Walking Away from the Cash is Good Business

Sometimes there’s nothing tougher than a heaping helping of your own medicine. In this case it involves me, a nice pile of cash, peer pressure, and a tough decision.

You folks know how often I rant about the fact that strategy is about saying “no.” It’s easy for me to pontificate on this point. I tell you about companies I’ve seen do this well and others I’ve seen screw it up.

On Friday, it was my turn to put up or shut up. Today I’d like to recap the thoughts and events that led me to turn my back on an opportunity to earn a decent chunk of change. In sharing this I hope to make this critical strategic lesson accessible and easy to understand so you, in turn, can apply it to your business.

Allow me to bore you for a moment and explain my firm’s strategy so you have some context. I run a leadership training business. Our strategy is to offer training sessions on critical business skills to large companies. We differentiate ourselves with the experience level of our instructors. We value delivering outstanding service to our clients and delivering top notch business results.

We grow by deepening relationships with existing clients (translation: becoming part of corporate universities or recurring leadership programs) and adding new clients. When we’re not teaching, we’re developing new clients, building new classes, or eating Cookie Crisp while watching Spongebob reruns (it’s about a balanced lifestyle folks).

That strategy sounds pretty clear, no? This is where it gets screwed up though…

Our clients know many of us have consulting backgrounds. Occasionally they ask us to provide consulting services on different topics. Sometimes those requests aren’t in our area of expertise and we refer the work to other firms. Sometimes the work is squarely in our wheelhouse. That’s when it gets sticky.

We recently took on an incredibly cool consulting project. We did so because it strengthens a very important relationship for us, enables us to better understand where our training fits for the client, and, candidly, it’s a financially attractive deal.

Shortly after launching this work, we received another request for proposal on an incredibly cool consulting project. The work is fascinating and it’s also squarely within our capabilities to perform the work. It too is financially lucrative.

Then I read the proposal request. The timing they’re requesting overlaps directly with the consulting project we’re already doing. It would be feasible to perform both projects simultaneously but doing so would stretch our team and would introduce a risk of not delivering the best work we could because we might be too taxed from a resource standpoint. On top of that, the work and travel schedule would be brutal for several months.

One of my colleagues kept pushing me to take on the new project. He kept saying how we could balance the work and how we could maybe bring on some partners to help with it. He kept banging away at how cool the project seemed and how financially attractive it could be. He was acting like that guy in high school who was telling you how cool you’d be if you smoked weed and how much fun you’d have doing so. He was the pusher.

Arrrrggghhh! Must… walk… away… from cool project… and money… aaggghhhh!

I did one of the most difficult things I’ve ever done as a businessman – I respectfully withdrew from the proposal process for the second project. It stung.

I’m glad I walked away though. There were a few major lessons that came out of the experience:

1. Staying on strategy sends a clear message to your team and your clients. Everyone on the team knows the business stands for something and isn’t simply a venture in search of the almighty buck. It lets clients know “we know what we’re good at and we won’t let anything distract us from delivering great results.”

2. Saying “no” protects other critical parts of your business. I’ve seen many consulting firms get slammed with major projects. While they’re delivering those projects, they’re not spending time selling new projects or building new client relationships. When the projects they’re working on end, they hit a massive dry spell because there’s no new work to do. By saying “no” to this project, I protected the time I spend developing new client relationships or deepening existing ones. Doing so ensures there’s work to do after I do the work I’m doing.

3. Saying “no” supports microeconomics. This is a classic case of supply, demand, and price. If you continuously increase supply by saying yes to everything (because demand is higher), you run the risk of putting downward pressure on your pricing. I know the market is so huge that a simple “no” by my tiny firm has no impact on that ecosystem. It’s more a point of principle… if you say “no” to work, the message you send is “our services are in demand and our pricing is reflective of that demand.” It keeps you from the alternative which is lowering price over time because the quality of your work gets crappy from overloading or you’re desperate to generate new work because you’re in a self-inflicted drought (see point 2 above).

This was a very painful decision for me. Staring down the barrel of holiday credit card bills can make you think about doing stupid stuff for incremental cash. But on the back end of doing this project I said “no” to I know there would have been hell to pay for the decision. We would have been worn out and looking at a sales pipeline that might not be very attractive. On top of that, a few “yes” decisions when it should be “no” could ultimately turn my business into something I don’t want it to be (a traditional consulting firm).

Saying “no” to cash is hard. I encourage you to look at your business and see where applying this principle will benefit you in the long run.

What experience have you had with saying “no” to keep your business focused? How do you handle situations like this?

– Mike Figliuolo at thoughtLEADERS, LLC