People hear the words “business deal” and tend to think of some scene where a guy gets into a Rolls Royce, exchanges a few words with another guy in dark suit, and then hops out at his mansion and carries on with his business.
The truth is, a business deal isn’t always that pretty. In fact, it can be quite costly and harmful to your business if you fail to go about it correctly.
Here are a few insights that you may find useful when setting up a business deal.
When setting up a business deal, choose your partners wisely
Right off the bat – choose your partners wisely.
This is essential if you want to give your business a fighting chance. Business is human and humans can make or break your business. When you go to make a business deal with potential partners, make sure you put in the time to do a little background research on them first. I’m not saying that you need to take it to the extreme, however, you should at least have a basic understanding of a potential business partners.
A few possible ways to research:
- Look them up on social networks (Facebook, Twitter, Google+,etc)
- Look them up on search engines (Google, Bing, etc)
- Find someone you have in common and ask for a reference.
Understand the details before you seal the deal
This should be a no-brainer. Unfortunately, the details are usually what trip us up when setting up a business deal. The truth is, you need to understand exactly what it is you are getting yourself into prior to making any moves. If you don’t, the details WILL come back to bite you and will end up costing you money.
Businesses will present agreements that favor themselves; that’s just how it goes. They do this because it ultimately means more money or less risk for them. Be sure to fight for details that favor your business. If you think a contract presents too much risk and not enough reward, don’t hesitate to walk away from the deal. You’ll be thankful you did.
Oral and written agreements need to match
I made the mistake once of agreeing, over the phone, to add some additional work to an existing business agreement we had with a client. The idea was that the new work would be added to the existing contract and there would be an adjustment in the pricing. The problem, however, came about when this particular individual took a position with a different company without first adjusting the price. In other words, the contract’s scope was magically adjusted without the price being adjusted. Luckily we were able to work out the situation, however, you can imagine how it could have went south.
Everyone likes to say “I like to do business with a handshake and a thank you“. I respect that mindset. However, the truth is, you’re taking on too much risk when you don’t have written agreements. If two people trust each other ,and both plan to deliver on their end of the deal, why would they be against putting it on paper?
Keep immaculate proof
I learned my lesson about verbal agreements; even though they’re legally binding, they’re incredibly difficult to prove. Written agreements provide solid evidence of the details. This lesson extends to communication as well. As you communicate with your business partners, try to find ways to document your conversations so you can reference them in the future. Good record keeping typically benefits everyone involved.
You’ll need to do this by using technology:
- Use a CRM software such as Salesforce.com to act as a central database.
- Integrate Google Apps (gmail, calendar, documents, etc) with your CRM software.
- Consider utilizing Mosec to record, transcribe, and then store your voice calls in your CRM software.
Always deliver on what you promise
If you fail on lesson #2, delivering on your end of the deal will be difficult because there may be different expectations to what you have promised. Nevertheless, after you have settled the details of the deal, make sure to come through on what you promise.
In some rare situations, you may want to actually over deliver on what you promise as a token of good measure. If done correctly, this can be incredibly valuable and solidify your credibility in the minds of your partners. However, you need to be incredibly careful with that strategy; you may end up devaluing your offer and have the opposite impact. Nevertheless, I can’t think of one situation in which you would want to under deliver on your part of the deal.
Always deliver.
Don’t hesitate to seek advice before agreeing to a business deal
Business is complicated. At times, you’re likely going to be put in a position that you don’t feel comfortable with. If that’s the case you need to seek legal advice. Yes, lawyers are expensive. The reason they’re expensive, though, is because they are incredibly valuable. A little preventative work by an attorney can not only save you a bunch of money, but it could ultimately save your business from collapsing.
When seeking out legal advice, though, be sure to find a professional that has knowledge and expertise in the area you need help with. For example, those who are starting a business would likely want to seek out someone such as Doug Bend, who specializes in start-ups and small businesses.
The legal system can daunting and confusing at times. When in doubt, be wise and seek advice.
Conclusion
So there you have it – while it’s certainly fun to wheel and deal, business deals actually require a lot of hard work and thoughtful consideration.
For those who have experience in setting up and executing business deals, what are some of your thoughts on setting up a business deal?