How to Kill a Multi-Million Dollar Business Without Really Trying
Take your clients for granted and expect the money to roll in
My sister in law recently sold her business, but she wouldn’t have sold it if she had known what would happen next.
She had started the financial planning and investment company as a young woman, when she was a single mother who had just been laid off from her job.
In those early years, she studied for state certification exams, scrambled for clients, and worked night and day.
One week she came to visit me in Atlanta because of a business course she was taking. She stayed up late into the night trying to learn the material and pass the exams, and turned down wine with dinner because, as she said, “I need to study instead of losing my resolve.”
Placing customers first
She was determined to succeed, and she always placed your customers’ interests first, even if it meant earning a lower commission.
As her business grew, there were times when she could have reaped immediate financial rewards by making risky investments with client money, but she didn’t because it wasn’t in their long-term best interests.
I don’t know if she studied John Maxwell, but she adhered to some of the tenets of his business model: Place customer needs first, provide the right resources, tailor your services, never violate client trust and exceed customer expectations.
My sister in law’s philosophy of placing customers first paid off. Several years after starting her business, she managed over $100 million in assets. As her clients grew richer from her investment advice, so did she. She is now a millionaire.
She reached a point where she could work 30 hours a week and bring in a million-dollar annual income. She guarded her clients’ assets as scrupulously as she guarded her own, and was happy when she could help someone grow their nest egg enough to retire without financial worries.
When she acquired some wealthy, high-profile celebrities as clients, she continued to value her older, less affluent customers. She never took anyone for granted. She made it a point to meet personally with them on a regular basis, and when she ran across a unique investment opportunity, she contacted them immediately.
“If you believe in unlimited quality and act in all your business dealings with total integrity, the rest will take care of itself.” — Frank Perdue
A few years ago, she decided not to take any additional customers. People from all over the country tried to persuade her to manage their portfolios, because they had heard of her from her published works or from their wealthy friends.
Last year, her husband developed health issues and she decided to retire. Her son and stepsons, who had their own careers, were not interested in taking over the business, so she sold it for several million dollars.
Abandoning a successful business model
But the man who bought it, for a considerable sum of money, is not following the business model that made her so successful. He immediately doubled client fees, although he had not contacted a single client personally.
He appears to believe the money will continue to pour in while he takes a hands-off approach and does little to manage customer portfolios.
Alarmed customers have contacted my sister in law. She is upset, too, because she cares about her clients. But she sold the business with a non-compete clause, so she can’t continue advising them, even if she were to start another company.
Customers are threatening to find someone else to manage their portfolios, and if that happens, the man who purchased her business will have squandered a ready-made client list.
He will have thrown away millions of dollars by not following her successful business model, based on placing customers and their needs first.
“You will get all you want in life, if you help enough other people get what they want.” Zig Ziglar
Her story reminds me of Aesop’s Fable about the Golden Goose:
There was once a Countryman who possessed the most wonderful Goose you can imagine, for every day when he visited the nest, the Goose had laid a beautiful, glittering, golden egg.
The Countryman took the eggs to market and soon began to get rich. But it was not long before he grew impatient with the Goose because she gave him only a single golden egg a day. He was not getting rich fast enough.
Then one day, after he had finished counting his money, the idea came to him that he could get all the golden eggs at once by killing the Goose and cutting it open. But when the deed was done, not a single golden egg did he find, and his precious Goose was dead. (Library of Congress, Aesop’s Fables, 620 BCE)
The man who bought my sister in law’s business has an opportunity to earn a considerable income if he takes care of his customers, is judicious, and is patient. But he isn’t taking care of the goose.
The path to riches might be slower when you place client service first, act with integrity, take a measured and wise approach, and focus more on the quality of your product than on how much money you’re making.
You might have to make short-term sacrifices for long-term gain.
But at least you won’t kill the Goose that lays the golden eggs.