Last week I was in San Diego attending the semi-annual retreat for the mastermind program of which I am a member. It was three chock a block full days of learning, masterminding and networking with new and longtime colleagues in our entrepreneurial journeys. We take the time to work ‘on’ our businesses. It is always a terrific, encouraging, uplifting, and exhausting trip and there is never enough time to connect with as many people as I’d like, nor get as much ‘down time’ as I wish was possible.
During the course of the event, a very compelling offer was made to do private work with my mentor. This is a goal of mine and here was a special opportunity. Should I go for it? Is this a ‘bright shiny object’? How to decide if this was the right time and the right offer for me? How to decide whether I should incur this expense in my business now?
In addition to discussing the pros and cons with several colleagues, I also used my Four Powerful Questions to Ask Yourself Before You Spend Money in Your Business template. When faced with an expense, especially one that is unplanned and falls in the ‘opportunity’ category, answering these four questions with brutal honesty can really help you to make the smartest decision for the situation.
Let’s look at the questions in the context of my opportunity.
- Does it directly contribute to revenue generation?
In this situation, the answer is ‘no’. While the knowledge and guidance gained in doing the private work with my mentor will certainly put me in a better position to increase revenue in the future, doing so is not a direct cause and effect. Investing in adding a sales person would directly contribute to revenue generation. This investment is, to me, a layer removed from direct.
- Does it have to happen now? Nope. This wasn’t in the ‘must do it now’ bucket and the fact that this offer was put on the table unexpectedly doesn’t change that. An example of ‘must do it now’ could be such things as replacing your only computer that bites the dust and is irreparable.
- Can the cost be reduced?Probably not. This is a special offer that is at a discount to normal pricing and may not ever be repeated. This is a strong reason to consider making this investment as in its current form, the cost would represent about a 15% cost savings. An example of ‘can the cost be reduced’ in which the answer would be a strong ‘yes’ could be when a product or service is made available with a payment plan, and a good discount if it’s paid in full up front. Of course, taking advantage of this type of reduction is dependent on its impact on cash flow and overall timing (e.g. are you paying for something today that won’t be ‘delivered’ for six months? If so, the discount better be super good to pay in full).
- Is there another way to achieve the same thing at a lower cost to you?Maybe. In this case, we’re talking about mentorship and that involves being clear about your objectives and goals during the engagement. Are there other subject matter experts who could provide an analogous mentorship at a lower cost to me? It’s highly possible and so from a purely objective place, it would make sense for me to research some to contrast and compare. In the subjective world of coaching/mentorship it is also necessary to factor in personality, methodology, and more. So it’s not completely cut and dried. In terms of an example in which there is a way to achieve the same objective at a lower cost? Let’s stay in the general area of business development —- virtual training courses are always significantly less expensive than attending in person. Both in terms of actual cost of the program and then adding in any necessary travel expenses. Yet both virtual and in person training have the goal as the end result.
After looking at the opportunity presented to me through the lens of these four questions, the answer was quite clear. ‘No’, this wasn’t a good investment for me to make at this time.
In summary, regular use of these questions can keep you from jumping at ‘bright shiny object’ opportunities and just in general keep expenses in check.