In my post earlier this month 5 Tips for Starting a Home Based Business the second tip was Build an Order Book.
I learned this from a wise, very experienced business leader, who would say – and told me that as a CEO he would say it to his team – “don’t tell me about the business we have now. Tell me what’s in your order book for six months from now.”
This one needs strategy, planning, discipline. And it requires us to be thinking ahead and “marketing ahead”. But it’s how we can build a sustainable business.
This might seem like a no-brainer and in some ways I guess it is. And yet, thinking about those of us who work from home, typically although by no means exclusively as solo operators, I wonder whether a combination of circumstance and habits of work mean we might find that a difficult objective to achieve.
By circumstance I mean basically the condition, as I say admittedly not universal, of being solo operators or maybe working, as I have often done, in a two or three person alliance.
By habits of work I mean how, if we come from a corporate or government background, we have been conditioned to shape our work practices in terms of goals and objectives determined more by the larger organization for which we have worked than by our own initiatives.
In short, we – ok, some of us – do not have systems in place for having orders locked in at least six months ahead, through a combination of:
- circumstance – as consultants, coaches and other professionals we take pride in the work at hand and can get quite immersed in the projects we have now and which inevitably have pressing deadlines, so we are not always practical about planning ahead and securing business ahead
- habits of work – I’m thinking of the phenomenon of work dominated by the in tray, physical or electronic, where there always seem to be pressing priorities and we have some reason to believe that the Organization is working in one way or another to generate future business
Obviously these are sweeping generalizations and I acknowledge there will be plenty of exceptions. For example, if you have been a chief executive of an organization of any reasonable size, you will have had overarching responsibility for forward planning, ensuring future cashflows and so on. But even chief executives can get bogged down in the day to day demands.
Some suggestions for building an order book
- take care of existing customers
- respond speedily to new leads
- negotiate on time
- keep past clients in the loop
- document the process
Take good care of existing customers
An oft-cited Rockefeller Foundation study showed that a whopping 68% of customers leave, not because of rudeness, or price or quality issues, but for “no special reason”, which one author suggests means “benign neglect” , or as I would put it, nobody paid them any attention.
In line with that, I believe strongly that the best place to start with building our order book is to look at our existing customers and give serious consideration to ways we can give them better service, which might include such simple things as:
- checking in with them more frequently to see how they are going, not always leaving it for them to contact us
- asking them for feedback, maybe with an annual performance review – this can take some nerve-steadying but I firmly believe that, even if we have to wince at some of the feedback, the fact that we opened ourselves to a critique will win points for us, not lose them
- focus on the relationship, not the transactions
On the most basic financial analysis, it makes sense to give priority to going the extra mile to ensure that existing customers are happy, given that it costs somewhere between 4 and 10 times as much to acquire a new customer as to keep an existing one.
And studies by Bain & Company show that a 5 percent increase in customer retention can increase a company’s profitability by 75 percent.
There is a whole sub-topic here about lifetime customer value (LCV) which I will save for another day (Basic? Yes, but I find that a lot of professionals don’t know it, or if they do know it, don’t apply it in any rigorous way).
Deal speedily with new leads and referrals
Reflecting honestly on my own past practice, I am pretty sure there have been times I have lost potential business simply by not following up promptly and effectively enough.
If I am slow to respond to a lead I have generated or attracted, or when someone has been referred to me, I can’t blame them for wondering how well or otherwise I would focus on them and their company should they consider hiring me.
There may be a bit of fatigue at work, from leads or referrals that were really tire-kicking, or brain-tapping exercises that were never going to turn into a paid gig. Or we may be tempted to put off contacting the new leads because we are focused on the job at hand, for which we are getting paid now. At any rate, I am pretty sure some of my best contracts and clients have been secured because I responded promptly, even if need be staying up very late to produce a proposal.
Negotiate on time
If you are a company of one, or maybe two, and especially if you are already very busy, there is a risk with new work or future project proposals that you may agree toh an unrealistic timeframe, through what could turn out to be unnecessary willingness to please.
I don’t know about others, but my impression is that over many years of consulting it was the rule rather than the exception that, when asked about the time frame, the client would half-jokingly say, “Well, we needed it yesterday.” Or last week, or a month ago. Through some bitter experience, I know that is precisely the time to get very serious and establish what room there is for negotiation on time. Sometimes we can be pleasantly surprised: for example, the prospective client may say something like “but now that we’ve missed that deadline and the Board doesn’t meet again for two months, we have another month and a half…”.
And in other circumstances you may be dealing with some very forward-planning types who don’t actually need you to start for another month or more. The caveat there is to lock in a contract and perhaps a down payment as an expression of good faith. It may be necessary to explain that the time they have asked you to commit, from a certain date in the future, is now blocked in for their project.
My assumption is that prospective clients will actually be impressed, even if they don’t say so, that you are not available to jump through hoops for them, that you have other clients and they need to negotiate with you on time.
Keep past clients in the loop
If we have had good relationships with clients in the past, we should make sure they know what we are doing now, what services we offer (some may be new to them and our mentioning them may be very timely) and how we can be reached these days.
Some former client representatives may have moved to new companies, which have need of services you provided successfully to those clients in their former roles. Or they may have contacts in need of your services and whom you would value meeting. Letting them know what you are doing now could be a very timely memory jog.
There are some practical documentation, record-keeping issues here, and I’m sure some readers have solutions to suggest that would be far better than the basic systems I use.
In the meantime, with a simple spreadsheet we can set out some details, using different colors to show timelines for both firm contracts and prospective ones. It can be exciting to see your spreadsheet calendar start to fill up, months ahead.
You can then add in your projections for earnings for the various projects.
Other ideas, experiences?
What other ideas do you have for building an order book at least 6 months ahead? What has worked for you? Any experiences, good or bad (we learn more from our bad experiences, don’t we?) you would like to share.
For now, best wishes in building a fat, lucrative order book!