In Business Development, like in all sales environments, leaders need to know when to stop wasting their money on an opportunity they’re unlikely to win. Throughout the business development process, there are several important milestones when you should evaluate progress and answer the questions: can we win? And what are the chances of us winning?
There is a fine line to walk between bidding on enough opportunities to meet your growth goals and ensuring bid and proposal (B&P) budgets are not wasted. Preparing a winning bid requires significant investments in time and money. Small businesses who win consistently allocate between 0.75% and 1.5% of the total contract value for B&P, which includes the capture and proposal development. For large businesses, the cost to acquire a new contract is typically between 1% and 3% of the total contract value.
If you bid on opportunities that you consistently don’t win, then you’re spending your profit, money that cannot be invested in company growth efforts elsewhere. This article will cover the key considerations when no-bidding an opportunity.
First No-Bid Opportunity: Searching through Databases for Opportunities
The first chance to no-bid an opportunity is when you are searching through various databases for bid opportunities. Generally, this person is a BD Analyst who is looking for contracts that fit your company’s capabilities and past performance to input into the pipeline for review. The BD Analyst should use search parameters and an ideal opportunity profile that is created when the company performs its annual BD strategy session to gauge interest.
Second No-Bid Opportunity: Gate 1 – Interest/No-Interest
The second chance to no-bid an opportunity happens when BD leadership reviews new opportunities in the pipeline. Generally, the BD Analyst or opportunity lead will present why they think this is a good opportunity for the company, and BD leadership will decide whether to pursue. These pipeline meetings serve as a quality check to ensure new opportunities are in line with the BD strategy and the ideal opportunity profile. Regular pipeline meetings ensure you don’t pursue opportunities that you have no chance at winning.
Third No-Bid Opportunity: Gate 2 – Pursue/Don’t Pursue
The third chance to no-bid an opportunity is during qualification and/or at a formal Gate 2 review. For opportunities that pass Gate 1, someone in your organization needs to perform additional research to verify if it’s a real opportunity. Generally, you need to identify the buyer, determine if they have funding, and confirm the requirement still exists and there will be a competition. Each BD organization has research and analysis requirements to present at the Gate 2 meeting, so BD leadership can make an informed decision to assign a capture manager and try to win the contract or no bid. Opportunities that pass Gate 2 move into formal capture. About 50% of opportunities reviewed should pass Gate 2.
Fourth No-Bid Opportunity: Gate 3 – Preliminary Bid/No-Bid
The fourth chance to no-bid an opportunity comes during the formal capture status review — Gate 3. At this point, Capture Managers have complete customer engagement, intelligence gathering, and win strategy. Likely, they have also done some competitive analysis and perhaps held some high-level teaming discussions. The Capture Manager for this opportunity will then present their strategy and plan for winning the contract. BD leadership will make the preliminary bid/no-bid decision based on the information and progress made. Approximately 75% of opportunities reviewed should pass Gate 3.
Fifth No-Bid Opportunity: Gate 4 – Bid/No-Bid
The fifth chance to no-bid an opportunity is when the final RFP is released. The Capture Manager should have completed the capture phases, competitive analysis (Black Hat/Price to Win analysis), teaming, and most of solution development. At this point, BD leadership is looking for red flags that will prevent the company from bidding — unfortunate surprises happen sometimes. Of the opportunities that made it to this point, 90% should pass Gate 4.
Sixth No-Bid Opportunity: Gate 5 – Ready/Not Ready to Submit
The last chance to no-bid an opportunity happens during the proposal phase, usually at Red Team. There is also a signatory review at Gold Team, but there’s usually not much time left to make major changes. No bids at the Red Team phase are very painful, but they do happen on occasion for many reasons. Some reasons are the proposal effort failed, a critical subcontractor backed out, the government changed requirements that you can’t meet, recruiting could not identify key personnel or a lot of other reasons. This is the most difficult stage to no bid an opportunity because of how much time and money has been invested, but it is sometimes necessary to prevent throwing more money after a lost cause.
Look for Reasons to No Bid an Opportunity
Deciding to no bid can be a difficult decision, especially if it comes late in the process. It’s important to gather as much information as you can at every step of the business development process so that BD leadership can make informed cost-benefit decisions. We must strive to be as objective and realistic as possible in this analysis so that you don’t undervalue risks or overvalue benefits. When considering bid/no bid at any stage, it’s crucial to ignore sunk costs. Do not continue to chase an opportunity to justify the money you’ve already spent pursuing it if you are unlikely to win. Instead, spend your time and money to do more robust capture for your next opportunities, ones you’re more likely to win.
OST Global Solutions offers fixed-priced services for opportunity identification and qualification to help you meet your growth goals. We also have expert capture managers and proposal professionals who can help win new contracts and meet your growth goals.
Contact us to learn more.