Over the years I’ve read about the importance of collaboration w/ competitors vs. competing with them.

Today, I was reminded why this is more advantageous in many scenarios. An industry newcomer is pidgin between competing on price (below the value of x) or somewhere in between.

The play by play is:

  • Determine if valuing on low bid, at or below value of x is worth the effort
  • The value of x is unknown and may cost the company in money
  • If t is value of time, we have time decay
  • Consider your burn rate (how much left in the bank before going in the red)
  • Thinking about the unknowns, how much can the company stomach going into more debt
  • Low bid is where the majority live at
  • All low bidders leave a percent on the table
  • Low bid might just be covering their direct and indirect costs, but no profits (which is a key indicator in valuations)
  • Conduct an actual takeoff and determine if you can take the work on w/ out increasing overhead and increase profit margins
  • Somewhere in between might just be good enough for some on the way to exiting their business but haven’t reversed engineered the final retirement number

Whereas collaboration is taking two or more competing companies or organizations to combine strengths, cover down on weaknesses, and minimize risks to produce better outcomes.

Very few live in this space— it’s a bold and strategic move. It’s the one owners can influence the most and set the culture and tone for the rest.