explained to him that there’s nothing wrong with being an income producer. We work with both income producers and business builders; knowing which one you are helps you create a viable business plan that suits you and your goals. Many financial advisors are attracted to the income producer profile. They want to concentrate on what they do best, and don’t want the burden of managing other advisors or running a complex organization.

But Robert insisted he wanted to learn how to build a business. He wanted to create a business he could sell when he retired.

Robert seemed keen, but transforming into a business builder is not a trivial matter. Your intention must be clear and you must be prepared to change entrenched behaviours. Since Robert had been an income producer for so long, our first challenge would be overcoming his income-producer mindset. We decided to probe on how Robert currently grew his practice.

Robert explained that he developed new business through personal contacts and a referral system he’d learned early in his career. After working with a new client and solving their financial issues, he’d ask for three referrals. Robert was a good advisor and charismatic -- his clients were helpful in giving him leads. Robert then sent the referrals a letter and followed up with a phone call. The system worked for Robert because he was disciplined and kept it up, but it was extremely labour-intensive.

I pointed out to Robert that this was a typical income producer strategy, then asked Robert why it wouldn’t work for a business builder. He drew a blank.

“Your sales approach indicates a classic mindset where effort equals reward. Most income producers believe that the harder they work, the more they’ll make. This is true to a certain extent, but when you hit a ceiling, working harder won’t create a breakthrough. Becoming a business builder means adopting a new mindset, where your effort and your reward are separated.”

Robert asked what we meant by this.

“Income producers reap the reward of harnessing their individual potential. But a business builder looks to leverage the time, creativity and intelligence of others. The business builder frees themselves from the constraints of what they can humanly do in a single day and benefits from the distributed effort of all the employees in their business. It’s a different mindset, and it changes how you approach your business.”

I explained to Robert that income producers focus on sales, whereas business builders concentrate on marketing. In sales, it’s up to you to create a favourable impression when you first meet your prospect. Because your prospects generally begin with a negative or neutral perception of you, you’ve got your work cut out for you. Marketing differs from sales because it takes the burden off of you, and leverages the efforts of others. Marketing builds your brand and identity. It creates a favourable impression in a prospect’s mind before you get face-to-face.

We asked Robert how much money he was spending on marketing. He answered not much. We then asked him how much he thought companies like Coke and Sony spent on building their brand and identity. He answered billions.

“The scale is different,” we said, “but the concept is the same. If you’re running a business, no matter how small, you need to develop and utilize a marketing plan. You should be investing 10 to 25% of your gross income promoting yourself. At your present level, that means $50,000 to $130,000 annually.”

But money isn’t your only resource, we explained. How much time are you willing to devote to marketing? Some initiatives are time intensive; others require capital. Robert needed to develop a robust cluster of time-intensive and capital-intensive marketing initiatives that would feed off of each other.

Robert asked me what he should do about his referral system. We explained this is where the business builder separates themselves from the income producer. While income producers seek referrals; business builders go after introductions. A referral is a name a client supplies to you; an introduction is when your client personally introduces you to their friend or associate. While the two sound similar, they represent the different mindsets. In a referral system, you do the work. With introductions, you’re asking your clients to work for you. When your client says to your prospect, with you present, that they value the work you’ve done for them and recommend you, your job becomes significantly easier. Your client has done your marketing for you. Remember, as a business builder, you’re looking to leverage the efforts of others.

Robert developed a marketing plan outlining how he would spend his time and a $50,000 annual marketing budget. As well as introductions, Robert planned to write a regular column for a community newspaper, run direct mail, and telemarketing campaigns, concept lunches, and arrange worksite seminars. Part of Robert’s budget went toward hard costs, and the remainder toward part-time staff that would arrange the mailings and do the calling.

We advised Robert to make a long-term commitment to marketing. Too many advisors take a ‘flavour-of-the-month’ approach, trying out the latest trend and dropping it too soon because it didn’t seem to work. While some marketing initiatives, like introductions, can have an immediate impact, others take time. We also advised Robert to develop a system that tracked the return on his initiatives, so he would know which were effective, which ones needed tweaking, and which ones he should reconsider. But again, he needed to give each initiative time.

Robert was excited about his marketing plan. He was becoming a business builder, a process that would take 18 months and would require the implementation of a full business plan, of which marketing was only the beginning. Robert’s marketing plan eventually paid big dividends. Within two years, he had broken the $1-million revenue mark. At last he was experiencing the separation of effort and reward.

Lessons Learned

Robert learned that making the transformation from income producer to business builder required more than just a change of behaviours; it meant first shifting his mindset. Instead of believing that his reward depended on his own efforts, Robert saw that he could increase revenue by leveraging the talents, skill, and time of others. This mindset undergirds the business builder profile. Once you make that change in mindset, you’ll find it easier to adopt the behaviours of a business builder. If not, you’ll cling to your old habits and try to get everything done yourself. For Robert, the change in perspective meant moving from a sales approach of getting referrals to a marketing system of asking for introductions and running a series of marketing initiatives. He utilized outside suppliers and hired part-time staff to run his marketing campaigns.

Marketing made selling easier for Robert. By the time he got face-to-face with a prospect, they were already sold on his expertise. Robert had learned the key difference between sales and marketing. In sales, you try to maximize your time and energy; in marketing, you optimize your time as well as the time and talents of others, whether they are suppliers, employees or your own clients.

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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.