Part II: How to Ramp-Up to Serve a Fortune 1000 Company


The 5-Step Process:
As I mentioned in Part I of this blog, the lessons I learned from living though the “ramp-up” experience resulted in the 5-Step Process I’ve outlined below.

But before we start, I’d be remiss if I didn’t point out that for more insights on closing big orders with big companies you should really read my blog “Why Do Small Businesses Stay… small?” introducing the basic concepts of Decision MAPping, and then the follow-up podcast interview with its creator, Rich Hodapp.

STAGE 1: Bidding/Proposal
Scoping the Work – First, if you’re responding to an RFP, do a quick review of the requirements. Do they match your strengths? If they don’t and it’s a bit of a stretch: Please, close the file and walk away!  Your most precious asset is your time. Don’t waste time chasing orders outside your core competency.  Second, make sure you have a thorough understanding of the project. This is where I see the most mistakes with my SBE customers! Take the extra time to make sure you’re building a bid based on solid foundation.
Evaluating Required Resources – In my early years I suffered from Superman syndrome thinking I could do anything.  This is not the time for rose-colored glasses! Make sure you get a jump on chasing down exact subcontracting costs. Get firm, written quotes. This is not the time for educated  guesses – which I now interpret as laziness, procrastination or both.
Pricing the Project – Too many small businesses price projects based on industry experience without knowing their absolute cost of delivery. One thought: SPREADSHEETS. Learn how to use them, it’ll save time and you can re-use them for future bids.
Responding to an RFP/RFQ – Please understand unless otherwise stated, if you’re responding to an RFP/RFQ the majority of the sales cycle is over.  In order for a Fortune 1000 to issue an RFP they have moved past “concept” and structured a solution. Your job is to respond to their designed solution. Spending time writing about a better mouse-trap, even though you may be correct, is not something a corporate buyer can act on! So why do it?

STAGE 2: Writing the Proposal 
Organization of ideas  – Make sure your written response to an RFP is well thought out, has a natural flow of ideas, and clearly meets the requirements of the RFP.
Detail the processes used to fulfill the project – Make sure you detail your process for delivery–this gives the buyer confidence you know what you’re doing and have a plan to execute. Fortune 1000s have a natural aversion to risk. Remove it. Write your proposal with THAT purpose in mind.
Don’t try to sell a different solution – If you’re responding to an RFP the time to sell the customer on “concept” is already over, don’t waste your time! (Yes, I repeated myself… I can’t count how many times I told my sales staff the same thing–and they still tried to sneak it by me!
Clear description of Terms and Conditions
–         Detail how to handle Changes in Scope – NEVER start a change without a signed approval… I’ve seen too many SBEs get burned and never paid for changes by going outside the customer’s process.  “…but, Danny, they need it now!”  If you want to risk doing it for free… go right ahead!
–        Set up delivery milestones – Know the project well enough that you can segment it into stages that match your project cash flow needs, and…
–        Tie payment terms to delivery milestones
– Style points – A company that takes the time to design professional logo, letterhead, website, all social sites, etc., and then delivers an RFP response that is well conceived and looks great shows they pay attention to the details. You do get points for style. They don’t override substance, but they do count.

STAGE 3: Contract Negotiations 
Know your cash flow requirements – Big projects require cash. Make sure you know if you need a deposit to start work.
Know your real cost basis – The downside of large orders is they can put a company out of business. Underestimate the project cost, or not knowing the actual cost basis until after the projects starts, will burn you.
Own the last minute changes BEFORE you agree to them- Since last minute contract requirements and changes are inevitable make sure you run the numbers on the cost of those late additions before you agree to the selling price.
Negotiate fairly, but don’t be a “doormat” – Many SBEs are in awe of large companies and think they need to accept every term and condition. You don’t. Negotiate fairly for what you need to succeed.  And always remember, as much as they might try to tighten the screws, they need you to succeed!

STAGE 4: Starting the Project 
Don’t start work until the agreements are signed and you have the Purchase Order.
Internal Project Kick-off Meeting
–     Evaluate the pricing spreadsheet and the project plan
–     Lock-in Subcontractors – Communication with subcontractors and lock-in pricing with an official agreement, including the terms & conditions that apply from your agreement
–     Don’t over-hire!  Do the proper planning for new hires, if required. Do not commit to hire before you have the contract signed. Consider short-term, freelance contracts instead of permanent hires (if necessary, you can always convert Freelance to full time down the road)
Follow through on the process
–        Do what you say you’re going to do, when you say you’ll do it.
–        Manage to the Project Plan – I found out that a project gets behind schedule hour by hour, day-by-day… not all at once.  If you don’t have a project planned out in detail you are planning to fail.
–        Manage to the Milestones – if payments are tied to milestone achievements prepare your customer for the milestone date in advance to ensure your payment comes as close to the agreed-to milestone date as negotiated.  If it doesn’t kindly let the customer know the project will need to stop and wait for the payment to arrive.
–        Handling Change Orders – if you’ve agreed that work doesn’t start on change-orders until the customer has signed off… DON’T START WORK ON CHANGE ORDERS UNTIL THE CUSTOMER HAS SIGNED OFF ON IT! If you do, you have a greater chance of never getting paid for the extra work.  Why would you do work for free?
–        Keep the Account Manager/Sales Rep involved and informed with the decision owner and the implementers during the project fulfillment period to determine levels of satisfaction with the process.

STAGE 5: Post-Delivery  
Internal Project Review
–        There’s always a curveball thrown into a big project.  Thorough upfront planning dramatically reduces them, and then the few curves can be handled.
–        There’s significant value in the post-project wrap up meeting. Celebrate successes. Properly evaluate the trials and work together to get to the root cause.
–        If problems are process related, fix them. If it’s skills related, train them. If it’s personality clashes, work through them as best you can. If you feel you’re faced with an unfixable personnel issue, remove the antagonist from your organization immediately. We’re a small business! The odds of survival are already difficult enough without adding the impact of internal chaos.
External Project Review
–        You want to make sure you’ve developed a return customer.  In my experience, most everyone understands the occasional bump and hiccup in a large project–especially if under great pressure.  If it’s your mistake, claim it immediately. Don’t defend your company. And always offer a solution.
–        Make sure to include the key people from your customer and your company for the project review, always work to get their honest impression of the final delivery.
–        If they’re satisfied, investigate other opportunities. If they are not, work to find out the root cause and be frank: ask them if it precludes them from recommending or using you again.

Building and growing a small business: that’s what we all dream about doing. Even though it can be an absolute blast, it can also be an implosion.  I’ve seen both, and when it crashes it’s the ugliest train-wreck imaginable.  There’s no secret to ramping up to handle major orders: there’s just no substitute for thorough, well designed, efficient and effective internal and external business processes.

I know I’ve only scratched the surface, so I welcome anything you have to add and any comments.  Until next time…

Be safe on your Small Business journey!

Danny Gallo
Social Media Director & Small Business Advocate, Supplier-Connection
Managing Director,  The Allasso Group

   

The Allasso Group, LLC

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: