Growing Your Consulting Firm Via Geographic Expansion with Kelllen Smith

Speaker A: Uh, hi and welcome to the crackerjack Consulting Podcast. The crackerjack Consulting podcast gives consulting firm leaders tips, tools and best practices for running a more successful firm based on the wisdom of people who've actually been there and done that. I'm your host, David A. Fields, and today we're talking with kellen Smith from Eighty20 Consulting about expanding a consulting firm's brand nationally. Also, if we have time, we're going to talk about founder transitions. Kellen is currently the CEO of Eighty20 Consulting, a, uh, finance and accounting consulting firm that supports CFOs. Uh, Kellen is also an independent board director for First Legal. So hi Kellen, and thank you for joining us today.

Speaker B: Hi David, thanks for having me. Uh, thrilled to be here.

Speaker A: Just give us a really brief background on um, 8020 because folks may not have heard of, you may not have heard of 80 20. How old is the firm? You know, roughly how large is the firm, terms of people and revenue, that sort of thing. Anything that'll give people a flavor for the firm.

Speaker B: Yeah. 8020 was founded in 2013, uh, out of Southern California in the LA market. So coming up now on our 13th anniversary. Uh, yes, 13th anniversary. And we have since scaled, uh, nationally, hence what we will talk about today. We were founder led up until recently where we went through the founder transit, uh, founder transition and our firm is roughly 130 or so total FTEs.

Speaker A: Excellent. So thank you for that background. You had mentioned, I'd mentioned at the outset and then you referenced also that there's this process of scaling the brand nationally and so I'd love to dive into that to get us started. Could you just give a little bit of background on kind of where you were and where you are now so what you've reached and what the future holds.

Speaker B: Yeah. So, uh, originally, even about a, uh, year and a half, two now since I joined the firm, we were largely Southern California, which is where our roots were, deep relationships, uh, in that market. Incredible brand equity that continues to remain and remain the case and a mature organization and mature go to market function. We since have taken that and said how do we take what has been so successful in California? And clients ask for and some of which Covid us, like many, uh, our brand or our work got uh, pulled outside of California because private equity firms and other things of that nature were able to leverage us in a way that they necessarily couldn't have when everything was fully on site because our, our consultant base was LA heavy and that was kind of one of the precipitants but also how do we take this to other markets that would benefit from the services and the value that 8020 drives. So we set out to essentially start with one additional market and from there the plan. And that's kind of where we're at today. So we are in the launching and uh, development and growth phases of our second market, which is Dallas, Texas which is where I reside. And in parallel starting to identify another two or so markets that we will look to go through and go into, into the next 12 months or so and do that via greenfield like we're doing here in Dallas, or potentially acquisitions or aqua hire type approaches. So not necessarily a one size fits all. But we are in kind of the middle stages here of taking the brand and expanding it nationally, uh, for our clients.

Speaker A: Got it. Okay, I've got like a bazillion follow up questions based on what you just said. The first thing that strikes me about your business, which is interesting and different from many firms we talk to, is you are regionally focused. Uh, we work with some folks who actually interestingly are also California based, are very regionally focused. But a lot of consulting firms are not. A lot of firms are like, oh, we'll work with anybody in, you know, all over the globe that's in our industry, in the functional area we, we specialize in. So why was 8020 regionally focused? And uh, you know, what do you see as the advantages to that? Because, and, and let's start there because then I want to go with then how do you replicate that? Why replicate it? So why were you regionally focused? Was it a BD thing? Was it because of the process for how you work with clients? What's the, what's the rationale there?

Speaker B: Yeah, I uh, think it's a combination of things and that's a great question. I had not stepped back to think about that myself actually in those terms. But in. When we started originally, our founders had deep, deep roots in Southern California. They had been in the industry and professional services and had a very wide and deep network there. So some of it was natural right in that uh, the uh, business development, the relationships that initially began to grow 8020 and have continued to help, um, we have continued to serve, uh, even to this day, uh, are within that L A market and everything was built around that. The consultant base was built around that. It was a very in person market and very in person time. Um, whereas now it's obviously a bit different and there's some, some hybrid nature that led to our ecosystem all residing within that Los Angeles market. Right. And that ecosystem is self fulfilling driving growth both between your consultants and your BD function. And so that was kind of if you just boil it down to why LA and why how did we grow with the depth of routes we have that that was a large portion of it. I would also say there's a component though to our model which is quite unique I uh think. And part of what kind of the premise of which the firm was founded on and that is that there is oftentimes a gap uh when you look at advisory services in general or consulting to where you have the more strategy advisory type consulting work which has value in certain instances and has more framework based and team based consulting projects and things of that nature. But maybe don't have the operational execution uh underneath because that's not necessarily the, the background of people they hire or how they're approaching it. Not to say they don't do any of it. And this applies, doesn't apply to every firm but generally you have that kind of advisory strategic type layer of consulting firms and then you end up with what you would kind of consider at times more of your staff aug type nature or I just need a person but may lack in that strategic framework. Right. Or approach or experience to know how to think through advising at times. Sometimes continuity can become a challenge. If you. There are so many instances as a CFO myself previously being a CFO and needing this service, you end up with uh, needing someone that can think with that strategic advisory mindset but execute and they've actually sat in the seat and done the work so you can drive the outcome in parallel to thinking through it. And so I share all that David, because when you think of that type of work and the nature of the work. Right. It demanded the consult our consultants to be very embedded in partnership with their firms they were working with and um, with our clients day in and day out. And so they really become a way that that team can accelerate certain projects and they're working amongst the team with the team et cetera in a operational capacity to just as much as an advisory capacity. And so when you look at the differences right between potentially national firms that required in a lot of senses that on site, in person touch Got it.

Speaker A: So there was a very. This is very much an on site business, uh, a hands on on site in which case a geographic focus makes m a lot of sense. Especially if you don't want tons of consultants traveling and all of that. Okay, so that makes sense to me. And it sounds like you're going to continue that model. And so now you say, great, we're in this market, we want to choose a second market. We want to choose a market to go into. What have you found to be the challenges in a geographic expansion? This, by the way, is something which used to be much more common. It's still common at a certain point in a firm's growth. Right. That we deal with a lot is there's you open up new practices or new geographies, and it creates a new set of challenges. So I'm curious whether your experience has matched what we tend to see. So what have you seen as the challenges and what have you seen as the keys to making a new geography work?

Speaker B: Yeah, that's a great question. And, you know, I boil it down to a few things, David. One is getting brand recognition. Right. Uh, in any market where, when you think of consulting, right. Within finance and accounting can mean a lot of things to a lot of different people. And there's a lot of variations of it and many players out there. So getting your brand, brand awareness and your brand in the marketplace is really critical, um, and also at times challenging to determine the right way in that marketplace. Right. To get that. And that does impact, in my experience, vary slightly by market. The other is the, you know, getting from a consultant standpoint and a delivery standpoint, we have a lot of excitement about 80, 20. And so that's actually been something that's really exciting to bring new talent here that can serve our clients in different ways. But you obviously need the BD side. Right. And so you're a new brand, a, uh, regional player that's not known in a market. Right. So finding a. The. We call them client services directors, but your business development folks who have a passion for the build. Right. And they get excited by that entrepreneurial side of, hey, I could be one, two or three, you know, employee, employee number one, two or three on the ground. Right. Helping build this brand. Right. And that is a distinct profile that you're oftentimes looking for. And it takes a certain appetite in a certain person that likes the a little bit more of that unstructured hunt, right. To come build something into something that doesn't exist today. Uh, and that takes time. So you have to take the time and be thoughtful to find the right people to link arms and say, okay, we're going to build this market up. So. So that would be another big component that I would say from a challenge standpoint. So it's getting to what I say is critical mass, meaning you have enough boots on the ground building enough relationships to, to get the brand out there in addition to other activities to get the brand out there. But talent has been incredible. A lot of receptiveness and excitement because it's slightly different. But that would kind of be what I would share. And then the last thing I would say David, is you can't try figuring out what things might work in a different market from what works in LA while still figuring out what your non negotiables are from a brand experience. Right? Because it's, it can't be two completely different markets, but there will be nuances in each market that are slightly different that is going to fuel that growth that may not exist in la.

Speaker A: Can you, can you expand on that last point just a little bit? Because I can imagine some listeners are uh, and we've seen this with some clients saying no, no, no, we want a very, very consistent playbook. Market to market, practice to practice, region to region. Uh, yes, we understand that if we expand into parts of Asia it's going to have to look different and we're, we're expanding into latam is some of that and Louisiana look different. But the US is the US So what's different? What are you finding realistically is different between Dallas for instance and la?

Speaker B: Yeah, I think, um. Well, I want to comment on one thing you said David, that I would agree with. In the sense that there is a experience and approach in a way 8020 works with clients that clients consistently time and time again walk away from and say I get it now, right? That component has to stay the same. Right? Because we do not want different experiences necessarily or levels of service or outcomes or how we fundamentally operate and engage with a client to differ drastically. Right? That is the, I'm going to say the magic, right, to some degree behind 80 20. Right. I think most consulting firms would say they have their form of that. So I do believe that has to stay consistent. However, I think that the way you potentially market uh, and build relationships, right. And go about it may be different than market to market. So I'll give an example. In Los Angeles we find post Covid in particular it's very spread out, a lot of traffic. Getting people in person to events is not as desired. People don't necessarily just jump in their car and go to a lunch or go to an impromptu happy hour or get a few executive women together to run and grab coffee here in Dallas that I personally appreciate this. They, they enjoy and embrace the, the constant in person relationship building. And so for us, right, the playbook by which we have to we go about building relationships, getting the brand out there and getting opportunities to serve clients is done largely in person. And so it doesn't sound like a big difference on the surface, but it is a very large difference when you think about how you are tactically getting in front of potential buyers.

Speaker A: Yeah, that actually sounds like a huge difference to me. And it goes into the natural transition. Thank you for this setup for my next question because you said, okay, here's the three things that we have found we need to work on. We need to make sure we get brand awareness. We have to get, uh, call it business development folks on the ground, people who are the right folks who want to build a practice from scratch and have the wherewithal to do that. And we need to create this balance between what our brand standard is and what operates slightly differently. Yes. Did I capture those roughly right. M. Okay, so from a brand awareness standpoint, it sounds like LA was built off of these really deep relationships and it was built over time, over 13 years from really deep relationships, these personal interactions. If you are building, trying to create awareness and a new market is what you've touched on a little bit, uh, how are you going about that? How do you create awareness rapidly in a new market? One on one conversations, there's only so many lunches you can have, you know, so many one on one meetings. You're building that network really slowly. So what are you doing to expand more rapidly in a new market?

Speaker B: Yes, and I can attest there's only so many meals in a day, given I'm out and about quite a bit. Uh, I think that it is a combination of looking at, I'm going to say like a matrix of influence in a sense, for a lack of a better, better term. But every person you contact within a firm, I mean within a market, right. Fundamentally has a network right. Of their own as well as different organizations and things of that nature that they're involved in. And so one of the things, aside from which I'm going to preface all of this with, I don't think think necessarily David, which is why I said the business development side is so critical. You can't substitute boots on the ground building relationships. And the more people you have within reason that start to scale, you reach a natural mass right. Where you get that tipping point and the, and you're really just in known in the market. But aside from that, I think there's an augmentation component that comes with it which is understanding uh, the different areas of influence by which you need your name out there and to be a part of. And also where can you fundamentally give to the community, get involved with the community, connect people within the community. So taking that ecosystem and constantly bringing together the different portions of your network to where they introduce you to different portions of their network becomes a multiplier. And so you do have to have a little bit of your name keeps coming up, right. And so and so says, oh, you should meet so and so, because there's an aspect of it exponentially increases quickly. And I've, I've lived this personally, David. There's a point of, you reach this point where the flywheel starts to fly on its own because people are introducing you to other people and things of that nature. But it does take just volume of constantly being out. And the last thing I would say too, David, you have to genuinely care. I mean, you do. I have to genuinely care, I think. And if you're here to just take something, right, the, you know, markets, markets aren't really welcoming to that. And, uh, it's probably seems obvious, but I, uh, think you have to look at it as what is your goal with every conversation. Of course we're growing a business. I'm growing a business. Right. But at the end of the day, my goal is to say how. And I mean this is, how can I help so and so what can I do to help them? How can I be a sounding board? And I believe, you know, at the end of all of that, those relationships ultimately will accumulate and pay off. But I don't think there's a silver bullet.

Speaker A: Yeah. Okay, well, that's, that's great. It's good to hear. There's not a silver bullet. You're very much aligned with what we talk about as right side of thinking. Consulting is not about us, it's about them. It's about the clients or prospects and creating value for them. Okay, so let me dig under the not as pretty side because you've said we're now going to, we're going to get this thing locked and loaded in Dallas and we're going to expand into two more markets. Have there been missteps, uh, in the Dallas work that you would say, oh, don't want to do that again when we go into two new markets so that other listeners would say, oh, yeah, okay, thank you. I can avoid that particular pothole.

Speaker B: Yes, absolutely. There are things I. And look, Dallas has been successful. We are growing overall as a company. We're growing in Dallas. We've hit our first year goals. So, um, for all intents, it's been a success. That does not mean that I go to bed every night saying, we got it all figured out, or I go to bed at night saying, you know, I would have done nothing different. Right. So. And we still continue to build. But yes, I would say the, the main things that I would do differently is. Or the main thing I should say is higher in numbers out of the gate. So what I mean by that is from a business development side, right, Going back to the equation I said, of needing to multiply your presence and relationships and, and networks you're tapped into happen faster. If you have more business development folks that also can partner together, creates a little bit of an ecosystem, you're creating a little bit of a healthy competition. Right? We're all in this together and you just cover more ground quicker. And so I would, the way I would do it again is I would probably look for what I would call an anchor BD folks, someone who's been pseudo in the industry or has a track record, things like that. Maybe built something with three or four business development folks alongside them. And when you go into market, you're going into market with what I'm going to call critical mass right out of the gates to where your acceleration, although it still probably takes maybe as long right to ramp. There's, I don't think there's. Again, to use a silver bullet. I don't necessarily think there's a silver bullet in ramping a new business development hire. It just takes time for a book to take off. The difference is you're doing it times four at one time to where now your ability to make other hires, other investments are significantly higher in that first 12 to 18 months.

Speaker A: Got uh, it. That, that's, that's really interesting. I think it's gonna be a huge learning and a real uh, sort of eye opener or thought provoker for a lot of folks who are reluctant to hire in, in a new market because if it goes south then you're firing and that's not a fun experience. And also BD folks are not easy to find off, off camera, off recording. I had asked you about Gartner and whether you compete. You said you, you don't compete. But they are also serving that CFO area. And I was listening to the CEO of Gartner 2, uh, weeks ago and he said their rate limiter is number of salespeople. And he said something we say to firms all the time and it's really fascinating to hear him say it, which is it takes him Three years to build a BD person and they can't just buy them. They find it doesn't work. You're. You've had at least some experience, some success. It sounds like buying a BD person or, or maybe moving someone, but that's already from your business over which are you doing? Are you buying them or are you taking your existing a few good rainmakers from inside your firm and moving them?

Speaker B: So we have not moved folks from within the firm partially because the relationship aspect, with people having deep relationships in that market, it takes time.

Speaker A: Right. They wouldn't have the Rolodex. So you're looking for folks that have the Rolodex.

Speaker B: Exactly. And then the other component is. By the way, I agree with the CEO of Gartner. I mean it takes to get to full maturity of a book. It's probably three years. Can you accelerate it slightly? Do you have anomalies here and there? Yes, and I don't necessarily have the. A perfect equation that suddenly changes that. So when we look for folks, it's actually a various backgrounds, David, that we are finding success with. There's not one certain background. And a lot of it has to do with the fire in the belly, so to speak. Like it's just finding that person that has that fire in the belly in the same network. Right. By which we are operating in and can genuinely solve clients problems. Right. So then there is a little bit of do they have the acumen from a finance and accounting standpoint to truly be a partner? Right. And so yes, that is a hard equation to find by definition. But I would argue the hardest one is the fire in the belly. And someone who gets excited by waking up every day to hunt for a lack of a better term and they enjoy that. They want to get out and meet as many people and then go and figure out how to help them and close. Right. So again, I think you can find people who like making the introductions but don't necessarily do the work to go through and sell and manage. And you can also find people who are really great at once they're in finding additional work. That's very valuable too. It's just different timing by which you would hire that person in my experience. So I don't have one single background. Um, but I will say if you interview enough people, you will find the handful that are excited to build alongside, get excited by the entrepreneurial side and genuinely have a drive to grind.

Speaker A: Yeah, that's outstanding. This has been incredibly insightful. Uh, I think it again is really useful for Folks to hear and think about. If they want to go into a new market, they need to be focused on how do you build your brand, Especially if you are geographically focused and you've painted, I think, a good picture of some of the advantages of being geographically focused. For one thing, it makes it really easy to find your prospects. You're not scattered all over the place and you can be in person much more easily if you're geographically focused, LA traffic notwithstanding. And so building awareness in that way, keeping your so your culture, your client experience intact, finding the right people and re emphasize how important it is to start with a critical mass. Don't kind of tiptoe your way in because you'll never get there. That has been awesome. Thank you so much for being willing to share that. If the listeners want to hear more from you or discuss with you or they think they have an opportunity for you, maybe someone's like, oh, I know someone in Dallas that really needs this kind of support. How should they get in touch with you? What would be the best way?

Speaker B: Yeah, look, I would love to connect with anyone, uh, regardless, even if it's just to ideate or bounce things off of one another. They can, uh, email me at any point. My email is K Smithy consulting. Com. I also am pretty open as far as someone's, uh, interested in calling or texting. So, uh, shoot me an email and happy to connect.

Speaker A: Excellent. Um, that's terrific. You, you deserve all the success you've had with 8020 consulting. I, uh, really appreciate you coming on the the show today.

Speaker B: Yeah, thank you for having me, David. This was an insightful conversation and ah, lots to be learned, A lot of successes, but still learning along the way.

Speaker A: Excellent. And, and that's our episode and thank you all for listening.

Speaker C: M the crackerjack Consulting podcast is produced by the David A. Fields Consulting Group where you'll find everything you need to build a more successful consulting firm. We'd love to get your feedback and hear about any consulting firm leaders you think we should have on the show. If you'd like to appear on the show or know someone whose insights would be helpful to others in the consulting industry, please send us an email@infodavidafields.com that's infoavidafields.com let a friend know about the show and if you subscribe, you'll be notified about every new episode. I'm, um, Robin Epstein and our host is David A. Fields. Thanks for listening.