The Prospecting Professor

Build Your Essential Network

There is a Japanese proverb that states, "When you are thirsty, it's too late to dig a well."

A few years back, Harvey Mackay turned this proverb into a best-selling book on networking, "Dig Your Well Before You're Thirsty."

More recently, blogger Kai Chang writes about essential business and personal relationships that one should cultivate now...before they are needed. Mr. Chang asks the question...'What relationships should one build now, in order to sustain oneself from the valleys and vagaries of life's trials and opportunities?'

He frames this question by identifying The 16 Essential People in Your Life. In his view, they would be:

• Headhunter
• Computer Security Guru
• Realtor
• Criminal Defense Attorney
• Personal Finance Advisor/CPA
• M.D.
• Police/Law Enforcement Officer
• "The Wolf"/"The Cleaner"
• The Event/Ticket Connection
• The Local Celebrity
• Big Money Guy
• Local Politician
• Auto Mechanic
• Consigliere
• Mr. Connections
• Best Friend

This is an interesting concept to ponder. It makes sense in a lot of ways too.

Of course, this list of 'Essential People' will vary depending upon one's definition of "essential." I live in a 93 year-old building, with 93 year-old pipes, I would include "plumber." My wife, a choreographer and dancer, would include "chiropractor." My ex-wife would, most likely, list her "therapist."

This whole concept can be encapsulated in another great quote, "By the time you need a friend, it's too late to make one." I always thought that the originator of these words was Mark Twain...yet a Google search reveals no link to Twain, or anyone else either.

Fine. In that case...I said it.

"Educating" the Prospect

In the March 13th issue of "B to B", author Wayne Pollard makes a good point in his article, "The Education Fallacy."

Ofttimes, a salesperson will give an 'educational presentation to inform a prospect about his/her offering.

However, for certain prospects, an 'educational presentation' will fall upon deaf ears...and may even be counterproductive.

Let's assume that a prospect is reasonably knowledgeable about the marketplace of whatever you are selling and leaning against purchasing what you are selling. If the salesperson delivers a presentation to a prospect who is already emotionally committed to another course of action...the prospect will be more resistant to any new information that threatens their rigid perspective.

Here's a good example of how this works. An educated smoker who has seen and heard all of the evidence on the evils of smoking is presented with evidence that smoking causes cancer. However, the smoker is completely committed to continuing their smoking...and will resist the 'new' evidence by discrediting it.

'Educating' them will not change their minds.

What's the answer? In the first place, 'educating' a prospect is not the same as persuasion. Persuading a prospect to change their minds requires empathy...what are the propects' emotional reasons for holding on so tightly to their viewpoint?

'Educating' the market without persuasion does not result  in sales.

Where the Dividends Are...

In the 1951 comedy hit, "Father's Little Dividend", Spencer Tracy (as Stanley Banks) learns that his daughter (Elizabeth Taylor) will become a mother...and he comes to grips with the prospect of becoming a grandfather.

In yesterday's  New York Times, 4/5/06, they published a topographic map that depicted the average dividends received per taxpayer in each of America's 3,141 counties in the year, 2003. In 2003, more than $90 billion was distributed to shareholders around the country...yet only 21 counties had an average of more than $2400 in dividends per person.

On the dividend map, the highest 'peak' was Bristol, VA, a city that the I.R.S. treats as a county. Dividends there averaged a remarkable $33,392 in 2003, a tenfold increase from prior years. Most likely, this is a one-time payout of a locally-controlled business. The Prospecting Professor notes that Settlers Life, the mutual insurance company, is based in Bristol, Va...and surmises if the dividend payout is related to this company.

The other top dividend-recipient counties are Kewaunee County, Wis., east of Green Bay, at $14,117...and Teton County, Wyo., surrounding Jackson Hole, at $13,025. Both counties have small populations with a high proportion of wealthy citizens, e.g. Dick Cheney and Harrison Ford in Jackson Hole.

Syracuse University has also analyzed the I.R.S. data, and published a list of some of the other Top 50 U.S. Counties for Dividend Income on federal tax returns filed in 2003. Here's a partial list:

• Collier County, Florida
• Pitkin County, Colorado
• Indian River County, Florida
• Marin County, California
• Martin County, Florida
• San Juan County, Washington
• Talbot County, Maryland
• Lancaster County, Virginia
• Blaine County, Idaho
• Goochland County, Virginia

In a New York Times article linked to the one cited above, it was noted that Americans with annual incomes of $1 million or more, about one-tenth of 1 percent all taxpayers, reaped 43 percent of all the savings on investment taxes in 2003. The savings for these taxpayers averaged about $41,400 each.

Regardless of your political stripe, this should provide some grist for the mill.

Billionaire on a Budget

In the latest "New Yorker," there's a funny cartoon. Actually, there are funny cartoons in ALL "New Yorkers", yet I am referring to one specifically.

Two executive-types are sitting next to each other. The setting appears to be some tony mens-club, and both men seem rather smug. One says to the other, "I have my pants put on...one leg at a time." Which is a lead-in to today's tale.

Larry Ellison is the co-founder and CEO of Oracle. He is also one of the world's richest men...with a net worth of around $17 Billion, most of it in Oracle stock.

He is also perennially over-extended.

In a series of emails, obtained by the San Francisco Chronicle, that were ordered unsealed by a judge in a shareholder lawsuit...a number of embarrassing details were revealed regarding Larry Ellison's personal finances.

In 2002, Philip Simon, Ellison's personal financial advisor wrote, "I'm worried, Larry. I think it's imperative that we start to budget and plan."

Why would Mr. Simon be concerned?

Larry Ellison appears to have runaway spending habits...and habitually taps out his $1 Billion+ line of credit. According to deposition testimony, Mr. Ellison's itemized expenditures included: interest accrual-$75 million annually, a villa in  Japan-$25 million, a new 244-foot motorized yacht-$194 million over three years, "lifestyle"-$20 million annually, etc.

Mr. Simon goes on to scold Mr. Ellison, "I know this e-mail may/will depress you. However, I believe it's my job to address issues you'd prefer not to confront. You told me years ago that it's OK to raise the 'diversification issue' with you quarterly...Well, I'm doing so. View this as a call to arms."

Simon goes on to say, "We have a freight train going down a track, hitting a debt wall."

Let me stop and say something. Kudos to Philip Simon for his candor in this situation. Not only is Larry Ellison one of the five richest persons in the world, yet he's also known to be the archetypal, hard-charging, 'Type A', CEO-type personality. It takes some chutzpah to speak to your Mr. Bigshot client like this.

In a famous exchange between F. Scott Fitzgerald and Ernest Hemingway, Fitzgerald was reputed to say, "The rich are different from you and me." Hemingway's glib response, "Yes, they have more money."

And if you are Larry Ellison...you also have $75 million in annual interest payments.

By the way, in the aforementioned shareholder lawsuit, Ellison agreed to settle by donating $100 million to charity and to pay $22 million to the lawyers, out of his own pocket.

If you are interested, Philip Simon works for Howson & Simon, a boutique CPA firm based in Walnut Creek, CA...if you want an accountant who's not afraid to lay it on the line.

Connecting the dots...

One of the target audiences of The Prospecting Professor are financial salespersons. Although we certainly welcome readers of all stripes, many of our articles address the sales and marketing concerns that financial salespeople face, both strategically and tactically.

Over the past few days, I've highlighted businesses that will participate in the upcoming National Small Business Week Celebration 2006, in Washington D.C. On April 12-13, more than 100 business owners from around the country will gather in recognition of their outstanding achievements.

For financial advisors who read yesterday's entry about Sittercity.com or Friday's story regarding Shatto Milk Company, your response may have been, "Nice little stories...but so what? How does this help me with my business?"

Good question. Here's how.

If one of these nominees were in my neck of the woods, I would find a way to contact them. A congratulatory phone call might be a great place to start..."Congratulations! I've been reading about the SBA award that you've received. Great stuff! Kudos to you...and best of luck in Washington D.C. By the way, I specialize in working with small business owners like yourself, and when you return from your trip I would love to get to know the secrets of your success over a cup of coffee. Can I call you in a two weeks to set something up?"

Follow up on this conversation with a handwritten letter, that reinforces your congratulatory tone. Or if you wanted to really get on this person's good side, you might send a cute and funny gift. How about a disposable camera...for pictures on their Washington D.C. trip?

In general, small business owners can be very good prospects for all sorts of professional and business services. Moreover, business owners (small, medium and large) have much of the wealth in this country.

Every few years the Federal Reserve Board sponsors the Survey of Consumer Finances. In the most recent survey, here is what they found:

• Households with business ownership hold 46% of the economy's aggregate wealth, while comprising just 13-14% of the population.
• A household owning any business was seven times more likely to be classified as high-wealth, i.e. more than $1 million net worth...than a household with no business interest. Among business owners surveyed, 17% had a net worth of $1 million or more, compared with 2.4% for the general population.

I hope this clears things up.

Sittercity.com: Small Business Success Story

On the evening of April 12, at a reception in the U.S. State Department, the Small Business Administration will honor small business owners as part of the National Small Business Week Celebration. As part of this celebration, The Prospecting Professor will highlight and profile some of the nominees.

Genevieve Thiers of Sittercity.com will represent Region V, which covers Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin.

In 2001, Genevieve Thiers was 24 years old, and a fresh graduate from Boston College. She had an idea...to help families find baby sitters by creating an electronic database using profiles and postings to match parents and sitters. The Brookline, MA native, the oldest of seven children who paid off much of her BC tuition through her babysitter gigs, had a sense that the idea of an online babysitter service would work.

At the outset, she spoke to a number of potential investors about corporate backing. The support wasn't there, all of the 'angels' turned out to be pessimistic naysayers who said that Genevieve's idea was doomed to failure. As it turned out, all of the folks she talked to were men who didn't get it. Genevieve remembers thinking, "Get your wife in here, she'll understand what I'm saying."

Consequently, she took matters into her own hands, stuffed a bunch of fliers into her backpack, and went to every college campus in the Boston area (which is a lot)...and papered all of the dorms. Within one month, Thiers had received over 600 responses from students looking to register on her site, as well as 30 families who were interested in finding a sitter.

Five years later, business is booming. Sittercity.com is in 20 core U.S. markets, has ten employees, $1.1 million in revenues and 150,000 babysitters. Currently, the company offers parents a subscription that costs $39.99 for the first month of use. Also, Sittercity.com has attempted to differentiate themselves from free sites (e.g. Craigslist) by emphasizing quality assurance. All sitters are at least 17 years old and come with references. Many are first-aid and CPR-certified.

Genevieve Thiers was a music major in college and never studied business. Today, she is based in Chicago, after receiving a master's degree in music from Northwestern University...and is also an aspiring part-time opera singer, www.genevievethiers.com.

Remembering the "No's" and snubs early in her career, she has turned away recent overtures from venture capital firms. However, Ms. Thiers is not against being purchased by a larger company in the longer term.

Good luck, Genevieve!