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Tuesday, February 24, 2009

Risk and reward

When do you go against the grain of logic and reason, and hard and fast numbers, and decide to move forward with a business?

The answer, almost always, is when your gut feeling tells you to do it - when you are willing to take the risk because you think the likeliness of success is high enough even if the superficial barriers suggest you should be cautious.

These thoughts went through my mind today as I revisited the decision to pull the plug on relaunching Washington Construction News. On some levels, our red-line business indicators say this expansion would be a mistake right now. But on another level, I concluded that the investment required -- if necessary I could tap into retirement savings to maintain obligations -- is worth the reward.

This touches on a fundamental question and challenge for anyone involved in construction marketing. When do you go for it, and when do you hold off? Which projects do you bid, and which do you ignore? (The opportunity and cash cost for many RFPs I suspect would be greater than my actual cash at risk in restarting Washington Construction News -- the combination of local knowledge and business experience, with an established operating infrastructure, reduces the risks even more.)

The answer to the go/no go decision almost always depends on the quality of your relationships with your client counterparts. Open public bids where you have no relationship with people setting up the bidding opportunity are generally a waste of time and energy. If the bidding opportunity is truly fair and open and based on price, you probably will lose by winning as some desperate low-baller will most likely get the job.

If on the other hand the bidding rules allow qualitative and relationship-oriented measurements (like the Brooks Act does for AEC federal projects), then will you win the work if you are coming out of the cold, or are your chances a whole lot better if you are properly connected and relate to the bidding organization? The answer is obvious.

I thought of these matters today, realizing the quality of the relationships we have in the Washington D.C. area are impressive, as are the quality of relationships of the person we hope will take the publisher's job. So if she says 'yes', we will get started. And I will remember the rules of business risk and reward need to be put to the test in practice.

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