The golden triangle – focus on the pipeline as recession looms
The three underpinning principles of business, known as the Golden Triangle; marketing & sales, cash control and the staffing, should always be at the forefront of a business owners mind, but when times are good, as they have been, complacency sets in. But now as a recession looms, I urge you to review the three golden principles. The Coronavirus pandemic has impacted upon the economy and will do for some time to come. The way the pandemic has impacted upon the economy is different to other recessions, as individual’s health is concerned and confidence by individuals to resume behaving as they did before will vary considerably.
The anticipated sales pipeline is the raw data for deciding what to do with your business. Working out what your expected pipeline will be in the “new normal” is critical as all the commercial decisions will hang off this. Understanding what will happen to your portfolio of work is fundamental.
The first step is to take stock of what is happening in the wider world. Watching the news and listing to people speak will immediately surface what people are concerned about, how their habits have changed and what they are optimistic about for the future. Sorting what you surface into issues which are driven by Politics, Economics, Social activity, and Technological changes will help to surface even more considerations of how the future will look. At a time of significant change, this exercise seems easy to do, but if it is done on an annual basis, surprisingly it will reveal that there is always change occurring. From the main drivers you will be able to decide which business sectors or activities are likely to be in decline or a growth phase in the future.
Identifying the trends is a useful starting point as you can then take stock of your existing client base and decide which are likely to have more, or less, work going forward. Some will benefit from the current situation and some will not. The obvious choice is to back those who will benefit, and steer clear of those who will suffer.
Having analysed your existing portfolio determine which work you believe will occur an where there is a risk. Assign percentages to them, say 90% for work that you would be surprised if it did not occur and lower percentages for work where there is a higher risk it will not occur. People rank the future work as having a high, medium, or low probability of occurring. With the percentages in place a more realistic prediction of turnover can be gained, from which suitable resources assigned.
Invariably, this brutal assessment will mean that income is probably going to be less than you were expecting. So apart from reducing costs, the next step should be to find new clients or gain some more work from existing clients. Approaching existing clients and having a discussion with them about the future, should be relatively easy if relations are good. Find out their needs and see if it fits with any services you offer which they were not aware you delivered.
Finding new clients who require the service which you are already providing to others, takes some research, not only to identify them, but to sort out how they procure and who are the decision makers. There are several techniques then to get in front of the decision makers and be given the opportunity to provide a price. For companies in the construction sector, a good place to start is by searching the lead databases provided by the likes of Builders Conference, Glenigan, Barbour-Abi or Planning Pipe, to ascertain who the key players are in the target segment. On average it takes 6 or 7 touch points to make contact, so utilise several channels and be persistent.
Be selective about who you approach. Make sure that if they became a client you would be happy with them. The ability to pay on time, their approach to business and their future aspirations are all consideration to be weighed up. Have a clear Bid – no - Bid strategy. However, do not be so rigid that you end up with all eggs in one basket. Being reliant on one good client is very risky and one should aim for no client to represent more than 15% of income.
If you would like a sounding board about your marketing and pricing strategies, especially as we go into the next difficult stage, of increased competition in attractive sectors caused by businesses bidding for work they would normally avoid, please get in touch.
Other blogs in the Golden Triangle series
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