Mid-sized consulting shops are facing increased competition from venture-capital backed mega-firms looking to increase their market share at the state and local level.
With their margins under threat, some mid-sized firms have either sold out, banded together to form their own mega-shop or downsized into smaller operations without big overheads.
Now, one Republican firm is pushing back against that trend and hoping a novel hire will power its growth strategy.
McShane LLC recently hired former House candidate Samuel “Sam” Peters as its new CEO — a move the firm’s founder believes will help it double its head count, currently at 29. But it’s not just size that matters in this increasingly competitive business climate.
Firms like McShane LLC have come to realize that higher overhead doesn’t necessarily translate into significantly higher profits. For instance, as the Las Vegas-headquartered shop has added an office in Austin, Texas, expanded to include fundraising and been named on the 2022 Inc. 5000 fastest growing private companies in America, it’s only increased margins by 7 percent.
That’s where Rory McShane is hoping to put Peters’ business experience to work. As the owner of a mid-sized firm, McShane told C&E, “I have the worst end of both equations: operational overhead similar to a large firm, but we don’t have private venture capital behind us.” Still, he believes they can compete against larger shops in areas like client services.
“Taking on a mega firm is really really simple: I pull up my phone, and show [a prospective client] text messages from a [current] client running for Congress,” McShane said. “I talk to them several times a week, when’s the last time you met a senior partner at the firm? A lot of times what happens is they only meet with the principals when they sign their contract.”
He added: “It’s just a question of what is more important to that client.”
Now, hiring a former client is a rare move, but McShane believes it’s just one of the industry conventions around running a consulting business that need to be discarded. Moreover, he noted the traditional firm model of having partners who both operate the business and work on servicing clients isn’t ideal for growth.
“It is not best for our clients if their strategist has to be focused on cash flows and budget forecasts and HR and payroll and legal,” he said. “You have to figure out a way to clear as much headspace as possible so the focus is on delivering political strategy and not the machinations of running a business.”
McShane made his approach to Peters on Nov. 8. He had stopped by his client’s house to watch the Election Night returns. As the numbers started to come in, and didn’t look promising, he asked: “If we’re not successful tonight, what would you think about becoming CEO of the company?”
Peters initially laughed it off, but after he lost his race and McShane mapped out his vision for the role, he agreed to step in as CEO and officially started in the role on Nov. 21.
“Becoming the CEO of McShane was not in my strategic view if I lost,” said Peters. “But after the race was decided, Rory and his guys approached me. They made me immediately intrigued. I get to stay involved in politics and continue the conservative fight.”
In addition to his experience as a candidate, Peters was also an officer in the U.S. Air Force and built a successful insurance business in Las Vegas.
“McShane brought me on, in part, because of my business acumen and, in part, because of my political experience,” he said. “Consultants don’t always get the best light shone on them. What I can bring is a level of expertise, but also that experience as a candidate and also be seen as a honest guy.”
Peters said the firm worked on 152 campaigns in 2022. His goal is to get them to 250-300 by 2024. At the same time, he sees the firm as being able to serve as a traditional marketing agency to business clients in Nevada.
“That’s something we’re looking at and going to work on,” Peters said. “I’m a firm believer that if you build it, they will come. We have a good base to build off of.”
