- December 24, 2019
- Posted by: David Marshall
- Category: Business, Management
As a manager or a salesperson, you’re going to have plenty of opportunities to make all kinds of deals, partnerships, and financially-beneficial arrangements with other parties. Whether it’s a project you’re going to sell, services you’re going to buy, or even the purchase of, or merger with, another company.
The problem is that many of these deals — in fact, many business decisions in general — involve emotions and ego. You get the idea that something is right or good, and get emotionally invested, and your ego won’t let you be persuaded that you could actually be making a bad decision.
Years ago, when I was running a company, the president of one of our divisions was hell-bent on acquiring another small company in the same business. The idea was that we could shore up a good bit of market share with this acquisition, as well as knock off one of our competitors.
I looked at the proposal and all the financials, and I noticed that 60% of the company’s total sales volume went to one customer in China.
I said, this deal is never going to happen while I’m in charge. Because everything in my experience base tells me that they will knock us off immediately, and you won’t know when it will happen. So I put the kibosh on the deal so we wouldn’t buy a company that was going to lose two-thirds of its sales at the drop of a hat.
Not too much later, I ended up leaving the company. And within 90 days of my leaving, they made the acquisition and bought the company outright. They were so in love with the deal, irrespective of the blemishes, irrespective of my recommendation and years of wisdom (if I do say so myself).
Two years later, as you probably guessed, the Chinese company decided they would now make the products themselves, and dropped the company as a supplier. Just like that, that company lost nearly two-thirds of their own sales, after providing the Chinese company the exact products they wanted to copy and manufacture themselves.
What made matters worse is that the acquired company wasn’t vertically integrated: There were other third-party vendors who were also supplying raw materials and OEM parts who were also hurt because they lost a major customer as well.
This kind of thing happens every day. You fall in love with a deal, and you’re not objective about it, and you end up getting blinded to the problems it has.
It’s okay to be enthusiastic about a deal or decision, but just don’t fall in love with it. Be prepared to walk away at any time. If your ego is strong enough, and your confidence is high enough, you can take the rolled eyes and the objections of the people who wanted the deal to happen. But it’s much harder to shrug off the ridicule and anger when your bad deal costs people their jobs, livelihood, and financial stability.
I’ve been a manufacturing executive, as well as a sales and marketing professional, for a few decades. Now I help companies turn around their own business. If you would like more information, please visit my website and connect with me on Twitter, Facebook, or LinkedIn.
Photo credit: Geralt (Pixabay, Creative Commons 0)