Thriving Profitable Practices 01 |
How to win more of the Right Jobs
For years, I worked in a large AEC firm’s financial team. We had over twenty people running the accounting functions that supported the business. When reflecting on what actually made a difference, I believe there are really only three things to focus on:
- Win more of the right jobs
- Ensure project fees cover project costs
- Invoice early and collect debt quickly
This article will cover the first item. Read about the other two here:
Winning more of the right jobs
Not all jobs are created equal. And, neither are all practices.
We all have our natural strengths and weaknesses. And as such, certain types of projects we’ll enjoy, be proud of and make money – and others we won’t.
An important step in putting these insights to work is creating a pipeline management system. This can be in the form of a spreadsheet or a CRM tool such as Fresh Projects’ STARTER (Free)
This incredibly easy and powerful system will quickly bear fruit. Enabling you to focus on winning jobs that are good for your practice.
Managing the pipeline process
A pipeline should consist of two distinct phases:
LEADS – lightweight placeholders for potential jobs. The information tracked on leads is minimal – they serve mainly to ensure we don’t forget about them. Before a lead can progress to the next phase, it should be qualified – is this a job we actually want to do?
OPPORTUNITIES – as a job gets closer to converting so we track in more detail. A project budget should be done for each opportunity before issuing a fee proposal to the client. All costs expended on opportunities (e.g., time spent on winning the job) should also be tracked and carried through to the won job when analysing its profitability.
Setting up a pipeline management system
When implementing a pipeline management system, we need to ensure that these 4 things are in place:
1. A comprehensive list of all potential leads and opportunities is maintained.
2. Basic information about each lead is captured:
a. estimated potential fee
b. estimated start date
c. estimated project duration
d. probability of winning the job
3. The pipeline stages are clearly defined, and each lead and opportunity correctly assigned:
c. proposal sent
Setting up a pipeline management system
4. Each opportunity and project is classified so that we can identify the types of projects and clients that we are best at converting – then stop wasting time and energy on opportunities that we struggle to
Examples of classification categories might include:
a. project size
b. client type (private, government, etc)
c. project type (residential, commercial, healthcare, etc)
d. lead owner (i.e. person with the client relationship)
e. lead source (e.g. website, referral, competition, etc)
How to qualify leads
Before a lead is converted to an opportunity, qualify the prospect by:
- Validating the client – credit checks, references etc but can be as simple as listening to our gut feeling.
- Defining the project scope – the services you will and will not undertake.
- Quantifying the probability of winning – do we have the right skills and experience, who is our competition?
- Preparing a budget – what will the job likely cost to deliver.
- Calculating our fee – ensuring it has a healthy profit margin.
Once an opportunity has been properly qualified and a decision has been made that the job is worth pursuing, we can send the service proposal to the client.
Learn more about project budgets and fees in our second article in this series.
How the pipeline can provide valuable insights
If leads are classified as they enter the pipeline, we will soon start to gain valuable insights into the types of jobs that we are best at winning. Patterns might emerge, such as:
- More fees are won in mid-sized jobs than smaller jobs, due to less competition
- Healthcare projects are easier to convert than residential projects
- Sarah is better at closing deals than Paul
- We almost never convert leads that contact us via the website
This creates a positive feedback process – where potential leads can be disqualified sooner and focus can be on winning more of the easier and more profitable opportunities.
Forecasting future income
The final benefit of a robust pipeline process is the ability to confidently forecast your future practice income.
Because each lead has an estimated fee, probability and start date, we can quickly establish a monthly weighted probability forecast. The fee value is multiplied by the probability of winning the job – so a 100k fee with a 10% probability counts for 10k, but a 20k fee with a 75% probability will count for 15k.
Creating insight and focus on winning the right type of jobs via your Pipeline Management system is the first of many important steps to creating a healthy practice.
The next area to focus on is ensuring that project fees cover costs. Read more about this process here.