Reprinted with permission from CPA Practice Management Forum.
CPA firms often ask for my top recommendation to help them win large opportunities. Unequivocally, I suggest the development and strategic deployment of the “opportunity pipeline.” Hands down, it is the single best tool to identify and reel in big pieces of business. Sound difficult? It’s not. In fact, creating and using a pipeline is an intuitive process that once implemented requires little more than about an hour a week, a spread sheet and someone responsible for its maintenance.
Definition and Rationale
The pipeline is the financial statement of opportunity management – an inventory of all large, active opportunities a firm is currently pursuing. It can be produced in Excel or with a CRM software package. The pipeline’s purpose is to give your partner group a precise overview of large opportunities. But make no mistake. The pipeline is anything but a static, passive document. Created and used properly, it is a dynamic business-building tool.
A pipeline differs significantly from a proposal log, which is a “reactive” record. A proposal log’s value is limited because by the time a proposal is issued, the selling window is coming to a close. In fact, 80 – 90 percent of persuasive communication occurs before the proposal leaves the firm’s hands. Beyond that point, very little opportunity exists for influencing the prospective client.
The pipeline covers three categories. Final stage/proposed opportunities are those most evolved and ready to close. Qualified leads are those with an identified need and potential (the need is significant enough, the prospect might spend money to address it, and the buyer is in a position to make a decision). Unqualified leads represent companies that might have a need. Suspects are companies which you would like to target. They constitute a “wish list” that should be maintained separately, and not on the pipeline.
Assigning estimated engagement dollar amounts to each entry permits you to see the potential of the entire pipeline. Sort the opportunities from high to low on potential engagement dollars within the above categories, and subtotal the number of opportunities and dollars by category, as well as in the total pipeline. Once opportunities are won or lost, they should be removed from the active pipeline and maintained on a separate page as a win/loss report. Depending on your firm’s size and scope, you will need to establish the dollar threshold that determines entrance into the pipeline.
The pipeline review process runs on collaboration and creativity; think football, not golf. The review is best handled in a half hour weekly or biweekly partners meeting, either in person or by phone, led by the managing partner. Keep the reviews to a half hour to keep attendance up. If the spreadsheet is maintained on your firm’s server, partners can update entries as developments occur. Or, they can report these during the meeting and leave the updating to someone else in the meeting.
Each important entry is scrutinized by asking strategic questions. Are the right people being deployed to maximize the chance of scoring a win? Are the appropriate resources being applied? If an opportunity has become stuck in the pipeline, what or who is required to unstick it? The review meeting is also an opportunity to make sure efforts are not being duplicated, for example that one partner is not calling on someone with whom another partner has an existing relationship. The review will also help identify where additional strategy development is required for an opportunity. But save lengthy strategy discussions for another time. The pipeline review is not the time for strategic recalibration, as this takes additional time – usually with only the team pursuing a specific opportunity.
What You Can Expect
The advantages of using a pipeline are numerous and varied. It:
- helps you see the desired end results of your activity
- promotes teamwork and develops the firm’s “collective brain” of opportunity development experience, and
- keeps the partner group focused on revenue opportunities with the greatest potential impact.
A pipeline can also help determine revenue. You can anticipate pro forma revenue by multiplying the total in the pipeline by the historical win rate.
If my clients’ experiences are any indication of what a pipeline system can deliver, consider these results: Of four firms, ranging from $30 million down to $6 million, the dollar total being pursued rose between 40% and 400% within six months of installing the pipeline. Because of the improvement in reporting, win rates in all four firms initially declined and stabilized at approximately 65% of total dollars bid.
Now More Than Ever
The benefits of a pipeline have never been more evident than today. As a result of Sarbanes-Oxley compliance, large chunks of business have shaken loose and are landing on mid-size firms with stunning force. Channeling that energy into high-value client relationships is your challenge. The pipeline is as certain a way as I know to help you do just that.