Why a Full Pipeline Doesn’t Mean a Healthy Business
The Sales Cycle – Part 1 of 8
By Ron Farrell, Grounded Growth Coaching
“We’ve got $3 million in quotes out right now.”
Sounds pretty good.
But how much of that $3 million is actually real?
How much was quoted last week?
How much has been sitting there for three months?
How many customers are actively making a decision — and how many haven’t returned a phone call since June?
There is a big difference between work you have quoted and work you are likely to win.
And an even bigger difference between work you are likely to win and money that will eventually make it into your bank account.
Your pipeline has already cost you money
Every opportunity sitting in your pipeline has a cost attached to it.
You may have paid to generate the lead.
Someone answered the phone, qualified the opportunity and booked the appointment.
Then came the site visit, estimating, pricing, proposal, follow-up and probably a revision or two.
For a larger project, several people may already have touched that opportunity before the customer has spent a dollar with you.
So when I look at a big pipeline, I don’t just see potential revenue.
I also see money already spent.
That doesn’t make a large pipeline bad. Of course you need opportunities.
But pipeline isn’t revenue, and it sure as hell isn’t profit.
Start looking at the age of your quotes
This is where things get interesting.
Pull up your open quotes and sort them by date.
What do you see?
If you have 40 open quotes, but 25 of them are more than 90 days old with no meaningful activity, do you really have 40 opportunities?
Or do you have 15 opportunities and 25 things nobody has had the nerve to mark lost?
Those stale quotes matter.
They inflate your pipeline. They distort your close rate. They make your future revenue look healthier than it is.
And sometimes they keep owners from dealing with a much more uncomfortable reality:
We might not have as much work coming as we think we do.
That’s worth knowing sooner rather than later.
Give your pipeline a reality check
I wouldn’t start by asking how much your open quotes are worth.
I’d start here:
How many are actively moving?
When was the last meaningful contact?
Does the customer have a decision date?
What is the next step?
How long does an opportunity normally take to close in your business?
And perhaps most importantly:
If this quote disappeared from your pipeline today, would you actually be surprised?
If the answer is no, I’m not sure it belongs there.
A smaller pipeline made up of legitimate, qualified opportunities is far more useful than a massive number padded with wishful thinking.
Because you can’t schedule crews with wishful thinking.
You can’t pay suppliers with it.
And the bank has never accepted an open quote as a deposit.
So by all means, build a strong pipeline.
Just make sure you know how much of it is actually real.
Better Business. By Design.
Ron Farrell works with business owners who want better profit, stronger systems and a company that doesn’t require the owner to carry everything on their back.
After building, systemizing and selling his own business, Ron now works with owners on the numbers, people and operating structures that turn a demanding job into a valuable business asset.
Recent Posts
