Bid deals

In my book on failure I talk about the distraction factor that big deals bring with them. Self funded startups generally don't have the depth to digest a large client or survive the pre-deal courtship period that is a part of such deals. The final killer is that the courtship process sucks up so much capacity that there isn't anything left to support smaller clients who have been paying your bills on a month to month basis.

But then when or how do you know that you are ready for a deal. I work with the rules of ten. Remember the rules apply to large deals and will always have exceptions. I have run into trouble when I violate one or more of these. I also use them as a checklist to rate my chances on a deal. If I am violating any of these rules, there is a good chance that even if I have the capacity to execute, I would still have problems closing the deal.

a. The size rule - Pass anything bigger than 10 times the largest deal you have signed and executed so far. Also pass anything that represents more than 10 times the business you have written so far.

b. The relationship rule - Pass anything that passes the size rule but comes from a new client or a new relationship. Any relationship less than 10 months old is classified as a new relationship.

c. The volume rule - Pass anything that is more than 10 times the volume of business you have done to date in that relationship.

d. The growth rule - Pass anything that would require you to grow ten time before the deal is signed and executed. Growth can be in year on year revenues, staff strength, infrastructure, office space or any other factor that would require you to put up cash for investments or expenses.

e. The learning rule - Pass anything that requires your team to learn 10 new things effectively before you can get the job done.

f. The time rule - Pass anything with a sales cycle longer than 10 times the amount of time you spend on an your average business deal. Also pass anything that has an execution cycle of 10 times the amount of time budgeted for your average contracts

g. The negotiation rule - Pass anything that would require you to negotiate with a team ten times your size (in numbers, strength or experience).

h. The competition rule - Pass anything where you would end up competing with 10 more competing firms.

i. The decision maker rule - Pass anything where after 10 client meetings you still haven't met the guy who has the authority to sign the check. Also pass anything where after 10 meetings you have no idea where you stand with the client, his budget, or your chances.

j. The presentation rule - Pass anything that requires you to make more than 10 sales presentations at the same client (different teams, same client)


Why the number 10... Why not 5 or 7 or 3 or even 8. The number doesn't matter but the rules do. You can set your own threshold for walking away from a deal.