Originally posted by: scott
Originally posted by: Descartes
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Feel free to ask any additional questions if you have them.
How do you acquire NEW clients (aside from follow-on business from established accounts)?
I'd appreciate it if you'd share a lot about landing NEW clients.
A variety of mediums:
1) Existing clients. If an existing client is happy with your work, then inevitably they refer you to someone else. It's important to have a good working relationship with those in a position to make decisions. Executive-level people often have executive-level friends, and you'll find that you get referred quite a lot through their network.
2) Business organizations. Most cities have some organization suited for businesses of any size, but they tend to have a focus on small to medium-sized companies. It's a great way to extend your network.
3) Cold calls. I hate to suggest it, but it can sometimes be useful. We will often hear about a company that's looking to start a large project (with a large network, you can find out about literally everything going on in any number of cities), so we'll find out who is the head of the project and get in contact. Sometimes we'll know someone that knows that person, and we might go have a lunch meeting. Simple meetings like this may not immediately lead to opportunities, but almost always do at some point down the road.
Those are probably the three main mediums. We haven't had to fund any marketing campaigns at this point.
Do you find trade shows effective in getting new clients?
No. We're not really the type of company that would benefit from trade shows.
Do you have much work in foreign countries where you're intensely pressured for bribes to win contracts? How do you handle that when competing for contracts against firms from other countries that don?t have US-style prohibitions on that?
Our work for foreign companies is ultimately contracted through a US entity. Large foreign companies very often have additional companies that operate out of the US, so it makes things easier.
Generally, do you mostly work on fact finding & diagnosis, then present clients with solutions they can implement?
Or do you tend more to take on project work pre-defined by clients, so that you end up like a body shop providing surge-need temp help for clients?
Or do you take projects on a firm-fixed price basis?
All of the above. Right now we have active projects that operate under each of the models you have mentioned.
If you work ffp, then how do you usually handle issues with creeping SOW, where the scope keeps enlarging with no relief in performance schedule or money, while still making your client happy?
That's tough, and honestly it depends. We have over a dozen people on a project now that was supposed to be 8 months in duration, but that was 2 years ago. It's not so much a scope creep as it is a reevaluation of the requirements as they emerge. Sometimes clients support such an emergent approach, but a lot of times they don't.
Ultimately, the onus is on us. We have to evaluate the project to determine whether or not a fixed-price is feasible. Often times it isn't, and we simply tell the client that it's not going to be possible. Sometimes only a portion of the project gets pushed to a separate phase that isn't fixed-price, and other times we require a feasibility analysis phase to determine whether or not such a bid is possible. I wish I could express some rule that says, "if the project is this, do this", but really it's more of an intuitive response that you get from past experiences; you get a sense for what will creep and what won't, and you can isolate those known areas to help mitigate any scheduling or budget problems.
Generally how do you bill? Hours on a rate schedule? Any retainer? Bounty on achieved savings?
That too depends
I know that's a common theme, but it really is. We have our own rate schedules, but sometimes the client dictates them to us as well. They'll send us requisition notices for our people along with the requirements, etc. This is almost like a staff augmentation initiative, and larger companies have such processes because all staffing, be it contract or full-time, is centralized.
Retainers aren't exactly common in our type of business, but we do have them. In some cases, we've designed mission-critical products for companies (e.g. Wal-Mart) that get deployed to offices around the country, and in those cases near-immediate responses are needed. In those cases we will usually have a retainer after the product has been deployed until they build an internal support staff. That's really the only scenario in which we see retainers.
We don't do a lot of bounty type work. We do work on some product development efforts that we see as having potential, but we pick such projects carefully as they can be a large resource drain. We aren't in a position to take significant capital risk, so we have to have a reasonably accurate ROI potential first.
Generally, what is your overall bill rate for overhead + selling, general & administrative expenses? Does the rate fluctuate a lot?
Fortunately, the rates are fairly static. I monitor certain market indicators to determine a floor and ceiling, and in the past 5 years I've only seen that floor increase by ~$5/hour or so. I haven't seen any real effect from outsourcing on the rates. Rates do fluctuate between clients though, so determining the schedules for a client is more about negotiation. A 5 year contract is obviously worth more than a 6 month contract, so we have to assume a lot of flexibility.
Do you/did you use SBA loan(s)? How'd that work out for you?
No loans. Everyone is >= 100% billable, and we (my two partners and I) had enough capital to pursue the various opportunities.
Do you put on people as independent subcontractors to temporarily get specialized help as needed?
Typically not. All of our people have been in the industry for an average of 10 years, so literally everything we need we have covered. We typically don't bid on contracts outside of our skillset, because we find that it's more of a burden than a profit. We also can't guarantee the same quality of service.
Of course, there are times when a client wishes us to pursue something outside of our skillset, and this is usually when it's something that no one else is doing either. A lot of the barcoding-related work we did in the past was new territory for most, so we work with the client to educate our people while still maintaining the same QoS.
Do you have many disputes/big issues with subs? Any faithless-employee type issues where subs try to steal your clients? How do you handle that?
Not yet. We're all like a big family. My two partners are very good friends of mine, and I've worked with the others an average of 3 years. We've traveled frequently together, been through many long hours together, etc. That tends to help build a sense of a respect and loyalty. Couple that with very competitive compensation and nice work environment, and we don't have any issues. I don't anticipate any either, but if someone did have such ambitions I'd sincerely hope they approached us in a professional manner.
Generally what kind of turn-on do you need to start work; detailed written contract that you've negotiated, simple one liner go-ahead from CEO, etc?
Depends
Most require contracts, and sometimes those contracts take weeks to negotiate (in some cases a lot longer; some government contracts are as long as 500 pages). For existing clients with which we have a trusted working relationship, we'll sometimes start the initial phases without all the formalities. If you've had a client that has paid every invoice on-time for the past 5+ years, then you'll find that both sides tend to be very flexible; you give and you get.
Generally do you end up hiring employees from clients, or lose employees who jump ship to clients?
:gift:
We've never taken an employee from a client, but we have had an employee or two move to the client. Sometimes people simply want a slower, comfortable 8-5 environment and a lot of our clients can offer that. Most of our people are of similar mind though, and that type of an environment is a bit antithetical to their personalities. It certainly is to mine.
That said, it is something you always have to consider. Finding good people is incredibly difficult, so we tend to try to hang onto them. We do this by paying them more than they'd likely get anywhere else, giving them a flexible work environment, bonus structure/company ownership, etc.
Hope that was somewhat useful. That should give you an idea of how things operate. If you have any questions about any specifics, feel free to ask.
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