Crafting Deals with Customers and Partners

Written by Sean Murphy. Posted in 2 Open for Business Stage, 3 Early Customer Stage

Bootstrappers prosper by closing deals  with customers and partners. Here are twelve tips if you are new to crafting deals.

Checklist for Crafting Deals with Customers and Partners

  1. Focus on the opportunities that are in front of you. Deals can be steppingstones to larger and more important relationships but you need to close the deals with smaller players and meet your commitments to enable medium size deals, and to close and honor the medium size deals to be eligible for major deals.
  2. Establish a working rapport with the customer/partner, a deal should be the start of a long and mutually beneficial relationship.
  3. Maintain your balance, burnout is much more of a risk than losing any one deal in this environment.
  4. Don’t get into an adversarial relationship with your customer/partner.
  5. Focus on reaching a business agreement, start by drafting a short write-up in plain English of the deal points. Lawyers can advise you on business risks, but in the end it’s the entrepreneur’s call what risks to take.  A reasonable rule of thumb is that legal fees are worth 1% of the value of the deal
  6. Reach a joint understanding how you can end or undo the deal as a part of the deal. It’s important that you do this in the beginning before you sign. No deal lasts forever and you should outline the parameters for ending it cleanly.
  7. The business risk in a software license for the vendor is primarily in the warranty, limitations of liability and indemnifications,  and source code escrow–in particular under what conditions customers will gain access to your source–is normally a bad idea for the vendor and the customer.
  8. Trust is built over time. If possible, establish a meaningful working relationship on a limited set of quid pro quo items before negotiating for a significant deal.
  9. The more predictable and transparent you are with customers and partners, the easier it is for them to forgive the natural mistakes and miscommunications that accrue to any business relationships. Strive for mechanisms in the contract that encourage both sides to over communicate and stay in alignment.
  10. You may be looking for  a mix of revenue, know-how, endorsements, referrals and leads, revenue, market intelligence, channel partners, etc.. Be clear inside your team and with your customer or partner what your priorities are: build mechanisms into the deal that help to keep both sides on the same page about important issues and in alignment on common goals.
  11. Talk time to walk around the situation. Look at the deal from the other side of the table and try and interpret what you are offering and asking for in the context of the other party’s needs and objectives. Also look at what the deal will enable for your two firms in combination.
  12. There are broadly two kinds of deals, those that are personal with a key individual in another small firm, and those that a team or committee decision at a larger firm. There may be a key individual involved from the larger firm but there is normally more of a separation between who you approach for the deal, who decides to do the deal, and who is responsible day to day for implementing what is agreed to. Your firm may be large enough where different people may be involved in the approach and decision than the day to day implementation. You need to address the issues that are distinct in these three phases and have a plan for ensuring ongoing joint execution unless the goal is simply to make an announcement.

If you have other checklist items please add them in the comments

Here are some related posts on early deals:

Trackback from your site.

Comments (3)

Leave a comment

Quick Links

Bootstrappers Breakfast Link Startup Stages Clients In the News Upcoming Events Office Hours Button Newsletter SignUp