11 February 2015

It’s not a sale until the money is in the bank

greedy banker executive CEO boss, holding dollar banknotes

There really is no simple instruction book that explains every single aspect and consideration for running a successful small business. Sure, there are certain elements that are common across all businesses, like knowing your financial details enough to be clear on whether or not you are making money. However there are other elements of running a small business that are less tangible and more behavioral, but just as important on an individual level.

An example of this is having a realistic attitude to money. To run a small business we need to be optimistic, but there are times when we need to make sure that we are balancing our optimism with a strong dose of reality. I have worked with business owners who go through a roller coaster ride of emotions, all the time, mainly revolving around their finances and one of the biggest reasons for this is they assume a sale is completed before the money is in the bank.

By this I mean they may rest all of their hopes and future plans on a big job or project. They have submitted their prices and their mind races ahead to what this will mean for the business and what they will be able to pay off or buy as a result of winning this project. The more they visualise this the more real it becomes and two things happen.

Firstly, they become almost desperate to win the project (often without really thinking through what is means for the business) and secondly, they stop all other business development whilst waiting to be notified regarding the project they are hoping to hear about.

The first issue can lead to disappointment and depression. In their mind they have already won the job, so if they are told they haven’t, it can be very upsetting. Even worse they have already painted such a mental picture about what the money will do, the depressed feeling of not being able to do this can take away all motivation and create other problems in the business, including a loss of morale for the entire time.

The second issue, stopping all other business developing in anticipation of winning the big project, is an even bigger issue. From my experience the bigger the project the longer the decision making process can take. This can lead to long periods of time when a business is doing no business development, pinning all hopes on wining the “big” contract.

So how do we manage these issues? My advice is simple, never assume you have won a project, contract or client until the money is in the bank. It is an old cliché, but it has worked very well for me over many years. I remove the emotional attachment from all projects that I am bidding for – if I get it, great, but I don’t hold my breath waiting to find out and I certainly don’t stop business development whilst I am waiting to hear.

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