Do you Favor the Fast Nickel or the Slow Dime?
Posted: Sunday, September 09, 2007
by Steve Kennedy
Winning The Game Of Business
Do
you Favor the Fast Nickel or the Slow Dime?
I first heard about the “fast nickel/slow dime concept” early on in my
investing days. Real estate people use it all the time as they would think
about selling. Should I take less money
now (fast nickel) or hold out for a higher price later (slow dime)?
I decided to take a poll among some of my friends and colleagues to ask what they thought about the concept of the “fast nickel and the slow dime”, which they preferred and why.
Boy! Talk about a loaded topic! The answers surprised even me, so I thought I’d share a few, and then chime in with my own.
“The way I see it, if your pipeline is stacked full
enough, you have enough slow dimes coming in to maximize profit potential. The
only reason to go for the fast nickel is out of desperation for work.” ~Pete
“For
me, the fast nickel beats the slow dime any day. So buck common wisdom. Take a
fast nickel over a slow dime.” ~ Judy
“Slow
dime every time. Nickels usually wind up costing you a dime of effort anyway.”
~Ed
“I more often will hold out
for the slow dime.
It's important to know I
consciously decide with each deal what it will be. So there is not a straight
answer except that I am usually looking for steady long-term residual income,
so a slow dime.” ~ Ken
“A fast nickel is better than a slow dime.
McDonald’s doesn’t make much profit per burger, but they sell a lot of burgers
and they make a lot of profit.” ~ Jim
All pretty interesting, right?
As for me, I have always
used both concepts in my business. When times are slow, I go for the fast
nickel to pump up cash flow, and when times are good I am always working on the
next slow dime project.
I have always believed
that cash flow is king and if you need cash flow, fast nickels are easier to
come by than the slow dimes. I have built businesses intentionally on the fast
nickel idea because it allowed us the time and good fortune to work on some
longer-term slow dime opportunities. When customers have a positive fast nickel
experience working with us when risk is lower, we can earn enough of their
trust so they can move with us into the slow dime level.
That being said, when you
are able to create something of value to bring to the market place and it has
long-term potential, I am a big fan of the slow dime— a return that continues
to pay over and over turning lots of dimes into lots of dollars. You might ask
why not go for the dimes to begin with and forget the nickels. After all, once
it’s up and running, the slow dime business seems to be way less work than
chasing the fast nickel. But we sometimes forget how long it took to build that
slow dime business in the first place.
My opinion is to have a
nice balance of both. This allows for a much calmer ride through the business
cycles.
Steve, makes sense! Thanks for your insight!
