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Business Advisor

My 2nd Commandment: Don’t Give Anything Away!

In business, knowing when to say 'No' can be just as important as landing another customer. A bad job can lose money while keeping you away from a good job.

In my last blog, I proposed that when building green we follow a variation of the 2,400-year-old Hippocratic Oath, Primum non nocere (“Above all else, do no harm”), as our 1st Commandment. I reinterpreted that oath from a business perspective as “Above all else, do not leave any money on the table building green.” Like a good doctor, I believe that before we can make things better, we have to agree not to make things worse. And if we are going to start out losing money when building green, we will definitely be making things worse. In fact, we owe it to ourselves, our employees, our families, our larger community, and yes, our customers to make sure we are profitable building green.

Since I am writing in the company of Hippocrates, why not go for the gold and rub elbows with Moses? Thus, I propose that you incorporate the following 2nd Commandment into your best green-building business practices as well. Did you catch that? This and subsequent commandments are designed to help you build a strong, durable, high-performance, low-maintenance, healthy, efficient green-building business. And to do that we need to discuss some critical business fundamentals that will support our businesses in good times and bad.

Without further ado, my 2nd Commandment is “Don’t give anything away.” This may of course be kind of tricky for someone new to green building, because in many cases we are willing to consider giving everything away just in order to… get the job, install our first solar panel, build our first LEED home, drill our first geothermal well, our first whatever makes us forget about what really needs to come first: the bottom line.

Now, I can hear you heating up your keyboards already, but hear me out. I am writing for the bell curve. That is, I am writing for the majority of situations, not the minority. Yes, there are exceptions to giving items away, and yes, I have made them myself in the past and will likely make them again in the future. Some exceptions I’ve made have paid off; others haven’t. However, what made the difference between those that did and those that didn’t was making sure I made a cold, hard, and frank assessment of my motivations, the potential rewards, and the expected costs. AND I ran those motivations, rewards, and costs past someone else as knowledgeable about the issues but not as emotionally involved as I was.

Here are some good and not-so-good discounting exceptions to consider:

  • Good: discounting when the project is sufficiently green that you can guarantee local media coverage. If the trade-off doesn’t cost you anything out-of-pocket and is in fact only the opportunity cost of forgoing the profit, and you believe the result will make the project attractive enough for positive media coverage, then go for it!
  • Not so good: discounting anything because the client says if you give him the discount, he will give you more work to do at another property he owns or at his kid’s home, pass your name on to a friend, or have you remodel another part of the home next year. Won’t happen! Tell him next year, when that work comes through, that you will pass the discount on to him at that time. Period. End of story.
  • Good: discounting when the client makes his home available for open-house tours where you get to invite the attendees, manage the agenda, and pass out literature. Just because a client offers to have a dinner party may not be enough. You should host the party to ensure you can manage your message.
  • Not so good: discounting anything when the client offers to have an open house where he invites his friends, but you do not get to speak, invite your client list, or pass out materials about your company. See above.

Of course, I would love to hear about exceptions you have made—how they have worked and how they have bombed. But for me, the Bottom Line remains the bottom line: Discounting should be the exception, not the rule. You need to be honest with yourself about what the return will be, and the return needs to be tangible!

Next blog? The 3rd Commandment: Change orders are a sign of weakness!


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