Yes, no or maybe?

There’s a tendency for business owners and entrepreneurs not to want to pass up the opportunity of a potential sale.

The famous saying attributed to Richard Branson goes something like, ‘If some one offers you an opportunity, say yes and think about how you’ll do it afterwards’. 

There is good sense in this. You want to show confidence and enthusiasm to a prospective customer so making them aware of your immediate concerns is not the smartest sales tactic. 

For lifestyle businesses too where the owner is the person delivering the service, saying yes and being positive at the outset is a good tactic. If it turns out on further investigation that it is not such a great idea you can always offer help in some other way. Perhaps refer the prospect on to someone in your network who would do a great job. That way you make two people happy and spread a little bit of goodwill.

Pricing specialist and business thought leader Ron Baker argues that ‘knowledge businesses’ - those that deliver value by means of their intellectual capital and ‘know-how’, should consider charging less if they gain new knowledge from a particular assignment. They may not make as much profit as on a more routine job but they have added to the bank of the firm’s knowledge which should be beneficial in the longer run.

In these challenging times, where sales and cashflow are at a premium, the inclination to say yes is greater than ever.

There are circumstances however where I believe that turning down a potential sale is the best thing to do. By all means try to refer the prospect on to someone else if you can, but sometimes it is better not to to proceed.

An example would be where the business has a clear niche where they do specialised and highly profitable work. Stepping out of that niche to exploit an opportunity will shift focus and resources from what the business already does very successfully. So it may not be the best approach.

Another instance where caution is recommended is where the new opportunity would require significant input from the owner. If this would shift their focus from managing their core business, the benefit from the potential new sale might not outweigh the costs.

Passion and enjoyment are also important. You may make money on a new assignment but if it doesn’t make you happy or inspire you, you may want to think twice.

So in many cases I would agree with the great man and saying, ‘Yes’ and going for it is the best approach. 

Every now and then though, after reflection, a better way forward might be, ‘Thank you for the opportunity but we are not able to help you this time’.

www.base52.co.uk

Knowledge is power

I like the TV programme where antique experts go on a road trip in a vintage car. They start off with a wad of cash and along the way they stop at antique shops and hunt out bargains. Their booty is sold at various auctions and the winner is the one with the biggest profit made on the trip. All proceeds to charity of course.

I really enjoy this, partly for adding to my limited knowledge of antiques, partly for the banter and mainly for the haggling. Yes, the haggling.

That, for me, is the essence of the show. Can the expert find a treasure and negotiate a price with the shop owner which leaves them with a healthy profit and the shop owner satisfied?

After watching a ridiculous number of episodes (I’m on repeats of repeats of repeats now) I’ve reached the conclusion that there are two main types of antique expert. 

There are the ones who have an uncanny knack for sniffing out the genuine treasures and noting with glee that they are under-priced. The shop owner has not realised they have a hidden gem in their cabinet and left it jumbled together with sundry bric a brac.

Then there are the less observant, or perhaps less able experts. They mooch around the shop for a good while and eventually settle on something shiny which catches their eye. Inevitably these items are fairly-priced, which makes turning a profit a little more challenging.

Then the negotiation starts.

Our savvy expert knows he has a bargain on his hands. He shares his thoughts with the camera and goes off to find the shop owner. Negotiation is simple and quick. ‘Is this the owner’s best price?’ or, ‘Can they knock a couple of quid off’ The deal is done and both the expert and the owner are happy. Both have achieved good value. The owner has achieved their target price (or thereabouts). The expert has achieved outstanding value - a result of their knowledge, acquired from years of obsession, research and experience.

Our less savvy expert takes his shiny object to discuss with the owner. He looks for flaws, “There’s a bit of a crack here’, ‘Did you pick this up for a song in a house clearance’ or, ‘Is this one you’ve had for a while’. He makes a ridiculously low offer. The owner is clearly not happy and is reluctant to drop. They eventually reach a grudging compromise. The owner’s body language shows disappointment. They accepted a lower price than they wanted to and have barely covered their costs. The expert has the chance of a small margin if all goes well at the auction. If not, they'll make a loss. It’s a functional and unsatisfactory deal with neither party terribly happy with the outcome.

My take-out from this is that the expert with the knowledge is the big winner in the profit stakes. Haggling skills alone are unlikely to result in a great outcome.

I think this has relevance beyond the world of antiques. 

Knowledge has value, particularly in professional service businesses.

If businesses can find ways of applying their knowledge to address customers’ needs and wants, at the right price, there lies the potential for healthy profits and satisfied customers.

www.base52.co.uk