Founder-dependent business development means that most new clients come to a firm through the owner's personal relationships, reputation, and referral sources. In many professional services firms, that's how the business was built, and it may be the main reason the firm has been successful for so long.
That's an ExitReadiness® issue. When the owner wants to grow, step back, or sell, a buyer or successor will ask one question: where does the next client come from if the founder isn't in the room? If the honest answer is "the founder's Rolodex," that's a valuation discount, not a strength. Firms that command better multiples and smoother transitions treat business development as a system, not a personality.
In this episode, Pat Ennis and Walter Deyhle talk with Karl Wappaus, Founder and Principal Advisor of Legacy Growth Advisors LLC, about moving business development beyond the founder. Karl explains why warm introductions and center-of-influence relationships work better than cold outreach for professional services firms, when a fractional business development leader makes sense, and how firms can prepare the next generation of rainmakers.
Key Takeaways
A pipeline problem often hides behind a performance problem. Revenue looks fine while the founder is still generating it personally. The weakness shows up when the firm is sold or handed off.
Founder dependency may not show up in a valuation the way it should. Customer concentration gets a clear discount, but sales concentration in one person is often folded into a small company-specific risk adjustment. Buyers still notice it.
Opportunities that don't move, rot. Without a pipeline system or CRM, follow-up becomes inconsistent and opportunities go cold.
Professional services firms sell on trust. Nobody hires a CPA or estate attorney from a cold email. Clients hire whoever was vouched for by someone they already trust.
Center-of-influence relationships compound. Attorneys, CPAs, and wealth advisors who already have the client's trust can make meaningful introductions. It's a slower start, but one strong relationship can produce referrals for years, and that pipeline survives a leadership transition.
Cold outreach still has a place. For product-oriented and many other service businesses, outsourced cold calling and outreach can work. Relationship-based selling is more effective when trust drives the buying decision.
Fractional can lower the risk. When a firm is still defining its ideal client, a fractional business development leader costs less to start, is easier to bring on or end, and brings an existing network.
Measure behaviors, not just revenue. Track meetings held, centers of influence met, and introductions made and received each week and month.
Don't let relationships become silos. When a partner's referral network isn't shared, the firm misses chances to cross-serve clients.
Develop the next rainmakers. As senior rainmakers age out, rising stars often want the role but don't know how. Coaching them is part of building transferable value.
Where to Start
Have a conversation. Karl's first step: talk through where business development stands today and say your growth goals out loud.
Put a pipeline system in place. Use a CRM or another consistent tool so opportunities keep moving and follow-up doesn't depend on memory.
Build and share center-of-influence relationships. Identify the attorneys, CPAs, wealth advisors, and other professionals your clients already trust, and involve others in your firm in those relationships.
About Karl Wappaus
Karl Wappaus is the Founder and Principal Advisor of Legacy Growth Advisors LLC, a fractional business development advisory firm serving founder-led Registered Investment Advisors (RIAs), law firms, CPA practices, and architecture and engineering firms throughout Washington, DC, Baltimore, and Northern Virginia. With more than 25 years of business development experience, Karl helps professional services firms build sustainable growth strategies around warm introductions and center-of-influence relationships rather than cold outreach. His focus is helping founders develop business development capabilities that support continued growth without depending solely on the owner's personal involvement.
Connect with Karl: LinkedIn · legacygrowthadvisors.com · karl@legacygrowthadvisors.com
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Full Episode Transcript
This transcript was generated automatically and lightly edited for readability. It may contain minor errors.
Hey there, this is Pat Ennis of ENNIS Legacy Partners. Welcome to the ExitReadiness® PODCAST. I'm here with co-host Walter Deyhle. Our mission here on the podcast is to provide you, the business owner, with subject matter expertise on topics pertaining to building transferable or sellable business value and then for planning your eventual exit from the business. We want to help you build a business that's transferable and then exit successfully on your own terms and conditions.
Today we're going to talk about value acceleration: solving the business development problem that quite a few of the owners we work with are facing. For many owners of professional services firms, which will be our main focus today, business development has always been very personal. The owner has spent years, sometimes decades, building relationships, developing a reputation, creating referral sources, and becoming the person people think of when they think of the firm's services. And that can work extremely well, for a long time. In fact, it may be one of the primary reasons the business has been successful for as long as it has.
But eventually it can become a problem. If most new business continues to come through the owner's personal relationships, efforts, and initiatives, what happens when that owner wants to step back, either gradually or entirely? Who develops the next generation of relationships? And perhaps most importantly, from an exit planning perspective, what exactly is a future buyer or successor acquiring if the person responsible for generating much of the top-line revenue and new business is preparing to leave? That's where business development becomes more than a growth issue. It becomes a business value, transferability, and exit issue.
So today we're going to talk about how business owners can start moving business development beyond themselves, without simply hiring a salesperson or relying on cold outreach. We'll explore how to build a more systematic approach to relationships, referrals, and centers of influence that can continue generating opportunities long after the founder or owner has stepped away.
Joining us today is Karl Wappaus. Karl is the founder and principal advisor at Legacy Growth Advisors LLC, a fractional business development advisory firm helping founder-led RIAs, law firms, CPA practices, and architecture and engineering firms across the DC, Baltimore, and Northern Virginia region. Karl brings more than 25 years of business development experience, and his approach is built around something that should resonate with professional services firm owners and founders in particular: warm introductions and center-of-influence relationships rather than cold outreach. So Karl, great to see you, and great to have you with us for the first time. Welcome to the ExitReadiness® PODCAST.
I appreciate it, Pat. Looking forward to participating.
Hey, Karl, thanks for joining us. I'll start us off. Pat and I at ENNIS Legacy Partners work a lot, just like you do, with founder firms across many different verticals. So whenever we have someone like you on who's in the industry, we like to confirm that the trends we're seeing are really out there. Let me start with this: what's the number one thing you see when you're working with firms that makes them hard to sell or hand off, and how does business development play into that?
Great question, Walter. What I would say is that most founder firms have a pipeline problem hiding behind a performance problem. Revenue looks fine because the founder is still out there personally generating it. But the moment you try to sell the firm or hand it off to a successor, a buyer is going to ask one question: where does the next client come from if you're not sitting in the room? And if we're all being honest, the answer is the founder's Rolodex, and that's a valuation discount, not a strength.
I've been in business development for a little over 25 years, watching this pattern across many professional services firms. The firms that command better multiples and smoother transitions are the ones where business development is a system, not a personality. That's the gap Legacy Growth Advisors exists to close. I come in as a fractional business development leader, so growth doesn't live or die with one person.
Hey, Karl and Walter, can I follow up on something? On pipeline: Corby, my business partner, and Walter, you'll attest to this, more often than not is helping a founder or owners actually get a pipeline in place. He has a phenomenal spreadsheet for that. It could probably wash your car too. Whether or not an owner has a pipeline management system or tool in place, however they do it, what does that indicate to begin with? Do you see it as a problem right away?
It can certainly lead to a problem, especially with multiple opportunities they have to manage at the same time. What I often see in that case is opportunities slipping through the cracks. Follow-up isn't persistent or timely, and inevitably those opportunities turn cold in the long run. I like to compare opportunities to produce on a grocery store shelf: if they're not moving, they're rotting. That's where we need to keep the momentum going, and that's where a CRM can be helpful.
Hey, Karl, what you're saying brings to mind the quality of earnings aspect of valuation. If you tell a business owner their valuation is going to be discounted because their biggest client is 30% of revenue, they understand they're riskier because of that. But they don't think they should get a discount because 90% of their business is driven by one person in the firm. From a valuation standpoint, when I do valuations, concentration risk can bring a pretty heavy discount. But when your sales are driven by one person, you'd normally just put something into the company-specific risk, which is usually a fairly small hit. So most valuations don't really capture what you're talking about. I think that's a really interesting part of all this.
I would agree. Interesting perspective for sure.
So, Karl, you've built your practice, Legacy Growth Advisors, around warm introductions, which we all prefer to cold ones. You've built your philosophy and process around warm introductions and center-of-influence relationships instead of cold outreach. Why do you think that model works better?
I'll tell you, Pat, most professional services firms sell on trust before they sell anything else. Nobody hires a CPA or an estate attorney off a cold email. They hire based on who vouched for them. A traditional business development hire usually comes in and starts prospecting like it's a transactional sale, and that's the wrong instinct for this world. It burns relationships instead of building them. Our model is built entirely on centers of influence: attorneys, CPAs, wealth advisors, and other professionals who already have the client's trust and can make a meaningful introduction. Never cold outreach. It's a slower start, but it compounds. A single strong center-of-influence relationship can produce referrals for years, and that's the kind of pipeline that survives a leadership transition, which ties right back to what we were talking about earlier.
That absolutely makes sense for professional services firms, which is your focus at Legacy Growth Advisors. But probably most of our listeners don't own professional services firms. They own roofing companies, garage door companies, or other kinds of service companies. Based on your experience with business development broadly, could the role look different for a firm that's more product-oriented, and might it include cold outreach?
Yes, 100%. There are a lot of good firms out there you can even outsource cold outreach to, through cold calling. I'm not saying it doesn't work. It's just that relationships are much more effective. And as we all know, trusted relationships are built through trust across the whole ecosystem. A good referral partner who's going to refer you has to trust you. So there's a place for both activities: the center-of-influence methodology I'm describing, and cold outreach, which typically works better for product-based selling than for professional services.
Hey, Karl, I retired as a CPA at the end of 2024. Part of the reason was that the things I really enjoyed were going to lunch with attorneys and wealth managers who were great referral sources, and referring clients to them, and face-to-face meetings with clients. Then once COVID hit, a lot of that dried up. Are things back to normal yet, or have you had to adapt your strategies?
I'd say it's a little bit of both. Some environments are much more virtual, and I'm also seeing a return to more face-to-face meetings in between. So I'd say it's bouncing back toward in-person. Folks are looking to get out and build that personal connection. The thing I often hear about virtual sessions is that people just can't connect as well over a monitor and a microphone as they can in front of someone. Whether it's on a golf course or over lunch or coffee, any of those settings can build trust with time and effort.
So, Karl, when would an owner decide to go fractional rather than hiring a full-time business development person?
I'd say it comes down not only to the numbers, but also to the maturity of business development in the firm as a whole. If they're still identifying their ideal client profile and need some guidance there, it may not serve them to hire someone full-time at a high rate. It may make sense to bring someone in on a fractional basis, where the startup cost is very low and onboarding and offboarding are very flexible, which is very important to a business owner. It reduces risk, and it also opens you up to meaningful introductions into a network built over 25 years. Those are the kinds of introductions I'm looking to make for my clients.
Can an owner have a range in mind for what to expect to pay a fractional business development person? How is the compensation usually structured?
Compensation can be structured a few different ways, because depending on the services, the sales cycle could run months or even years to close, versus something more transactional where a commission tied to the sale is the main incentive. So the length of the sales cycle is really going to guide compensation, whether that's commission, a bonus, or performance pay tied to key KPIs. I think it's important to measure not just the revenue outcome, but the key behaviors this person is carrying out, monthly and maybe even weekly. How many meetings are they having? How many centers of influence have they met with? How many introductions are they making and receiving? That's always important to track.
Hey, Karl, have you seen companies where the compensation system punishes people for bringing others into their lead generation? In other words, is there a financial incentive for people to hoard their contacts?
I haven't seen that so much, other than as a natural knowledge silo. Where that causes a problem is when a partner has built a great network of referral partners over their career at the firm, but they become pigeonholed into one type of referral, while the firm may be cross-selling different services into different markets. Without sharing those centers of influence with colleagues, you're not going to be able to cross-serve your clients as well as you'd like. That's where I see it hamstringing opportunities.
Over the last five to ten years, we've seen more and more professional services firms, law firms, CPA firms, and so on, hiring for this role, either full-time or fractional. Walter and I have been around for a while, and Walter, you can speak to this because you were a partner in a CPA firm. It seems that back in the day, certain partners were the rainmakers, were expected to be, and were compensated as such. They were the predominant business development people. But now there does seem to be this role that's come on the scene. Do you want to say anything about how that happened, or am I seeing things wrong?
No, I think you're spot on. Across professional services, I see a lot of firms with well-established rainmakers who have been there 20 or 30 years. Even before they exit the firm, the conversation starts: who's next, and are they trained properly to do this? I often see rising stars at these firms who are hungry and ambitious but just don't know how to do it. The point of fractional business development isn't only to do the firm's business development work, but also to coach and advise these folks. Sometimes it takes a few words of encouragement, more than anything else, to work up the courage to go to a networking event without someone along.
No question. This is probably a good question to wrap up on, unless Walter has others. If a founder listening today knows their firm is too dependent on them personally for new business, what's the first step? We like to give listeners one, two, or three practical steps to start moving the ball down the field. What should that look like?
I'd say that if someone out there is listening and recognizing that their own firm is part of this conversation, that's usually the right moment to have a conversation. Not to sell anything, but to guide, listen, and ask good questions about where things stand today and what their outreach goals are, and really get them to say those goals out loud. That's the one thing I'd want to hear first from the founders of these organizations. So I'd summarize it by saying a good conversation is probably the first step in all of this.
Okay. Walter, do you have anything else?
No, I'm good. I think this has been really helpful for listeners.
So, Karl, is there anything we should have asked you that we didn't?
No, I'd just go back to the point you brought up earlier about rainmakers. That's a common problem I hear across the board. If you're hearing it on your side and I'm hearing it on mine, it's obviously a trend.
Well, I've heard it from firms where the rainmakers are aging out. They want to go do their next act, whatever that is, and when they look down the org chart, they're not seeing anyone in the next generation who gets really excited about being a rainmaker. And that needs to continue, particularly in professional services these days, as AI, which is a whole different conversation, continues to chip away at and somewhat disrupt it. You're going to need that rainmaking to happen.
So if anyone wanted to reach you and have that conversation, like the one we have scheduled with you and a client this afternoon, tell listeners how they can get in touch with you and what that would look like.
The best way to reach me is by email at karl@legacygrowthadvisors.com, or by phone at 410-218-0178.
Okay, great. We always like to ask guests: is there anything you want to promote today? Have you written a new book, or are you going to be in a movie?
Nothing to promote today. I'd just say it's been a pleasure being part of this conversation. It's always motivating to hear what's going on in the world of business development. As a founder of my own organization, I'm constantly practicing what I preach, and I definitely need to put the pedal to the metal on actively networking, keeping in touch with my centers of influence, and being a good give-to-get person out there.
Very good. Well, listeners, if you'd like help building that transferable, sellable business or getting ready for your eventual exit, or perhaps your next act, you can reach Walter, myself, Corby, and others at email@ennislp.com, or go to our website at ennislp.com. If you prefer to begin your planning process at your own pace, DIY, perhaps using AI but with a proven framework, visit exitreadiness.com and explore our DIY platform. You'd have access to basically our entire platform, with periodic check-ins with us. Thank you for listening. If you found today's conversation helpful, please consider liking it, sharing it, and subscribing. And until next time on the ExitReadiness® PODCAST, this is Pat Ennis and Walter Deyhle signing off.
