4 Business Development Steps for Ensuring Your A/E Firm Stays Busy
August 20, 2020
When the COVID-19 pandemic hit, many architecture and engineering (A/E) firms had a pretty significant backlog of work. Consequently, even as the U.S. edged into a recession, they were able to stay busy.
However, as the pandemic has dragged on and the recession has worsened, many firm owners and principals are starting to see their backlog evaporate and are growing increasingly anxious about how they’re going to keep people busy in the months ahead. And unfortunately, anxiety isn’t conducive to the kind of focused business development (BD) effort required to find and land new work.
It’s a little like the good swimmer who glances around and realizes they’re farther from shore than they’ve ever been. Intellectually, they know they can make it back. But emotions kick in, their form and breathing suffer, and soon they’re flailing around and in serious danger of going under.
What’s the “life preserver” for firms in this predicament? The clear vision and calm actions that come from having and sticking to a BD plan.
How to Pursue New Work Effectively When It Matters Most
It’s important to note that some firms use the terms “business development” and “marketing” interchangeably. We do not. We see BD as an umbrella term that encompasses marketing, sales, and customer relationship management, and making clear distinctions between these activities is important as you work on improving your BD processes.
With that perspective in mind, we’ve found in our work with A/E firms that there are four critical steps for your “business development survival plan.”
1. Define your key markets and your position in each.
The first part of this step is easy. Where do you get most of your work and what are you best known for? Looking at your financial statements can help back up what is likely a very intuitive answer to this question.
The second part is more challenging, especially since the onset of the recession may have changed the business landscape to some degree. It’ll require in-depth research on the part of your BD team (and an outside consultant, if necessary) to figure out where you stand in today’s economic climate and, just as importantly, who your competitors are. That aspect is crucial in any market that’s faring better than others since good news travels fast and will entice new challengers to bid on jobs.
"Seeing your work backlog disappearing is unnerving. But taking action as soon as you recognize it’s not being replenished and developing a detailed plan can help give everyone much-needed confidence."
2. Determine the right pricing strategy for each market segment.
You may not be able to charge the same fees during the recession that you charged before the recession. Obviously, clients are going to be more price sensitive during a downturn. And, the cost structure in your firm may have changed.
For example, you may have less overhead and a higher utilization rate if you’ve shifted to a remote working approach. That said, you may have higher IT and BD costs. So, it’s important to crunch the numbers and adjust accordingly so that you remain competitive in getting new work but also make some money on each project.
3. Structure your business development investments.
It’s critical that your BD investment flows naturally from steps 1 and 2 of your plan. The fact is, you can’t know what your investment should be until you’ve identified your key markets and set your pricing strategy. So, whatever it is you’re doing right now to drum up business, you need to stop until you can reassess. Wasting time, effort, and money on activities that may not pay off is a problem in the best of times. In a recession, it can be catastrophic.
To continue our swimming analogy, without solid research to guide your BD efforts, you may raise your head to find you’re swimming away from shore. For example, if there are opportunities in your key markets but you go after them with pricing that’s too high, you risk both not getting the work and alienating the clients.
Once you have your “intel,” it’s important to document what you might call your “revenue generation plan.” Doing so makes it possible to track your BD investments and have accountability in terms of what choices were made and actions taken, and what resulted from them. There are many metrics you can use—proposals sent vs. signed, fees proposed vs. contracted, etc.—but the best is gross profit sold, which is the amount you stand to make on a project. In tough economic times, it’s important to be focusing on getting the work that generates the most profit as opposed to the most revenue.
4. Turn your plan into action.
Renowned business expert Peter Drucker has said, “Plans are only good intentions unless they immediately degenerate into hard work,” and there’s no denying the truth of that statement. You can craft the most detailed and insightful business plan ever, and if nobody executes it, nothing changes.
In many cases, a lack of action is the result of confusion about responsibilities. That confusion can lead to everything from multiple people chasing the same opportunity to nobody going after a project that’s a perfect fit.
For that reason, it’s essential that members of the BD team and other staff that are pulled into BD activities (principals, project managers, etc.) understand their role and “stay in their lane.” For example, someone who has a marketing director-type role should focus on the quality of the website and marketing materials that are used to attract potential clients. Once projects have been identified, the pursuit is handed off to a BD rep or sales rep, who contacts potential clients, responds to RFPs, gives presentations, etc.
In some cases, the person chasing the work is a “seller/doer.” Often an owner or principal, this role is common in the A/E industry, as clients like knowing that the person who sold them the services will also be closely involved in execution of the work. There’s nothing wrong with this approach to sales, of course, but again, people must understand and stay in their lane. Nothing good comes from a BD rep and a seller/doer both trying to land a project and unaware that the other person is doing the same!
Yes, You Can Reach the Beach
No doubt about it: Seeing your work backlog disappearing is unnerving. But taking action as soon as you recognize it’s not being replenished and developing a detailed plan for going after work in a logical and methodical way can help give everyone much-needed confidence. Then, they can focus on doing what needs to be done to keep your firm afloat until the tide changes and the economy rebounds. At that point, your enhanced approach to business development will only benefit the firm even more.
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