EC 2020: Strategies for Electrical
Contractor Business Development
in the New Energy Economy
Category: New Business Sector
David R. Riley, Ph.D.
Thomas E. Glavinich D.E., P.E.
Associate Professor
Architectural Engineering Department
Pennsylvania State University
e-mail: [email protected]
Associate Professor
Civil, Env, & Arch. Engineering
The University of Kansas
e-mail: [email protected]
Justin Reginato, Ph.D., P.E., LEEP Green Assoc.
Assiociate Professor
Construction Management Program
California State University, Sacramento
e-mail: [email protected]
EC 2020: Strategies for Electrical Contractor Business Development
Challenge
Shifting Landscape
•
Energy economics
•
Boom in line contracting
•
Recession in building construction
•
New technologies
•
New business methods
EC 2020: Strategies for Electrical Contractor Business Development
Challenge and Opportunity
Many contractors are lamenting the loss of
business or the inability to capitalize on new work
• Too many contractors are currently focused on
holding on to whatever shrinking market share
they have left, not increasing their market share
However, some aggressive electrical contractors
are capturing work in new fields and are growing
despite the recession
• Business development is a key tool in this
growth
EC 2020: Strategies for Electrical Contractor Business Development
Project Outcomes
• EC Business Development Success
Factors
• Manual for Business Development
• Recommendations For ELECTRI,
NECA, IBEW, and NJATC
EC 2020: Strategies for Electrical Contractor Business Development
E.C. Business Development
Success Factors
1. Healthy core business to build upon
2. Entrepreneurial spirit and skill to build
business
3. Technical competence in the targeted work
4. Process experience in the targeted business
5. Knowledge of marketing, sales, and
relationships
EC 2020: Strategies for Electrical Contractor Business Development
Manual Objectives
• Provide an understanding of business
development.
• Explain why business development is critical
to the future success and survival.
• Show how to successfully implement a
business development program through
examples and case studies.
EC 2020: Strategies for Electrical Contractor Business Development
Manual Focus
• Manual applies to electrical contracting
firms of all sizes.
• Focus of manual is on smaller electrical
contracting firms need effective
business development processes but
don’t have the time and resources.
EC 2020: Strategies for Electrical Contractor Business Development
Business Development vs. Sales
Selling focuses on the needs of the seller;
marketing on the needs of the buyer. Selling is
preoccupied with the seller's need to convert
his product into cash; marketing with the idea
of satisfying the needs of the customer by
means of the product and the whole cluster of
things associated with creating, delivering, and
finally consuming it.
EC 2020: Strategies for Electrical Contractor Business Development
Developing Relationships
• Technical: be the best at what you
do regardless of the price.
• Personal: get to know your clients as
people.
EC 2020: Strategies for Electrical Contractor Business Development
Business Development & the Services
Lifecycle
EC 2020: Strategies for Electrical Contractor Business Development
Business Development & the Services
Lifecycle
Phase 1: Young company or new
to the market:
• Focus your limited resources
on sources of data that are
easy to get (e.g. GCs)
• Find out what you do well
and what needs to be
improved
• Increase your close rate
EC 2020: Strategies for Electrical Contractor Business Development
Business Development & the Services
LifecyclePhase 2: Established in
the market:
• Market specific
capabilities to GCs and
end users
• Hire an aggressive and
smart Business
Development
professional
• Brand matters
EC 2020: Strategies for Electrical Contractor Business Development
Business Development & the Services
Phase 3: Build on your
Lifecycle
reputation:
• Know your end users
well and talk to them
regularly
• Know exactly what
they need and when
they need it
• Become their preferred
electrical contractor
• Own the work before
it’s on the street
EC 2020: Strategies for Electrical Contractor Business Development
Business Development & the Services
Phase 4: Move on toLifecycle
greener
pastures:
• When technologies become
mature, any EC can perform the
work, owners/GCs will hard bid it
• While everyone else is beating
themselves up, move on to other
markets
• Biz dev moves from focusing on
maintaining old clients to finding
new ones
• Repeat the cycle
EC 2020: Strategies for Electrical Contractor Business Development
The Basic Economics of Biz Dev
• Know your close rate
• Estimate how much a biz dev professional would cost
Scenario:
• You bid on $10MM of work and get $2MM (20%
close rate)
• You estimate a biz dev person would cost $300k/year
• Your biz dev person would have to capture 3.75% of
the $8MM you’re missing out on (or increase close
rate to 23%) in order to cover his/her cost
EC 2020: Strategies for Electrical Contractor Business Development
The Basic Economics of Biz Dev
• Most ECs that have seriously dedicated themselves
to a strong business development effort have seen a
very large ROI on the hiring of a professional to head
that function
– Not just trying in increase close rate, but finding new
markets
– Found new markets while the construction economy was
soft
– Discovered leads before they were on the street; work
towards becoming the “preferred” EC
EC 2020: Strategies for Electrical Contractor Business Development
Recommendations
• Develop literacy of business development
process and strategies
• Design strategic plans appropriate for EC
expertise, size and region
• Capitalize on NECA/IBEW/NJATC and ELECTRI
International
• Monitor new market development
EC 2020: Strategies for Electrical Contractor Business Development
Project Timeline
We plan on completing the research and sharing our
findings at the 2013 NECA Convention in Washington
D.C. this fall
Activity
Step 1: Program Design
Task Force Formation
Step 2: Matric Development
Task Force Meeting / Focus groups
Step 3: Summarize Results
Task Force Meeting
Step 4: Feedback Period
Step 5: Evaluation and Completion
Su. 12
Fa. 12
Sp. 13
Su. 13
Fa. 13
X – July EI Mtng
X – NECA Convention
X – July EI Mtng
NECA Convention – X
EC 2020: Strategies for Electrical Contractor Business Development
Team
David R. Riley, Ph.D.
Thomas E. Glavinich D.E., P.E.
Associate Professor
Architectural Engineering Department
Pennsylvania State University
e-mail: [email protected]
Associate Professor
Civil, Env, & Arch. Engineering
The University of Kansas
e-mail: [email protected]
Justin Reginato, Ph.D., P.E., LEEP Green Assoc.
Assistant Professor
Construction Management Program
California State University, Sacramento
e-mail: [email protected]