Wednesday, December 10, 2008

To Chase Or Not To Chase – What Business Am I In?

All those tempting opportunities

There’s always a balance when starting a business between keeping a razor sharp focus, and being open to new opportunities when they come your way. You can’t chase everything that comes down the path when you start a business.

When I first started my business in 1986 I was a manufacturer’s rep selling computer memory boards to businesses. One day I called on a prospect and they told me, “We don’t need any memory boards, but I could use a good programmer.” I few days earlier I had run into a colleague of mine, who was a programmer, and had just quit his job at the same company I had worked at, to start his own programming business. I called him up and in about 10 minutes we worked out the details. I presented him to the prospect and they hired him that day. From that one opportunity my training and consulting business grew.

Every now and then when you start a business an opportunity will present itself that’s not quite in the core competency of your current business. It may be in the same playing field but you would really have to find new resources or set up different procedures to handle this new opportunity. It’s always tempting to go for it because it’s either it’s a good-sized deal or you really need the business. (Or your entrepreneur gene is out of control.)

If you have salespeople, and they bring you the deal, it complicates the decision. If you decide not to pursue the deal, and your sales rep is working on commission, they may see it as taking food off their table. It’s another small business dilemma.
Ultimately, you have to make the decision if going after this business is in the best long-term interest of your company, regardless of whose feelings you may hurt.

Here are four things to consider when you are making this decision:
1. Are there any other current customers that could use the same product or service?
2. Will it cost you the same or even less to deliver this special deal, than you typically spend?
3. Are the profits from the deal worth the time spent going after it and opportunity lost from your current business?
4. Can you keep selling the product (or an upgrade to that product) or service to the same customer after the initial sale?

If you answered “yes” to all the above, then I don’t think there’s anything wrong with some flexibility and going to for the deal; especially if you really need the business. Just be clear with yourself and your employees why you are going for the deal. Go through the four points I list above with them as well.

Also, think about the downside. What if you invest the time and resources and then don’t get the deal? What have you lost? Will it really set you back? Since every situation and deal is different, I cannot tell you what to do. I just want you to be clear, and brutally honest, on why you are chasing the deal.

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