Column: Compete to Win - To Improve Win Ratio, Build a Business Development Organization

      Many small and struggling companies have not developed a business development and marketing organization that will generate and win the new business opportunities needed for their business to grow.

      This is particularly pertinent with companies that are part of the US Small Business Administration’s set-aside programs for small firms and socioeconomically-disadvantaged firms. These programs allow firms to acquire new business in sole source or other noncompetitive environments; they haven’t had to really compete.

      This practice does little to encourage building a marketing and business development function within their company. Often, technical managers capture business from technical counterparts and the set-aside rules force little, if any, competition.

Ill-equipped for Competitive Markets

      Many set-aside awardees are ill-equipped for the competitive federal and commercial contracting marketplaces. These companies often have allowed their overhead structure to inflate until they reach a price that their customer will no longer accept. This overhead often does not include business development, which is between 20% to 30% of cost structures in competitive companies.

      When companies that rely on set-asides do add business development and marketing functions, they sometimes price themselves out of the competition. If your price is 30% more than the competition you can’t win competitive bids. The dilemma: how to restructure and cut their non-marketing overhead, while building a business development function.

Restructuring Personnel and Costs

      You can always cut costs by laying off employees, but that is seldom an answer that best serves the needs of the company. Employees are your most valuable resource. Transfer people who are charging to overhead into billable positions. This moves costs associated with these individuals from overhead to direct costs.

      Perform a zero-based approach to justify the need for all employees. Try an exercise where you hypothetically place all employees in the parking lot. Then invite them back into the organization chart one at a time based upon needs to be filled. Those left in the parking lot give you a list where hard decisions are needed. Make some very hard, non-emotional decisions.

Building a Dedicated Business Development and Marketing Team

      Implement systems and methods that will guide the competitive and marketing process. This will be new to many organizations who have not been indoctrinated to the competitive process before.

      Implement a bid information review process to increase win ratios, and understand the elements of a bid: 1) Program Rationale (Why the customer buys); 2) The Program (Who, what, where, etc.); 3) Procurement Plan (Customer’s plan to buy); 4) Program Schedule (Concept to Award); 5) Competition (Strengths and Weaknesses); 6) Bid Rationale (Why are we pursuing?); 7) Investment versus Payoffs (Return for our B&P investment); 8) Win Strategy (How do we win?); 9) Capture/Strategy Details (How do we execute?); 10) Proposal Plan Overview (Support efforts); 11) Contact Plan (Who? Why? Message?); 12) Key Issues (Risk? Probability?); and 13) Decision/Action (Bid vs NoBid?).

Learn to Compete

      This requires a change in thinking. You must keep costs low, deliver only what the customer will pay for, and manage the program to maximize profits. Seek change/task orders after the win.

      When the program is advertised, it is normally too late to prepare an effective proposal. You are well behind the procurement curve, and your competition has had the chance to influence the solicitation in their favor.

      Learn what agencies and prime contractors have a need for and introduce your company and its capabilities. Participate in procurement related conferences and activities.

      Don’t limit your outreach to the same old agencies. Many times, other agencies have similar needs. For instance, all Defense Dept. agencies have needs for weapons, information technology, communications, etc. Be creative and look to new horizons.

      Look for “Best Value” procurements. These evaluate factors beyond just low price, including quality, expertise, experience, unique technical solution, barrier to entry, etc.

      Create “Win Themes” that are significant, believable, relevant, verifiable, defendable, RFP/Customer-specific, evaluation criteria complementary (“To the Point” in layman’s terms), compelling and engaging.

      Look for solicitations where the evaluation criteria is not representative of the real expectation of customer need. Give the customer only what is in the contract, and seek change orders when added services are requested. You must talk to the customer and influence their thinking while they formulate or change the RFP. This is where you have a chance to set your company apart as a leading candidate to perform the contract.

      Bid to win, then manage to profitability and cash flow.

John M. Collard is chairman of Strategic Management Partners, Annapolis, MD, specializing in turn-around management, new business development, raising capital and rebuilding underperforming distressed companies. He can be reached at StrategicMgtPartners.com or 410-263-9100.

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Column: Compete to Win - To Improve Win Ratio, Build a Business Development Organization

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