Advisory business – Who is the ideal customer?
January 22, 2023
Let’s start with an analysis of existing clients:
| Client | Infrastructure Advisor | Investment manager | Investment research | Strategic advisor |
| % of revenue | 85% | 5% | 8% | 2% |
| Demographics | 45 years old, Male, principal advisor, $350,000, Masters level, de factor | 45 years old, male, founder and partner, $?, MBA, married | 40 years old, female, Head of ESG Research, $250,000, Bachelor degree or greater, married | 55 years old, male, CEO, $250,000, Masters, de facto |
| Goals | Continue to grow his income and support his team, longer term – build infrastructure | Create his investment fund, raise capital and build a sustainable investment business | Build an ESG research capability, hire more people to increase capacity and rank highly | Grow his advisory business, create an indigenous economy |
| Measures of success | – Work won against target – Build infrastructure | – Raise investment capital | -Top ranked ESG investment research – Research votes as $ | – Building an indigenous advisory business connecting indigenous economy to the capital markets in a thoughtful and productive way |
| Values | – Rigour – Honest – Speed – People – Appropriate risk taking | – Rigour – Speed – appropriate risk taking | – Rigour – Speed – People – Novelty | – Rigour – Speed – Novelty – Appropriate risk taking |
| Customer pain points | – Have targets, need to go out and find work – No one can build infrastructure, needs new approaches and funding | – Raising money is hard, needs to have differentiation and meet due diligence requirements – regulatory requirements | – competitive area – limited resources – limited experience | – indigenous interests and economic opportunities are not seen as ‘credible’ – advisory business is paid as a consultant or pursues success fees which creates cashflow crunch |
| Sector growth rate | Infrastructure advisory – no growth rate but multiple macro trends (population growth, climate change, technology, sustainability) | ESG funds – projected compound annual growth rate (CAGR) of 12.9% to 2026 | ESG research – projected compound annual growth rate (CAGR) of 12.9% to 2026 | Indigeneous economy – 4% per year but could grow 60% over 5 years if follow Maori growth |
| Sales cycle length | – known from previous employment – 2-3 months from response to RFP | – referred by mutual contact – dependent on fund raising stage, can be less than 1 month | – referred by mutual contact – not clear | – known from previous employment – 1-2 months |
| Products/services used | – Economic and financial analysis – sustainability analysis – strategic advice | – ESG impact assessment – Market analysis – Fund documentation development | – ESG research idea generation – ESG research review – ESG policy development and review | – Opportunities analysis – Fund development strategies – Economic and financial analysis |
The elements to consider include:
- Three of the clients are building something new – a new fund, new research capability, new advisory business – but they are not the bulk of the revenue
- Largest client by revenue has a strong revenue target and the services deliver that revenue
- Success for all of the clients is growth which stands to reason
- Two of the clients are founders/CEOs and two are team leaders – all have a P/L in some form so effectiveness and commerciality matters
- Intellectual rigour and speed of the services is the key value
- Not the cheapest per hour resource for any of the work provided but likely that the total value of the service is high for the spend
- All of the areas are growing but ESG and indigenous economy likely to grow 10%+ over next 5 years – that is why it is ‘new’ businesses in these areas – cannot consult to existing businesses as they are limited
- No clients from formal marketing i.e. inbound enquiries due to an advertisement or brand
- Common services – economic/financial analysis, ESG market assessment/research and fund development
Draft ideal customer
The ideal customer:
- has a revenue target (i.e. needs to make a certain amount of money – so not small business or corporate services) or at least a strong connection to a P/L statement
- Ideally in ESG or indigenous economy due to forecast growth but can be in infrastructure if client maintains/can grow into a strong market position
- Requires a mix of economic/financial analysis and linking to capital markets with some non-traditional metrics (i.e. ESG) – overarching goal is to raise money from government/markets/regulators
- All clients are over 40 years old
- At least a bachelor degree (more likely to have a Masters)
- Makes more than $200,000 per year
- Core benefits – speed, rigour, understanding of the greater funding requirements
- Values – people, rigour
Next steps
What is the Total Addressable Market (TAM)?
How do I go beyond referrals?
“So…. what are you building?’
My business – a 4 year refresh
The ego or ‘why do I really want to manage money?’
About The Author
