Firstly, before I jump into what business referrals could mean for your Louisville business, I wanted you to see this.

You may have already heard me talk about this … but the explosion of shady flim-flammers gaming the Employee Retention Credit and making questionable claims on behalf of business owners is raising all kinds of red flags at the IRS.

As it should.

Here is the headline of the IRS’s most recent “Dirty Dozen” release: IRS opens 2023 Dirty Dozen with warning about Employee Retention Credit claims; increased scrutiny follows aggressive promoters making offers too good to be true.


And I will have more to say about this in the future. But if you’ve been potentially victimized by one of these overly-aggressive promoters, let’s talk:

One of the strategies employed by these slim shadies is offering extravagant referral fees. And I’m not opposed to a nice referral bonus.

But when they made it so large (sometimes into the five figures), it became a recipe to attract the sharks. 

However, when you do things right — working ethically, professionally, and well behind the scenes with vendors, clients, and other businesses — it means good things for your Louisville small business. After all, you’re small fish in an economic tank with much bigger fish (and those sharks). Survival chances are greater when you swim with others.

That will be the subject of today’s Note.

But before I dive more into that, I do want to make one more brief diversion to revisit the global banking situation… and the vulnerability of the banking world right now. 

It’s easy to let panic set in. The reality that your Louisville business could take a big hit because the bank fails in which your money is invested, means you might be tempted to scramble to pre-emptively right the ship. 

Yes, things could get rough ahead, and the recession that’s been threatening for the last year is almost a certainty. And if you’re looking for a business loan, banks are going to be much more stringent about giving those out. They want to make sure you’ll make good on their investment. 

As far as the possibility of your business being threatened by a bank failure, if you’ve got under $250,000 in FDIC insured US bank account, then you can take a breath (also, joint accounts are covered up to $500,000). 

More than that, we should take a look at what that means for your business. It might be time to “kick the tires” of your bank to ensure reliability. It might even mean making a switch.

And we can talk about what that looks like. Just grab a time with us.

Most of all, don’t get caught up in hysteria. 


So, today I want to talk about a way that you can build your business and create some strength in your financial framework through a bit of an indirect method. (A little something called business referrals.) 

What does building a referral system mean for you?

The Why & How of Business Referrals for Louisville Owners
”You can make more friends in two months by becoming interested in other people than you can in two years by trying to get other people interested in you.” – Dale Carnegie

Everybody knows about customer and employee referral programs, which usually offer a quick, monetized reward for sending business your way. They’re great when they work well. (Most word-of-mouth programs are as long as your company has a good reputation.) 

As small business owners, we all know referrals are GOLD. Most customers who have a good experience with a company will recommend that company. Leads from those referrals tend to be worth more in both the short and long term, and most people trust referrals from people they know personally. 

It’s like having salespeople you don’t have to pay. 

Then there are other businesses (non-competitors of yours) who may be willing to recommend your company to their own customers. You, of course, must be willing to recommend your customers to them. You may well already have an ad hoc, informal version of this arrangement. Nowadays, this is called a “referral team.” You can formalize this process for an even better payoff. 

Here’s how to start on the business referrals track.  

Building a business referrals team: Who to approach?

Ideally, you’re looking to put together a team of about six or so associates who have companies that complement — but do not compete directly — with what your company does. Your prospective team members are determined by your company’s goals, your market and industry, your (presumably good) opinion of your prospective fellow team members, and your idea of who’d be most willing to spread the word about you.

Regarding competition, there is wiggle room in your choices: In our line of work, for instance, one accounting firm that does only tax preparation might make an excellent referral teammate for an accounting firm that does only business advising. Maybe an accounting firm that handles tax and accounting could find good prospective teammates in lawyers, insurance agents, IT providers, and so on. 

The point is to create a steady, two-way flow of new customers. An effective referral team is also usually a small one. That’s the best way to hold every member (including you) accountable for sending referrals to each other. 

A little common sense here: Make sure your company is ready to participate in this network and handle the new business. If there are any problems handling the business coming through your door already or any customer service issues you’ve been meaning to clean up, now’s the time! You do not want team members referring customers to you and then having those new relationships consistently go south — there’s no quicker way to see your referral team unravel. 

Building a business referrals team: Formalities

As we said, you probably have informal referral arrangements with some businesses already. A proper business referrals team (sometimes called a cross-referral network) takes the expectations of the idea a step further to build reciprocal relationships. Here are some thoughts:

  • We wouldn’t go so far as to say use a contract, but you can get all parties to sign a written referral agreement (here’s a sample) that spells out who’s on the referral team, who has to do what by when, and who gets what in return, as well as what defines a valid, successful referral. 
  • This agreement also makes a handy prop to show new, prospective members (and a handy piece of documentation if it comes time to expel a non-performing team member, too). 
  • Your agreement will be dynamic; later, as your team gets rolling, you can use it to detail a tier system for better rewards for the team’s MVPs (for example, discounts on each other’s products or commissions on the referred business). 
  • Pretty soon you’ll get an idea of who’s a team player. Again, keep the star group small (referral network experts recommend no more than six so nobody gets overwhelmed or neglected), and check in with each other every week or so, if possible, just to strategize. A referral team doesn’t have to be constantly humming, but folks should never feel unconnected, either. You want to be on each other’s minds. Don’t forget to share your company’s marketing materials (including videos and social media posts).

Too often, referral rates become lost in impressions and misremembering. Track the details of the history of your team’s referrals, including dates, clients, contact info, and so on. (A notebook or Excel doc works fine, but there’s a ton of software out there for this job, too.) 

Building a business referrals team: Patience is a virtue

Building a referral team takes time. You’re probably going to have to talk to and try out a lot of people, and you may well run through more than a few unproductive members until you hit the right team combination. But that’s when it will all be worth it for the stream of new business. 

I mean, who doesn’t love business referrals? 


While this topic is less “on the nose” about finances, it really has the potential to save money and headaches by automatically sending business your way. Plus, it’s always good to have friends in the business. 

Here for you,

Kevin Roberts