Making Rain on a Small Business Budget (Part 2): The Solutions

Making rain is about making money for your business. The more you are willing and able to change, the greater the chances are to reduce your “bizometric” pressure (the business equivalent of “barometric” pressure) and make rain. Here are a few simple suggestions to get you started:

• Start with a plan
• Know–really know–your customer
• Understand your competition
• Build a business case
• Get help.
  

Start With a Plan

Planning is one of the cornerstones of time management and an essential element of business development. Early in my consulting career, our group manager made a simple statement that I will never forget, “If it’s not in writing it doesn’t exist.” This applies to all business deliverables, including plans.

Plans can take many forms, from a 5-page executive briefing to a 50-page detailed plan. Essential plans include a strategic business plan (to define your business), account plans (to define your customers), capture plans (to define a specific pursuit), and proposal management plans (to define your proposal approach to the pursuit).

When it comes to planning, there’s good news and bad news. The bad news is that most small business budget owners: (1) Don’t know what these plans are; (2) Know what they are but have not taken the time to develop them; or (3) Claim to have them but really don’t. The good news is that these plans are relatively easy to develop, have common elements, and significant overlap. The answers to a few simple BD questions provide a simple example of the power of planning to determine a proposal support budget for the upcoming year.

Proposal support budget example:

Q1: What is your new business revenue target for the next 12 months?

A: $26 million

Q2: How much of this new business is likely to require a proposal?

A: 100%

Q3: What is the average contract size?

A: $2 million

Q4: What is your estimated win rate?

A: 35%

A back-of-the-envelope analysis of the answers to these questions yields the following sobering fact: a total of 37 proposals will be required to meet the $26 million in new business target.

If proposal due dates were evenly spread out over the year, and response times were consistent, the high-level analysis would be complete. However, the harsh reality is that RFP release and due dates are highly unpredictable. Given this inherent lack of predictability, it’s likely that three or four proposals may be due during the same time and the proposal team will be idle at other times. Conclusion? You will need some amount of additional proposal development help this year.

Know–Really Know–Your Customer

If you have taken the time to develop strategic, account, or capture plans, they should include some intelligence about your target customer at a minimum. Basic customer information includes their mission, goals, customers, buying habits, budget, culture, decision makers, preferences, and so on.

One easy way to determine how well you know your customer is to develop a simple organization chart. If the org chart looks like something that was cut and pasted from the prospect’s website, you are in trouble. The org chart should take the form of a stakeholder analysis, an approach that has been touted by companies like The Complex Sale since the 1990s. The chart should zero in on the stakeholders who have some role in the decision-making process for the bid you are pursuing. For example, gatekeeper, recommender, decision maker, evaluator, informer, power sponsor, potential influencer, etc. Determine the amount of power and influence each stakeholder has on the decision-making process, and color code each stakeholder box on the organization chart to indicate whether they are supporters (green), opponents (red), neutral (yellow), or unknown (white). A quick glance at this color-coded organization chart is a great indicator for determining your win probability.

If you are fortunate enough to be in the early stages of the pursuit, the organization chart becomes the basis for developing an action/call plan with goals and objectives for each customer stakeholder and specific actions, dates, and responsibilities for you and your capture team.

Understand Your Competition

Most companies typically know something about the customer they are pursuing. If you don’t know anything about the customer (other than what’s in the public domain), you probably have a less than 5 percent change of winning their business. If you know something about the customer, but don’t know anything about the competition, you dramatically reduce your chances of winning by even more. The vast majority of small-budget organizations know very little about their likely competitors on a bid. At best, their competitive analysis consists of the usual cast of characters listed as bullet points that get lost on a kick-off meeting slide.

Don’t get me wrong. It takes some time, effort, and money to determine who the likely competitors are and to conduct some high-level SWOT (strengths/weaknesses/opportunities/threats) or other analysis to determine potential sweet spots (for you) and sour spots (for your competitors).

At a minimum, develop a list of the top 2-3 competitors. Rank/score them across the evaluation factors and/or customer hot buttons that you have identified. Identify your strengths and how they compare to competitor weaknesses. (Why us?) More importantly, identify your weaknesses and how they compare to competitor strengths. (Why not them?) If there is an incumbent, think long and hard about their chances of winning (most likely 60-80%). If you can convince yourself and your management that bidding against the incumbent is not a good idea, congratulations are in order. You just saved yourself a whole bunch of B&P dollars and time that you can focus on a higher probability bid.

Build a Business Case

Many small business owners and executives (me included) are very hesitant to seek help from others. Let’s face it, no one can do the job better than we can right? Eventually, even these staunch naysayers realize that there is an opportunity cost of doing everything themselves.

Example: Your professional time has some hourly value. Let’s say $100/hour. Assume it will take you four hours to complete either a mundane or a highly specialized task that you could delegate. Total cost = $400. If you can find someone who can complete the task for a lower hourly rate, in less time, or both, your business case is made.

The trick is overcoming some of the typical hurdles to finding the help you need when you need it. Personal examples of this approach for mundane tasks include gardeners, house cleaning, nanny/mannys, and personal trainers. Personal examples of this approach for specialized tasks include doctors, dentists, lawyers, and financial advisers.

Get Help

If people are so willing to find help for personal tasks, why are the same people so reluctant to get help for business tasks? The short answer is they aren’t. Getting help for your business is a lot more common than you think. Just ask the 30 percent of business owners who are still in business after ten years.

There are two major sources for business help, internal employees, and external consultants. Both are viable options with pros and cons for each. Internal employees and known entities, but may not be sufficiently qualified to do the work. What’s more, they may already be stretched to the limit with too many things of their own to do. Hiring a full-time employee is another option if you have the workload to justify their salary and compensation package.

Confession: I am a small business owner of a consulting business with no employees other than myself. Instead of hiring full-time employees to sustain my million-dollar business, I hire consultants on a project basis to keep my customers and partners happy and my business running efficiently.

Here are my tips for finding and hiring consultants efficiently and effectively.

Definition: Consultant noun. 1. someone who borrows your watch to tell you the time…and then keeps the watch.

Shop around. Business development consultants are uniquely qualified to assist in times of need. They are pre-programmed to step into a situation quickly, assess the damage, and deliver immediate results (without the time-consuming distractions and politics often faced by the rest of the team). The high rates that consultants charge can be a difficult pill for some companies to swallow. Just this week a prospective customer of ours emphatically stated, “We don’t pay consultants more than $150/hour.” I sent them the following quote from a performance evaluation I received about one of our consultants that same day. After reading the quote, the prospective customer changed their mind.

“[Pat] is truly in a league of his own. The tasks that took other consultants 4-5 hours to complete, [Pat] completed in an hour with higher quality. [Pat] is a natural teacher and provided valuable feedback that turned the proposal process into a learning opportunity that will enhance our ability to respond to future opportunities. He provided flexible support any day and any time. As a trusted advisor, [Pat] provided valuable guidance that ensured we successfully navigated the intricacies of the government proposal process. One of the best value consultants we have ever hired.”

The safest way to become more comfortable with consultant rates is to understand the true value that consultants can bring to your company. If you are completely new to the consulting arena, begin by shopping around. Contact related associations (like APMP), established companies, and individual consultants in your area. Ask about local consulting rates and availability of resources. If these channels don’t yield positive results, don’t be afraid to tap your social or personal networks of colleagues and friends for referrals.

Cost too much? Small budget managers make the common mistake of bargain shopping when it comes to hiring consultants. If the rate of a consultant seems too high, think again. The consulting market is dynamic. Hourly rates can fluctuate on a variety of tactical and strategic factors. If you turn your back on a well-established and credentialed consultant because of a high rate, chances are that consultant will end up working for one of your competitors who will be happy to pay someone to help them win the exact same business you are coveting for your own.

If you get lucky, you may find a highly qualified and experienced consultant that is priced below market value. It’s mostly a matter of luck and timing. Warning: If you find a consultant with a significantly lower rate than the competitive range in your market, chances are they don’t have the experience or the qualifications you need to get the job done right. The old Fram oil filter commercial (1981) comes to mind when I think of consultant rates. “You can pay me now (for an oil filter) or you can pay me later (for a complete engine replacement).”

Whatever you do, don’t get caught up in haggling over a $10-20 rate differential with an individual consultant. Higher priced consultants have higher rates for a reason. They are in high demand, or easily make up for the rate difference with more efficient service, not charging for travel, or not billing for all hours worked. When in doubt, ask the consultant about their work ethic¾what hours they charge for, and what hours they don’t. Very few customers have ever told me that their prized consultants cost too much. Instead they use words like “magician”, “worth their weight in gold”, “one of the best”, and “high value”.

Develop a stable of trusted consultants. Once you have made the investment to identify, select, and use consultants as part of your “Get Help” strategy, it’s time to think about a longer-term approach to winning more and working less. Start by working with a small number of consulting companies and individual consultants.

After each project, rate the consultants’ performance, contribution, and value using a standard questionnaire evaluation with objectives ratings across a number of evaluation categories that are important to you. Make an independent assessment about whether each consultant should be considered for future work in the same (or different) projects. If you maintain this disciplined approach after each consulting project, you will slowly develop a stable of high-value, trusted consultants that you can rely on in times of need.

Buy in small chunks. Still not convinced that a consultant is right for you or costs too much? Consider a small business development project that won’t break the bank and will provide you with an in-the-trenches look at whether a consultant is right for you. The following projects can be completed in a few hours and add significant value to your efforts:

• Proposal template development (1-2 hours)
• Compliance matrix development (1-2 hours)
• High profile (executive summary or volume overview) graphics (2-3 hours)
• RFP analysis and outline development (2-4 hours)
• Proposal theme development (4-8 hours)
• Color reviews (4-8 hours)
• Post-mortem review (4-8 hours)

These projects will cost you a few hundred dollars, but the time, effort, and aggravation savings for you and your staff are priceless.

Consulting Humor Break

Question: How many consultants does it take to change a light bulb? Answer: Five. One to change the bulb and four to recommend how to do it better next time.

Let’s Share Ideas. What additional tips do you have to stretch small business dollars?