Building the Business Case: Financial Decision Makers
In Building the Business Case: The cost of status quo, I observed that most of us were taught to focus on the buyer’s budget. I suggested that the budget doesn’t matter. Only the perceived cost of the status quo matters. Price and budget are on the same side of the see saw.
The larger the cost of the status quo, the larger the budget or price that is justified.
Technical buyers do not speak the language of the board room
In the real world, many technical buyers are not trained to think in terms of building the business case. They think in terms of technology. They do not think in terms of dollars. So, they make technical arguments to financial decision makers.
Since they are speaking the wrong language, they often fail to get funds.
There is always capital competition
There are a lot of technically feasible projects. Everyone wants the CFO’s to fund their project. Since all companies have finite cash, technically feasible projects will not be funded unless they have a stronger financial argument than competing projects.
Funding comes from financial decision makers who ask,” Which of my current investment opportunities will create the greatest, quickest, most certain return on my investment?”
The winner is the project that provides the:
- Quickest payback
- Largest payback
- Most tangible and certain payback
If it doesn’t cost them to stay with the status quo, it isn’t going to happen.
Sellers will better serve these buyers by assisting in building the business case.
That is why the Need Diagnostic includes questions to connect the need to the business (3 in the diagram) and then to quantify the financial impact of the need (4 in the diagram).
Translate technical wins to revenue by co-building the business case with the buyer.