Part III – How many opportunities do I need in my pipeline?

Easy and realistic answer: not more than you can manage from a capture perspective. 

What drives your pipeline is your revenue goals/target numbers. Let’s say for example that your revenue goal/target is $12M for 2010, which has been based on your forecast of ending 2009 at about $10M.  Here is an approach that can help you determine the size of your pipeline.

1.  Estimate your sales based on funded orders on month-by-month basis for your existing contracts- calculate that work at 100%.  For each new month, replace these figures with actual sales vs. estimated sales.

2. Estimate your sales on high probability option renewals but calculate these numbers at 80% of what you estimate that the actual sales would be if the option were renewed.

3. Estimate your sales on successful contract re-competes but only enter 50% of what you estimate the actual sales would be on the new contract. 

4.  When you add these numbers up on a month by month basis over the course of a full year, the delta between this number and your revenue goal/new target is what you need in new opportunities to achieve your goal. 

5. Enter potential new opportunities and your estimated sales/month if you win these opportunities but only enter 30% of what you estimate as your actual sales if you win the new contract.  Generally speaking, you will need 4 or 5 times the new opportunity revenue in your pipeline to achieve your revenue target.

Over time you will be able to adjust these percentages based on actual.  For example, if your win rate is a lot higher, you’ll quickly achieve your revenue goals.  If it’s lower, you may need more opportunities in your pipeline. However, here is what you can be sure of, if you don’t have a good capture plan you will have a hard time winning anything!

Comments