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I help companies modernize their technology and licensing strategy for maximum effectiveness, efficiency, and profitability.

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Mastering Risk Management: Bigger Profits, Greater Satisfaction

Posted on January 12, 2021   0 comments
Businessman shocked by big invoice.

There’s a well-known story about the value of work versus the value of knowledge. The truth of that story relates well to software licensing, because managing the risks involved in selling licensed software includes obtaining and taking experts’ advice seriously.

You may have experienced this lesson already:

  • You’ve been horrified at the amount due when you received your bill for auto repair or health care.
  • You thought you could cut costs and ram a project through on a short schedule with skimpy investments, only to discover how expensive this thinking can prove to be when your project falters.
  • The cost of attorney fees seems tremendously inflated.

We must admit it is the knowledge and application of that knowledge, not merely their time, for which professionals are paid. Expertise isn’t earned overnight but through long years of practice. Luckily, our economy recognizes that expertise is far rarer (and more valuable) than we may assume at first.

The "Handyman's Invoice"

Although you can find this funny story in the lore of just about any industry, I’ll use the handyman’s version here.

A factory is in crisis. They don’t know why, but there is one pivotal piece of equipment that breaks regularly and stops the entire production process when it malfunctions. They try to fix it themselves, but they can’t, so they find someone to come and tell them what is wrong or to fix the problem.
They finally find a handyman who can fix the problem. The handyman checks out the machinery, stares at it, and pokes around a little bit with his flashlight. Finally, he takes out a piece of chalk and marks an X on the faulty piece of machinery. On his advice, the factory addresses that part of the equipment. The factory is thrilled and asks the handyman to send an invoice. When the invoice arrives, it’s for $50,000. The handyman was only there for 30 minutes, so the accounting department is confused. The accounting agent reaches out to ask for a breakdown of the invoice, hoping to see in an itemized view of why he is charging so much. They receive the itemized invoice, indicating a $1 charge for marking the part with an X and $49,999 for knowing where to put it.

(Here’s a famous version of the story involving the artist Pablo Picasso. If you have a favorite version of this story, let me know what it is in the comments!)

What's the takeaway?

There are a few conclusions I can make when considering this story:

  • Expertise is extremely valuable. 
  • Expertise is valuable not only in emergencies but also in the original construction of any project.
  • “Quick and dirty” can wind up being very costly.

In the universe of software design and production, software companies will profit by thoroughly absorbing these truths.

Risk management for software companies

It’s not an exaggeration to say that licensing is the core of your software’s risk management. Any undertaking in life or business involves some risk. When planning a rollout of your new software, you may be tempted to skip over the licensing challenge. Licensing can be complicated and seem unrelated to the magic of your new app, but don’t give in to this temptation!

Having a strong licensing strategy is essential, and if your licensing setup fails, your business fails. It can fail in big or small ways, but it will seriously impact your revenue. It’s as simple as that.

You have a choice: you can secure the help of a recognized expert in your product’s original design, or you can risk the possibility of a shockingly expensive fix down the line.

How can you mitigate these risks?

Finding an experienced coach would be my first suggestion. I have previously written some details about how coaches have helped me achieve success in many aspects of my life and work.

Can you get where you want to go without hiring a coach? Probably. It’s been done before! However, it’s likely to take longer, cost more, and be full of potential pitfalls you won’t know to avoid.

Coaches, plainly put, are the key to securing success in your business. A coach’s expertise will allow you to move at warp speed, create a reliable process/product, and minimize risk significantly. With their help, you’ll have more time, more options, and more revenue.

Plus, it’s so much better to invest in a coach’s advice while you build rather than frantically seeking one out to fix a failure.

Avoid the $50K invoice for fixing your technology mistakes!

I’ve been immersed in computer technology and software licensing for over 30 years. It’s been a fantastic ride, and I am committed to continually pushing the boundaries of what I can do with it.

Lately, I’ve felt the urge to share my expertise to spare software companies some of the anguish many experience when something goes wrong. For some, I have been that handyman that has to come in to find the flaw after the logic is already in place. The wisdom accrued from many years’ experience is often required to locate the problem and build solutions after the fact. 

Instead of risking unmanageable failure, why not skip the pain and loss to begin with and partner with a licensing/technology coach from the beginning? Your blood pressure, reputation, and bank account will thank you.

Mike Wozniak

Mike Wozniak is the founder of SoftwareKey.com and is responsible for marketing, content, and product strategy. When he isn't plotting new ways to help customers architect licensing and business automation solutions, he likes to travel and do burpees! Why do burpees on vacation? Just Because I Can!

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