For any business, revenue matters.
For any small business, 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 to give any small company lasting credibility.
Scott Tarlow, CEO of Success Systems, a B2B company in StamfordCT, has managed vendors as an employee of a large corporation and vied for contracts as a small business proprietor.
As a result of his experience, Scott knows what it takes for a small business owner to catch – and keep – their first “big fish.” Here is his advice:
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.
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.
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.
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.