The Budget Curveball
Written By: Ibby Smith Stofer
Picture the following scenario: Every sales person and buyer has at one time or another run into the curve that caused his or her desires to run off course, sometimes even to crash. In the combined sales and buying experience, both parties are moving forward and things are going smoothly. The anticipated close and purchase is within sight, and forecasted for this quarter.
Then there is the unexpected delay. The buyer either goes silent or delivers the unexpected news that the sale/purchase is not going to happen. Both parties are surprised, frustrated, and confused. You validated choice, you followed all the internal customer processes, and you were the clear product or service of choice. So what in the heck happened? How can things have gone so far off track? Is it salvageable? These are among the questions being tossed around in your mind as well as in your conversations.
In sales or purchasing roles, surprises are generally not good things for anyone. Surprise usually means we forgot a step or two that is actually key to moving forward. It can also mean that something has changed without our knowledge and it is generally not news we want to hear.
If you sell capital equipment or are the buyer of it, the news that often throws the potential deal off track is budgetary in nature. Either there is not funding available, or priorities have shifted since your joint effort to provide the customer with their equipment of choice. This can be on either the buyer or the seller’s side. Perhaps you have offered direct payment plans in lieu of a direct purchase in the past, but your new CFO is against taking on additional direct lease or rental agreements. Alternatively, the customer did not think that the IT budget would “borrow” from the capital budget and get priority over their needs.
Whatever the situation is, we can reflect on Ben Franklin’s advice, “An ounce of prevention is worth a pound of cure." Reflecting on this can help us prevent having to “cure” a situation that could possibly have been prevented with a little forethought.
Things happen and even the best-informed buyer, the most thorough of sales professionals, cannot always anticipate what can happen during the traditional 12-24 month sales cycle for capital equipment.
However, if you include a lease option in each proposal it helps both parties to consider the potential possibility that the budget may not be available and provides an alternate path in the event that the budget curve does sneak up and throw you off course. Think of it as putting guardrails on your proposal.
It also allows the buyer to present options along with the choice of equipment and to be aligned and aware of the financial needs as well as the end users needs. It can be an effective tool to help both the buyer and the seller when used correctly.
Remember, a lease option can be a closing tool, a relationship builder, and an alternate path should the budget curveball be thrown later in the cycle. Attempting to throw out a lease option when the budget curve has been introduced to the buy/sell situation is, as Ben would say, about 15 times heavier or harder than having positioned it early. That is not to say that it is not a good idea to discuss leasing at this point. That may or may not work, but is certainly worth exploring with the customer.
It is also not a great idea to simply throw into your proposal every type of leasing scenario possible. When that happens, the financial decision maker can infer that you have no understanding of their situation. Maybe you don’t know their situation and you don’t know if they will have money in a few months or that they need step up payments to minimize cash flow issues. It is far better to add a comment in your initial proposal that custom lease terms are available rather than provide a menu of choices that may or may not be appropriate.
Including this simple statement should open your discussions regarding budget and financial issues early in the buy/sell process. It may afford you the opportunity to meet with the finance area and develop both relationships as well as a custom solution that meets their needs.
Remember, a lease option can be a closing tool, a relationship builder, and an alternate path should the budget curveball be thrown later in the cycle. Good luck. Give Med One Group a call or visit our website to learn more about us and our ability to help both your customer and yourself avoid the budget curve ball that causes you to miss forecast.