"The U. S. Constitution doesn't guarantee happiness, only the pursuit of it."
Ben Franklin
My business is helping clients developed strategies and tactics for profitable new growth.
A long time friend/client and I were discussing that the other day and he said "Bill, times are tough and I am only spending on what I know for certain will produce return. You have to guarantee that what you do will do that."
Of course now more than ever he and every business manager needs to be frugal in how they spend money, but isn't there some danger in taking that concept too far?
A point where in the quest for prudent cost control, one falls into the trap of missed opportunity,
How (do) you balance the two?
A long time friend/client and I were discussing that the other day and he said "Bill, times are tough and I am only spending on what I know for certain will produce return. You have to guarantee that what you do will do that."
Of course now more than ever he and every business manager needs to be frugal in how they spend money, but isn't there some danger in taking that concept too far?
A point where in the quest for prudent cost control, one falls into the trap of missed opportunity,
How (do) you balance the two?
It's about ratios, risk acceptance to risk avoidance. In tough times such as now, you favor avoidance with the opposite being true during better times.
ReplyDeleteBut at no point should either be 100%, in fact I would go so far as to say the ratio in either direction should never exceed 70/30.
By the way did you give him the guarantee he asked for?
There are few guarantees in life Earl with fewer still coming from consultants, so no I didn't.
ReplyDeleteHowever I am working on a performance based alternative that gives him the option to 1) pay the normal up front fee or 2) pay a much larger amount later determined by how successful the programs I help them develop turn out to be.
Risky for me requiring that I trust them to provide an accurate accounting (in this case I do) but it addresses his concern about not being the only party with skin in the game.
We'll see.
How do I do that? Tough call.
ReplyDeleteYou cannot avoid risk. Whether you know it or not, just being in business is risky. But at the same time (and now more than ever), you need to assess potential return versus known and unknown risk.
Maybe it's like the old saying, don't take anymore with you to Vegas than you can afford to lose.
earl,
ReplyDeleteanother vegas related saying is, 'you can't win big unless you wager big' which would support the notion that you do have to take some risks if you want to gain the rewards. mind you, this doesn't mean taking uncalculated, random risks. i tend to be an optimist but as crazy as things are right now, if you have a long-term mindset, it's a great time to be investing - and to me, that applies to investing in people, technology, resources, the stock market, etc, etc.