by Jim Cantrell, President & CEO, SSD
 The common misconception that new business can be had in little to no time with the right people making the sale, the right contacts and the right sales pitch can lead to decisions and behaviors that eventually doom your revenue forecasts or worse, your company. While almost all of us can find examples to the contrary, the painful reality is that a fixed amount of time is required to develop most business opportunities to fruition and very few of the factors that determine this length of time are under your control. Despite the best attempts, it is often impossible to shorten this sales cycle.
A lack of understanding of the time to sale dynamic is the most common problem that we encounter in our consulting practice. By not factoring time to sale into your business strategy, poor revenue performance and inappropriate resource allocations result.
All purchase decisions exhibit the same basic decision mechanics. Each decision point or mechanism has a time factor associated with it. This is particularly true in government dominated industries such as aerospace. Aerospace procurement decisions are often complex and larger dollar procurements require more decision criteria, more decision levels, and more decision makers. This is also true of acquisitions that have implied risk and both conditions lead to increased decision time and increased time to sale.
The single biggest factor in determining the time to sale is the size of the procurement. Put simply, the larger the dollar figure, the longer the time to sale. Small dollar procurements, such as consulting contracts, might be closed in as little time as a week. Larger programs, such as aircraft orders or spacecraft systems, can require several years between initial opportunity awareness and the first sale. Large software systems might likewise require several years to close the deal. Different industries also exhibit differing time scales due to relative risk tolerance and competitive pressures but aerospace and large municipal construction projects tend to exhibit the longest times to sale.
 In our consulting practice, working mostly with aerospace programs, we have found a very strong correlation of program size with time to sale. We have been tracking this parameter for many of our efforts and have arrived at the correlation shown in the "Time to Sale" Figure. These data show that pursuits for programs valued for less than 1 million dollars in size, the time to sale is measured in months to a year. Programs with value in excess of 1 million dollars have a characteristic time to sale measured in years.
With time scales like these, the strategic implications of time to sale are profound. Much like cash flow, time to sale has to be integrated into bid strategies, bid/no bid decisions and business development resource allocations. Also very important is the fact that individual managers not involved in business development on a daily basis typically do not understand this basic time dynamic. Managers and leaders who do not understand this will not have realistic expectations of revenue forecasts and will not understand the dynamic that can cause serious harm to the business if not properly managed.
In our consulting practice, we have worked with both large and small companies who have found themselves trapped in the time to sale dilemma. This typically arises when the corporate backlog is worked down from an all time high and little attention has been paid to maintaining the new business pipeline in the process of executing the backlog. The dilemma arrives when the backlog reaches a low enough level to affect company near-term revenue. We have seen both large and small businesses let the new business pipeline “dry up” and begin the long struggle to build new backlog.
The job of rebuilding a contract backlog is greatly impacted by the time to sale phenomenon. Larger contracts will take substantial time to develop and will not contribute to near-term cash flow needs. If you are faced with a depleted new business pipeline along with a small contract backlog, your choices are very constrained.
In order to build backlog quickly, developing the shortest time to sale prospects which will tend to be smaller in dollar value will be a priority to meet cash flow needs. Simultaneously, larger prospects can and should be pursued but the contracts resulting from these pursuits will occur well after the critical near term need. Dollar for dollar, smaller programs have a higher cost of acquisition compared to the larger revenue programs. This situation
can become a death knell for a business that does not immediately recognize the gravity of the situation and understand the underlying mechanisms.
Often, a low backlog situation coupled with a depleted new business pipeline is most fatal for large companies especially when they are not willing to make the expensive investments in new business and simultaneously shed excess expenses and people in the organization.
In our consulting practice, we have formulated the following criteria to help clients avoid being trapped by the time to sale dilemma.
Maintain a new business pipeline that has an adequate volume of new business in the short, medium and long-term timeframes.
Manage the individual new business volumes in each timeframe differently and according to the needs of those opportunities. For example, opportunities that are mature and are closer to closing will require frequent interactions with the customer and a higher rate of resource
expenditure.
Run revenue forecasts every quarter and use realistic time to sale and realistic win probabilities. Nobody is served by overly optimistic revenue forecasts.
Maintain revenue pipeline volumes of two times estimated revenue needs for short-term opportunities, five times for medium-term opportunities and ten times for long-term opportunities.
If worst case scenarios put your company in a potentially compromising short-term revenue crunch, work an appropriate combination of short-term pursuits in parallel with long-term pursuits.
Use long-term business opportunities as your growth mechanism as this will give you the best return on your business development investments.
The phenomenon of time to sale is a fact of life and has to be well integrated into business development strategy and management processes. If not taken into account, time to sale can turn a short-term business down or market change into a business threatening event.
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