Are you a service provider or contractor? Do you find yourself chasing contracts or putting together proposals without results? To determine the right amount of time and energy to spend on new business opportunities, I use a framework called The Money Tree.
Imagine that you and the family decide to spend a fall Saturday afternoon together partaking in a seasonally appropriate activity. No, not tailgating. Not picking your gourd of choice out of a field. You pack up the mini-van and head for Uncle Bob’s Pick-Your-Own Apple Farm.
Uncle Bob takes your money, hands you a bushel basket and points you out the screen door toward the apple trees in the distance. When you approach the trees you realize a few things:
1. The trees are actually much taller than they looked when you Googled “Uncle Bob’s” on your phone.
2. It’s been a long time since you climbed a tree.
3. Uncle Bob just snookered you into paying him good money to provide free labor for overpriced apples.
Believe it or not, new business opportunities available to a contractor are a lot like apples on a tree: the apples at the top require the most effort to get to and are the hardest to see, and the “low hanging fruit” are the easiest to get your hands on and the easiest to see.
New business opportunities fall into one of three parts of The Money Tree.
The Top
These are potential contracts that are in the planning phase, have not been designed, and may not even have any budget. You have no relationship with the client and/or the contract will be awarded based on low bid.
These are projects that may never see the light of day, so we don’t spend much time pursuing them. Find out who the decision maker is, log it as an opportunity in your CRM and set a reminder to check on it every 2-3 months to see if the project is getting any traction. The ROI is very low for opportunities in this category, so our goal is to keep tabs on the project while spending very little time on it.
The Middle
Here we find projects that are in the design phase or are currently out for bid. The client has determined they have the dollars and the desire to put behind the project and it is moving forward. Contracts with private clients that do not require competitive bidding, but are open to negotiation, would also fall into this region of The Money Tree.
We can afford to spend some energy on these contracts because they have a better than average chance of coming to fruition. Here are some of the strategies we want to consider:
- Make sure you get on the bid invitation list.
- Find out if the client has a prequalification process and submit the necessary information.
- Look for an opportunity to get your product, service or technology specified in the bid documents.
- Review the bid documents or RFP as thoroughly as possible as early as possible. If you find any discrepancies, contradictions or gaping holes in the documents, share that information with the client and offer suggested solutions.
- Submit a detailed proposal that addresses all the requirements as well as any potential concerns that may come up. Consider including your qualifications, resumes of key personnel, references, evidence of insurability and bonding, safety record, and a list of your current projects.
- Follow up after the proposal is submitted to see if additional information would be helpful in making their decision. You would be amazed how few contractors make this first follow up call.
The Low Hanging Fruit
This is the Promised Land. The “place where the beer flows like wine,” as Lloyd Christmas so eloquently put it. This is the part of The Money Tree that offers the the fewest hurdles, the highest ROI and opportunities to build strong relationships with our clients. It is also the area that most contractors completely ignore.
Why do we spend so much time and energy going after new customers, chasing work and jumping through sourcing and purchasing hoops, just to have the opportunity to bid on their next project?
For some reason new customers are sexy, exciting and mysterious, like the pretty new girl who showed up in your 11th grade American history class and had the attention of every male in the building by the end of 6th period. The problems with new customers are similar to the problems with the new girl in class: you don’t know anything about them, you have no relationship with them… and everybody and their brother is clamoring for their attention.
Instead of chasing new customers, I recommend that we focus on deepening and broadening the relationship with our existing clients. Think about it: We’ve gone through the bidding process, the procurement process, and we now have a contract. We know how they operate and also that they pay their bills. They know us and they likely have the dollars and desire to let us solve some other problems for them. We would be wise to spend a significant amount of our business development time and energy expanding relationships with our current and previous clients. How do we do this?
Say these words to your customers and watch what happens: “What else can we help with?”
Here are some options to consider to expand these existing relationships:
- Look for additional value you can add to a project, even if it is not in your wheelhouse. Perhaps you can hire subcontractors or purchase equipment for your client.
- Maintenance contracts or extended warranties can be a win-win proposition.
- Does your client have other locations or other divisions that have problems to solve? Ask your current client to make an introduction to their colleague.
- Establish a unit price contract with hourly rates for emergency response services.
- Make a point to send an interesting article to each of your key clients or phone every month or two and ask, “What can we help with?”
- My personal secret weapon for relationship building? Bacon wrapped donuts. Boom.
Now take this framework, use it to categorize the opportunities you are considering, and be smart about how you spend time chasing work. Conversely, you can plant some apple trees and wait for the suckers to come to you.
About Todd Dawalt
Todd Dawalt has spent nearly 20 years in the construction industry and has a podcast to help construction professionals grow in the area of leadership and ass-kicking in their business at The Construction Leading Edge. He lives in Kentucky with his smoking-hot-third-grade-teacher wife, four kids, and a Chihuahua of below average intelligence.
