Description: In business, Expected Value (EV) is a statistical concept used to forecast the potential financial outcomes of decisions that have uncertain results. It represents the average return or value anticipated if an action or decision is repeated multiple times. Expected Value is crucial in decision-making processes, especially when weighing the risks and rewards of various choices. The formula for Expected Value is: Expected Value = ? (P(x) × x) Wherein: P(x) is the probability of a particular outcome occurring. x is the payoff (value or return) of that outcome. Practicing probability math in your business is an important skill set, and the “EV” many times will tell you a story that is instinctually counterintuitive. Learning how to apply EV to your business decision making can have everything to do with being profitable and sustainable, vs. struggling with cash flow and survival during your first 5 years and beyond. “You’ve got to Know When to Hold ‘Em, and You’ve got to Know When to Fold Them.” - Willie Nelson, and the mathematics of playing poker are definitely “all in” for this training! EV allows you to review your new business opportunities and apply some quick and emotionless data points to affect your best pragmatic business owner decision making. Then you can choose that long sales cycle big project and “do it for the portfolio” or see the cost & expense vs. the payout, opt to “pass on the one-off home run”, and stick with the bread and butter that pays the bills every time!
You will LEARN:
- What “EV” (Expected Value) is, and how to use it to evaluate client project opportunities that are new or different.
- The Data importance of the EV equation for deciding pragmatically if a new or big project makes sense for your firm.
- How EV can help you understand your sales cycle by project type, timeline, and payout price point, for profitability.