Business Development And The Beta Concept
Reducing Pipeline Volatility

If we have worked together, you more than likely have heard my
stock answer when asked, “So, tell us about yourself.” I pretty much always begin with how I am a
perfect example of the ole saying, “If you want to make God laugh, tell Him
your plans.” As a young man in school, I
had no idea I would be doing what I am doing.
My degree is in Finance, with a concentration in Banking & Investments…I
wanted to be a finance guy. Or so I
thought. A recent engagement with a
client inspired this article and will allow me to attempt to marry what I
learned in business school with what I have learned doing AEC business
development consulting for the past 23 years.
So, let’s talk beta.
In the world of finance, the beta (β) of a stock measures its volatility
relative to the entire market. A beta greater than 1 indicates higher
volatility, while a beta less than 1 signifies lower volatility. For the long term, you want your investment to
be close to 1.
This concept can serve as a powerful analogy for business development efforts
in the AEC (Architectural, Engineering, and Construction.) industry. Just as
investors seek stable returns, AEC companies should aim for a business
development pipeline with minimal volatility.
Too often, AEC firms experience a 'hurry up and wait' cycle in
their business development efforts. They land a significant project, shift all
their focus to its execution, and put business development and marketing on
hold.
As the project nears completion, a sense of urgency sets in due to an anemic
pipeline. This cyclical pattern of intense activity followed by inactivity
mirrors a high-beta stock's volatility, creating uncertainty and instability
within the firm.
To avoid this volatility, AEC companies should strive for a
steady, low-beta business development pipeline. This involves maintaining
consistent business development activities, ensuring a continuous flow of
opportunities, and avoiding the feast-or-famine cycle. How do we accomplish this?
1. Consistent Effort Over Time
Regular Business Development Meetings: Schedule meetings to review
the status of potential leads, ongoing proposals, and upcoming opportunities.
This keeps the team focused on business development, even during busy project
periods.
Dedicated Business Development Processes: Establish a team or assign individuals specifically responsible for business development, separate from project execution teams. This ensures that business development activities continue irrespective of project demands.
2. Balanced Resource Allocation
Resource Management Tools: Utilize tools to allocate resources
efficiently between ongoing projects and business development efforts. This
prevents the common issue of diverting all resources to project execution at
the expense of business development.
Cross-Training Employees: Train employees to handle both project execution and business development tasks. This provides flexibility and ensures that business development activities are not neglected during busy periods.
3. Data-Driven Decisions
Market Analysis: Regularly analyze market trends and data to
identify potential opportunities early. This proactive approach reduces the
risk of a dry pipeline and ensures a steady flow of prospects.
Performance Metrics: Track key performance indicators (KPIs) related to business development, such as lead conversion rates, proposal success rates, and the average time to close deals. Use this data to refine strategies and maintain steady growth.
4. Relationship Building
Client Relationship Management (CRM) Systems: Implement CRM
systems to manage interactions with current and potential clients. This helps
in maintaining long-term relationships and identifying new opportunities
through existing clients.
Networking: Encourage continuous networking through industry events, seminars, and professional organizations. Building a robust network can lead to consistent referrals and new business opportunities.
5. Marketing Integration
Content Marketing: Develop a content marketing strategy to keep your firm visible and engaged with potential clients. Regular blog posts, case studies, and social media updates can keep your firm top-of-mind.
Email Campaigns: Implement regular email campaigns to nurture leads and keep them informed about your firm's capabilities and recent successes.
6. Quantifiable Examples
Lead Conversion Rates: Track and aim to improve the percentage of leads that convert into actual projects. For example, if your firm currently converts 20% of leads, set a goal to increase this to 30% over the next year through consistent follow-up and relationship building.
Proposal Success Rates: Measure the success rate of your proposals. Do you know your company’s ‘batting average’? Remember, if it can be measured, it can be improved.
Pipeline Value: Regularly calculate the total value of potential projects in your pipeline. Aim to maintain a pipeline value that is a multiple of your annual revenue target, ensuring that you have sufficient opportunities to sustain growth.
Conclusion
By applying the principles of stock beta to business development,
AEC companies can achieve a more stable and predictable pipeline. This involves
consistent effort, balanced resource allocation, data-driven decisions,
relationship building, and integrated marketing strategies.
When it comes to Building New Business…embracing these techniques can help avoid
the volatility of the 'hurry up and wait' cycle, ensuring sustained growth and
long-term success. Just as a balanced diet leads to better health, a steady
approach to business development fosters a healthier, more resilient company.
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Bobby Darnell is the founder and Managing Principal of
Construction Market Consultants, Inc. An Atlanta based consulting group
specializing in business development, sales, marketing, CRM as well as
executive placement for the AEC (Architectural, Engineering and Construction)
industry.
Bobby budgets four hours per week for just ‘talking shop’ with AEC Business Owners
and/or AEC Business Developers. He never does follow up emails or calls unless asked.







