By Scott Tarlow, founder, president and CEO of Success Systems
For any business, revenue matters. For a startup, sustained revenue is of paramount importance: a paucity of sales in one month could lead to bankruptcy the next. To prevent disaster, it’s essential for startups to lock down a big client as soon as possible. Big clients have the wherewithal to make large, timely payments and have reputations outsized enough to give your company lasting credibility.
As a result of my experience in managing vendors as an employee of a large corporation and who have vied for contracts as a small business proprietor, I know what it takes for a small business owner to catch – and keep – their first “big fish.”
Here’s my advice:
1. Price matters most.
Large companies are emotionless behemoths. Big businesses live and die on budgets and are very astute in squeezing the vendor to get give-backs. This is particularly true when there are budget overruns or cut-backs. As a result, always have a reserve built into your price structure. An intelligent account leader will make sure that this price reserve fits the happy medium between cutting too close, which can bankrupt your business, and too much, which leads to a lack of trust.
2. Be upfront and honest.
You owe your customer the unvarnished truth about the project and its expectations even if it’s not in your best interest to do so. An ethical company will appreciate your expertise and honesty and make adjustments to be successful – a less scrupulous organization may hunker down and go into “CYA” mode. The latter indicates a doomed relationship and/or project, so it’s best to flush out the truth of the relationship immediately. After Success Systems secured a contract with The Nielsen Company to supply them with data, Nielsen changed the terms of the deal. By setting the goalposts much further back after signing the contract, Nielsen made it nearly impossible to complete the project in time. When everyone is unhappy with the results, no one wins.
3. Review your terms carefully.
Never enter into a contract with a company without having a trusted, well-skilled attorney to advise you about the contract details. Large companies have an army of lawyers to actively protect their interests. Certainly, they are not watching out for you – they are watching out for their clients. Hiring a good lawyer also may mean saying no to your “Cousin Vinnie.” Your friend or relative may be a great real estate attorney, but what does that person know about your business? Good lawyers that specialize in your area of work are probably expensive, but in a litigious society a retainer is a necessary hedge against risk.
4. Document everything.
Keep contemporaneous notes of all your calls, customer promises, comments and meetings. In addition, keep a log of all your efforts and activities that went into completing the project. It may seem like a pain but when memories become fuzzy (and memories always do) you will be glad you have a history committed to writing at the time it occurred. Your lawyers will be happy, too.
5. Build professional relationships, but not friendships.
It is easy to develop friendships with your counterparts when you spend so much time working with them, but keep in mind at the end of the day they are just colleagues and clients. Your client’s interests are very much their own. At the end of the day, it is their obligation to protect their own jobs and their superiors will require them to stand by the company instead of yours. The terms of the contract will always govern, even if they verbally indicated something different. If a “friend” in the other organization makes a sincere promise, make sure that you get it in writing.
Scott Tarlow is the founder, President and CEO of Success Systems. Since 1980, Tarlow has worked in the automated financial systems industry. Under his leadership, Success Systems has worked with prestigious companies such as Sun Electric Corporation (a division of Snap-On Tools), Exxon, USA Schlumberger Technologies, RPS, The HT Hackney Company and Harold Levinson Associates, among others.