Published - May 2003
FROM THE ROAD
By Dave Jakielo
Beyond the Price Tag
Seven Steps to Selling Your Services
I have said it many times: A company is either moving forward or moving backward, there is not such thing as standing still. I bring this up again because the best way to continue to move forward is to grow your business by offering new services or gaining new clients.
Before we go any further, a word about pricing. One of the most popular questions I am asked by owners of practice management companies is, "How much should I charge." My answer is always the same, the selling process is more than just throwing a dart at the board and quoting the number it lands on.
Pricing a potential new contract is probably the most important aspect of keeping your business viable. In the many operational reviews I have conducted, one disturbing pattern has appeared time and time again: many companies seem to have a few unprofitable clients.
Sure, the companies probably signed those prospects figuring what they didn't make in profit they would make up with volume or by spreading overhead. Somehow they think that a transformation will take place and a loser will turn into a winner. Fairy tales are nice, but remember even Cinderella returned to her real life after midnight.
The danger of this kind of "I'll think about that tomorrow" thinking is that if you lose your most profitable client, you end up in the red quickly. I've seen this disastrous situation occur more than once.
Now that you know you have to price every client so it is profitable, let's move on to the selling process. Numerous steps and advanced planning are required if you expect to be successful. Below I'm have outlined the seven steps to success:
1. Write a sales plan. The plan should outline what specialties you are willing to service and should include territorial boundaries and size (both minimum and maximum) of clients. Without a plan you'll have to take Yogi Berra's advice: "When you come to the fork in the road, take it."
2. Gauge your install capacity. How much business can you absorb at one time? This depends on your ramp-up capabilities, which includes employee recruiting and training, computer system capacity, office space, and the most important-do you have enough cash to fund the start up if you weren't successful in obtaining a start up fee?
3. Assess your bench strength. Do you have competent team members to dedicate to the start up process? I always recommend establishing an install team. This is accomplished by assigning experienced employees to specific tasks and functions to ensure a smooth startup.
4. Create a pricing spreadsheet. You'll need the spreadsheet to determine the proper management fee. (I'll be happy to email you the spreadsheet I've used in the past, free of charge) You must know your current cost per procedure, predict what the new client's cost per procedure will be, and calculate the revenue per procedure based upon your pricing. This step will ensure that you will make money-or is billing your hobby?
5. Develop a monthly collections budget. The budget should indicate ramp up collections as well as the full run rate collections. This will help measure whether you are on track and if you're hitting on all cylinders.
6. Listen to the prospect. Before any new client contract is signed, the COO or Director of Operations needs to have met the prospect and listened to what their needs and expectations are. Only by listening can you ensure delivery on expectations. Plus, the pricing structure should be approved to ensure the new client will be profitable.
7. Write an installation plan. A written installation plan should be developed with timelines and responsibilities of both the billing company and the client. I have seen many bad installs because it wasn't clear who was responsible for what. For example, who applies for provider numbers or changes mailing addresses?
So the next time you find yourself getting ready to bid on new business remember that it takes more than just blowing the dust off your dart case and tossing a few to arrive at a price. A little planning up front can turn red ink into black. May this be your best year yet!
David Jakielo is author of the book the "Sales Coach" and provides seminars & consulting. He is located at 86 Hall Ave. Pittsburgh, PA 15205. Telephone: 412-921-0976. E-mail Dave@DavidJakielo.com. Web page (which includes past articles): www.Davidjakielo.com.