Let's say that yours is a minority-owned small business located in a medium-sized city, providing the complete range of civil engineering and surveying services for a variety of municipal projects. With a current staff of 11, including two registered engineers and one registered land surveyor, the majority of your current project work involves performing as a subcontractor to larger engineering and surveying firms on municipal or state projects requiring participation by one or more of the firm types shown in the box at right.
Over the next two years, your firm grows to 18 people, including five registered professionals and appropriate technical and administrative support, and you are now winning the occasional small project as a prime.
Spring ahead to the end of your fifth year in business. You are doing less work as a subcontractor and more small projects as a prime. At the beginning of that year, you won an 8(a) Set Aside Indefinite Delivery/Indefinite Quantity (ID/IQ) project of up to five years duration, from a U.S. Army Corps of Engineers (USACE) District. The contract has a maximum value of $5 million of the five years, with a maximum of $1,000,000 per year.
At the end of your fifth year, you have 14 small clients given you work as a prime, a few of whom had no work for you that year, but most of whom have given you one or two project assignments worth between $20,000 and $25,000 each, for a total of approximately $425,000. In addition, you have managed to contract almost the complete $1,000,000 from the first year of the USACE ID/IQ contract. So your income for that year is estimated to be $1,410,000. Doing the math, your revenues on the USACE contract represent approximately 70% of the year's revenues.
Now, when you write in a Statement of Qualifications (SOQ) or a proposal that approximately 70% of your business comes from "repeat clients," are you saying something that has an important meaning, or is it more misleading than not?
Some people reading this might interpret it to mean that 10 of your 15 current clients gave you a second (or third. . . or fourth . . . etc.) project this year.
However, based on the specific dollar values reported, only one out of 15 clients, or 7% of your clients, gave you "repeat" work this year.
So what is more important in the overall reputation of your firm: the number of dollars that came from "repeat clients" or the number of clients that liked your work product and the overall work experience with you to choose to work with you again?
My opinion, therefore, is that the discussion of "repeat clients" has about as much reality and value as the discussion of "capacity," whose graphic representation we often call a "going out of business" chart. The chart appears to show how staff capacity increases as current projects are completed and people are freed up for new assignments. Unfortunately, since the chart can't show new projects coming on line, new hires, or people retiring, quitting, or being let go, it presents a view of future workload that has very little resemblance to the firm's real availability past the end of the week.