The Common Law of Business Balance

Last week I was working with a client on the financials of an EU-tender.

The tenderer had set out their service level expectations and they had also set out the budgetary restrictions. There was a disconnect.

The tenderers expectations of the service level could not be provided by my client at the budget allocated. It would take more time to provide this level of service than the budget allowed.

We found ourselves trying to explain this in business “speak” and I got to thinking there must be a business term for this. It turns out there was, from a very long time ago in fact.

John Ruskin (1819-1900), a leading English social thinker and philanthropist, said the following: “It’s unwise to pay too much…but it’s worse to pay too little. When you pay too much, you lose a little money…that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing that it was bought to do. The common law of business balance prohibits paying a little and getting a lot – it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better.”?

So, the basics of business balance is that “you get what you pay for”, a term we are perhaps more familiar with!

Because we live in such a consumerist society today, everything is available in a “cheaper” version. Back when you had to save for big ticket items like washing machines or sofas, more often the not, you could expect a lifetime of use from them. You can still buy high quality products but aren’t we tempted to buy cheap and expect more than we get.

So, when it comes to my clients tender how could we explain the concept of business balance: that the tenderer could not get everything they wanted at the budget they had allocated? My client wants to provide a high standard service, but the tenderer doesn’t want to pay or does not appreciate the different standards of service available.

In this case we explained what the tenderer would get within the budgeted hours. We made recommendations for the number of hours to complete the job to the high standard my client offers and provided costing options. We await the outcome!

They may choose to “deal with the lowest bidder and add something for the risk they run”!!

Have you encountered these situations in tenders or other business?

If you need help to complete a government tender and don’t know where to start, feel free to give me a call for a chat to see if we can work together.