No Budget No Problem – BV – Part 17
A common approach in sales is to confirm that your prospective customer has funding already budgeted for your proposed project. If the customer has a budget, has the customer already been working with one of your competitors to identify a baseline budget?
Or what if you discover that your potential customer has no real budget for your proposed initiative? Perhaps you discover that the customer does not fully understand the investment required. Do you walk away if there is no budget? Of course not.
Here are two methods for circumventing a lack of budget for your initiative:
- Make your value proposition so compelling that your customer believes that your initiative is more important and more valuable than other projects that might already have budgeted funds already established but not yet spent. In this case, you can actually “steal” the budget from other projects by helping your customer make your business case most compelling.
- Top executives in your customer’s organization have a lot of flexibility in how funds will be spent, whether or not a budget has been allocated. Working with these top executives can help you bypass the formal budget allocation process within your customer’s organization.
Capital Expenditure or Operating Expense
Find out whether your customer will classify project funding as a capital investment or as an operating expense. Depending on the level of investment and what is being purchased, your customer might prefer to take funding right out of monthly operating expenses. In other cases, the investment could be significant enough to require booking it as a capital expenditure.
Generally, it is easier to get approval for expense-based funding. Companies often have stringent requirements for documenting capital projects and a rigorous approval process.
I’m DJ Sebastian, and we will continue this discussion on creating customer value in the next briefings.