David C. Baker’s chosen profession aligns perfectly with one of the many things entrepreneurs need to be successful: management skills. Baker founded ReCourses, a one-man management consulting firm, in 1994 to give exclusive help to small and mid-sized marketing services firms (advertising, design, interactive, public relations and in-house departments that also perform those functions).
Before starting ReCourses, Baker spent six years as the owner of an ad agency. As an ad agent, Baker called on the editor of a monthly newsletter for the advertising industry and suggested personalizing the advice in it and that the editor do consulting with individual firms. The editor declined then suggested that Baker do it instead. In exchange for 10% of his earnings, the editor offered, Baker could advertise in the newsletter free. Baker accepted. Six months later, he was getting so many requests for consulting that he divided the agency up and set several employees up in business so that he could start his own venture.
Baker says that he saw an opportunity to help principals in creative services industries who receive ample training on the craft side of their professions but none on the business side and took advantage of it. At the outset, ReCourses had two main competitors: SecondWindNetwork.com, Baker believes was unable to adapt to changing practices, and StuartSanders.com, whose sales were not as strong as they needed to be. Today, ReCourses has numerous quality competitors such as WinWithoutPitching.com, EmilyCohen.com, and AgencyRoundtable.com, to name a few. The company aims to set itself apart by providing more thought leadership, such as “position papers” and occasional podcasts, free of charge. Baker’s approach to solving client problems is a mix of scientific explorations like the ReCourses Functional Model and the courage to tackle tougher issues that involve organizational development and tough employees or partners.
Baker penetrated the consulting market by placing full-page ads in a leading industry publication for about a year and a half. At a cost of $5,000 a month, that method of advertising was not cost-effective. So, Baker decided to start offering free thought leadership material in exchange for a person’s email address. In the 16 years since, his opt-in email database has swelled to 10,600 names. He operates ReCourses with only the help of his wife. Most years, ReCourses hits the $1 million revenue mark, allowing Baker to pay himself a $200,000 annual salary. A year for Baker equals eight months. He spends the other four months indulging in personal pursuits such as photography.
An international business, ReCourses receives 32,000 unique visitors a year, and an average of four to five new prospects a week without any outbound lead generation. Eighty-five percent of Baker’s clients, such as FunctionFox.com and CurrencyMarketing.ca, come from the United States and Canada with the remaining 15% coming from 10 other countries. The typical fee for ReCourses’ services is $10,000 to start, with an additional $250 added for each employee at the firm who needs consulting. For a “single issue,” that can be solved remotely, the fee can be as low as $3,000. Higher fees, which average between $20,000 and $25,000 relate to mergers and acquisitions and cover services like finding a buyer or seller, negotiating terms and guiding the client through integration. Baker also founded a conference, Mind Your Own Business, a profitable venture since day one.
ReCourses is a completely bootstrapped company that Baker has considered expanding and hiring more consultants but hasn’t done so, yet; however, when he thinks a client requires expertise that he lacks, he will refer the client to a trusted source sans referral fee. When it comes to company growth, Baker’s focused more on increasing revenues more so than hiring more people. He’s currently nurturing an idea that could yield millions of dollars in profits. He has no plans to sell his firm at this time.
This segment is a part in the series : 1Mby1M Deal Radar 2011