How many times have you heard the phrase “work smarter, not harder,”? We toss that phrase out regularly, but how often do we take a step back and evaluate if we are truly working smarter rather than harder?
It’s estimated that the average AEC firm puts out anywhere from 4 to 10 proposals in order to win just one project. Those proposals can contain more than 70 pages of valuable information, countless resumes to showcase talent, and require your marketers to spend tens of hours per proposal to get them just right. A common reaction to the shrinking hit rates amongst the AEC industry is to send out more proposals. But is that smart?
This month, we are exploring the concept of Predictable Revenue. We first mentioned the importance of developing a predictable revenue model – how you can scale and futureproof your firm by developing processes that rely on historical data to forecast future growth and trends. Then we told you why the first step needs to be establishing a single source of truth.
Next up is understanding that more does not always equal better. More proposals do not always guarantee more business, and on top of that, more business does not always mean more money.
Are You Weighing Time Currency in Your Cost of Pursuit?
First, let’s consider the time that it takes to put together a project-winning proposal. According to SMPS, the first conversation around a project occurs an average of 7 months before an RFP is sent out. From there, there’s an average of 5 meetings that occur. During the proposal process, marketers and proposal managers spend dozens of hours on putting together the final proposal, and rely on input from their Business Developers, administrators, and project team members to collect important data.
Establishing a single source of truth may help to reduce the amount of time tracking down data, but there are still necessary steps that need to occur for a proposal to be put together.
This time-consuming process becomes a necessary evil when proposal teams are spending their time chasing business that ultimately isn’t:
- A great fit for the firm
- A project that the firm is leveraged to win
- A project that has a healthy estimated margin for the firm
As marketers continue to attempt to keep up with the growing demand in proposal generation, they’re becoming increasingly frustrated, burnt-out, and demotivated. This is increasing the turnover in these departments, ultimately costing firms more and more money each year.
How to Ensure You’re Going After the Right Business
Because the process of chasing down business is so time consuming, it becomes essential for a firm to only chase business that can fit the requirements as outlined above. As a general rule of thumb, a project should only be pursued if it has a healthy margin expectation, as well as a scope of work that makes sense for your firm. Not only does this increase your firm’s chance at winning the right business, but it also satisfies your client relationships as they are looking for vendors who have experience in the work they are looking for.
To start, evaluating your firm’s Go/No-Go process is going to be critical.
Go/No-Go processes are all about evaluating historical data to make decisions on whether a project is worth the pursuit. These conversations should be held by a committee of leadership team members and decision makers who can accurately weigh the pros and cons of chasing a project.
Within this Go/No-Go process, there should be clearly established criteria that outlines a “go” versus a “no-go”. Questions like…
- What is the estimated total cost of pursuit?
- Do we have similar project experience?
- Do we have a project manager available?
- How strong is our relationship with this potential client?
- What is this client’s payment history?
- Why should we bid on this project?
…will set you up to see clearly whether this project will be healthy and beneficial for your firm.
By investing in a system that offers a single source of truth and is coupled with an automated Go/No-Go process, you’re able to mirror that roundtable discussion with data and technology to remove any gut-based instinct out of the decision-making process. While it’s impossible to remove any emotion from a business pursuit, seeing the data outline whether a project makes sense for your firm and the bottom line encourages healthier financials in a growing competitive market.
Additionally, it’s important to keep in mind that the decision to submit a proposal is only on part of the overall Go/No-Go process. Your firm will be tasked multiple times throughout the sales cycle to evaluate if this project continually makes sense for your firm to invest time and effort into. If at any point in time that decision becomes a “no-go”, it’s important to have a contingency protocol in place. This is where repeatable processes start to really make a difference in your firm.
Win More of the Right Business…By Going After Less
The amount of proposals your business submits each year is not indicative of the overall health of your firm. By understanding that more is not equal to better, you’re able to narrow in on the projects that make sense for your firm, in an effort to establish more predictability into your revenue and growth.
If you’re hesitant to press pause on the boilerplate proposals that are sent out the door at your firm each month in an attempt to throw more at the wall, pull a report that details the cost of pursuing past projects and couple that with data around whether or not your firm won that business. This report should indicate a clear pattern in terms of your generic proposals pulling in fewer projects and your tailored, niche proposals winning more business. This correlation directly indicates the significance of only submitting proposals to projects that make sense for your firm and come with a healthy margin.
The last step in establishing this predictable revenue model is developing repeatable processes that translate into consistency in your firm’s operations. Next week, we will cover everything you need to know, where to start, and why it’s the final piece your firm needs when thinking about predictable growth.
To get a glance at what an automated Go/No-Go process looks like real-time, enriched by historical data of past projects and client relationships, book a demonstration of Cosential today.