Access to budget RISK
A deal without a budget is just a conversation.
For a sales process to come to a natural positive conclusion. The prospect must agree to a commercial arrangement which implies access to a budget to pay you, the supplier.
Budgets come in two forms, either a ring-fenced amount that the prospect has available for your project or access to a budget, which can be utilized to purchase your solution.
Smaller companies tend not to have strong budgeting and planning structures, so the acquisition of a budget is more of an ad hoc affair whereby prospect sees merit in your solution and a budget can be found. Larger companies typically have more structured forms of budgetary control. If you’re lucky, there is a specific budget heading for your project or the budget can be reallocated for your solution.
In some situations, the prospect who wants your solution, who has the business need for your solution is not the holder of the budget, so be aware that this can introduce a risk into the selling cycle.
Generally, clients are unwilling to share details of the budget. It’s not good practice to push hard to 8uncover this. When you give indicative pricing, it’s important to check with the prospect as a means of ascertaining budget availability.
Amplifying Factors Priority, Metrics, Pain/Need
Further reading :
How to Have a Successful Budget Discussion With a Prospect
3 Steps to Qualifying Budget the Right Way
Beating the ‘I have no budget’ objection: 9 sales experts share their best strategies
RED – Access to budget is unknown To be fair. At this point, you may not have shared pricing, but access to the budget is appropriate to ask at this stage, even if some possible top numbers on either side. Lack of clarity regarding access may be sufficient grounds to disqualify. |
AMBER – Access to budget indicated This a very common situation. The prospect will indicate to you that they can access budget. Later, in process, you will harden up on this as prices become clearer. |
Green – Access to Budget confirmed Your access to the budget is confirmed. Usually, this is a good sign as it indicates that there are serious about making a purchase decision. Be aware as the deal progresses this may change to more negative signals as pricing become clear. |
Mitigations – What to Do?
How you present pricing is very important. Never do so without doing the discovery to ascertain the pain/need with business consequences or the price becomes a cost rather than an investment amount.
Be alert to the sensitivity of prospect pricing or suggestions of costs. If you suggest, for example, a proof of concept paid pilot or suchlike and you get heavy resistance on this this may indicate that access to budget for a full implementation may be a struggle.
Without over laboring the point discussing costs and giving the customer the opportunity to decline to proceed when costs are discussed as a great way of ascertaining budget access is a problem. Unfortunately, you probably have done some work on the opportunity by the time you get to that point, but at least you can qualify them out at the earliest reasonable opportunity.
Be mindful of the person you’re dealing with when discussing access to budget. Only later, when you access power will you really get a feel for any issues surrounding budget.
Access to budget may be more problematic in outbound created deals than inbound referrals as it is rarer that than inbound or referral will come to you if the company is unable to access budget to purchase your solution.