Wednesday, February 29, 2012

Startups and Vendors

I work with a lot of startups. I work for a lot of startups. Yup - two way street! Vendor management is frequently a large part of my job. Sometimes I'm the vendor, and sometimes I'm the client.

Usually, negotiating between a vendor and a client follows certain steps:

  1. Find each other. Sometimes the vendor finds the client, sometimes it's the other way around. Either way, there's a need and a provider, and you both kind of like the idea of working together.
  2. Identify a way to work together. You settle on a basic project with some goals and a simple structure. It can be anything from the vendor providing a service (e.g., hosting) to custom development work, to training, to co-working on something with the vendor on behalf of a customer.
  3. Pricing, Timing and Scope. This is where things get interesting. After all, the client wants things as cheaply as possible, and the vendor wants to make as much money as possible. In theory, the landing place should satisfy everyone.
So you've got the basic idea of what ya'll want to do, and you're starting to talk about money and timing. You've already established that both parties WANT to work together. This is just the stuff about making it happen. Here are some things to remember:
  • "Well, we're self funded." That's nice. And that's important to the party doing the paying, but it's not relevant to the conversation at hand. Leave it outside this conversation; it's just opening the way to emotional involvement and driving you farther from a deal. Where the money comes from doesn't matter. You the client need to talk what this project is worth to you in dollar terms.
  • Payment isn't always dollars. Maybe the dollars are simply not there. Consider payment in other services or other means. Don't have cash? Maybe the vendor will take equity. Are you a marketing firm looking for dev services? Consider paying in branding help. It won't always work, but it can broaden the creativity.
  • Adjust all parameters. There is a slider for money - how much this will cost. There are other sliders, too: time and deliverables are at least two of them. If you can't do the whole thing now, can you do part of it? Can you do it more slowly and stretch out the payments?

In the end, we're all looking to get the best deal possible while accomplishing some great thing. Start with that common ground, and be creative about the rest. There's usually a way to work together. All you have to do is find it.

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