The Large Client Solution: $30,000-80,000 project, 3-6 months.
The sales cycle for large clients is at least three months, sometimes six months. These are signature projects that can account for 50% or more of the revenue for the year and give us the big brand names that identify us as players in the industry.
There are two main challenges to large projects. First, the bidding process is so long, we often have to commit resources that may not be available when the bid is won, which means our staff is forced to double up on work. It’s a huge manpower problem, as oftentimes without the larger projects, we’ll lose the freelancers we depend on to other projects.
This is a normal risk that all small agencies have, but the promise is a project that can meet half your yearly revenue, and grow the business two to three times its current size. (The bigger companies almost always have more projects, and once they’ve worked with you, they continue to do so).
The second problem is the time that larger companies require cuts away at your sales and networking time. Large projects steal away your time selling new business, and when the project ends, you don’t have a pipeline of business.
The Medium Client Solution: $5,000-$20,000, 1-3 months
These projects are built through your reputation in the community. They are primarily entrepreneurs, startups, and other small businesses looking for quality work from someone who “gets them.” These projects bid and close quickly, and are the majority of our work. But they require hefty time commitment in the community, meeting new clients and working your referral network.
Closing rate is about 25%, but we’ve managed that rate by tightly managing our sales process. When the sales cycle drags out, or if we get the sense that we’re a “third bid,” or the client is cash-strapped, it’s easy to move on.
The Problem: Business Slowdown
These two strategies kept us in good standing for three years. But as small businesses are now struggling, and large businesses are bidding projects but not awarding them, we found ourselves looking at a huge budget gap starting in the fourth quarter. For the first time since we started our business, we were actually faced with the prospect of not having projects in the pipeline.
Recession Solution: Be The Client
Our solution was to change our offerings. The one project we didn’t tackle for years was one- and two-hour consulting gigs. The selling, invoicing, and focus required to sell, execute, and invoice smaller clients looking for information was simply too high. Medium-sized projects keep you afloat, and they’re barely profitable unless you get multiple projects at the same time. There was just no way to sell projects that maxed out at a few hundred dollars. And yet the highest volume of prospects was the one and two hour proposals.
Since we are a marketing company, we decided to turn ourselves into the client. We put together an e-commerce site, set up an online marketing and affiliate plan, and begin marketing our expertise in training DVDs. We still go after medium and large projects on proposal, but we now have a revenue stream aimed at capturing the tire-kickers, the low on cash entrepreneurs, and those looking for just an hour or two of training.
Using the networking skills that sell the medium projects, we’ve built a distribution channel with other clients and even competitors, who lack the resources or ability to recreate our training series. The larger companies also work into the mix, as many of the directors that we sell large projects to are in urgent need of cutting-edge marketing training. Each person who buys a DVD does so as a future client, both in repeat sales and in future project consulting.
The project is a risk, as the revenue could drop off any month we count on it to be there, but it’s also just as easy to market 100 DVD’s in a month as it is to win a $10,000 project. The way we look at it is simple. We’re a marketing firm. If we can’t market our own products and services, how could we possibly be trusted to market someone else’s? And in the process, we’ve also picked up new skills in programming, video, packaging and fulfillment, and credit merchant accounts, which has led several former clients to look into replicating our system for their business. The knowledge has also led us to prepare plans for two more stores, which we’ve already got commitments from major partners to assist in distribution and sales.
Our runs for less than $100 a month for all fees ( http://store.socialmediaheadhunter.com). Pre-launch figures have been fantastic, and we’re prepping right now for the full marketing program next week.
To top it off, the cash flow problem is solved, as the money for every sale is processed through our credit card site (which we can now also use to bill for consulting services, reducing slow pays and those who can’t pay in 30 days with cash).
The major advantages of small business are efficiency and nimbleness. In our case, we were able to switch from a services to a diversified product and services company in a matter of months. Companies may be cutting back on their spending, but everyone can afford a training DVD or five.