Show me the Money

How do we handle decisions about money? Let's take a look at a couple of scenarios.

Scenario Number One

What if I told you that of all the things you do today, you could choose only a handful. How would you begin to sift through your services and products to pare the list down to a core set? Could you tell me, right now, what those products or services are? What criteria would you use to judge?

Would go for the high value/high profit or margin items? It would seem like a logical direction. Maybe you would go for developing a niche that is only yours further.

Now let's expand the view to a landscape that includes your direct competitors. What does that list look like?

Same exercise looking at indirect competitors. Has the list changed at all?

What are the market considerations and concessions you need to make?

Scenario Number Two

You are about to negotiate a pay raise or to provide a quote for a project you have been asked to bid on. Every single book on salary negotiation is filled with advice on documenting value, matching that value to a need, and communicating worth. And if you have your own business, I recommend being prepared to quote rates.

Have you done your research to find out what the going rate for what you provide is? How do you stack in comparison with others? Would it surprise you to learn that although women know how to negotiate and attach value to their worth, there is still a social cost associated with them doing so? [thanks, Dan]

In your calculations and communications with the party interested in your services, do you spell out terms and conditions? Anyone experiencing project run overs and scope creep?

Scenario Number Three

What if you found an envelope filled with real money. No marks on the envelope and no idea who put it on your desk or in your mail box. There are maybe be a couple of thousand dollars in the envelope. What would you do with it? Would you report the find to the police? Or would you keep it.

By the way, this scenario is not so far out, it has been happening in Japan. [thanks, Dan] How would you decide to act if you knew it would be just sitting in a box somewhere unclaimed? Would your decision change if your next door neighbor or colleague decided to keep the cash?

If someone revealed to you that the money was a gift intended for your to do as you wished, what then?

_____________

We all think we have one definitive relationship with money. And we think the decisions we make are applicable in absolute terms. Yet, when we apply a broader context or add information to the mix -- marketplace behaviors, relationships, dependencies -- that picture and those decisions may change radically. We thought we were talking about greenbacks yet we may be talking about grays.

Now, that would be $9,000, please.[Expression first heard from David Newman, Unconsulting].
 

Comments

[Carolyn Ann]

I did have my own business - woodworking (furniture, custom bookshelves, mostly ended up doing garden stuff, though). The way I set my rates depended on the job, where it was and how likely a parking ticket was. I generally looked for a specific amount per hour, then materials and finally something to cover those parking tickets.

Most of it was non-negotiable; material costs are what they are. Traffic cops, likewise. My hourly rate was flexible - to a point. If I deemed the person was going too cheap, they didn't get my work. If they accepted without haggling - great! (The killer was "I can get that Target/Ikea/etc for $75!" In which case I suggested they do so, and they never heard from me again... ) Work wasn't started until I had the material costs covered as a deposit; nothing less.

So many clients tried to change the terms and conditions before the job was finished; one went so far as to suggest I drag over a ton of dirt through their apartment building - in order to fill the planters they hadn't "quite" paid me for.

The "value" wasn't so much what I thought my time and skills were worth, as what the local competition was charging. Because I picked the wrong market, I generally didn't make as much profit as I initially thought I would. (My tax returns were pathetic...)

Bad planning? Or simply inexperience with the market, and with what's appropriate for custom bookcases? A bit of both; and the books were of so little help! (A Jim Tolpin book was of help, but, unfortunately, not in any specific sense.)

Okay, what would I do if I found a lot of money? Turn it in. It's not mine, and that's all I need to know!

If someone said it was a gift, I'd have to wonder. An unrecognized gift-giver? I'd absolutely refuse to take it. (Don't politicians get into trouble over that sort of thing? :-) ) Without knowledge of the gift, or gift-giver, I'd be forced to conclude that some ulterior motive is being played.

(If I knew the gift-giver, I'd still refuse it. I don't want that sort of gift. It's smacks too much of either charity or vain attempts at buying my friendship.)

As for #1, I've no idea. And I've now got to dash...

Carolyn Ann

PS Good questions. :-)

[Valeria Maltoni]

Carolyn Ann:

The books are usually of little help. I love to read and to learn; yet I do know that each situation is a new opportunity to test what my version of that knowledge is.

Funny, most of the people who found the money in Japan had that reaction. I would venture that most people in general would. We have a sense of what we've earned and what is fair by and large.

Yes, we think we know because we stopped looking. Every so often it's good to challenge and push a little further.

[Trisha]

What great questions! I love that you make me really think.

Scenario 1: My husband and I own our own business and manage a team of home-based employees (we also work from home). He handles all the marketing and vendor relationships, I handle all the technology (website design, computer tech support for our team, etc). It keeps us very busy - on average we work 70-hour weeks, so my focus is always on those tasks that have a direct positive impact on our bottom line. If a tweak to one of our sites (and we have many) will improve our conversions and generate more sales, that's what I do. I work hard to not allow myself to get distracted with things that aren't necessary, because I can't afford the time (which is partly why my own personal blog is suffering from inattention :) ) As for our competitors, we routinely evaluate what our closest direct and indirect competitors are doing - we all offer the same product, so we want to be sure what WE are doing is in some way unique and better (better price, better service and follow-thru etc). But you are right that we, like many people, make the choices based on money - what is most profitable. If I had to whittle down all that I do to fewer tasks, I would abandon those that don't earn us money. Which means either hiring a housekeeper and cook or living with more mess and less home-cooked food than I do now :)

Scenario 2: This is hard to answer because I don't work on contract for anyone else, but if I did, then I agree with Carolyn Ann - you can't sell yourself too cheaply. It's human nature to want the best deal, lowest price, but if we don't value our time, expertise, and experience why should anyone else? It's important to make the buyer understand that they are not just buying a product, they are buying a *high quality* product. You can't get that at Target or Ikea, or by going with the cheapest web designer.

Scenaro 3: Oooh the toughest one always comes last, doesn't it? I have to take myself out of my home environment to answer this (I still remember what it was like working in the corporate milieu). There are only 3 reasons someone would *anonymously* leave an envelope of money on my desk (the *gift* option would not be anonymous): 1) By accident - they wandered into my office and not finding me wandered out, leaving their envelope behind; 2) By design - someone else found it and turned it in to me, not knowing what else to do; and 3) By design - someone is *testing* me. All of which leaves me morally and ethically obligated to find the rightful owner. I would hold on to the money and make every effort to find whomever it belongs to, for a reasonable length of time (a year perhaps?). After that I'd keep it, but most definitely if the owner ever turned up, I'd pay up.

If it were revealed to be a gift to me, then I'd go shopping. And probably spend a little bit to buy a "thank you" present for the gift-giver.

[Valeria Maltoni]

Trisha:

Your response to the first scenario intrigues me -- do we really know what are the things that make us the most money when it's all said and done? Maybe people buy your services *because* you spend the extra time getting to know them. In that case it would be time well spent.

And here's the trick, how can you invite the buyer to learn about quality? After all, it may be subjective.

Time after time, I find that found wealth may not be the solution to all. And yes, there is more satisfaction in shared experience than in pure hoarding.