Of course we can pay for that … if it makes business sense

Had a good conversation with a vendor last week. They were looking to increase their business with us, no surprise there, but the rep was actually a bit cynical (in a nice way), and (probably wisely) asked directly what the chances were that we could actually get Project X off the ground?

I’ve seen these great ideas start, but then some manager complains that they have no budget for this kind of thing.

In retrospect, it is almost a rude question, but I know that any good businessman would answer the question the same way – if posed correctly and completely. I went to some folks in finance and management and put the question to them this way:

If I asked for $100,000 for a project, with 80% likelihood that I would get back $500,000 in return within 12 months – would we be able to get the cash? Note – this is a “new project” – not included in the budget for this period.

Invariably, the answer is yes – who would turn down ROI like that? It’s an interesting exercise to probe the limits of that little equation (How about $1M to make $5M? $10M to make $50M? 2:1 payback over 18 months?), and yes, the project proposal would have to be a bit more detailed, but the real heart of the vendor’s question was can you get money for an unbudgeted project?

NB: Need to realize a caveat here that this isn’t quite an infinite progression – increasing dollar amount jst means the higher you’ll have to go for approval, ultimately up to the board level. And no, you probably can’t get a $10M project approved easily if your company does $500M/yr in sales … that’s fairly material … it’s all relative …

And the real heart of any business’ answer will be – of course, if you can get a decent ROI, there will always be some way to get the cash. It just gets us back to the recurring angst over cost-justifying projects – develop these skills, and you should have little trouble getting projects funded. And … you’ll learn to quickly let go of the “nice to have” “fun” projects that are “cool” and “new technology” but all soft-benefits.