The Entrepreneur: Cherry-picking Apples or Pears

Posted by admin at 15:51 on 13 Feb 2017

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How to decide between quotes?

If you run a business and need a service, you will do the sensible thing. You will speak to three or four possible providers and shortlist two or three of them to give you quotes. So far so good.

The difficulty it comes when you get the quotes and need to cherry-pick the best adviser. What do you do?

I always go to the numbers first. How much is it going to cost me? What benefit will result? What is the bottom line effect?

If a quote is well above the money I have to spend then I must reject it. However, usually there will be two or three quotes within my possible range.

It would be really useful if quotes were all done on exactly the same basis, for exactly the same services and with exactly the same quality of production, timescale, etc. (i.e. a direct like for like comparison is possible). Unfortunately this is rarely the case. Do go back to advisers and seek clarification and ask for a more detailed breakdown to ensure you can compare like with like. Has a very low quote misunderstood the brief or concealed hidden extras?

As someone who both gives and receive quotes, I thought it might be helpful to give some suggestions how to decide between the different offerings presented to you.

The key is to decide what elements are important to you. Normally you might find that there are four categories.

1. Cost. If the budget is tight then whatever the offering, you will have to take the most affordable quote. This is obvious but you will realise that the most affordable might not be the cheapest in terms of headline quotes. You need to be very clear that there are no extras that would be added to the price of the cheapest compared with the others. You also need to consider whether the cheaper quote requires you to do more work and whether you have the time or other resources to do that.  Typically I find that a cheaper offering will require me or my team to do more preparation or to do in terms of contribution to the result or the after the event clear up or finishing. This can cost the business more in terms of lost opportunity too, if it takes staff away from doing what they do best and generating business profits. Is a fully outsourced solution worth the extra cost?

2. Quality. This is the difficult one. What level of quality is being offered and what level do you require?  I tend to think of quality using the supermarket example. Do I need Marks & Spencer, Waitrose, Tesco's finest, Tesco's basic or will Aldi do? For example, printing. Recently we have needed to get some printing. For company logos to be put onto T-shirts for a one-off event, quality was not a priority. For the business cards, quality was really important to us. The best suggestion here is to get samples and if it is for services then ask for testimonials. Our clients are usually willing to give testimonials or make recommendations and our potential clients, particularly if they are in a particular sector or industry, will ask to speak to clients in that same sector or industry. Consider also what are the risks of poor advice? Could there be a significant downstream financial loss?

3. Speed. Good work can sometimes take a long time. A rushed job can lead to poor decision making and errors. However, if you have a deadline that is important, for example a year end or the fulfilment of a contract, time is essential. If the quote makes no mention of working to a time scale, go back and seek clarification. Ask about the suppliers' resources. Is it a holiday period, do they have large numbers of staff who can cover? Ask for a realistic timetable and consider pricing based on completion within a fixed period. Recognise that there may be a premium price that attaches to a prioritised delivery.

4. Likeability. Whether you like these suppliers may not matter for a small, one-off project such as printing T-shirts. However, if this is a large project, lasting several months, for example the development of a new software system for the firm, you will be working closely with these people for months. You will be e-mailing them, telephoning them and they will be in your office. You may need to explain your business to them, tell them all about your plans, about your staff and about your financial position. You need to like them, feel they are sympathetic with your business and can work with you to the best advantage.  The only way to assess this is to meet with them. Do you feel that you are only entitled to a single meeting or some brief phone calls or emails? If you want to get the best opportunity for your business to feel sure you have chosen the best quote, you have the right to ask to meet the potential suppliers again to make your final decision.

These are my tips. I realise that as a provider of quotes, if you read this I can expect you to ask for testimonials from other clients, to do a deal on completion times and to expect to see me more than once during the process, but The RM2 Partnership is proud of the service that it can offer to clients and to prospective clients and we are happy to work with our clients and for their benefit to ensure that the services they receive are what they want and to the level that they need to make their business runs smoothly.