Risk share, reward share

In these times of continuing economic uncertainly, at Red Splash we are seeing a number of business owners that still want to invest in marketing and development activities to grow their company but are procrastinating as they weigh up the risk of making that investment over retaining the money in their business.

Investing wisely at this time can reap dividends that would not be possible in more economically buoyant times and the way to take the risk out of that investment is to undertake rigorous due diligence and research and test ideas fully.

Not all businesses are in a position to do this due diligence and research in-house though and many more do not possess the skills to develop and ruthlessly execute the business development activities required to grasp the opportunity.

We have become acutely aware of this as we have recently seen a number of companies where there was clearly an opportunity for them to grow but despite our best efforts they have not been able to bring themselves to make the required investment, at least not yet and the opportunity may be gone before they do.

Last week, in our board meeting, we decided to take a bold step and for the first time offer our prospective clients a risk sharing model as an option to our normal fee model – in fact we prefer to call it a reward sharing model. If we are convinced that there is indeed a real opportunity for business growth within a current or prospective client, then with the right measures in place we will share in the investment of undertaking the detailed research, developing the plans and executing the activities in return for an agreed slice of the success.

We are now talking to a number of companies about this new model and it has been warmly received - we believe that the recent economic turmoil has thrown up a real opportunity for Red Splash that was not there a year or so ago and we are now investing in that – the timing to step up a gear in our own business may never be better.