This seven-part series is based off of the most common proposal mistakes that we see throughout our work. In our first two parts we discussed the sins of Pride and Gluttony. Committing one or more of these proposal sins is the surest way to lose a bid while wasting effort and resources.
The third proposal sin, Greed, the fraternal twin of Gluttony, manifests itself in companies that are both cheap and aggressive. Greedy companies seek to cut costs while simultaneously setting lofty growth goals. Greed becomes obvious when managers blend being a tight spender with the ambition of a daring entrepreneur, turning into a strange cross between Scrooge McDuck and Senator Palpatine (aka Darth Sidious).
Greedy companies cut overhead to the bone by slashing the bid and proposal budget, while their skeleton proposal staff struggles to respond to more and more solicitations. They don’t bring in outside help, such as consultants, because of the associated costs. This is an odd strategic decision, as the primary reasons for hiring consultants are that the expertise or experience doesn’t exist within the company, and that it’s cheaper to bring in a consultant for a surge than maintain a fully staffed proposal center. They also fail to involve their project staff in the proposal because they would have to either lose the billable time or compensate personnel for after-hours work. The resulting low win_rate is often surprising to the company’s owner, but it takes money to make money.
The root cause for this sin is that a greedy company doesn’t resource its proposals to_win, and the overstretched staff resorts to machine-gunning out some barely compliant boilerplate. This approach burns out employees until they are ill-motivated, cynical, and spent. The resulting losses further demoralize the staff, leading to a double-whammy of high turnover and sluggish growth.
Additionally, a greedy company discourages starting capture early because “capture is expensive.” Instead of preparing in advance, managers know that by the law of numbers, they can win sometimes if they rely on bottom pricing and luck.
Moreover, larger proposals often culminate in chaos that resembles Godzilla attacking a major metropolitan area. As a result, greedy companies get discouraged from going after anything large and complex as a prime again. Petty bean counting and fear, rather than judicious investing, guide the pursuits of a greedy company.
Mitigating the risk of Greed comes from management realizing what it takes to write a winning proposal and properly budgeting to meet their growth goals. This requires a mindset shift from quantity to quality. An obvious truth is that proposals cost money, but the rare well-written proposals cost more money than the majority of losing ones.
Generally, a minimum budgetary target for small businesses is 0.75% of the total opportunity value. In other words, if you are seeking to book $30 million and your win_rate is around the industry average of 33%, then you should bid on roughly $90 million in opportunities. Therefore, your total minimal bid and proposal budget should be around $675,000 for the year, split into a realistic number of pursuits you have a higher chance of winning. This budget covers capture and proposal cycles and includes the cost of the hours for overhead personnel, project people not billing to the customer while working on the proposal, and proposal consultants.
Non-existent capture results in a missed chance to implement a win_strategy that would raise your Pwin. Use capture as an opportunity to build customer relationships, gather intelligence, ghost competition, find the sought-after teaming partners, and mature the technical and management solutions.
In other words, the recipe for avoiding Greed is to target carefully, budget realistically, start early, invest where it makes sense, develop your staff through training, and get timely consulting support.
If you are a company that is struggling to turn your tight budget into proposal_wins, please contact us for help developing an apt capture and proposal strategy.
Business Development and Operations Manager
Because there is no second place in proposals!TM