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.

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James MacLennan

... is the Managing Partner at Maker Turtle LLC, a digital consultancy focused on creating value in ways that align with your strategy and drive engagement with employees, customers, and stakeholders. He is an active creator, providing thought leadership through on-line & print publications, and public speaking / keynotes.