When "Free Food" Isn't Free

By Rich Freedman

Hi everyone. I promise not to discuss fiscal cliffs or debt ceilings!

Folks who've worked with me know I'm fond of using the term "free food" to refer to RFPs that you had no prior knowledge of, or a call from a partner firm asking you to team on a project opportunity that neither firm has tracked or is pre-positioned for.

Firms that are facing fierce competition and a dwindling backlog are regularly tempted by these "opportunities". They're tempted to prepare quals packages and proposals for prospective clients (and sometimes clients) even though their firm:

• Was unaware of the project opportunity until the RFP hit the streets
• Knew about the opportunity, but for whatever reason is not effectively pre-positioned
• Knows that their chances of winning are slim, and in fact, the project may be wired for an incumbent or another firm

Of course, some firms don't have to worry about this temptation because they're magnets for sole-source work. But those firms are the exception, not the rule, and they didn't get there by chasing free food and likely weren't always in that position.

The temptation of free food can overcome reason and the most cogent go/no-go process. It's like putting a pizza or a plate of brownies in front of college students. It can be particularly challenging for those firms that are asked by clients or prospects to submit because of their firm's overall strong marketplace position in a particular client sector.

Further, the feel-good placebo of doing something — anything — to bring in work to feed hungry mouths and avoid layoffs can often cloud a more thoughtful analysis of the "opportunity cost" of responding. Opportunity cost is the next best use of the financial and human resources that are used to chase the project. In some cases, such as when a partner firm will be fronting the lion's share of the proposal and presentation preparation costs — with minimal time and investment by your firm — the opportunity cost is low. However, in most other scenarios, this is not the case.

Here are just some of the considerations that should be factored in before going after free food. These opportunities can:

• Take focus away from the strategic target list of clients and opportunities that the firm has been tracking (and hopefully pre-positioning for) on an ongoing basis.
• Tie up valuable marketing staff involved in proposals, graphics and presentation preparation.
• Tie up financial resources that could be used in high-ROI strategic marketing positioning efforts (e.g., workshops, article placements) that can reach multiple clients and prospects in a manner in which your firm is put forth as the expert.
• Lower the firm's shortlist and win rates, given that your chances of winning are usually slim.

Of course, there are hard dollars associated with these impacts. In fact, one of my clients, a 40-person architecture firm with a niche in senior living facilities, recently added up the opportunity costs associated with such pursuits for 2011 and 2012 — about $138K and $100K, respectively. This boiled down to an average of $10K per submittal when factoring in proposal and presentation preparation, as well as travel costs.

If this was your firm, how could you have better spent this money?

Firms that work in the municipal sector, for example, may argue, "You need to lose one to win one," or "We want to keep our name in front of this client/prospect" — even if the project opportunity is wired or the firm is otherwise not well positioned to win. I don't buy it. I'm certain that such clients exist, but you should think hard whether they're worth your time and investment.

So if you're one of the 44% of Americans who believe in making New Year's resolutions — one of the most popular being some form of dieting — resolve to steer your firm clear of "free food" as much as possible in 2013!

Thoughts on this topic? Questions or ideas for future article topics? Call or e-mail me at 508-276-1101 or rich@friedmanpartners.com.