As we drive along the roads each day we make split second decisions. These decisions can have zero or life changing consequences, or anything in between. A cautionary yellow light can occur when driving slow or fast, far from the intersection or right in it. Once in a while we ignore the warning signal and blow through a “risky” yellow light and pray for the best.

don't ignore a warning signalYellow lights occur in your work and business every day. Your employees often make similar split second crucial decisions that impact the risk, profitability, and health of your organization without realizing it. This is because we don’t like to rock the boat, question our clients when they make a request, or even follow instructions that just don’t seem right. Very often it seems much easier to ignore these questionable situations – we don’t have time, we don’t want to appear untrusting. But we all know that a yellow light can turn red at any moment.

Yellow lights in business come in many forms but all have something in common – they all have potential consequences that are unknown. Stopping at yellow lights may seem very inconvenient, even risky – what if we offend our client by questioning their decision?

Proceed with Caution?

Here is a typical example of a situation that happens every day in business, yet most professionals, and especially untrained seller-doers will ignore it until it is too late:

Preliminary conversations with a prospective client regarding a project your team is hoping to win and start in the next 3 months are going really well. Your team is getting very excited and already tasting the fruits of a big win. This project is a real game changer for the firm, and would add over a $1 Million in revenue over the next two years. You can feel the momentum building, and the client is about to make a decision to select our firm. In passing they jokingly mention they wanted to start the project a year ago but couldn’t get the funding. You smile and ignore the statement – this is too good to be true – and it is. How lucky to be here at the right time when they are finally ready to move forward. Several months into the project you start to get concerned that the client has not paid any of their invoices. Weeks later after the client goes radio silent and won’t return your phone calls you find out he still has no money and the project isn’t going to continue. At that point you really wish you had asked more questions and you are $40,000 in the hole…

Are You Even Seeing the Yellow Lights?

Yellow lights can be quick one-off statements, word-of-mouth information, or can even come from your intuition such as when you’re talking with others and something just doesn’t feel right. Something inside you says – should I say something? Should I ask a question? But very often the fear takes over – the fear of losing a client, getting embarrassed, or even worse – derailing a good relationship.

These yellow lights occur every day but often we choose to look the other way. Sometimes the yellow lights are a blessing – they are warnings being sent to warn you of possible danger ahead. If you just take the time to STOP, and turn the yellow light to Green or Red, you will not only deter possible future risk, but you will show your client, boss or employee (wife, kids, parents) that you want the best possible future outcome.

So how do you stop and turn a yellow light to green or red? The process is actually simpler than it seems. In some cases it is as simple as asking some questions. You can precede your question with a statement that lets the individual know that you are concerned – for example:

“Mr. Prospect, I know how important this project is to you and you have already had considerable delays in the past with funding. What has changed since last year with the funding situation and how can we be confident that this project will be fully funded?”

This may seem like a radical approach but what are the downsides to asking this? If the client has money he or she will happily answer and the yellow light will turn green – you can proceed with confidence. If they don’t have the money then you were never going to get it anyway.

Another scenario that often occurs is when a client asks for something outside the scope and you know it will cause them to exceed their budget. Very often our staff, including project managers, will move forward and give the client what they want, hoping they will get paid if they bill it.

A more effective approach might be to ask the client how they want to proceed and let them make the decision. For example:

“Mr. Client, this is a great idea and will really add value to the project, however it will cost more money to do it that way. Let me go back and figure out how much extra this will be and then you can decide if it makes sense to move forward with this change.”

In your employee’s desire to keep your client happy, maintain the relationship and avoid conflict, it is often easier to kick the can and deal with a tough situation later. This often results in missed expectations, increased liability, schedule delays and budget overruns.

Use Role Playing to Practice How to Respond to Warning Signs

One way to work on this with your team is role playing. I often get a group of project managers together and have them take turns playing the client and the consultant. For some funny reason they love playing the client! This type of role playing can give them the words they need to be successful in difficult situations, and build their confidence so that they can see this type of slowing down process as a benefit rather than torture.

Next time you feel that uncomfortable feeling about something that is said, you will know that it is a gift, and even a possible opportunity. Take the time to slow down, turn the light to green and proceed with the certainty that you may help your firm avoid a big crash someday.

 

June R. Jewell, CPA Find the Lost Dollars: 6 Steps to Increase Profits in Architecture, Engineering and Environmental Firms

 

June Jewell is the author of the book “Find the Lost Dollars: 6 Steps to Increase Profits in Architecture, Engineering and Environmental Firms.” She is the President of AEC Business Solutions, focused on developing business assessment tools and business management training to help AEC firms improve financial performance.

Connect with her on LinkedIn and learn more about how to improve your firm’s financial performance at www.AECBusiness.com.


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