Yes, You Are Too Close

Ever had a project to do that you knew would fail, but the boss was excited about it - so you plowed ahead anyway? Could you be emotionally detached enough to say it's a bad idea? You need FEASIBILITY.

Problems always arise when we are too close to a problem, a project, or a business plan. Members of a family owned business know this all too well. I have been involved in projects that were the “pets” of my superiors. When asking to at least do a feasibility analysis on the idea, the reply is always “this can't lose; just do it.”

One project I worked on began prior to my involvement. It was a “just do it”(very expensive) project. I was tasked to figure out what was going wrong and fix it. The result was that the players wanted to charge $3,500 per unit. After a year in business they were getting $170 per unit. We increased the upsell, increased efficiency and developed a cash stream. “This can’t lose” almost always turns into “what happened?!”

When management is too close to a project, details are overlooked because of the political cost of looking at the issues. You have a good relationship with a key customer, the customer wants to partner with you on a new project and share the revenue and expense. How can you say no? Management will proceed on the idea, good or bad. The project will then evolve to “we will get this done if it kills us”, and it probably will.

I prepared a feasibility review with a client in a similar position. The CEO could not say no to a major industry player. My conclusion was not to do the project. The player was angry - so my clients split the cost for a second opinion. The second opinion independently verified my conclusion; my client could now say no and blame me for it. Saved my client a bad investment of about $500,000.

Is it feasible?
1. Concept feasibility: Do you understand what the task is? Is the idea specific or just “blue sky?”
2. Economic feasibility What are the specific implementation and operational costs - including fixed overhead (if the operations is tied up on the project - who fills in?)
3. Legal feasibility: Is the idea legal? Don’t laugh - the people at Enron probably thought it was a good idea at the time. What industry specific regulations will affect you?
4. Operational feasibility: Does the project fix into your area of expertise? We have seen hospitals try to enter the wholesale and retail arena with mixed success. What core competencies does your company bring to the table?
5. Time feasibility: With current staffing - can you accomplish the project? What will suffer if schedules require alteration? Will your current customers accept the problems that arise?
6. Competitive feasibility: How will the competition respond to your idea? Will you be willing and able to compete against larger entities that now decide that you are competition?

Most feasibility projects that I become involved in already have a desired outcome. The key people need the words to approve or disapprove of a project.

Don't be afraid to use an outside feasibility adviser - I can say “no” when you can’t.

Feel free to disagree with me at (800) 480-7292 or [email protected].

Paul Szklarski, is vice president of sales with Iselin, NJ-based Shulman & Assoc., a Sandler Training Affiliate.