By: Bruce Hokin
When dealing with decisions using Cost Benefit techniques it is very important to follow the proven principles. The health of your company and your reputation depend on it. If these rules are not followed then your decisions could be flawed.
Let's start, shall we?
Profitable Way #1. Making Better Asset Purchase Decisions for Your Company
Cost Benefit Analysis is very useful when deciding between competing financial outcomes. Do we purchase this new asset or that one? Do we proceed with this investment in new technology or continue as normal? Is it time to replace an ageing asset yet, or should it be kept longer?
Profitable Way #2. Making Better Asset Purchase Recommendations for Your Clients.
All the comments above relate just as much to you as to your clients- even more so, since there may be repercussions if your recommendations are flawed.
Think of the benefits to the business if you can show your clients a proven easy-to-understand system used by many governments and large corporations world-wide for making better financial decisions.
This methodology will withstand external scrutiny - it has done so many times in the past.
Profitable Way #3. Audit Client's Cost Benefit Methodology.
Another separate opportunity is for you to offer to “audit” your clients' project development plans and spreadsheets for mathematical correctness as well as the validity and strength of their assumptions.
Large companies will appreciate an objective review of their project methodology. It can add weight to their funding applications also.
Profitable Way #4. Consulting to Clients on How to Spend their Scarce Investment Capital on Competing Projects.
Cost Benefit Analysis is very useful in ranking projects based on their Benefit Cost Ratio results. The project with the highest Benefit Cost Ratio should be authorised first since it will increase the company's value the most (all other things being equal).
Profitable Way #5. Offer These Services to Charities
Not-for-Profits and Charities need to show their stakeholders/shareholders that their financial decisions are based on proven principles. They may not have sufficient spare funds to undertake this analysis themselves. However, you could offer to audit and consult in the area of Cost Benefit Analysis, gratis, in return for some acknowledgement in their Annual Reports.
Profitable Way #6. Implement this Method Across Client Companies
Once you learn the principles of Cost Benefit Analysis you will appreciate that most companies would benefit from an “across the board” implementation of this method. This could mean extensive training and developing an implementation strategy. More business opportunities for you.
Profitable Way #7. Advertise Cost Benefit Analysis Services in Newsletters and Client Correspondence.
This service can help in setting your company apart from your competitors. Why not advertise this expertise in your newspaper advertisements?
Profitable Way #8. Training in Cost Benefit Analysis
Running training programs in Cost Benefit Analysis for many invited clients can lead to further business, both in implementation and other consulting work.
Profitable Way #9. Offer to Prepare Cost Benefit Analyses for Client Funding Proposals.
Cost Benefit Analysis is a powerful tool that can clearly show the benefits contained in the new proposal compared to the “do nothing” or other competing options. It can also show how soon the project will move from a net cost to net benefit position. Other measures of payback can still be included for reference purposes such as Payback, Internal Rate of Return and Net Present Value. It clearly shows the benefits received for each $ of cost expended.
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Bruce Hokin is an experienced accountant (FCPA) specializing in Cost Benefit Analysis. You can find more of his in-depth FREE articles, FREE Newsletter and e-zines at his website. To sign up for his downloadable Cost Benefit Analysis training program "5 Steps to Cost Benefit Mastery" just go to his website. You could be using this technique in under 2 hours! Available at www.thecostbenefitcoach.com