b'Business ManagementContinued from page 21the different components that go into your plan.The first step of a diversification decision is looking at the markets that have an accelerated growth onthehorizonanddeciding which have potential for your company to enter. This process evaluates current competitors and purchasers in that market in order to decide if it is the right fit for your company.Before you can enter into a new market, it is critical to assess bothyourinternalstrengths/weaknessesandexternal opportunities/threats.This process can give you a better understandingofhowyour company can compete in the marketsoyoucanbemore preparedtomakedecisions aboutyourfuturegrowth strategy.Managing the Risk of Profit Potential utilize a go/no-go test to evaluate the viability of a Do you remember the loveable childrens cartoon Bobpotential project, applying criteria such as:the Builder? His signature yellow hard hat and redPrior experience/relationship with the client,toolbox are as recognizable as his famous saying: Can we build it? YES, WE CAN! When presentedGeographic location,with a project opportunity, many contractors quicklyPayment history, andrespond with enthusiasm like Bobs before thoroughly considering whether taking on the project makesOther likely bidders.sense for their business.Thomas C. Schleifer, Ph.D., former Professor atHowever, this test does not include a risk assessment Arizona State University, wrote, many constructionof profit potential. If profit potential is not already professionalsbelievetheycandesignorbuilda criterion in your business development efforts, anything. The pertinent question is, can we buildconsider incorporating a risk matrix into the discussion or design it at a profit. Construction isnt that hard.before saying yes to the next opportunity.Construction at a profit is. (4) A classic risk matrix such as that shown in Figure 2 Being awarded the project often results in the famousis an effective tool for examining a projects potential adage, the good news is, we won the project; and thesuccess.bad news is, we won the project. Fortunately, thereMany criteria can impact project profitability; however, is a better way to evaluate projects that balances thethe 4 most important parameters relate to how well excitement and optimism of a win with the practicalthe project aligns with your previous project success.need to make a profit. Project sizeWhen in a tough situation like this, many organizationsProject type22 www.mrca.orgMidwest Roofer'