There is a difference between being the best and having the best proposal

You are at the top of your profession, internationally recognized for having the best product or service or for having world-leading knowledge and skills. It’s a given that your local, provincial, or federal government will hire you whenever it needs related goods or services. How could they not pick you when there is no one else who could possibly be as good?

Actually, it is quite easy. What’s worse is that I have seen many companies fall prey to erroneous assumptions that give the buyer valid reasons to choose someone else. Here are the top five mistakes that I see highly capable vendors make:

#5 – “We’re great and they know it.”

You have a relationship with your potential client. They’ve “oohed” and “ahhed” over your offering. Your name has been splashed all over the local and national media as a success story. The industry publication, which you know your client reads, has just profiled your product or service and indisputably crowned it best in class. You’ve already been in to speak with your potential client and they have a clear understanding of the benefits to them. The proposal is just a formality, right?

Wrong. Most public sector organizations in Canada must run competitive solicitations with clear and auditable steps. Pre-RFP (Request for Proposal) marketing is primarily useful for two main reasons: (1) to ensure that the specifications or criteria in their request reflects your strengths or at the very least do not restrict you from bidding, and (2) to gain insight into your client’s wants and needs to help you better respond to the RFP.

#4 – “We can do that.”

I’m sure you can, but it won’t get you a contract.

Most public sector buying is not based on what you can do but on what you have done. Chasing an opportunity because you can do it is futile if there is a requirement for past experience that you cannot meet. They don’t just give you a pass because you can probably do a good job.

Depending on the criteria, there can be many ways to link past projects to a current opportunity even if there isn’t a perfect match. Hoping that they will make the connection between your past experience and their current requirement will not cut it. For subjective requirements you have to make the connection for the evaluators. For objective requirements, you have to clearly meet them.

#3 – “We’ve used this proposal before and had success so let’s change a few words and the cover page and submit it.”

Boilerplate can be useful, but each bid is unique. You must ensure that you respond to the criteria in the request or else you will not get full marks.

#2 – “I know what they’ve asked for but they’re wrong. I’ll show my value by telling them what they really need.”

A funny thing about buyers is that they think they know what they want. Usually an RFP is issued only after much internal negotiating about what is required.

The time to influence a client’s decision about their requirements is in advance of the RFP. Sometimes this is informally done through meetings and presentations made to decision makers and staff, while other times there is a formal Request for Information (RFI) process where suppliers are asked about the product or service solutions they can provide. Once an RFP has been released it is difficult to change a requirement; only carefully thought-out and well-crafted enquiries and suggestions have a chance at effecting change. And if the RFP isn’t changed before the due date, do not waste your time–a non-compliant proposal will be tossed before your client even gets to read your superbly articulated alternative.

#1 – “We’re the experts in the field so we’re going to use our tried and true corporate processes to complete the project.”

Clients, especially the federal government, believe that they know best how things should be done. When a client wants a project or service provided in a certain way you must adapt to their requirements or they will move on to someone else.

For example, if they want an item shipped on Tuesdays and you ship on Wednesdays, you’re the one who will change your process or you won’t be doing business with them. A more complicated example is in the area of professional services where the government typically outlines their desired approach, while companies have their own tried, tested and true approaches. Guess who has to adapt? It won’t be the buyer.

There are ways for companies to present their offering in a way that mirrors what the government is asking for while preserving the key parts of their corporate or personal approaches. If done right, this can be viewed as a value-add to the buyer and increase your odds of winning. But if done poorly, you will be judged as not understanding what they have asked for.

Conclusion – Have respect for your buyer

The key theme common to each of the bullets above is to have respect for the care and thought that went into creating the RFP. If you don’t take the time to properly understand and respond to specifics in the RFP, you will miss your mark. Conversely, by building your response to address the specific requirements as outlined in the RFP you will greatly increase your likelihood of success. There is a method to the buyer’s perceived madness!

Note:  “This article was first published as a Business Matters column at the Ottawa Business Journal. For more columns by Keith Parker please see http://www.ottawabusinessjournal.com/businessmatters3.php”

To find a PDF of Kevin’s original powerpoint presentation, please click on “Are you prepared: By Kevin Pidgeon“

If you run a retail operation, chances are that you spend over 2,500 hours in your business, every year. A very serious question, how many of those hours do you devote to achieving rather than to simply doing?

How can you find the answer if you don’t know the question?

Fact –  your business can be more profitable. It can also be a much more interesting way to spend your day. What you need to do is put a whole lot more emphasis on what you achieve and less on what you do. Without some knowledge of your particular operation I cannot offer specific solutions or opportunities. What I can do is help guide you to the answer by clearly identifying the questions:

What do your customers see when they walk into your store?

Complacency and the comfort of the familiar will be your biggest challenge. When you go to work tomorrow, park a few blocks away and walk to your store front. What does your store front say about your business? Now clear up the clutter –  expired notices, manufacturer’s stickers, out-of-date trading hours. When was the last time you changed your window display? Your store front is your 24/7 advertisement –  what is it saying?

How can I improve my message and customer appeal?

Now here’s how to clean up your image and project a much clearer message to your customers. Place a black dot on a piece of white paper –  it’s simple, it has impact, everyone will know what it is, the message is clear. Now, cover the same paper in black dots and what do you get –  a grey piece of paper. The simplicity and impact have been lost. Using the Black Dot Rule, less is always more.

How do I reduce stock, improve my range and increase cash flow?

Apply the 80-20 rule to everything that you do – believe me, it works.

Fact – 20 per cent of the products you sell generates 80 per cent of your profits. Without knowing your business I am confident that this rule will apply. So, let’s see what we can do to reduce stocks of the other 80 per cent of your range, which ultimately will release that much needed cash.

During recent years you will have increased your inventory by adding new products. But, how many products have you eliminated during the same period?
If a product has not sold in the last month, sell it off at cost and don’t reorder.

Of this 80 per cent, many products will be very slow sellers. So why are you keeping shelves full? Sure, your suppliers are happy, but you should either order less frequently or reduce the size of your order.

A few years back we took a section within our stores and reduced the range of products by 24 per cent. Cash flow improved but so did sales. We were amazed and had to find out why. When our research came back, it indicated that our customers thought we had actually increased the selection of products. We had turned a grey piece of paper into a Black Dot. And I have been applying that rule ever since.

How can I add a little life and excitement to my store?

Easy, just be a little livelier and exciting. Start to see your store through your customer’s eyes.

Smarten up your store front and change your window display at least once every month. Clear the clutter from the cash desk and regularly change the products that you display near the cash register.

Promoting your business is a diverse topic worthy of an article all its own, but the real point is to look for opportunities to promote. When was the last time that you asked your suppliers for promotional support? You may be surprised by their response.

How can I survive if my margin reduces?

If there is one black dot that I hope you will remember it is this “20 per cent of nothing is still nothing.” Many retailers seem to disagree, but I would much rather sell three products at a margin of seven per cent than one of that product at 20 per cent. I am not proposing that you become a discount operation, but I am suggesting that the protection of an imaginary per-cent margin has much less value than the generation of cash.

Retail is a hard business but it can also be exciting. Even today I find it impossible to walk into a store without looking for ways to improve that operation. There really is no place for complacency in retail. If you address the questions that I have set, then you will add a little excitement to your day and maybe a little more profit, too.

Finding the answers appropriate to your situation begin with taking the time to plan far in advance, to carefully review the terms and conditions of your existing lease and ensure you have a full understanding of the pros and cons of a lease renewal or other course of action that can have a long-term impact on cash flow, profitability and your ability to expand the business with additional equipment, inventory and staff.

In this article, we will focus on three key areas:

1) How to prepare and transition to new office space

2) The importance of reading your lease

3) When it is appropriate to consider a “blend-and-extend”

How to prepare and transition to new office space

Start early

Last minute real estate decisions usually result in higher rents, unnecessary costs and limited flexibility that leave a company ill prepared to handle any bumps in the road that come its way. This can negatively impact not only the company’s bottom line, but staff morale as well.

The simple solution is to start the process as early as possible. Begin reviewing your existing lease no less than 12 months in advance of the expiry date for offices of less than 50 employees and 18 to 24 months for larger organizations that need to consider the fact that the ideal building may have to be constructed.

While it may seem tempting to hold off on taking such a long view in the face of more immediate issues such as fluctuating staffing levels resulting from new contracts, acquisition of a new company or unexpected layoffs, leaving things to the last minute can make you a captive tenant with few options. A captive tenant is someone the landlord believes is unlikely or incapable of moving. This can take many forms, such as recent infrastructure invested in a leased facility including big equipment, server rooms or cafeterias that would be very expensive to relocate or replicate.

In any market, there is always a range in pricing dependent on many variables such as the economy, supply of space versus user demand and individual requirements of a tenant. Thus the landlord’s job is to ensure that a tenant pays the top of that range; nothing unfair, just a few dollars a foot higher than his bottom line.

But for a business with, say 20,000 square feet, that few dollars can add up in a big way over the life of a lease. A premium of only $2 a year adds up to an extra $200,000 in costs over a five-year lease, $200,000 drained from cash flow that could have otherwise been used to finance and grow the business.

Getting ready to move

If you have made the decision to move, how should you go about it to minimize, as much as possible, the business disruption?

Again, advance planning is crucial to avoid a logistical nightmare than can distract management from the priorities of running the business and drive the quarter into the red ink. Some points to keep in mind:

• Consider hiring a move manager. Many moving and storage companies or space planners also offer move management. They can help your organization avoid many of the pitfalls that might be encountered during the physical act of the move.
• Develop a moving checklist. There is no better step you can take than to develop a working checklist of all the activities to be completed prior to, during and after an office move. Include which staff are responsible for a particular action item and its status towards completion.
• Engage the new landlord. It’s important to keep your new landlord or property manager up to speed when it comes to the details of your move. Booking elevators, arranging truck parking and getting keys or access cards distributed to staff are just some of the areas where they can assist.
• Communicate with staff. It is crucial to keep staff in the loop and be responsive to any concerns they may have. A change in commute can be a huge issue and your choice of a new location should be governed by what best serves the majority of staff. Also, moving from a hard-walled office space to a more open concept layout can leave staff feeling as if they have been demoted now that their workstation is in “cubicle farm.” If possible, arrange a site visit to allow staff to become familiar with their new space before moving in.

Read your lease

Whether it’s your existing lease that’s been gathering dust somewhere for years, or a new one ready to be signed, take the time to review or read it.

It may seem like simple advice, but reading their lease is something that a disturbing number of commercial tenants just do not take the time to do prior to signing, or re-signing, their office lease. In fact most of our clients are very likely not the same person who handled the last transaction on behalf of their organization and thus do not even possess any of the historical context that was at play five or 10 years ago when the current contract was signed.

That’s why it is so important to read the lease – thoroughly – before any action is taken. This means cover-to-cover, all the schedules and any amendments that might have been made. Take notes and call an expert you trust if you have questions. There are potentially many hidden costs in a commercial lease and several of them come into play only at the end of the contract. So before you decide to talk to your landlord you had better be up to speed on your rights and obligations in order to avoid any nasty surprises.

Restoration/reinstatement obligations

One example of what can be a particularly nasty surprise for the unprepared tenant is an obligation to return the space back to its base building condition. This usually means bare concrete floors and the demolition of all interior walls. In most cases the landlord also has the right to insist on doing the work on the departing tenant’s behalf and at the tenant’s expense. What’s worse is that many leases state that even if you were not the one who did the construction in the first place, you can still be on the hook for the removal.

Many uninformed tenants have had their negotiating leverage eliminated in one stroke when informed by their existing landlord that they would be charged thousands of dollars should they fail to renew their lease and leave.

Despite its widespread use, this obligation can be hard to spot in a lease agreement. If you suspect you might have this type of clause in your lease, call an expert for advice on how to handle it.

The blend-and-extend option

Sometimes, opportunity can be found in adversity, even when it comes to your lease. In a market that is facing rising vacancies and dropping lease rates, such as is currently the case in Kanata, you may be able to reduce your leasing costs through your existing agreement with a blend-and-extend.

A blend-and-extend is when a tenant, typically with a few years of remaining lease term, signs an early renewal agreement with the existing landlord to add a few more years to their current lease. Usually this is done for one of two reasons: to achieve a lower rental rate today, or secure financing from the landlord to offset future construction costs or big investments such as new equipment purchases.

In both cases, the rental rate on the additional term is blended into the existing rate to create a new “blended rate” often lower than the original.

The mechanics of a blend-and-extend are relatively simple to understand. Let’s imagine a 15,000-square-foot company has two and a half years left on its office lease, and is paying $30 per square foot, in a market where the rental rate for a new lease has dropped to $25. Using simple math, if that tenant extended its lease for an additional two and a half years at $25 then the new average, or blended, rental rate would be $27.50.

Understand your landlord’s situation

A successful blend-and-extend, (or for that matter, any negotiation with a new or existing landlord) requires a lot of work and a high degree of market intelligence. Tenants must have a good idea of their landlord’s current bottom line, or they are setting themselves up for a failure before they even begin.

Do your homework. Talk to other tenants in the building or in the business park to get a sense of where the market is heading. Are there any big leases expiring close to your own in your landlord’s portfolio? Will they be eager to lock down your tenancy or will they be happier to wait a few years in hopes the market recovers? This is information you must have because, rest assured, your landlord is a local market expert and certainly takes the time to stay informed – it’s their job.

It begins with your staff, all of your staff. No matter how junior, how senior, how seldom an individual employee engages with a customer, each member of your team has a crucial role to play. The front desk receptionist, bookkeeper, or cashier is as much an ambassador for your business as the manager of your sales or service department. As the business owner/manager, your job is to ensure each employee has a clear understanding of how the organization must adapt to the times and where they fit in, with clear direction and whatever training or other support is necessary.

Why? It all comes down to service. When times are tough and money is tight, customers invariably focus more on value. They comparison shop far more diligently and will opt for the product or service that they perceive provides the best value. To avoid your product or service being commoditized and evaluated solely on cost versus benefits, providing personal and attentive service that focuses on identifying and addressing the customer’s pain points is crucial. How you engage with customers and prospects, how you identify their needs and respond to them, so they feel they are being helped, rather than sold, will make all the difference.

Focus everyone and everything in your organization on the customer:

• Make it real for every single employee, not superficial.
• Provide real-world practical training to make it happen.
• Look for fast ways to improve service (such as having a live person pick up the phone rather than frustrating callers with an automated system).
• Ask customers what you can do more for them.
• Make contact personal, not email.
• Improve every aspect of customer responsiveness (make it faster).
• Look for little ways to increase value for the customer (such as service deals).

Back-off on the big marketing investments. Instead, do your research and focus on opportunities that reach a more relevant audience. There’s no point in putting out the big bucks to get before 5,000 prospects if you know only 500 of them are fit your customer profile. For example, favour:

• Intimate seminars near a cluster of customers, instead of a big trade-show.
• Use direct marketing rather than grape-shot, such as ads in specialty magazines rather than national newspapers or TV).

Look at your competition, because they are no doubt looking at you:

• Copy their best ideas.
• Exploit their weaknesses.
• Consider hiring their best people.

By the same token, aggressively search for best practices in your sector. Third party business-to-business research organizations such as APQC and ISBM have a wealth of research available on various industry sectors.

Reduce costs and overhead, without compromising customer satisfaction. There is a distinct difference between cutting the fat, maybe even a little muscle, and cutting into bone. Don’t be penny wise and pound foolish by implementing cost reduction strategies that negatively impact your level of service or ability to bring new business in the door. What you can do is:

• Ruthlessly cut back on internal reports.
• Provide employee incentives for cost reduction ideas, which are implemented and work.
• Attempt to reduce operating costs in areas such as re-negotiating your lease, or finding a better deal on office services such as telephones and IT support.
• Work with your suppliers – do not unilaterally extend payment terms; you need allies, not adversaries.

Don’t lose focus by trying to implement too many organizational or operational changes at once. Focus on only one or two modest initiatives at a time, then:

• Measure their effectiveness.
• Stop what isn’t either increasing customer retention or reducing fixed costs.
• Don’t be afraid to experiment with a new idea for a short time.

Make customers feel valued by giving them direct access to the senior people in your organization – particularly yourself. Solicit your customers’ feedback and opinions on how your product or service can be improved, or what new products or services you should develop:

• Ask customers what they want, rather than to critique a new service idea (seek guidance on the best ways to have these interactions and hear meaningful feedback).
• Re-focus your team on thinking from the perspective of the customer (such as on benefits, rather than features).

Remember, you’re not in business to make money. You’re in business to serve a need. If you imbed this philosophy in the culture of your organization, success will follow.

This golden rule can apply to just about any aspect of running a business, from communicating with staff to dealing with customers and suppliers. But it is just as vital to the relationship a business owner has with their banking institution. When the market sours, the bank can be the lifeline that means the difference between throwing in the towel or hanging on until conditions improve.

Too often business owners engage in a purely transactional relationship with their bank to serve the day-to-day and monthly needs of their business. The bank may have a poor or limited understanding of the business, the markets its serves and the typical cycles it endures. When the business is struck by tough times and finds itself going hat in hand to the bank to secure credit or re-negotiate the terms of a loan, it may not find the help it needs.

It is always more difficult to solicit sympathy – and more importantly, help – if you wait until the situation is desperate to begin the conversation. Banks want to mitigate risk and ensure their investment in your business will not end up accounted for in their loan/loss provisions. Your desperation makes them nervous.

To establish a positive relationship with your bank and ensure the help will be there when you need it most:

• Understand how your bank works. Most banks have a range of services tailored exclusively to businesses of various sizes and scope. Understand where you fit as a business customer and who has responsibility and decision-making authority over your account. Not just the title of this person, but who they are by name.
• Get to know this individual. Sit down and discuss your business with them. Often, this person will be more than willing to pay a house call and discuss in detail your business and its current and future needs.
• When times are good, secure a line of credit. Build a track record as a reliable customer by regularly drawing on it and consistently paying it down.

Keep your bank honest

On the other hand, your bank is in business to serve you, the paying customer. Approach this relationship with the legitimate expectation that you deserve and can expect attentive and courteous service. You do have the right, at any time, to take your business elsewhere.

Our banking system is typified by a fee-for-service structure. Businesses in particular are on the hook for Visa/Mastercard merchant fees, points rewards plans and other costs which nibble away at margins. Beyond these are the fees associated with everyday banking transactions, the interest rates on credit cards, and of course, the cost of borrowing through a line of credit or a loan.

Most if not all of these costs are negotiable to some degree. Having established that track record as a good customer through timely payment of your bills, combined with years of loyal patronage, deserves to be rewarded with better rates and reduced, if not waived, fees.

Banks, however, are often slow to offer such rewards unless you make a point of asking for them. Don’t be afraid to shop around and see if you can find more competitive terms elsewhere that you can use as polite, but firm, leverage. Your bank, just like your own business, should be willing to give a little to keep a good customer rather than have to find a new one.

There is ample evidence from past downturns that the company that maintains its marketing spend through the downturn exits the downturn in a far better position than its competition. Even in the worst of times, there is still business to be written, markets to be taken and customers to be won. And a downturn, when many of your competitors may well be going quiet, often represents an unprecedented opportunity to grab a much larger share of voice.

2. Recalibrate your strategy and recast your budget strategically as opposed to simply cutting x% across the board.

People often look for the one thing that companies should do in response to a downturn. I resist being so binary since a downturn represents doom to some but incredible opportunity to others. And even for those for whom it’s a challenge, an across-the-board response is rarely the right one.

At times like this, strategy becomes more valuable than ever. Know where you’re trying to go, the best way to get there, and how you’re going to know that you’ve arrived. Cut those marketing tactics that won’t help get you there and re-invest the money in the tactics that will.

3. Negotiate pricing.

All the vectors you use to communicate to your marketplace are feeling the pinch right now. There is no better time to play hardball on pricing, or to negotiate added extras that usually cost a lot more. Most media outlets will cut their line rates or give you valuable extras like a free newsletter distribution, web conference, white paper distribution or even additional insertions. Trade show organizers may agree to a bigger booth space for the same price or throw in sponsorship opportunities or show guide advertising that in better times might cost you thousands more. Even if your supplier must hold the line on fundamentals, see if you can’t snag some of the valuable extras.

4. If you have channel or other partners, consider pooling budgets and activities to make your dollars go further.

Can you share a trade show booth with partners? Can you initiate a co-op advertising program that sees you put up some of the cost while your channel partners put up the rest? Is the opposite available to you — are you a channel for an OEM with a co-op program?

5. Do not abandon measurement.

If marketing is seen as the easiest thing for companies to cut during a downturn, then measurement is seen as the easiest thing for marketers to cut. After all, it doesn’t really contribute anything, right? Wrong. Harken back to tip No. 2: If you’re not measuring, you have no idea where you are or what got you there, you don’t know what’s working and what isn’t, and you simply can’t be strategic about your marketing spend. When times are good and there’s budget to spare, you might be able to afford to have some things work a little less effectively. When times are tough and every dollar must produce a result, you need to be measuring so you know which tactics are delivering and which ones aren’t.

6. Be transactional if there’s an immediate opportunity.

As I’ve already noted, a downturn means different things for different companies. If there is good business that can be immediately secured, be highly transactional in going after it. Alter all your messaging to “Buy now,” and focus on tactics, like advertising and direct marketing, that communicate transactional messaging best.

7. If there isn’t an immediate opportunity, go long.

It’s far more likely, however, that your customer’s buying cycle has stalled; it almost certainly has lengthened. So if your customers have hunkered down waiting for the storm to pass, there’s no point in blaring the hard sell at them or offering them discounts and other incentives to immediately do something they’re simply not going to. Does this mean you, too, should hunker down and draw the blinds until things blow over? No, it means your messaging should shift to support longer-term objectives such as awareness building, thought leadership and marketplace education. Tactics like media relations, content marketing, trade shows and white papers that establish your authority and expertise are a better use of your resources if this is your reality.

8. In all communications, employ story telling that emphasizes how your product or service saves money or drives additional immediate revenue for your customers. Speak to the pain they’re feeling in a recession.

Whatever the economic conditions, your marketing and communications messaging should be all about your customer, not you. You should always be speaking to the pain your customer feels and how your product or service solves that pain. In a recession, your customer’s pain is almost certainly all about revenue — making more of it or keeping more of it. Make sure you’re speaking to this.

9. Be overly attentive to your existing revenue base.

“Love the one you’re with,” says the old song, and that’s never more relevant than in a downturn, when new customers are hardest to acquire. Your current customers are keeping you in business and it’s almost always cheaper to maintain and build business with existing customers than to find new ones. Lavish your existing customers with attention, look for low-cost ways to improve the value you create for them, and communicate, communicate, communicate — let them know you love them.

10. Effective relationships never expire, so keep talking.

Keep talking to everyone in your value chain, including suppliers, service providers, channels, influencers and, of course, customers and prospects. Even if they can’t use your services or you theirs just now, keeping those lines of communication open and full of useful information will serve you very well when the economy recovers.

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This one-on-one, 30-minute consultation is reserved for advising entrepreneurs about specific accounting issues.

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