(NOTE: This message is laced with sarcasm to prove a point. Reader beware and enter at your own risk.)
One of my mentors taught me a very valuable lesson the hard way. He told me I had great ideas, and my sales approach was crap. He even sent me to âSales Trainingâ to get better at making my point.
I admit I was terrible. I have gotten better over the years and by making mistakes. One good idea after another thrown in the circular file until I learned an invaluable lesson from my mentor.
Executives only care about two thingsâ¦
#1 â MONEY
#2 â MONEY!!!!
Money #1 â How Much Will This Cost Me?
One of the first questions after someone poses an idea to an executive is: “What will this cost?”
Money #1 is about how much outlay of cash, time, or effort this idea will cost me. Is this idea an investment of hundreds of thousands of dollars? Capital? Expense? How long will it take? Who needs to be involved?
Everything in business comes with a cost. If the executive decides to put effort into something, she needs to know what it will cost her. Do I need to change the schedule on another project making it late? Is she hiring someone to complete this project? Does she need to pay overtime? Invest cash? Take out a loan? Everything comes with a price tag.
When presenting your ideas to an executive, make sure you have these details ready at a macro level. Too much detail, you lose their interest. Not enough facts and you will be sent back to the drawing board. What is the right level of detail?
Each executive will have different motivations. See if you can identify them before the conversation and leverage their preferences. Going to a CFO with highly complicated technology will confuse him. Seeking financial support from the Director of Engineering without discussing the details? Good luck. Determine their preference and use it!
Money #2 â What Is The Revenue Or Cost Savings That Comes With This?
The second question: “How much can we make off this idea” The corollary question: “What are the savings?”
Money #2 is more about what is in it for me. How much will we profit from this exercise? Will it increase revenue? Can it save me money elsewhere in the business? What do I get from my investment?
If an idea is simply for an idea’s sake, you better have a flawless argument to get approval. Asking for money (#1) without stating what is in it for me (#2) is suicide. If you approached your mother for $100, would you simply get it? Sure, sheâs Mom, and she loves you. Dad on the other hand wants a mowed lawn, clean garage, or something in return. (NOTE: This is a stereotype. See warning above.)
Executives need to know their investment will pay off. Some want immediate results, and others may be playing the long game of two to three years out. Either way, for their $100 today, they want something in return in the near future.
How can you save the business? Will the idea drive more revenue and improve cash flow? Is your production line 30% more efficient saving time and labor hours? Can we make and sell more widgets this month?
Approach your executive with some idea of what is in it for them. Show the way your idea can help meet (or exceed) their goals. If you ask for $100K, demonstrate the return of $200K, $300K, $500K, or more for the investment in your project.
Subjects like safety, risk mitigation, and even simply making a product right for the customer may not have hard dollars in return. Focus on cost avoidance when you cannot provide hard cash. Avoiding litigation and the lawyer fees associated to defend your product liability can be worth millions. Saving a personâs life is immeasurable. These costs are indirect, and they are potentially real.
In order to get Money #1 to begin your project, you must show how Money #2 pays itself back. Without it, your idea is nothing more than a dream.
Wrap It Upâ¦ This Is Costing Me!
I learned this lesson early in my career. As stated, my mentor saw potential in my new ideas. He knew I put a lot of effort into the concept and how it could help the business. I had opportunities to drive real change.
My presentation sucked. I spoke of the technical merits. I showed efficiency gains. I described in detail the plan of implementation. I knew generally what the âcashâ costs were in the conversation. I could give him more detail than he needed.
In the end, he asked me what it would cost. I had the cash value of the idea, and I neglected the time and human capital. His second question: “How does this affect the bottom line (the return)?” I did not always have this level of detail.
Business is supposed to be simple. I sell something for a price (Money #2) while making it for a cost (Money #1). When #2 is greater than #1, business is good. If #2 does not exist and you continue to spend #1, your business will not last.
Approaching an executive with these two concepts well prepared will serve you well. In everyday negotiations with my team, I often ask, “How much effort will this take?” and “Why should we do this?” In a way, my mentor is perched on each of my shoulders (like the angel and devil) reminding me of two thingsâ¦
MONEY and MONEY.
Go forth and sell your ideas better than I have in my past. Use the Money #1 and Money #2 tricks to your advantage. Get your paradigm-changing concepts implemented and improve your world!