Negotiations

business Mar 18, 2008

I had a very important meeting with my client on 14th regarding price negotiation and timely help comes from a Chat friend, here is a chat transcript, and if it wasn’t for some advise from Abhisek I wouldn’t have been so confident, this conversation put me in the right perspective.

me: i have a important rate negotiation tomorrow with my client, i wish i had taken more advise from u guys

Abhishek: one has to

me: its a do or die situation

whether i will survive or not

kinds

Abhishek: why

what happened

me: oh the margins are so thin, that and managing so many things that one tends to neglect the bottom line

5:26 PM Abhishek: yeah

me: sometime your ego makes u spend more

Abhishek: one also gves too much of credit

i think

me: to produce more

Abhishek: thats the problem of most companies

to give credit to increase sales

and then move into working capital trouble

5:29 PM me: yeah, thats my story at a very micro level, i have actually aksed my client that i need to produce less, cause its more economically viable, as economies of scale,doesn t help for a small time businessman like me

5:30 PM Abhishek: why so

does ur margins come down with increased sales

5:31 PM me: we have slab rates in our purchase order, the fixed costs gets divided

Abhishek: k

me: and then it a game of only variable costs

Abhishek: k

me: if we miss something or add something we loose

Abhishek: k

u must be giving credit to the other company

5:35 PM Abhishek: what is the constarint of r business

me: having just one single client

Abhishek: i am a consultant by my degree

me: and other similar vendors into aggeeeing to do work dirt cheap

5:37 PM other vendors are competing agaist each other, and screwing up the rates firther

and debts i take so that i don’t run out of cash

5:39 PM Abhishek: ur debts must be for WC requirement na

me: yes,

5:40 PM Abhishek: am i correct

me: though my CA has promised this year he will find me a suitable long term loan

Abhishek: u are making accounting profit

but nt cash profit

am i correct

me: yes

Abhishek: i know

5:41 PM me: you are correct bang on

Abhishek: ur problem will not get solved by taking loans

me: i know, but i cant afford to run out of cash

Abhishek: u have to solve ur problem of cash requiremnt

of business

thats teh solution

taking loans is a temp solution

5:42 PM me: i have to increase my income right?

5:47 PM Abhishek: u got my point na

me: yes, i got your poitn

thanks

i am trying to work on that

Abhishek: yeah

me: i guess focussing does work

Abhishek: try to start

5:48 PM by solving ur problem

by focussing

on what ur constraints are their

and then elvating the constarints

me: u a goldratt fan?

5:49 PM Abhishek: i did a full course on it na

me: wow…really

Abhishek: i am an AEP expert on Operation & distribution

me: ah, gr8…do give me a call and lets meet up

Abhishek: ah sure

me: it would be nice

Abhishek: got to prepare fopr the meeting

Abhishek: i think u make a ppt

me: really

Abhishek: would be my sugestion

would seem to be profesional

me: i had done it half way,have to search now

good suggestion

Abhishek: and try to give solution to some 0f the client problem

me: timely help, ping me if you get any more ideas,would appreciate it

5:54 PM Abhishek: so that he can meet some of ur demands

me: ahh

Abhishek: sure

tc

bbye

me: thanks a ton,byee

Abhishek: nice taking to u

me: same here..tc

ciao!

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