How do you choose between very different orders?
A client received two attractive orders. They are a very different size! Delivery dates overlaped.
🔶One is very large and will occupy the majority of their team. They want this in order to grow; they have completed similar orders before.
🔸The other is smaller, more challenging, the founder must supervise personally.
🤷 How do you make the decision if this happens in your business?
❓Accept one, or both?
❓Try to negotiate delivery?
🤯 Difficult one! 🤯
We started with a quick two column – advantages and disadvantages of each from the factual and emotional perspective. Consider:
✨ Reputation value?
✨ Risks?
✨ Impact on future orders from this customer or members of their group?
✨ Emotion – which they most “want”?
✨ Can they add people? Are raw materials on-hand? Factory capacity or are there alternatives?
✨ Potential slippage on the delivery date?
✨ “Cost” of having the founder tied-up – What should she be doing during that time?
But then we looked at a high-level evaluation of the financial merit:
💰 Revenue (the larger one is very attractive!),
💰 Cash impact – how much will be tied-up, for how long, what is the opportunity cost),
💰 Will there be other costs to expedite anything or any related employments costs.
💰 The true “bottom-line” profit the order will add for the company, and what period.
My client made an informed decision … there was a stark difference between the orders!
🔶 They wanted the larger project for the image:
“We are a multi-million dollar company.” “We work for X company.”
🔶 But, that one would also create a large loss for them. And for an extended period.
🔸 The revenue on the smaller project is not as attractive, it has potential to open a new niche.
🔸 The profitability of the smaller project is meaningful.
There is hopefully a happy ending because my client has reached out to renegotiate the large contract.
In the interim they will work on the smaller order, add some nice cash, and make profit that will strengthen the business for more growth.
🤷 How do you evaluate your orders and expansion? Comment below.
#businesssuccess#ProfitDetective#financialhealth#growth#expansion#decisionmaking#strategy
