A question was recently posed in the “Valuation” Group on LinkedIn by Mark Krickovich:

“Can You Define “Quality” in Valuation Services?  What is a Quality BV Report? Please define the elements of a high-quality Valuation product.”

There are a number of responses, including a couple of particularly insightful entries by Barbara Walters Price, Mercer Capital’s marketing director.  Take a look at the responses here  http://linkd.in/wuj2hQ.

Defining the Word “Quality”

I’ve thought about the above question a good bit over the years.  If you think of “quality” in business valuation services as the following:

• Attractive reports
• Math is all correct
• Text is readable and understandable and has been carefully proofread
• Reports employing reasonable valuation methodologies that appear to reach reasonable conclusion
• Reports have all appropriate acknowledgements of compliance with standards, statements of contingent and limiting conditions, appropriate appendices…

… then, you are probably missing the boat.

The above “qualities” are the price of admission where we and many others desire to do business.

I used to use an expression: “We deliver the best quality report, on time, and in budget.”  It sounded great.  The only problem is that clients expect quality.  They demand it.  As they should.

So, what is quality?  It is vague and in some senses, almost undefinable, because, as beauty is in the eye of the beholder – so is quality.

As Barbara implied in her comments, quality from a client’s viewpoint has little to do with an appraiser’s concept of quality and everything to do with the clients’ perceptions of the “quality” of our efforts on their behalf.  Quality business from an appraiser’s viewpoint tends to come through client and referral relationships where appreciation and respect are both mutual and fairly normal.

Quality Business

Quality business is business where our skills and services are truly needed and/or appreciated.  Quality business tends to be less fee-sensitive than commodity business, although there are exceptions.  Quality business may be recurring in nature, either with particular clients or through individual referral sources.  In either case, there are aspects of relationship involved with individual professionals and with firms.  Quality business can also be one-time in nature, for example, with a large litigation-related engagement.

In virtually all cases, quality business tends to be leveragable and to utilize various staffing levels to accomplish overall engagements.  Quality business tends to be with clients who appreciate focused efforts on their behalf.

If a firm’s business mix is disproportionately represented by commodity business, it is difficult to grow and to earn decent (or indecent) margins.  If your firm is not developing as much business as you desire, the answer does not lie solely in “quality business appraisal reports.”  Remember, “quality” in this sense is the price of entry into the world of quality business .

Quality business does not come from quality business appraisal reports.  That’s the starting point.  Quality business comes from developing reputations (personally and for our firms), building a brand (through longevity, specialization, size, etc.), and developing and maintaining quality relationships (those that can bring or refer quality business).

Marketing and Business Development Resource

A very helpful marketing and business development resource for professional service firms is Hinge Marketing (www.hingemarketing.com). Be sure to bookmark their blog.