This is a very interesting question and one which requires careful analysis of your current situation, as well as your plans for future growth. At CMS we have worked effectively with clients who do not need, or want, full-time sales functionality – equally, on several occasions, we have worked with clients as a bridge between no sales and full-time sales. And then of course, there are the times we have worked with clients in support of their existing sales function.
So what are the questions you need to answer?
What are my future growth plans?
This is a key question, and understandably it can feel that the numbers involved must require full-time sales to achieve. However, this is often not the case. In our experience, most builders under £10m in turnover do not need a full-time sales function. So unless your plans will take you over this figure, or you are looking for a very aggressive growth strategy you should think twice about employing someone full-time. Experienced part-time BDMs can be very effective.
What level of activity is required?
This is linked to the previous question and, more often than not, it is about targeting the right projects rather than volume alone. Consider this:
- An experience CMS Sales Hunter will contact around 20 potential clients for every day worked
- After allowing a little time to build relationships and refine the targeting of projects, we would expect this to consistently produce one or two opportunities to tender for every day worked
- If you have an average win ratio of 1 in 4, then you should be able to secure one or two new contracts for every four days worked
- A full-time Business Manager would therefore be able to generate something in the order of 6 to 10 tender opportunities a week – it’s a big company indeed that can sustain that level of tendering, let alone taking on 4 to 6 new projects a month
What budget can I commit?
Employing someone is an expensive, and potentially risky, business with additional costs like; bonuses, pension, and employers NI to factor in, but let’s just keep it simple and look at basic salary.
- The average salary (according to Total Jobs) for a sales representative in the construction industry is £32,500pa
- Assuming 8 bank holidays and 25 days annual leave this equates to around £140 per day
- The cost of employing a freelance person can be as much as £400 per day which seems really expensive in comparison
- However, if you consider your answer to the previous question it is likely that you only need this person for 1 day per week
- If you put that in productivity terms that means your employee is now costing you the equivalent of £700 per day (plus the additional costs of employment)
- And then of course you have the added intangible value of using a freelancer – in that you can stop, restart, speed up or slow down activity to match the level of activity going on in your business
What happens if it doesn’t work?
This can sometimes be a killer question for a company considering a direct employment. It may be that you have ambitious growth plans, or have reached the size where a full-time sales person is viable; but what if it doesn’t work?
I said at the beginning of the article that CMS has often been used as a bridge between limited or no sales and employing someone full time. Here is a brief example of one particular CMS client where this has worked well:
This £10m North London builder had grown to the size where a full-time sales presence was required. However, the directors wanted to ensure they had both the time to recruit the right person, and a considerable existing pipeline to ensure that person had the best possible start.
CMS began an intensive 12 day per month programme of business development for four months, which gave them the time they needed to recruit well. This proved to be so successful that the client now continues to employ the services of CMS, on a much reduced 2 days per month, to provide support and lead generation for their new full-time Business Development Manager.
Ultimately, the answer to the question – ‘should I employ a full-time Business Development Manager?’ – has to be: it depends on your situation and what is right for your business. However, what can be said with absolute certainty is that for many construction companies, a far more cost effective option would be an outsourced, part-time Business Development function.
To find out more about how CMS can help your business grow call us today on 01256 475880.
