Business Development and the “New Normal”

Reduction of Full Time Business Development Staff (Government Contractors)

So many highly experienced and successful business developers have hit the street this past year – cut from long time employers over money, a perception that Business Development is overhead.  Yes Business Development can become overhead if not managed correctly.  Ultimately BD even in a tough market should be about lead generation, target research, needs analysis, moving the prospect through the pipeline to pre-close and ultimately proposal and closing.  Yes things are taking longer and yes, some government agencies have no money to spend right now but is cutting BD an effective tool right now?  The answer is…it depends.

Do you have a unique solution or a solution that we know is needed right now and can we go after year end money or upcoming projects?  Do you solve a pressing issue; do you eliminate butts in seats?  Are you a sub or a prime?  A number of questions need to be answered to know for sure what the correct answer is but in the end there’s really only one question to answer and for that you’ll need to read the entire blog!

Each agency is different as you well know; they have different budgets and different needs.  Efficiency is king right now so if you’re selling bodies business development can definitely be tough however it’s not impossible.  Being a sub is a challenge right now as large primes are removing subs from contracts to keep the seats for their own people.  Here’s what we know right now – the cuts are real, we have no agreed upon budget and haven’t for years and quite frankly no one really knows what’s going to happen.  Budget constraints are here to stay so I hate to put it like this but you simply need to get over it.  We’ve seen some amazing talent let go this past year and eventually, typically after 6 months of searching they find a new position at a lower salary, one that more accurately reflects today’s environment of lowest cost technically acceptable.  Be proactive – talk with your employees about the situation at hand – it’s not a surprise to anyone.  There is a choice – allow top talent to leave or work to restructure compensation so it fits the new normal.

Full time business development leaving companies is definitely an opportunity for us at Springboard however we feel that if business development isn’t taken seriously it’s not really an opportunity for anyone.  Some companies need full time BD at a high level while others can grow dramatically with outsourced support – it just depends on what fits.  While we tend to be 1/3-1/2 the cost of full time BD help we aren’t always the right fit, sometimes full time is needed – especially with very large firms.

How Fast can you Close Deals?

When I’m asked a question like this I immediately start to wonder if this prospect is the right fit.  Why are they asking this question?  I get it, you’re looking for Return on Investment, I understand completely, you’re putting out money and you want to know the value of what you’ll receive in return and here’s the answer…I don’t know yet.

Let’s face it sales can be a bit of a crap shoot.  Anyone who guarantees you increases in sales/revenue at “x”% is without question lying.  A couple things we need to consider:

 

  • What’s your currently sales cycle?  Why is it that long?  Are there challenges that contribute to the length of the cycle or is it just that long?
  • Who is your potential buyer?  And why?  How do you connect with the potential buyer currently?
  • Do you have a presentation or marketing materials?
  • How do you price?
  • Who’s your competition?  What do they do really well?  What’s unique about you?

Many of these questions may seem silly but here’s why I ask:  We can typically shorten the time it takes to get to a decision maker but the sales cycle is the sales cycle.  You should not expect any major changes to the amount of time it takes someone to close a deal just because you’ve hired an outsourcing firm.  That being said it’s not uncommon for us to close deals in half the time it takes you but for others it may take longer.  It depends on the complexity of the deal, the process necessary to get the deal complete (RFP, multiple decision makers, large vs small deal, etc).  We find that many of our clients don’t have a strong grasp of their target market or they target someone they want to be a client but will never be one.  We find that many of our clients have little marketing materials that are usable while others have too much and it can become confusing for the prospect.  We don’t rely on marketing material but it can be a good conversation starter so it’s certainly helpful if done right.

When we ask you about your competition there’s nothing that drives me more insane then hearing you say “Well, our people are smarter and our service is better.”  As if your competition would actually say, even if it were true, that they hire below average staff and their service stinks.  This is the equivalent of telling your prospect “blahblahblahblahblah”.  What makes you unique, if you don’t know, it’s time to figure it out or you can forget competing – you’re essentially making yourself a commodity and now it’s all about price.

Pricing.  Oh pricing, it can be the devil in this relationship.  I can’t tell you how many times I’ve taken a prospect into a decision maker for a deal that would double the revenue of their company only for them to price the project so far out of the realm of possibility that the prospect is literally in shock.  They loved you, you came highly recommended, they felt you could deliver and make them shine like the rock star they are and you blew it with cocky aggressive pricing and then you blamed me for losing the deal.  Here’s the deal, when it comes to closing with outsourced business development, it’s a partnership.  You rely on us to ensure you have a qualified lead, a decision maker with a budget and a strong connection either personally or professionally.  We rely on you to showcase your value, deliver high quality and always on time, and to price competitively.  We can go to bat for you if you’re within reason but if you’re off the mark, there’s nothing we can do to help.  In fact we’ve probably damaged that relationship by bringing you in the door.

So how fast can we close deals?  I don’t know, it’s different for every client.  Some happen within the first 2 months while others can take a year or two.  If you’re not viewing business development as an investment in your company’s future then perhaps it’s not right for you at this time.  If you’re counting every dollar and every minute that goes by you’re not seeing the forest through the trees.  Business development is about building the relationships that are going to change your business and when was the last time you built a long lasting, happy client relationship over night?

Prospect Rant #5 – They said they had connections

Rant #5 – They TOLD ME they had great connections

It’s now 6 months later and we have no meetings scheduled.  I have to admit I love this one because it can happen across the board.  It can be your $225k hire, the retired military leader, the retired Agency head, the “commercial expert” or the newbie, etc.  You’re paying for action not cards in a rolodex.  How many former executives do you know that actually handled the sales process?  Not too many – so why would you expect them to do it for you?  You hired them for one reason and one reason only – to make introductions for you and now in order to see your investment flourish you need to pair them with someone who can communicate the opportunity and move the opportunity forward.

It can also happen with your in-house Business Development person, anyone can say they know people and how many CRM’s are filled with names and numbers that represent a person they met once at an event 5 years ago?  Again Business Development is about connections, strategy and execution.  You’re looking for someone who can figure out the puzzle, methodically go about meeting and meeting with your desired prospects, communicate in the most effective way the value that prospect would receive in working with you and moving that prospect along the pipeline IF they are the right fit.  The last thing you want is someone trying to cram a square peg into a round hole.  You want right fit clients and you need the person who is willing to walk away from a deal if in the short or long run they know it’s not going to work.  The frustration and potential damage to your reputation just isn’t worth a few months of revenue.

Let’s be honest, sales is a crap shoot.  There really is no way to tell if someone you interview really has strong connections or not (unless of course you’ve seen this person in action over a long period of time).  There’s also no way you can identify their strategic capabilities or their desire to execute.  What does work is communication and accountability.  This in no way implies you should be a micro-manager however there does need to be a standard for how information is delivered to you and vice versa.

Rant #4 What’s with all these expenses?

As you know from reading out last couple of blog posts we’re listing all of our prospect rants – what brings them to us initially.  Today’s is all about expenses and unfortunately most business owners don’t take into account the expenses associated with business development which ultimately leads to a much higher budget item then originally planned.  Keep reading to get a greater understanding of the full budget challenges:

 

Rant #4 – what’s with all these expenses?

 

What’s with all this expense reimbursement?  So Business Development is not just salary, commission, benefits and taxes…it’s also expense reimbursement and you should plan for a minimum of $30,000 if you hire someone full time.  Here’s what we typically see:

  • Mileage – at or near the IRS reimbursement rate, you should expect 800-1500 miles on average per month
  • Memberships – some groups are $35 a year while others are $30,000, you’ll need to determine a budget and which groups fit your target profile
  • Event fees – typically range from $30-400, including fees for appropriate trade shows which could be upwards of $2500
  • Phone reimbursement – typically capped at a monthly number or fully paid for by the company and may be company equipment
  • Parking and tolls
  • Taking clients/prospects/partners out to breakfast/lunch/dinner/drinks

 

When I was employed in a BD role years ago, my monthly expenses averaged $1200-2000 and that didn’t include the memberships…this was also over 5 years ago.  If you decide to hire full time you should plan for expenses and budget, be sure to discuss this budget with your BD staff.  I’ve had corporate credit cards and I’ve had to deliver expense reports biweekly.  For those that travel outside of the region you should expect flights, trains, rental cars, hotels, per diem as well.  This would also be the case if you need to attend a conference out of the area.

I’ve found that most BD outsourcing firms cover their expenses in house with the exception of out of the area travel which is typically only if requested and approved by the client ahead of time.  So typically if you use an outsourcing firm for business development its one flat rate monthly plus commissions.  We have seen some outsourced firms bill for expenses so if you’re in conversations it’s important that you know what you will and will not be responsible for and for how long.

 

Springboard Prospect Rant #2 – I Can’t Keep a Sales Person

Continuation of the Bob London of London, Ink “Customer Rant” posts, see previous posts for more information and the slide share of the presentation.

Springboard Prospect Rant #2– I can’t keep a SALES Person

Typically when a prospect finds us it’s because they’ve tried the traditional route and it just isn’t working for them.  They’ve hired 2-3 sales people over the last couple of years and they have either left or failed.  The issue may be the hire, or it may be in the process, the management of the sales person or in management altogether.   Here’s what we typically see:

 

  • They hire the person based off how they interview and their resume, not qualifications or references – interviews and resumes aren’t always 100% accurate
  • They hire the person who has spent their entire career doing something other than sales and yet expects them to be closing deals in 2 months – this is a person who requires training and mentoring
  • They hire family or friends where the challenge becomes accountability, how do you tell your child, your friend that they aren’t living up to expectations?  This can be an excellent idea but it can also have damaging consequences.
  • They hire without plans for tools, expenses or process of accountability.  Tools – tracking, Customer Relationship Management, communication.  Expenses:  mileage, phone, lunches, events, memberships, etc.  Accountability – who, what, when, how?
  • They want the professional who comes with a rolodex, who is on a first name basis with decision makers, who can shorten the time it takes to get in the door, who can frame them as experts in their field, who has a process for management and follow up and who can ask and have answered some challenging questions.   This can be an excellent hire and it can also backfire.   Former executive levels at times can fall into the trap of schmoozing with little follow up and execution – if you think about it, it makes perfect sense; they always had someone else to do it for them.  This would be a great person to partner with an in house program manager or business development manager.

 

Essentially what we end up seeing is the person who should be producing but isn’t getting a very long leash costing the company far more than it should or the newer professional who needs in depth training, mentoring and time expected to perform like a pro immediately.  Sometimes it’s the hire, sometimes it’s the training, sometimes it’s the expectations.